TMI Blog2017 (11) TMI 511X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee has carried on any activity not in accordance with its objectives. In view of the same, we are of the opinion that the assessee is eligible for registration u/s 12A of the IT Act w.e.f 01-04-2002 and accordingly, we direct the CIT(E) to modify the order of registration u/s 12AA of the Act w.e.f. 01-04-2002 i.e from A.Y 2003-04 onwards. - Decided in favour of assessee. - 03/Hyd/2017, 980/Hyd/2010, 399/Hyd/2011, 970/Hyd/2011, 971/Hyd/2011, 1029/Hyd/2011, 459/Hyd/2012, 905/Hyd/2015, 906/Hyd/2015, 108/Hyd/2017, 109/Hyd/2017, 110/Hyd/2017, 1008/Hyd/2010, 360/Hyd/2011, 911/Hyd/2011, 912/Hyd/2011, 913/Hyd/2011 - - - Dated:- 31-10-2017 - SMT P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER 223/Hyd/2017, 224/Hyd/2017, 225/Hyd/2017, C.O No. 75/HYD/2010 And ITA No. 1008/HYD/2010 For The Assessee : Shri S. Rama Rao For The Revenue : Shri B. Narsimha Sharma ORDER PER BENCH: ITA No. 03/HYD/2017:- This is assessee s appeal against the order of the CIT(Exemptions), Hyderabad, dated 26-12-2016 not granting registration u/s 12AA of the IT Act w.e.f A.Ys 2002-03 to 2006-07 and also for the A.Y 2009-10 onwards. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and 2008-09. Thereafter, he proceeded to consider the application of the second proviso to Sec. 2(15) of the IT Act introduced w.e.f 01-04-2009 by the Finance Act of 2010 according to which, where activities of any trust or institution are in the nature of advancement of any other object of general public utility, it shall not be a charitable purpose, if it involves carrying on of any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business for a cess or fee or any other consideration irrespective of the nature of use or application, or retention, of the income from such activity, unless the aggregate value of such receipts from such activity or activities during the previous year does not exceed 25 lakhs or less in the previous year. Thus, according to him, the purpose of such classified institution shall be deemed as charitable despite it deriving consideration from such activities, but if the aggregates the value of these receipts exceeds the specified cut-off, the activity would be no longer be charitable and income of the trust / institution would not be eligible for tax exemption in that yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tration u/s 12A on 2-03-2007 as is evident from page 1 of the paper book filed before us. He submitted that the assessee has come into existence in 1975 and has been carrying on activities as per its objectives and there is no change in the activities carried on by it, except for the nomenclature by virtue of the HMDA Act of 2008. He submitted that the assessee has been carrying on charitable activities on behalf of the Govt., as per the directions of the Govt., and is not working for any profit and therefore is eligible for exemption throughout the period of its existence. He relied on the proviso to sub sec. (2) of section 12A of the Act, to plead that the registration granted shall be applicable for all the preceding assessment years, when the assessment proceedings are pending before the A.O on the date of such registration. He submitted that the assessments for the assessment years 2003-04 onwards were pending before the A.O at the time when the registration u/s. 12A was granted and therefore the registration is applicable for the A.Ys 2002-03 onwards. 6. As regards the denial of the registration for the A.Ys 2009-10 and thereafter is concerned, the Ld. Counsel for the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ider the request of the assessee, and it is for such authority to be either satisfied or not satisfied for condoning the delay in making the application and to grant registration from an earlier date. Therefore according to him, the assessee cannot be granted registration u/s 12A of the IT Act w.e.f 01-04- 2002. Further, he also submitted that it is not disputed that the assessee s objectives are charitable in nature till the proviso to Sec 2(15) of the IT Act was introduced w.e.f. 01-04-2009. He submitted that the CIT(E) taking note of the said proviso, has granted registration for A.Ys 2007-08 and 2008-09 only. According to him, the CIT(E), while considering the application for the registration u/s 12A of the Act, is required to examine whether the activities carried on by the assessee fall under the category of charitable activities and only then can he grant the registration. He submitted that when the CIT(E) was considering the application for registration u/s 12A of the Act, the proviso to Sec. 2(15) of the Act was very much in the statute book and therefore the strict interpretation of the language used in the said proviso has to be considered and implemented. He submitted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s activity cannot be considered to be in the nature of trade, commerce or business. He also submitted that the CBDT circular No. 21 of 2016 is applicable not only to cancellation of registration but also to denial of registration under section 12A of the Act. Both the parties also relied upon various case law and the copies of the same filed before us. 11. Having regard to the rival contentions and the material on record and the case law relied upon by both the parties, we find that the objectives of the assessee being charitable in nature is not in dispute and the CIT(E), accepting the same, has granted registration for the A.Y 2007-08 and 2008-09. The registration u/s 12A of the IT Act is not annual but is for all the subsequent years until it is withdrawn u/s 12AA of the IT Act. Having granted registration for the A.Y 2007-08, holding that the assessee is not eligible for the registration for the A.Ys 2009-10 onwards will amount to rejection or cancellation of the registration granted earlier. In these circumstances, in our view, the CBDT circular No. 21 of 2016 would apply and the CBDT circulars being binding on the revenue authorities, the CIT(E) ought not to have rejected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessee has placed reliance upon the decision of the Single Member Case SMC at Ahmadabad in the case of Shri Bhanushali Mitramandali Trust Vs ITO reported in (2016) 68 taxman.com 205 Ahmadabad Tribunal wherein it was held that where the registration is granted in the subsequent year, the benefit of the same has to be applied in the earlier assessment years also under the first proviso to Sec. 12A(2) of the Act, and that such proviso is applicable even to appeals pending before the CIT(E). 14. The Ld. Counsel for the assessee had submitted that the application u/s 12A of the IT Act was initially rejected by the CIT(E) and the issue was restored to the file of the CIT(A) by the ITAT, and therefore, the earlier order of the CIT(E) got nullified and the assessee s application for registration got restored and has to be considered as pending for consideration by the CIT(E). He submitted that at the time when the CIT(E) was considering the assessee s application afresh, the assessee had filed a letter seeking registration w.e.f. 01-04-2002 and therefore the issue was very much before the CIT(E) while granting registration w.e.f. A.Y 2007-08. He submitted that as per the f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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