TMI Blog2016 (2) TMI 603X X X X Extracts X X X X X X X X Extracts X X X X ..... m of exemption section under section 11 which can only be looked into during the assessment proceedings. In view of the aforesaid, we are inclined to set aside the order of the learned DIT(E) and direct him to restore registration granted under section 12AA(1) of the Act to the appellant institution from the date of cancellation. - Decided in favour of assessee - ITA Nos. 6525 & 843/Mum/2014 & 2012 - - - Dated:- 15-1-2016 - Saktijit Dey, JM And N. K. Billaiya, AM For the Appellant : Shri N P Singh For the Respondents : Shri P J Pardiwala Shri Niras Sheth ORDER Per Saktijit Dey, JM ITA No. 843/Mum./2012 The above appeal is directed against the order dated 16th December 2011, passed under section 12AA(3) of the Income Tax Act, 1961 (for short the Act ), by the learned Director of Income Tax (Exemption), Mumbai, [for short the learned DIT(E) ] cancelling the registration granted under section 12AA(1) of the Act. 2. Briefly stated the facts are, the appellant institution was initially incorporated under the Indian Companies Act VII, 1913, and registered on 18th June 1924, with the Registrar of Companies, Bombay, as Bombay Chambers of Commerce. Subsequ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee is not eligible for registration under section 12A as it cannot be considered to be existing for charitable purpose as defined under section 2(15) of the Act. The DIT(E) held that once a trust / institution looses its charitable character, it becomes non-genuine for the purpose of section 11 of the Act. Accordingly, provisions of section 12AA(3) of the Act gets attracted. Holding as above, the learned DIT(E) passed the impugned order cancelling the registration granted under section 12A(1) of the Act earlier. 3. The learned Counsel, Shri P.J. Pardiwala, appearing for the appellant institution submitted, as per section 12AA(3) of the Act, the registering authority can cancel / withdraw the certificate of registration granted to a trust or institution subject to fulfillment of two conditions which are, activities are not genuine and the activities of the trust and institution are not carried out in accordance with its objects. He submitted, neither there is any change in the objects of the institutions nor there is any material on record to show that assessee has carried out activities not in accordance with its objects. The learned Counsel submitted, when registration u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imit as per the second proviso to section 2(15) of the Act, the activities of the trust cannot be considered to be for charitable purpose. The learned Departmental Representative submitted, under section 12AA(3), the registering authority has been empowered to cancel / withdraw registration granted to a trust / institution under certain circumstances. He submitted, in view of such provisions, the learned DIT(E) has authority under law to cancel / withdraw registration granted under section 12AA(1) granted earlier. 5. We have heard the rival contentions and perused the material available on record as well as the case laws cited by the parties. On a perusal of the impugned order of the DIT(E), it is patent and obvious that only reason on which the learned DIT(E) has cancelled / withdrawn registration granted under section 12AA(i), is fees earned by the assessee from different activities are in the nature of trade, commerce and business, therefore, assessee institution cannot be considered to be existing for charitable purpose . He, therefore, has held that the activities of the trust have become non-genuine. Undisputedly, the assessee was registered as a company in the year 1956, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the aforesaid facts, it has to be seen while cancelling / withdrawing registration under section 12AA(3) of the Act, whether conditions prescribed therein have been satisfied. As it emerges from the facts and material on record, the primary object of the assessee as per its memorandum and article of association is to promote and protect the trade and manufacturers of the state of other parties of the country . It is evident from record that the main / primary object of institution at the time of grant of registration under section 12A in the year 1998, has not undergone any discernible change in the subsequent years even at the time of cancellation / withdrawal of registration. At least, on a perusal of the impugned order of the learned DIT(E), we do not find any allegation by him that the institution has either changed its objects or deviated from its objects. Further, there is no allegation that the activities carried out by the institution are not in accordance with its object. When a specific query was made by the Bench to the learned Departmental Representative to demonstrate whether there is either change in objects of the institution or activities are not carried out in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thdrawal of registration under section 12AA(3). Therefore, in our view, only because the receipts / earning of the assessee during the relevant previous year has exceeded prescribed limit, for that reason alone the assessee institution cannot be considered as non-charitable. For cancellation / withdrawal of registration under section 12AA(3), the provisions of section 2(15) cannot be brought into play. More so, when there is no material brought on record by the learned DIT(E) to demonstrate / establish that either there is change in the objects of the appellant institutions on the basis of which registration was granted earlier or the activities of the institution are not in accordance with its stated objects. As held in the judicial pronouncements cited by the learned counsel, the first proviso to section 2(15), is not at all relevant for the purpose of cancellation / withdrawal of registration under section 12AA(3) though, it may be relevant for examining assessee's claim of exemption section under section 11 which can only be looked into during the assessment proceedings. In view of the aforesaid, we are inclined to set aside the order of the learned DIT(E) and direct him to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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