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2022 (7) TMI 1004 - AT - Income TaxRevision u/s 263 - Exemption u/s 11 and 12 - entitlement to benefit of section 10(23C)(iv) - CIT(E) held that the assessee is not carrying out any charitable activities and in view of the proviso to section 2(15) the assessee is not entitled to exemption u/s 11 and 12 - HELD THAT:- As relying on ANDHRA PRADESH STATE SEED CERTIFICATION AGENCY [2013 (1) TMI 63 - ANDHRA PRADESH HIGH COURT] we hold that the CIT(E) is justified in invoking the revisionary powers u/s 263 of the I.T.Act and denying the benefit of exemption u/s 11 and 12 of the I.T.Act. The judgment of the Hon’ble Rajasthan High Court [2022 (1) TMI 693 - RAJASTHAN HIGH COURT] held that when registration u/s 12AA is still in force and the revenue does not dispute the nature of charitable activities, CIT(E) is not entitled to invoke the revisionary jurisdiction u/s 263 - This judgment of the Hon’ble Rajasthan High Court is of no assistance to the assessee. As mentioned earlier, the CIT(E) has not cancelled the registration u/s 12AA but only denied the exemption u/s 11 of the I.T.Act for the reason that the assessee’s activities are hit by proviso to section 2(15) since it is charged fees for the services rendered and the receipt of such fee exceeds 20% of the total turnover. As in the case of Karnataka Badminton Association [2015 (1) TMI 1202 - KARNATAKA HIGH COURT] had held that cancellation of registration u/s 12AA(3) of the I.T.Act is not warranted for the reason that the assessee is hit by first proviso to section 2(15) of the I.T.Act. It was observed by the Hon’ble High Court that the revenue’s interest is protected by virtue of section 13(8) introduced by the Finance Act, 2012 with effect from 1st April, 2009. Section 13(8) provides that “nothing contained in section 11 or 12 shall operate so as to exclude any income from the total income of the previous year of the person in receipt thereof if the provisions of the first proviso to clause (15) of section 2 become applicable in the case of such person in the said previous year”. Thereby meaning irrespective whether the registration u/s 12A is in force when assessee is hit by first proviso to section 2(15) of the I.T.Act, exemption u/s 11 or 12 can be denied by virtue of section 13(8) of the I.T.Act. For the aforesaid reasoning and the judicial pronouncements, cited supra, we hold that the CIT(E) is justified in cancelling the benefit of exemption u/s 11 - Decided against assessee.
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