TMI Blog2015 (9) TMI 1012X X X X Extracts X X X X X X X X Extracts X X X X ..... stration and by the virtue of section 13(8), the assessee will not be eligible for exemption under section 11 in respect of such income. It is only elementary that a statutory provision is to be interpreted ut res magis valeat quam pereat, i.e., to make it workable rather than redundant. The considerations about the possibilities of the first proviso to Section 2(15) coming into play affecting the grant, decline or withdrawal of registration under section 12AA will thus lead to wholly avoidable undue hardships to the assessee, will be unworkable in practice and be contrary to the scheme of the Act. In view of the above discussions, in our considered view, the considerations about the possibilities of first proviso to Section 2(15) into play are wholly extraneous in the present context. As the withdrawal of registration is solely based on these considerations, the very foundation of the learned Commissioner’s action is unsustainable in law and consists of reasons which are not at all relevant in the context of registration status under section 12A or 12AA of the Act. For this reason also, the action of the learned Commissioner is wholly devoid of any legally sustainable merits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not even after the insertion of the proviso to Section 2(15) of the Act w.e.f. 1.4.2009 i.e. in respect of assessment years 2009-10 onwards. No serious objection was raised by the learned counsel for the revenue to the aforesaid submission. 6. Accordingly, the impugned orders passed by the Tribunal in both the appeals are set aside and the matter is remanded to the Tribunal to decide the same afresh keeping in view the proviso to Section 2(15) of the Act inserted w.e.f. April 1, 2009 with reference to the provisions of the 1922 Act after affording an opportunity of hearing to the parties in accordance with law. Needless to say, anything observed hereinbefore shall not be taken to be expression of opinion on the merits of the controversy. Sincere efforts shall be made to decide the matter expeditiously. As a result, all the appeals stand disposed of. 3. That is how the matter has come before the Tribunal once again. 4. Coming back to the relevant material facts as necessary for the adjudication, the same are as under. The assessee before us is a body set up under the Punjab Towns Improvement Act, 1922. The assessee was registered as a charitable institution under sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the trust or institution, as the case may be, he shall pass an order in writing cancelling the registration of such trust or institution . It is not even the case of the CIT that the activities of the assessee trust are not genuine or that the activities of the assessee are not being carried out in accordance with the objects of the assessee trust. The case of the CIT rests on the first proviso to Section 2 (15) coming into play on the facts of this case but then such a factor cannot warrant or justify the powers under section 12AA(3) being invoked. We, therefore, uphold the grievance of the assessee that the action of the learned Commissioner, in withdrawing the registration under section 12AA(3), was well beyond the limited scope of the powers conferred on him by the statute. The assessee, therefore, must succeed in the appeal for this short reason alone. 10. There is, however, a much more fundamental a reason for the assessee succeeding in this appeal. In our considered view, the consideration with respect to the first proviso to Section 2(15) coming into the play and, for that reason, the objects of an assessee trust or institution being held to be not covered by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visions of Section 13(8) which was brought into effect with effect from the same point of time when proviso to Section 2(15) was introduced i.e. with effect from 1st April 2009. Section 13(8) provides as follows :- Section 13- Section 11 not to apply in certain cases. . (8) Nothing contained in section 11 or section 12 shall operate so as to exclude any income from the total income of the previous year of the person in receipt thereof if the provisions of the first proviso to clause (15) of section 2 become applicable in the case of such person in the said previous year . 13. While introducing this amendment, Explanatory Memorandum to the Finance Bill 2012 (http://indiabudget.nic.in/budget2012-2013/ub2012- 13/mem/mem1.pdf) explained the reasons and backdrop of this legislative amendment as follows: Assessment of charitable organization in case commercial receipts exceed the specified threshold Sections 11 and 12 of the Act exempt income of any charitable trust or institution, if such income is applied for charitable purposes in India and such institution is registered under section 12AA of the Act. ... Section 2(15) of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r approval granted or notification issued is cancelled, withdrawn or rescinded . This amendment will take effect retrospectively from 1st April, 2009 and will, accordingly, apply in relation to the assessment year 2009-10 and subsequent assessment years. (Emphasis by underling supplied by us) 14. It is thus clear that the impact of the proviso to Section 2(15) being hit by the assessee will be that, to that extent, the assessee will not be eligible for exemption under section 11 of the Act. The mere fact that the assessee is granted registration under section 12 A or 12AA as a charitable institution will have no bearing on this denial of registration. As a corollary to this legal position, the fact that the objects of the assessee may be hit by the proviso to section 2(15) cannot have any bearing on the grant, denial or withdrawal of the registration under section 12AA. 15. It is also important to bear in mind the fact that in terms of the second proviso to Section 2(15), which was introduced by the Finance Act 2010 with retrospective effect from 1st April 2009, the legal prescription set out in first proviso to section 2(15) cannot come into play if the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e hardship in the sense that while the assessee will be disentitled to exemption under section 11 due to denial of registration under section 12 A or 12AA which is sine qua non for admissibility of exemption under section 11. On the other hand, if the status of registration is granted to the assessee even when some of the objects may be hit by the first proviso to Section 2(15) and the assessee s receipts from such activities do exceed specified threshold, no prejudice will be caused to the legitimate interests of the revenue because, notwithstanding the status of registration and by the virtue of section 13(8), the assessee will not be eligible for exemption under section 11 in respect of such income. It is only elementary that a statutory provision is to be interpreted ut res magis valeat quam pereat, i.e., to make it workable rather than redundant. 18. The considerations about the possibilities of the first proviso to Section 2(15) coming into play affecting the grant, decline or withdrawal of registration under section 12AA will thus lead to wholly avoidable undue hardships to the assessee, will be unworkable in practice and be contrary to the scheme of the Act. 19. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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