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2020 (2) TMI 366 - HC - Income TaxExemption u/s 11 - cancellation of registration - Tribunal justification in comparing the appellant with a private builder and developer and in holding that the appellant was carrying on business for profit so as to attract proviso to Section 2(15) ? - Whether the Appellate Tribunal was justified on facts and in law in sustaining the order u/s 12AA(3) particularly on grounds alien to Section 12AA(3) - HELD THAT:- There are no categorical findings that the activities of GIDC are not genuine or are not in accordance with the objects of the trust or the institution. Merely because, by reference to the amended provisions in Section 2(15), it may be possible to contend that the activities of GIDC are covered under the proviso, that, by itself, does not render the activities of GIDC as non-genuine activities so as to entitle the CIT to exercise powers under Section 12AA(3) of the said Act. We have really not gone into the question as to whether the activities of GIDC are indeed covered under the proviso to Section 2(15) of the said Act as amended. This is because we are satisfied that the substantial question of law at (b) is required to be answered in the favour of the appellant and against the Respondent Revenue. Once this is done, there is really no necessity to go into the other issue as is reflected in the substantial question of law at (a). We also add that the Circular No.21/2016 also, supports the contentions of Mr. Vaidya, inasmuch as it reiterates that the process of cancellation of registration has to be initiated strictly in accordance with the provisions under Section 12AA(3) and after carefully examining the application of the said provisions. The Circular, in the context of income limits under the proviso also explains that merely because in a particular year the limits may be exceeded is not a good ground to cancel the registration itself, though, all these aspects, can be taken into consideration at the stage of assessment. In fact in case of Khar Gymkhana [2016 (6) TMI 489 - BOMBAY HIGH COURT] as also in Karnataka Industrial Area Development Board [2015 (7) TMI 169 - KARNATAKA HIGH COURT] the Division Benches of our Court have taken the view that such matters can be evaluated in the course of assessment but this shall not be a ground for cancellation of the registration itself. We allow this appeal by answering the substantial question of law at (b) above in favour of the appellant and against the respondent Revenue.
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