TMI Blog2014 (6) TMI 367X X X X Extracts X X X X X X X X Extracts X X X X ..... ch thus would be of no assistance to the Revenue. - Decision in the case of Maharashtra Housing and Area Development Authority V/s ADIT(E) [2013 (11) TMI 516 - ITAT MUMBAI] and Rajasthan Housing Board Versus Commissioner of Income-tax, Jaipur-II [2012 (5) TMI 100 - ITAT JAIPUR] followed. Exemption u/s. 11 r/w s. 12 is to be, notwithstanding grant of registration, only by the Assessing Officer, whose powers in the matter of assessment are plenary, on the satisfaction of the condition/s of those sections. Exemption u/s. 11(1) is only upon the application of income for charitable purpose/s, so that it is only where so applied, reading the term 'charitable purpose' as per the extant law, that it could be allowed. The insertion of section 13(8) by the Finance Act, 2012 (w.e.f. 1.4.2009, i.e., A.Y. 2009-10 onwards), from which period the changed section 2(15) becomes operative, removes the matter beyond the pale of any doubt. The matter/issue of exemption u/s. 11 would thus have to be reviewed by the Assessing Officer in assessment on a year to year basis. The gross receipts having exceeded the stipulated monitory limit provided in the second proviso to section 2(15) of the Act, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the CBDT has vide circular No.11/2008 dated 19.12.2008 clarified that newly inserted proviso to section 2(15) will not apply in respect of the first three limbs of section 2(15) i.e. relief of the poor, education or medical relief; (c) that the appellant trust has no profit motive and to fall within the proviso to section 2(15), rendering of service to trade, commerce or business must be such that it has a profit motive; d) that the services rendered by the appellant trust are purely incidental or subservient to the main object of the Trust which is a charitable purposes . 4. On the facts and in the circumstances of the case and in law, the ld DIT(E), erred in withdrawing registration u/s 12AA/12A of the Act with retrospective effect from AY 2009-10 which is wrong and bad in law and contrary to the provisions of the Act, and the Rules made thereunder . 3. The assessee trust is constituted on 27.7.2000 by the President of India acting through the Ministry of SSI and ARI which were referred to as Government of India and Small Industries Development Bank of India, a Corporation established under the Small Industries Development Bank of India (hereinafter referred to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The ld. DIT(E) has also observed that once it is held that assessee is not for charitable purpose then trust itself becomes non-genuine as it looses its status of public charitable trust and accordingly the provisions of section 12AA(3) would get attracted. It is in this manner, the DIT(E) has withdrawn a registration granted to the assessee with effect from assessment year 2009-10. The assessee is aggrieved and has filed aforementioned grounds of appeal. 4. After narrating the facts it was submitted by ld. AR that the assessee trust is constituted by the Government of India and its activities did not change at any stage. He submitted that its activities were considered to be a charitable in nature, therefore, the registration u/s 12A was granted to the assessee. It was submitted that only on the basis of insertion of proviso in section 2(15) of the Act, the ld. DIT(E) has come to a conclusion that if the activities of the assessee are in the nature of trade then it looses its character of being charitable in nature and also its receipts have exceeded the prescribed limit as mentioned in the proviso. It was submitted that the withdrawal of registration u/s 12A is contrary to la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DIT(E) in ITA No.1198/Mum/2012 (AY-2009-10) dated 26.3.2014; b) Cotton Textiles Exports Promotion Council V/s DIT(E) (2014) 44 Taxmann.com 168 (Mum-Trib); c) Prithviraj Kapoor Memorial Trust Research Foundation (2014) 43 Taxmann.com 20 (Mum-Trib) It was submitted by the ld. AR that registration has wrongly been withdrawn by DIT(E) and his order is required to be set aside and the registration of the assessee should be restored. 6. On the other hand, ld. CIT, DR relied upon the order passed by DIT(E) the contents of which have already been discussed in the above part of this order. 7. We have heard both the parties and their contentions have carefully been considered. The assessee trust has been constituted by Government of India for providing effective credit guarantee for SSI loans for guaranteeing the loans and advances extended without collaterals and /or third party guarantees to small industries. Considering the objects stated in the trust deed, the assessee was granted registration by DIT(E) vide letter No.DIT(E)/MC/12A/35698/-2001-02 dated 18.10.2001 and only on the ground that the provisions of section 2(15) have been substituted by the Finance Act, 2008 wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y in-so-far as the Act is concerned, that the registration thereunder confers. 7.2 Coming to the ingredients of section 12AA(3), the Commissioner has again to be satisfied with regard to the activities being not genuine, or that they are not being carried out in accordance with the objects. The requirements are specific. They envisage some change over the period since the grant of registration, or of some information even with regard to an earlier period, that operates to disturb the satisfaction of the Commissioner as arrived at earlier. However, this change or the information, as contemplated, is at the end of the registered entity. This is implicit in the words 'activities of the trust or institution are not genuine or are not being carried out.....', in the provision. A change in law is not contemplated. Further, even though, and understandably, the law cannot contemplate a change therein in time, which even otherwise lies in womb of future, and is thus uncertain, there is, even post amendment to section 2(15), no stipulation with regard to the condition of satisfaction by the Commissioner with the objects of the trust or institution, i.e., as obtaining in section 12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Mumbai Cricket Association (supra), is only in terms of and subject to the mandate of section 12AA(3), and which thus would be of no assistance to the Revenue. We may further add, even as clarified by the tribunal in the case of Rajasthan Housing Board v. CIT [2012] 51 SOT 383/21 taxmann.com 77 (Jp.), heavily relied upon before us by the assessee, that the Assessing Officer is, while framing an assessment, empowered to examine the allowability of exemption u/s.11 where the proviso to section 2(15) is attracted. This follows trite law that exemption u/s. 11 r/w s. 12 is to be, notwithstanding grant of registration, only by the Assessing Officer, whose powers in the matter of assessment are plenary, on the satisfaction of the condition/s of those sections. Exemption u/s. 11(1) is only upon the application of income for charitable purpose/s, so that it is only where so applied, reading the term 'charitable purpose' as per the extant law, that it could be allowed. The insertion of section 13(8) by the Finance Act, 2012 (w.e.f. 1.4.2009, i.e., A.Y. 2009-10 onwards), from which period the changed section 2(15) becomes operative, removes the matter beyond the pale of any doubt. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne year crosses the limit provided in the second proviso, the registration originally granted has to be cancelled, it makes the second proviso redundant for the years where the receipts are less than the specified limit; this could not be the intention of the Legislature. In fact, the Act does not provide for claiming of exemption on year to year basis. 8. On a conspectus of the matter we, therefore, hold that denial/ cancellation of registration in the instant case is not in accordance with law. To clarify further the gross receipts having exceeded the stipulated monitory limit provided in the second proviso to section 2(15) of the Act, the assessee is not entitled to claim exemption in this year but that fact alone cannot make the Trust non-genuine for the purpose of invoking section 12AA(3) of the Act. We, therefore, set aside the order passed by the DIT (Exemption) and allow the appeal filed by the assessee. Needless to observe that the AO is duty bound to independently verify as to whether the assessee fulfilled the other conditions such as application of income, etc. so as to claim exemption under section 12(15). 9. In the result, the appeal filed by the assessee is all ..... X X X X Extracts X X X X X X X X Extracts X X X X
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