TMI Blog2011 (12) TMI 579X X X X Extracts X X X X X X X X Extracts X X X X ..... is regard in the order of DIT (Exemption). The assessee has also invited our attention to the P & L account up to the year ended 31.03.2008 in which the assessee has used 85% of the funds collected. There is nothing on record that the assessee has violated any conditions laid down u/s 12AA(3) of the Act. - Decided in favour of assessee. - I.T.A. No. 902/Ahd/2010 - - - Dated:- 30-12-2011 - G. C. Gupta (Vice President) And B. P. Jain (Accountant Member) For the Petitioner : Tushar Hemani For the Respondent : B. L. Yadav ORDER B. P. Jain (Accountant Member) This appeal by the assessee arises from the order of DIT(Exemption) Ahmedabad dated 22.01.2010 u/s 12AA(3) of the Act. The assessee has raised the following groun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9,308 68,07,016 2008-09 9,33,24,990 8,18,70,474 1,14,54,516 The society has thus accumulated a reserve of ₹ 493.23 lacs as on 31-3- 2008 as the security services were in the nature of commercial activity with no element of charity. A show cause notice u/s.12AA(3) of the I.T.Act was issued on 17-11-2009 for cancellation of registration, posting the case for hearing on 4-12-2009. 2. During the course of hearing Shri Amal Datt, Chartered Accountant, submitted that the Government of Gujarat is having 100% holding/membership of the society. There is no scope of having objective of earning profit. The surplus earned were not distributed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utility without being charged or with the element of charity. Up to A.Yr. 2005-06, the assessee was filing return admitting taxable income in the business wards. The registration granted vide order dated 9-11-2005 did not confer any right or entitlement regarding operations of section 11,12, 13 of the I.T.Act or any other provisions of I.T.Act which is to be decided by the Assessing Officer on merits. This is clearly stated in the concluding part of the above order. However, the question of Rule of consistency does not preclude the Department from initiating appropriate action under the Act on just cause - 259 ITR 1 (Supreme Court). Despite adequate opportunities, no material was brought on record to prove that the assessee society prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utility except the society operating on similar terms as any other security organizations or corporations. Claim of no profit motive is disproved from the operational results and the reserves accumulated as discussed above. It has only functioned as a commercial entity wherein every service was commercially charged and no element of charity has been brought on record. Thus, up to A.Y. 2008- 09 even without the existence of explanation to section 2(15) of the I.T. Act, the activities being purely commercial in nature cannot take colour of advancement of any other object of general public utility. The earnings out of this business activity have not been spent purely on charity but are only accumulated. In view of the insertion of explanation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee recouped their cost from the public at large. The objects/activities of the assessee were commercial in nature and they did not involve any charity . Holding thus, the Hon'ble ITAT upheld the order of the CIT refusing registration u/s.l2AA of the Act. In the light of above discussion, the society though was granted registration in principle did not carry out any activity justifying charitable object and invoking the principle of 'just cause' cited above [ 259 ITR 1 (SC) ], I am persuaded to hold that the activity of the above society are not genuine charities and are being carried out with pure commerciality with no element of charity. The registration granted earlier vide order dated 9-11-2005 is accordingly cance ..... X X X X Extracts X X X X X X X X Extracts X X X X
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