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2013 (10) TMI 706 - AT - Income TaxCancellation of registration u/s 12AA(3) of the Income tax act – Activities of general public utility u/s 2(15) of the Income Tax Act – Held that:- 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. 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, none of the land is earmarked to be sold at no profit, no loss basis to any person whatsoever, which clearly establish that the element of charity is clearly absent from the activities of the trust, which is contrary to the provisions of section 2(15) of the Act amended w.e.f. 01.04.2009 and the Ld. CIT Bathinda has rightly issued show cause notice to the assessee-trust for canceling the registration already granted to the assessee-trust which the ld. CIT, Bathinda has the power under section 12AA(3) of the Act – Decided against the Assessee. Penalty u/s 271(1)(c) of the Income Tax Act – Held that:- The reasons for levying penalty by the A.O. on account of difference in valuation of closing stock, difference in sale receipts of land sold and other receipts, discrepancies in expenditure account and difference in Bank Balances which could not be explained by the assessee are therefore the concealment of income and therefore, Penalty u/s 271(1)(c) of the Income Tax Act is legal – Decided against the Assessee.
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