TMI Blog2014 (2) TMI 1231X X X X Extracts X X X X X X X X Extracts X X X X ..... institution and income from business activities, as mentioned in first proviso to section 2(15), does not cross limit of ₹ 10.00 lacs. Subject to our above observations, the impugned order of the DI.T(exemptions) is hereby set aside and the registration to the assessee council granted under section 12A of the Act is hereby ordered to be restored - Decided in favour of assessee - ITA No.308/Mum/2012 - - - Dated:- 21-2-2014 - Shri D. Karunakara Rao, Accountant Member And Shri Sanjay Garg, Judicial Member For the Appellant : B.V. Jhaveri For the Respondent : Shri S.D. Shrivastva ORDER Per Sanjay Garg, Judicial Member: The present appeal has been filed by the assessee against the order dated 16.12.2011 of the Director of Income tax (Exemp.), Mumbai, passed u/s. 12AA(3) of the Income tax Act, cancelling the registration granted to the assessee u/s. 12A of the Act. 2. The assessee was registered as a charitable trust u/s 12 A of the Act. The DIT(E) noticed that the assessee was carrying out activities in the nature of trade, commerce or business etc., and gross receipts there from were in excess of ₹ 10.00 lacs. So by taking resort to the new ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the CBDT has issued a Circular No.1/2011 dated 06.04.2011 stating therein as under:- Section 12AA provides the procedure relating to registration of a trust or institution engaged in charitable activities. Section 12AA(3) previously provided that if the activities of the trust or institution are found to be non- genuine or its activities are not in accordance with the objects for which such trust or institution was established, the registration granted under section 12AA can be cancelled by the Commissioner after providing the trust or institution an opportunity of being heard. The power of cancellation of registration is inherent and flows from the authority of granting registration. However, judicial rulings in some cases have held that the Commissioner does not have the power to cancel the registration which was obtained earlier by any trust or institution under provisions of section 12A as it is not specifically mentioned in section 12AA. Therefore, section 12AA has been amended to provide that the Commissioner can also cancel the registration obtained under section 12A as it stood before amendment by Finance (No.2) Act, 1996. Applicability - This amendment has been made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stipulated in section 12AA(3), we find that there is no finding of the CIT that activities of the assessee, Agra Development Authority are non-genuine or not being carried out in accordance with the object of the assessee, Agra Development Authority. Even for the sake of argument if we accept the view of CIT. there may be a case of activities which are not charitable but it cannot be said that those activities of the assessee, Agra Development Authority, are non-genuine or not being carried out in accordance with the object of the assessee. The activities and objects of the assessee, Agra Development Authority are the same which were there at the time of granting registration under section 12A of the Act and at the time when CIT cancelled the registration granted under section 12A w.e. from 2009-2010. Thus, we find that this condition of cancellation of registration already granted under section 12A has not been satisfied. Where the condition stipulated under section 12AA (3) is not satisfied, the CIT cannot cancel or withdraw registration granted under section 12A of the Act. In the case under consideration, the condition stipulated in section 12AA(3), that activities of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l and synthetic high polymers and related materials and in related technical and non technical subjects, including finance and management thereof. [d]To project plastics, natural and synthetic high polymers and other related materials as eco friendly materials with excellent recyclability and their contribution in conserving natural resources and saving energy. [e] To project the vital contribution of plastics, natural and synthetic high polymers and related materials in various fields of national economy and the role they play in improving agricultural productivity and in cost effective protection, preservation, storage and handling of products in infrastructure development, in economizing construction costs, in providing affordable healthcare. [f]To disseminate for public awareness all relevant information about plastics, natural and synthetic high polymers and related materials so as to remove myths and misconceptions arising out of ignorance and to educate public, NGOs and policy makers and the media about the beneficial role plastics play in improving overall quality of life. [2] Assessee s main activities are Education, Training and Manpower Development for the P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the nature of business income and these receipts wherein excess of monitory limit as laid down in the proviso to Section 2(15) of the act which has come into effect from A.Y. 2009-10 and further that the assesse has been in receipt of such income regularly over the years. The decision of the co-ordinate bench of the tribunal in the case of M/s Bombay Presidency Golf club Ltd. 149 TTJ 471(Mum), relied upon by the ld. AR in this respect, is quite distinguishable on its own facts and circumstances and is not applicable to the facts and circumstances of the case in hand. 8. The next contention of the ld. AR has been that even if the objects of the trust fall in the category of advancement of any other objects of general public utility as per definition of charitable purpose given u/s. 2(15) of the Income tax Act. Even then the registration once granted to the assessee being a charitable institution cannot be cancelled or taken away because of the newly inserted proviso to section 2(15) of the Income tax Act. He has also relied upon various case laws in support of his contention. On the other hand, the learned DR has submitted that the registration of the assessee has rightly b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the total receipts of the Assessee trust has exceeded ₹ 10.00 lacs during the previous year .. 5. The Tribunal while dealing with the applicability of section 12AA(3) of the Act to the trusts which were already registered, in the light of the newly added proviso w.e.f. 01.04.2009 to section 2(15) of the Income Tax Act, observed as under: 5.2 We may observe that the tax exemption or benefits are granted to a trust or institution because its activities fall within the definition of charitable purposes as defined u/s. 2(15) of the Act. Under section 12AA(3) the registration of such trust/institution can be cancelled if its activities have become non genuine or it is not carrying out activities as per objects of the institution. Once the activities of a registered charitable institution cease to be charitable or do not fall within the purview of definition of 'charitable purpose' as per the relevant provisions/definitions given under the Act, then, such institution would not be entitled to tax exemption or benefits granted under the Act. Even despite the fact that such an institution, otherwise, is carrying out charitable activities. 5.3 Now, the question before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and income from business activities, as mentioned in first proviso to section 2(15), does not cross limit of ₹ 10.00 lacs. Our view in this respect is fortified from the judgment of the co-ordinate Bench decision of the Tribunal in the case of Rajasthan Housing Board vs. CIT (2012)21 Taxmann.com 77(Jp). 5.4 Thus, the action of the CIT(A) relying upon the newly inserted proviso from 01.04.2009 in cancelling the registration of the trust, in our view, is not correct or justified. The only effect will be that the Assessee will not be entitled for exemption or tax benefits which otherwise would have been available to it being registered as charitable institution, for the relevant year during which its income has crossed the limit of ₹ 10.00 lacs. Subject to our above observations cancellation of registration granted to Assessee u/s. 12A is hereby set aside and same is hereby ordered to be restored. 6. Similar issue came into consideration before the Hon ble Madras High Court in the case of Tamil Nadu Cricket Association vs. DIT [2013]40 taxmann.com 250(Madras). The Hon ble Madras High Court in para 34 of the above said judgment, observed as under: 34. Thus, whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or invoking Section 12AA read with Section 2(15) of the Act, Revenue has to show that the activities are not fitting with the objects of the Association and that the dominant activities are in the nature of trade, commerce and business. Merely by the volume of receipt one cannot draw the inference that the activity is commercial. 8. It is not the case of the revenue before us that the dominant activities of the assessee are not fitting with the objects of the Council and that the dominant activities in the nature of trade, commerce and business or that the councils dominant activities have ceased to be for the purpose of advancement of any other objects of general public utility. Merely because the income of the assessee has crossed prescribed limit of ₹ 10 lakhs, that itself cannot be ground for cancellation of its registration invoking section 12AA(3) of the Act. If any of the income arising on the activities is not in accordance with the objects of the trust, the assessees income, at best, may not get the exemption under Section 11 of the Act. Further for the previous year, during which the gross receipt income crosses limit of ₹ 10.00 lacs, the trust will not get ..... X X X X Extracts X X X X X X X X Extracts X X X X
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