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2016 (5) TMI 930 - AT - Income TaxRegistration granted to the assessee u/s 12A cancelled - assessee is a body corporate formed under UP Urban Planning and Development Act, 1973 - Held that:- The facts in the present case, we find, are identical to the facts in the case of Tamil Nadu Cricket Association (2013 (12) TMI 833 - MADRAS HIGH COURT ). In the present case the assessee had been granted registration u/s 12AA after considering its stated objects. Undeniably there has been no change in the objects of the assessee. The registration has been later on cancelled only on account of the proviso to section 2(15). It is not the case of the Ld. CIT that the activities are not being carried out in accordance with the objects of the assessee trust on the basis of which registration was granted under section 12A. Thus we find that the decision of the Hon’ble Madras High Court squarely applies to the case of the assessee. We therefore hold that the amendment to section 2(15) of the Act cannot be the basis for cancellation of registration granted earlier under section 12A of the Act, and that the Ld. CIT had erred in holding that the activities of the assessee were not genuine since it was not charitable in view of the first proviso to section 2(15) of the Act. The applicability of the proviso will have to be examined every year and thus cannot be the basis of granting or cancelling registration u/s 12AA. Moreover, the legislature has provided a safeguard against the objects being vitiated on account of the first proviso by virtue of section 13(8), which was brought into effect from the same point of time when proviso to section 2(15) was introduced i.e. w.e.f. 01.04.2009, which provides for denial of exemption of income u/s 11 in the year in which the first proviso becomes applicable. Thus, legally the impact of the proviso to section 2(15) being attracted is that the assessee will not be eligible for exemption u/s 11 of the Act. As a corollary to this legal position, registration u/s 12AA cannot be impacted by the object being hit by the first proviso to section 2(15). The grant of registration u/s 12AA(1)(b) requires satisfaction about the objects of the trust as well as genuineness of the activities, while for cancellation u/s 12AA(3) all that is insisted upon is the satisfaction as to whether the activities of the trust or institution are genuine or not and whether the activities are being carried on in accordance with the objects of the trust. Further we find that on the issue under adjudication in the present case, there are decisions of the Hon’ble Tribunal in favour of the assessee as pointed out by the Ld. AR and in such a situation it is settled law that the view favourable to the assessee has to be taken. Moreover the decision of the Hon’ble Madras High Court has precedence on the decisions of the Hon’ble Tribunal on this issue following the principles of judicial precedence. Thus in our considered view, the action of the Ld. Commissioner in canceling registration under section 12AA(3) is wholly devoid of any legally sustainable merit. - Decided in favour of assessee
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