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2009 (11) TMI 79 - AT - Income TaxExemption u/s 11 - withdrawal of registration granted u/s 12AA - charitable activities u/s 2(15) - assessee is carrying on any commercial activities or that it renders any service in relation to trade, commerce or business for a cess or fees - HELD THAT:- In the present case it is seen that the assessee does not have any power to levy contribution from sugar factories and cane growers' co-operative societies. The contributions are levied under the Uttar Pradesh Sugar Cane (Regulation of Supply & Purchase) Act, though payable to the assessee council. Therefore, it cannot be said that the assessee carries on any activity in the nature of trading, commerce or business or renders any services in relation to trade, commerce or business for a cess or fee. When the assessee undertakes its object, it does not charge any levy or fee for rendering services. Thus, it is incorrect to hold that the assessee is carrying on any commercial activities or that it renders any service in relation to trade, commerce or business for a cess or fees. The assessee receives grants and contribution which may include cess levied by the UP Government under Uttar Pradesh Sugar Cane (Regulation of Supply & Purchase) Act but such amount is not levied under any authority available to the council itself. We, therefore, hold that the registration granted to the assessee could not have been withdrawn. Apart from the services if any to the sugar mills, the assessee also performed various other functions like development of the zone, execution of development plan in all its essential like cane varieties, cane seeds, sowing programme, fertilizers and manures, development of irrigation and agricultural facilities, imparting technical training to cultivators etc. In respect of these functions, the assessee does not render services for a cess or fee. Therefore, these functions will still remain "charitable purposes" as defined in s. 2(15). Therefore, in respect of other activities the exemption as granted u/s. 11(1), 11(2) and 11(3) will still be allowable. In the same manner, if one of the objects is not "charitable purposes" within the meaning of s. 2(15), in view of the proviso thereof, the other objects if they are "charitable purposes" within the meaning of s. 2(15), the exemption as available u/s. 11 and 12 will still be available. Therefore, whether in view of the proviso to s. 2(15), the assessee is to be denied exemption u/s11(1) will be looked into at the time of computation of income and not at the time of granting registration u/s 12AA where the objects are "charitable purposes" as defined and (sic-not) in the nature of exception to s. 2(15) by way of proviso to s. 2(15). Therefore, the CIT was in error in outrightly rejecting or rather withdrawing the registration already granted u/s 12AA. Such facts are required to be examined at the time of framing assessment and not solely at the time of granting registration u/s 12AA. Since in the present case we have held that the assessee does not carry on any object which involves carrying on an activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business for cess or fee, the assessee council is entitled to registration u/s 12AA. The registration granted to council shall be restored. Assessee appeal is allowed.
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