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Issues Involved: Appeal against withdrawal of registration u/s 12AA of the Income Tax Act, 1961.
Issue 1: Withdrawal of Registration u/s 12AA The assessee appealed against the withdrawal of registration granted under section 12AA of the Income Tax Act, 1961 w.e.f. 2009-10. The CIT withdrew the registration after considering the nature of activities and income sources of the assessee, which were deemed to be in the nature of trade and business. The CIT relied on the proviso to section 2(15) inserted by the Finance Act, 2008, which limited the exemption for charitable purposes. The assessee's contentions were found to be inconsistent and unsupported by evidence. The CIT also highlighted that similar statutory bodies were not granted exemption u/s 12AA even before A.Y. 2009-10. The ITAT upheld the preliminary objection raised by the assessee's representative, annulling the CIT's order as being without jurisdiction due to the incorrect application of section 293C of the Act. Issue 2: Jurisdiction of CIT to Cancel Registration The ITAT Mumbai Benches in the case of Brahman Sabha Trust held that there was no provision in section 12AA to enable the CIT to cancel registration granted under section 12A of the Act. The ITAT found that the CIT's order was not sustainable as the amendment allowing cancellation of registration under section 12A was effective from 01.06.2010, while the order in question was passed earlier. The ITAT emphasized the distinction between "approval" and "registration" in the Act, stating that section 293C, which deals with approval withdrawal, cannot apply to a case of registration. Consequently, the ITAT annulled the CIT's order for lack of jurisdiction. Outcome: The ITAT allowed the appeal of the assessee based on the preliminary objection regarding the jurisdictional issue, annulling the CIT's order. The ITAT did not delve into the merits of the case, leaving the CIT the option to take further action in accordance with the law.
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