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2020 (2) TMI 1322 - HC - Income TaxExemption u/s 11 - assessee is registered under Section 12AA of the Act 1961 w.e.f. 1st April 2002 - CIT cancelling the registration under Section 12AA(3) of the Act w.e.f. 1st April 2008 applicable to the Assessment Year 2009-10 - activity of the assessee is related to levying various fees of charges from the users of the ports under various heads - Tribunal cancelling the order of the Commissioner (Appeals) passed under Section 12AA(3) in view of the amendment made under Section 2(15) of the Act brought into effect from 1st April 2009 - HELD THAT:- Registration granted earlier under Section 12A of the Act can be cancelled under two circumstances; (a) If the activities of such Trust or Institution are not genuine, and (b) The activities of the Trust or Institution not being carried out in accordance with the object of the Trust or Institution. Only on those two conditions being satisfied, the registration granted under Section 12A of the Act could be cancelled by the authorities. It is not in dispute that there is no violation of the said two conditions by the assessee. The activities carried on by the assessee is genuine one. As could be seen from the profits they have generated, the said profit is earned by carrying on the activities in accordance with the object of the Trust. Therefore, the two conditions stipulated in sub-section (3) of Section 12AA of the Act, which empowers the authority to cancel the registration, do not exist in this case. The registration granted is cancelled in view of the amendment of first proviso to Section 2(15) of the Act. That is not a ground specified in the Statute for cancellation of the registration. If the provisions of the first proviso to clause (15) of Section 2 becomes applicable in the case of such person in the said previous year, the Statute has protected the interest of the Revenue. Notwithstanding the fact that the assessee is conferred registration under Section 12A of the Act, unless the assessee falls within Section 2(15) of the Act, excluding the first proviso, the assessee would not be entitled to the benefit of exemption from tax. If the case of the assessee falls within first proviso to Section 2(15) of the Act, the benefit of registration which flow from Section 12A of the Act is not available. Anyhow, that is a matter to be considered by the Assessing Authority. But, on that ground, the registration cannot be cancelled, which is precisely the Tribunal has held. As decided in NH KAPADIA EDUCATION TRUST - EDUCATION TRUST [2018 (10) TMI 377 - GUJARAT HIGH COURT] Proviso to sub-section (15) to section 2 of the Act was added by the Finance Act, 2010 providing that the advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on of any 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 or any other consideration irrespective of the nature of use or application, or retention of the income from such activity. This proviso therefore applies to activity for the advancement of any other object of general public utility. Such activity would be excluded from the definition of charitable purpose if it involves carrying on any activity in the nature of trade, commerce or business or for cess or fee or any other consideration. Clearly, the legislature did not desire this condition or restriction to be attached to the remaining activities which were defined or categorized as charitable purpose under sub-section (15) which includes the education. - Decided in favour of assessee.
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