TMI Blog2013 (2) TMI 577X X X X Extracts X X X X X X X X Extracts X X X X ..... rust 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 acti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thinda went in appeal before the I.T.A.T. Amritsar Bench, who also rejected the appeal and later on assessee filed M.A. u/s 254(2) of the Act, which was accepted by the Tribunal and set aside the matter to CIT to decide the matter with some directions vide M.A.No.67(Asr)/2009 dated 04.03.2010 and so keeping in view the directions of the ITAT, the predecessor allowed registration u/s 12AA w.e.f. 12.06.2003 vide order dated 13.08.2010. The assessee has also filed the some case laws before the ld. CIT, Bathinda which he has mentioned in the written submission filed by the assessee in para 5 page 2 to 9 and lastly the ld. CIT considered the submissions of the assessee-trust and held that the assessee is selling commercial properties in the open auctions and the residential properties are partly sold by auction and partly through draw of lots. The activities are accomplished by the trust at a nominal cost which results in tremendous value addition in the land. It brings the land in the same category as the other real estate products available in the market, offered by the private colonizers and real estate agents. The assessee advertised its product widely in print and electronic media ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aving similar objects/activities, prior to the change of definition to the Charitable purpose u/s 2(15) of the Act. 4. The Ld. CIT, Bathinda respectfully followed the decisions of Hon'ble Supreme Court in the case of Indian Chamber of Commerce v. CIT [1975] 101 ITR 796 as well ITAT, Amritsar Bench and ITAT Chandigarh Bench and finally held that he is not satisfied with the activities of the assessee-trust, which are not charitable in nature within the meaning of proviso to section 2(15) of the Act and the assessee trust does not qualify to be treated as charitable institution and cancelled the registration already granted u/s 12AA to the assessee w.e.f.12.06.2003 by passing the impugned order dated 20.07.2003 u/s 12AA(3) of the Act. 5. The Ld. counsel for the assessee, Sh. K.R. Jain, Advocate stated that the order of the Ld. CIT, Bathinda canceling the registration which has already been granted by him is contrary to the law and facts on record and deserves to be cancelled on the ground that the assessee-trust is doing charitable purpose for general public utility. He further stated that the amended definition of section 2(15) of the Act was before the ITAT, Amritsar Bench, Amr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (supra). 5.1 Lastly he requested that the impugned order passed by the Ld. CIT, Bathinda may be cancelled. 6. On the contrary, the Ld. DR, Sh. Tarsem Lal, controverted the arguments advanced by the ld. counsel for the assessee and stated that in view of the amended definition of section 2(15) of the Act, w.e.f. 01.-04.2009, the Ld. CIT, Bathinda has issued a notice to the assessee regarding cancellation of granting registration u/s 12AA for which the ld. CIT has the power provided u/s 12AA(3) of the Act. He also argued that the facts and circumstances of the present case are squarely covered against the assessee by the decision of the ITAT, Chandigarh Bench, in the case of Punjab Urban Planning Development Authority (supra) and the ld. CIT has rightly cancelled the registration granted u/s 12AA(3) of the Act. Finally, the ld. DR stated that keeping in view the change of definition of charitable purpose, which came into existence w.e.f. 01.04.2009, the assessee-trust cannot draw any benefit from the fact that registration u/s 12A granted to the institution cannot be cancelled, reply to his answer is amended definition of charitable purpose u/s 2(15) of the Act. The Ld. DR sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity." 7.1 Keeping in view the aforesaid provisions, the charitable purpose include relief to the poor, education, medical relief and advancement of any other object of general public utility. In the present case, we found that 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 because as stated above, the assessee-trust is charging huge fees on account of various facts, as mentioned above. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cap students. (p) Land reserved for 'Yatri Niwas' in Bathinda near to New Bus Stand in 49.5 Acre (free of cost). (q) Land provided for 'Approach Road' nearly 60 wide 382.4 sq. mtr. Construction cost is nearly Rs.23.67 lacs approved vide Resolution No.21 dated 11.10.2007 (free of cost)." 7.2 After perusing the aforesaid activities, we are of the view that the ld. first appellate authority 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. Because the assessee advertised this value added product widely in print as well as electronic media so as to attract a large number of customers/clients from all the general public including the financially sound persons from the public. 7.3 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 mor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d above. 7.5 The Ld. counsel for the assessee has also not established before us that the assessee-trust is carrying out any charitable activities for the relief of poor, education, medical relief or for any other object of general public utility. 7.6 The ld. counsel for the assessee has cited the various judgments in the case of Welham Boy's School Society (supra), Chaturvedi Har Prasad Educational Society (supra), Kailashanand Mission Trust's case (supra) and Punjab Urban Planning Development Authority case (supra), which are not relevant and applicable to the facts and circumstances of the present case. In these decisions, there is no adjudication of the amended provisions of section 2(15) substituted by the Finance Act, 2008 w.e.f. 01.04.2009 as well as section 12AA(3) of the Act. As per Finance (No.2) Act, 2004 there is an amendment introduced by the said Act w.e.f. 01.10.2004 in section 12AA(3), which for the sake of clarity has already been reproduced hereinabove. But in the present case, the ld. CIT, Bathinda has decided the case on the basis of amended provisions of the Act. 7.7 Moreover, amendment introduced in the statute in section 12AA(3) as referred to hereina ..... X X X X Extracts X X X X X X X X Extracts X X X X
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