TMI Blog2014 (2) TMI 1172X X X X Extracts X X X X X X X X Extracts X X X X ..... , 2009 by the Central Board of Direct Taxes Circular No. 1 of 2011 dated April 6, 2011, shall not be applicable in the instant case for the year under consideration. We, therefore, considering the totality of the facts as discussed hereinabove, are of the view that the learned Director of Income-tax (Exemption) was not justified in cancelling registration already granted to the assessee-trust under section 12A of the Act by invoking the provisions of section 12AA(3) of the Act. In that view of the matter, the impugned order is set aside and the registration under section 12A already granted to the assessee is restored. - Decided in favour of assesse. - ITA No.496/Mum/2012 - - - Dated:- 4-2-2014 - Shri N.K.Saini and Shri Sanjay Garg , JJ. For the Appellant : Shri Firoze B. Andhyarajina For the Respondent : Shri A.C. Tejpal ORDER N. K. Saini (Accountant Member).- This is an appeal by the assessee against the order dated December 16, 2011 of the Director of Income-tax (Exemption), Mumbai. 2. Following grounds have been raised in this appeal : 1. The action of the learned Director of Income-tax (Exemption), Mumbai ( the ld. DIT ) in can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tivities were of charitable in nature and in achieving the object of the assessee-trust of providing facilities of stage and auditorium to promote cultural activities, the cultural performers collected ticket monies from the public audience from which the performers made contribution towards the running cost of the stage and auditorium. However, the contribution did not cover the running costs entirely and therefore, the assessee incurred an average loss of over ₹ 1 lakh per month. It was further stated that the theatre hire charges were charged for the performing groups against various facilities provided to them and also against the expenses incurred by the trust for the maintenance of theatre. Further, to maintain the day-to-day affairs of the trust and to give the proper services and other allied requirement for performing the stage shows the trust has incurred heavy expenditure and if the trust did not recover part of its expenditure from the performing group, it will incur heavy losses and will not be able to carry on the charitable activities. 5. The learned Director of Income-tax (Exemption) after considering the submissions of the assessee, observed that the provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2AA(3) of the Act for the assessment year 2011-12 and subsequent assessment years. It was emphasised that the registration in this case was granted under section 12A only, therefore, the cancellation of registration under section 12AA(3) of the Act for the assessment year 2009-10 was not justified. Reliance was also placed on the decision of the Income-tax Appellate Tribunal, Agra Bench in the case of Agra Development Authority v. CIT (I.T.A. No. 166/Agra/2012 order dated January 11, 2013). Copy of the said order was furnished, which is placed on record. In his rival submission, the learned Departmental representative supported the order of the learned Director of Income-tax (Exemption). 8. We have considered the submissions of both parties and carefully gone through the material available on record. In the instant case it is an admitted fact that the registration was earlier granted to the assessee under section 12A of the Act and the learned Director of Income-tax (Exemption) by invoking the provisions of section 12AA(3) of the Act cancelled the registration considering the activity of the assessee in the nature of commerce and trade. In this regard the Central Board of Direct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly on those cases where the registration has been granted under section 12AA(1)(b) of the Act. Before June 1, 2010 this section 12AA(3) nowhere empowers the Commissioner of Income-tax to cancel or withdraw registration under section 12A of the Act. In absence of such power the registration granted under section 12A cannot be withdrawn or cancelled before June 1, 2010. The power of cancellation of registration under section 12A of the Act came to be incorporated by way of amendment introduced by the Finance Act, 2010 with effect from June 1, 2010. The Central Board of Direct Taxes Circular No. 1 of 2011 dated April 6, 2011 explains that this amendment will apply for the assessment year 2011-12 and subsequent years. Whereas, in the case under consideration, the Commissioner of Income-tax cancelled registration under section 12A of the Act for the assessment year 2009-10 which is not in accordance with the law. This view is fortified by the judgment of the hon'ble Delhi High Court in the case of DIT (Exemptions) v. Mool Chand Khairati Ram Trust [2011] 339 ITR 622 (Delhi) and the order of the Income-tax Appellate Tribunal in the case of N. H. Kapadia Education Trust wherein the Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder section 12A of the Act. As per the Circular issued by the Central Board of Direct Taxes, which is binding on the Income-tax Department, the registration already granted under section 12A of the Act can be cancelled only for assessment year 2011-12 and subsequent assessment years by considering the amended provision which is applicable from June 1, 2010. However, the assessment year involved in this case is the assessment year 2009-10, therefore, the registration cancelled by the Director of Income-tax (Exemption) was not justified. Furthermore, the charitable purpose has been defined in section 2(15) of the Act, which reads as under : 2(15) 'charitable purpose' includes relief of the poor, education, medical relief, and the advancement of any other object of general public utility. 11. The above provisions are substituted by the Finance (No. 2) Act, 2008 with effect from April 1, 2009, which read as under : 2(15) 'charitable purpose' includes relief of the poor, education, medical relief, preservation of environment (including watersheds, forests and wildlife) and preservation of monuments or places or objects of artistic or historic interest, and t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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