Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2015 (2) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2015 (2) TMI 287 - AT - Income TaxRegistration under Section 12A cancelled - whether or not the learned Commissioner was right in exercising his powers under section 12AA(3), in withdrawing the registration granted to the assessee under section 12AA? - objectives/activities of the appellant are not Charitable in nature - appellant is doing the activities for a ‘cess’ or ‘fee’? - Held that:- As long as activities of the trust or the institution are being carried out in accordance with the objects of the trust or the institution, as these objects existed at the point of time when registration granted, it cannot be open to the Commissioner to fault the assessee so far as objects of the trust or the institution are concerned, and, on that basis, cancel the registration granted under section 12 AA(1). The words used in section 12AA(3) are free from any doubt or ambiguity, and, as held by Hon’ble Uttarakhand High Court in the case of Welham Boys School Society Vs CBDT [2005 (10) TMI 66 - UTTARANCHAL High Court ], the only power under which a Commissioner can cancel the registration is power under section 12AA(3) and validity of a an order cancelling the registration is to be examined on the touchstone of legal provisions set out therein. While learned Commissioner has, on the basis of elaborate reasoning set out in the impugned order, concluded that, “the objective clauses of the authority….. are in the nature of business with a view to earn profits” and that “the activities of Muzaffarnagar Development Authority are not charitable in nature nor advancement of general public utility within the meanings of Section 2(15) of the Income Tax Act”, none of these reasons, even if correct, can be legally sustainable basis for exercise of powers under section 12AA(3). The only occasion to examine whether or not the objects are charitable is when the registration is granted is when examining the application of registration under section 12AA(1) and once no adverse inference is drawn, vis -à-vis the objects, at that stage, that aspect of the matter cannot be examined again in the course of exercise of powers under section 12AA(3). Mere selling some product at profit (as has been the allegation of the revenue) will not ipso facto hit the assessee by applying proviso to Section 2(15) and deny exemption available under section 11. Thus mere selling some product at profit (as has been the allegation of the revenue) will not ipso facto hit the assessee by applying proviso to Section 2(15) and deny exemption available under section 11 - Decided in favour of assessee.
|