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TMI Blog2015 (7) TMI 198X X X X Extracts X X X X X X X X Extracts X X X X ..... e that the assessee, a statutory body formed by the Government of Karnataka for promoting and securing the development of Bangalore metropolitan area, was granted registration u/s 12A of the Act on 26/3/2003 based on an application filed by it. On 15/3/2011 the ld.DIT(E) issued a show cause notice to the assessee seeking reasons why the registration should not be revoked in view of the amendment made to sec.2(15) of the Act. The reply of the assessee was that its activities fell within the definition of charity viz., relief of poor, education, medical relief and advancement of any other object of general utility. As per the assessee, its predominant object was to secure a balanced development of Bangalore metropolitan area and it was having ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ictional High Court in the case of Director of Incometax (Exemption) vs. Karnataka Industrial Area Development Board (Income-tax Appeal No.261/2013 dated 7/11/2014). According to him, the Hon'ble High Court had held that the Karnataka Industrial Area Development Board, which was also having substantial receipts in the nature of sale of application Form, Water supply charges, Recovery of fine etc., was still eligible for registration u/s 12A of the Act. According to him, their Lordships held that only if the two conditions mentioned in sec.12AA of the Act were met, a registration granted u/s 12 of the Act could be cancelled. Both the conditions were not met. Per contra, learned Departmental Representative supported the order of the ld.DI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax (Exemption). A notice was issued to the assessee under Section 12AA(3) of the Act calling upon to show cause as to why the said registration should not be cancelled on the ground that case falls under first proviso to Section 2(15) of the Act. The assessee appeared, contested the matter. The authorities took note of the fact that the accounts for the year ended 31.3.2009 shows receipts by way of gain on disposal of land to the extent of Rs. 18,69,72,000/- and excess of income over expenditure at Rs. 155,76,64,004. An extract of the Income and Expenditure account for the financial year 2008-09 is reproduced as under: INCOME AND EXPENDITURE ACCOUNT FOR THE YEAR ENDED 31.3.2009 EXPENDITURE Rs. INCOME Rs. To repairs and maintenance 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceed to pass an order cancelling the registration granted under Section 12AA with effect from the assessment year 2009-10. Aggrieved by the said order, the assessee preferred an appeal to the Tribunal. The Tribunal relying on the judgment in the case of Karnataka Badminton Association in ITA No.1272/Bang/2011 held; the registration already granted under Section 12A cannot be revoked for the reason that the Charitable Trust or Institution pursuing of advancement of objects of general public utility carried on commercial activities and therefore as the conditions stipulated in Section 12AA(3) do not exists in this case, set aside the order of cancellation and registration of assessee under Section 12A of the Act. Aggrieved by the said orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the first proviso to Section 2(15) of the Act and therefore it ceases to be an institution for charitable purpose. Therefore, rightly the registration under Section 12A of the Act was cancelled which has been erroneously interfered with by the Tribunal. 6. Per contra, learned counsel appearing for the assessee contended, once a person is granted registration under Section 12A of the Act, the said benefit could be denied only if the case falls under Section 12AA(3) of the Act. Admittedly, the assessee's case do not fall under that provision. Even if the activity carried on by the assessee ceases to be a charitable purpose in view of the amendment brought about to the definition of charitable purpose under Section 2(15) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h trust or institution are not genuine, (b) The activities of trust or institution not being carried out in accordance with the object of the trust or institution. Only on those two conditions being satisfied, the registration granted under Section 12A of the Act could be cancelled by the authorities. 9. It is not in dispute that there is no violation of the said two conditions by the assessee. The activities carried on by the assessee is a genuine one. As could be seen from the profits they have generated, the said profit is earned by carrying on the activities in accordance with the object of the trust. Therefore, the two conditions stipulated in subsection (3) of Section 12AA of the Act, which empowers the authority to cancel registrati ..... X X X X Extracts X X X X X X X X Extracts X X X X
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