TMI Blog2015 (7) TMI 198X X X X Extracts X X X X X X X X Extracts X X X X ..... sts in this case. The registration granted is cancelled in view of the amendment of first proviso to Section 2(15) of the Act. That is not a ground specified in the Statute for cancellation of the registration. In fact, sub-section(8) to Section 13 which is introduced by Financial Act, 2012 which came into effect from 1.4.2009 categorically provides that, nothing contained in Section 11 or Section 12 shall operate so as to exclude any income from the total income of the previous year or any receipt there of. If the provisions of the first proviso to Clause 15 of Section 2 becomes applicable in the case of such person in the said previous year, the Statute has protected the interest of revenue. Not withstanding the fact that the assessee is conferred registration under Section 12A of the Act, unless the assessee falls within Section 2(15) of the Act, excluding the first proviso, the assessee would not be entitled to the benefit of exemption from the tax. If the case of the assessee falls with first proviso to Section 2(15) of the Act, the benefit of registration which flow from Section 12A of the Act is not available. Anyhow, that is a matter to be considered by the Assessing Author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld.DIT(E). Ld.DIT(E) also noted from schedule 15 of the Income Expenditure Account filed by the assessee that it had various receipts totaling to ₹ 25,563/- lakhs in financial year 2008-09. Ld.DIT(E) also did not accept the contention of the assessee that it was doing the work of a department of Government of Karnataka. Ld.DIT((E) thus held that the assessee was not eligible to enjoy the exemption u/s 11 of the Act. He cancelled the registration granted to the assessee u/s 12A of the Act w.e.f assessment year 2009-10. 3. Now before us, the ld.AR strongly assailing the order of the ld.DIT(E), reiterated the contentions taken by him before the ld.DIT(E). Reliance was placed on the judgment of the Hon'ble jurisdictional 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. Accor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -09 is reproduced as under: INCOME AND EXPENDITURE ACCOUNT FOR THE YEAR ENDED 31.3.2009 EXPENDITURE Rs. INCOME Rs. To repairs and maintenance 76,18,544 By sale of application forms 1,11,91,886 Administrative expenses 15,42,79,785 Recoveries of fines and penalties 7,01,51,481 Water and electricity charges 10,61,92,021 Interest received 1,31,17,52,356 special and other charges 9,43,78,709 Other receipts 14,16,03,730 Depreciation 63,04,074 Rent received 1,92,90,492 Forfeiture of deposits 1,12,40,038 Water supply charges 17,42,26,156 To Excess of income over expenditure 1,55,76,64,004 by gain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o genuineness of the activities or the activities not in accordance with the objects of the institutions, without appreciating that clear finding is recorded holding activities of the assessee were not in accordance with the objects and the objects are amended without approval of the department and therefore, provisions of Section 12AA(3) of the Act were applicable and recorded a perverse finding? 5. Learned counsel for the revenue assailing the impugned order contended that the definition of charitable institution has undergone a change with effect from 1.4.2009. The activity carried on by the assessee is in the nature of trade, commerce or business or at any rate activity of rendering any services in relation to any trade, commerce or business and the aggregate value of the receipts from the said activities exceeds ₹ 25,00,000/- and therefore, it squarely falls 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 ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 registration, do not exists in this case. The registration granted is cancelled in view of the amendment of first proviso to Section 2(15) of the Act. That is not a ground specified in the Statute for cancellation of the registration. In fact, sub-section(8) to Section 13 which is introduced by Financial Act, 2012 which came into effect from 1.4.2009 categorically provides that, nothing contained in Section 11 or Section 12 shall operate so as to exclude any income from the total income of the previous year or any receipt there of. If the provisions of the first proviso to Clause 15 of Section 2 becomes applicable in the case of such person in the said previous year, the Statute has protected the interest of revenue. Not withstanding the fact that the assessee is conferred registration under Section 12A of the Act, unless the assessee falls within Section 2(15) of the Act, excluding the first provis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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