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2013 (2) TMI 577 - AT - Income TaxRegistration granted u/s 12AA cancelled - assessee is earning huge profits by carrying various activities including the purchase of land at nominal cost, then level and clear it, cut into plots and sell the plots at much higher prices and earning huge profit and also charging fees and fines from the sale of forms, land enhancement fee, building plan fees, road cutting fees, transfer fee, fine and penalties and non construction charges - Held that:- The charitable purpose include relief to the poor, education, medical relief and advancement of any other object of general public utility. As in the present case, the assessee-trust is carrying on various activities in the nature of trade, commerce or business and rendering its services for the purpose of trade, commerce and business, the assessee-trust is charging huge fees. No doubt, the assessee has given some explanation for charging fees for the afore-mentioned activities by stating that the assessee-trust is charging fees as per rules framed by the Punjab Local Bodies Govt. which is clearly the admission by the assessee-trust that the assessee-trust is doing activities not for charitable purpose but for business purpose only. No doubt, these penalties charged by the assessee-trust are in the nature of compensatory but that is not permissible for the charitable institution. FAA has rightly held that the land of the assessee trust is in the same category of other real estate products available in the market offered by the private colonizers and real estate agents. It is a matter of record that the assessee-trust sells off all these plots by organizing a public auction, where through the bidding process and the competition generated in it, the prices of their land keep escalating and finally, the land is sold off to the highest bidder. The surplus income which is generated through the sale of land is again used for buying more land, developing it and selling it the same way, thereby generating more profit. On the facts and circumstances the assessee trust is not merely a mediator in buying and selling of land to the general public. Rather it operates in a business oriented way on the well known principles of profit generation. Therefore, the activities of the assessee trust clearly constitute activities in the nature of trade, commerce or business because no plots are reserved for any socio-economically lower society, there is no element of donation or support to any cause - CIT(A) has rightly cancelled the registration granted to the assessee-trust w.e.f. 12.06.2003 in view of the amended provision of section 12AA(3) on fully satisfied that the activities of the assessee-trust are not genuine and not being carried out in accordance with the objects of the assessee-trust - against assessee.
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