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TMI Blog2015 (1) TMI 1202X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 12A of the Income-tax Act, 1961 (for short hereinafter referred to as "the Act"). 2. The respondent-assessee, M/s. Karnataka Badminton Association (for short hereinafter referred to as "KBA"), was granted registration under section 12A of the Act on October 25, 1980, by an order passed by the Commissioner of Income-tax. Subsequently, a notice came to be issued on April 13, 2011, as to why registration under section 12A of the Act should not be revoked by invoking the provisions of section 12AA(3) of the Act by the authorities. In response to the said notice, the KBA filed written submission on August 6, 2011, and contested the matter. The authorities took note of the fact that the accounts for the year ending March 31, 2009, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us heads, the KBA has earned huge profits and after taking note of the change in the definition of section 2(15) of the Act which came into effect from April 1, 2009, it held that the activity carried on by the assessee is in the nature of trade, commerce or business or any activity of rendering any service in relation to any trade, commerce or business. Therefore, the consideration received irrespective of the nature of use or application, or retention, of the income from such activity would take the case out of section 2(15) of the Act and after referring the various judgments, the director has cancelled the registration. Aggrieved by the said order, the assessee filed an appeal-I. T. A. No. 1272 of 2011 before the Tribunal. 4. The Tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inition of "charitable institution" has undergone a change with effect from April 1, 2009. The activities carried on by the assessee is renting the choultry for marriages, social activities as well as commercial activities, i.e, to put up exhibition for sale of various consumer products and the aggregate value of the receipts from the said activities exceeds Rs. 25,00,000 and, therefore, it squarely falls under the first proviso to section 2(15) of the Act. Therefore, it ceases to be an institution for charitable purpose and, therefore, rightly the registration under section 12A of the Act was cancelled which has been erroneously interfered with by the Tribunal. 7. Per contra, learned counsel for the assessee contended that once a person i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rust or institution, as the case may be, he shall pass an order in writing cancelling the registration of such trust or institution : Provided that no order under this sub-section shall be passed unless such trust or institution has been given a reasonable oppor tunity of being heard." 9. A plain reading of the aforesaid provision makes it very clear that a registration granted under section 12A of the Act can be cancelled under two circumstances, i.e., (i) if the activities of such trust or institution are not genuine, and (ii) the activities of the trust or institution not being carried out in accordance with the object of the trust or institution. Only on these two conditions/grounds being satisfied, the registration granted under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year or any receipt thereof. 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 interests of the Revenue. Notwithstanding the fact that the assessee is conferred registration under the provisions of section 12A of the Act, unless the assessee falls within the provisions of 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 in the 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 assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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