Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2019 (2) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (2) TMI 1749 - HC - Income TaxExemption u/s 11 - entitled for registration under section 12AA - charitable activity u/s 2(15) - HELD THAT:- Nature of activity of the respondent-assessee must be considered. As already noted, the assessee is a statutory authority constituted under the provisions of the Karnataka Urban Development Authorities Act, 1987. Despite the insertion of the proviso, the assessee was entitled to continue the certificate of registration under section 12A of the Act, as even though the objects of the assessee fall within the limit of any other object of general public utility, but, having regard to the aforesaid dicta, it is held that its activity is not of a commercial nature for the purpose of earning profit, but being statutory body its objects are to ensure orderly development of urban areas of Hubli-Dharwad. In the circumstances, substantial question of law No.1 is answered against the Revenue. Whether Tribunal was right in following the judgment of KIADB [2015 (7) TMI 169 - KARNATAKA HIGH COURT] wherein it is held that the two conditions stipulated under section 12AA(3), which empowers the registering authority to cancel registration, do not exist in the case of the asses see? - HELD THAT:- It is only if the activities of such trusts or institutions are not genuine or are not being carried out in accordance with the objects of the trust or institution, on being satisfied about the same the registration under section 12A(1)(aa) of the Act could be cancelled and not in any other circumstances. In the instant case, the registration of the respondent-entity was sought to be cancelled on the basis of the insertion of the proviso to clause (15) of section 2 of the Act on the premise that the activity carried out by the respondent was purely trade and commerce and for a profit motive. But in the instant case of Karnataka Industrial Areas Development Board, it has been explained that the statutory authority therein was involved in the orderly development of industrial areas and hence, its activity was for the purpose of and in the nature of public utility service. The nature of the respondent-entity has been already discussed. Neither of the circumstances stated above apply in so far as the respondent-assessee is concerned. Thus the Commissioner could not have cancelled the registration certificate vide order dated November 28, 2011. Substantial question of law No. 2 is also answered against the Revenue and in favour of the assessee by holding that the Tribunal was right in following the judgment of this court in the case of Karnataka Industrial Areas Development Board, wherein it has been held that if either of the two conditions stipulated under section 12AA(3) exist then the registering authority is empowered to cancel the registration and not otherwise.
|