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TMI Blog2019 (12) TMI 496X X X X Extracts X X X X X X X X Extracts X X X X ..... eing the same by holding that the proviso to section 2(15) of the Income Tax Act, 1961 was applicable to the assessee, making it not eligible for registration. b.) That on the facts and circumstances of the case, the Ld. CIT(E) having granted the assessee registration upto A.Y. 2008-09, erred in having refused registration from A.Y. 2009-10 onwards holding that the proviso to section 2(15) of the Income Tax Act, 1961 was applicable as the assessee had receipts above Rs. 25 lakhs from A.Y. 2009-10 onwards, although none of the activities of the appellant were related to trade, commerce or business without disputing that the assessee had utilized 85% of its income in furtherance of its objects from A.Y. 2009-10 onwards, thus being entitled to exemption as per section ll(l)(a) of the Income Tax Act, 1961. 3) That the Ld. CIT(E) having granted registration upto A.Y. 2008- 09, erred in having refused registration from A.Y. 2009-10 onwards holding that the proviso to section 2(15) of the Income Tax Act, 1961 was applicable since the assessee had receipts above Rs. 25 lakhs from A.Y. 2009-10 onwards in ignorance of the Circular No. 21/2016 [F.NO.197/17/2016-ITA-I], dated 27.05.2016 is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as registered under the Societies Registration Act, 860 on 24.2.1961 under registration No.344/42 of 1960-61 having its registered office at Barabati Stadium, Cuttack. The appellant Association had been created for affiliating itself to the Indian Olympic Association (IOA)and enforcing all rules and regulation of the IOA and organizing various gains in the State of Odisha. 4. A search and Seizure operation was carried out in the residential premises of the Honorary Secretary of Orissa Olympic Association on 28.03.2006 and also Survey operation u/s. 133A of the I.T. Act, 1961 was conducted in the business premises of the assessee Association and demands were raised for the A.Ys.2002-2003 to 20.07-08 and the same were confirmed by the first Appellate authority. The Assessee society preferred second appeal against the orders of lower authority before this Tribunal and pleaded that the application filed in 1997 seeking registration U/S.12A of the I.T. Act, 1961 is still pending with the Competent Income Tax Authorities for consideration. The Tribunal accepted such plea put forth by the assessee Association and set aside the assessment orders framed for the A.Ys.2002-03 to 2007-08 for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the impugned order and submitted that the ld CIT(E) himself noted that the objectives of Orissa Olympic Association would fall in the advancement of any other object of general public utility. Ld counsel further explained that the Association is formed with the objective of furthering and encouraging sports and control over all matters relating to the participation of Orissa in the National and any other games held under the Indian Olympic Association (IOA). Ld counsel further pointed out that the assessee is enjoying exemption u/s.10(23) of the I.T.Act, 1961 w.e.f. 1.4.1974 and application of the assessee for grant of registration u/s.12A of the Act has not been decided in right perspective and the assessee is running between pillar to post seeking such registration. 9. Ld counsel further pointed out that from paras 9, 10 & 11 of the impugned order, it is clear that considering the charitable objects of the appellant, the CIT(E) in para 9 of the order, clearly held that the objects of the appellant are charitable in nature and thus not carried out with any object to earn profits, and he granted registration u/s.12A of the Act from 1998-99 to 2008-09. Ld counsel further explai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation for the subsequent period. 11. Placing reliance on the decision of ITAT Mumbai in the case of Dahisar Sports Foundation vs ITO (Exemptions)-1, Mumbai, 167 ITD 710 (Mumbai), ld counsel submitted that if the object or purpose of an institution is charitable, the fact that the institution collects certain charges does not alter the character of the institution. It is not necessary that it should provide something for nothing or for less than it costs or for less than the ordinary price. Ld counsel submitted that the incomes received as per financial statement of the appellant in the form of commercial lease rent was incurred for the charitable objects of the appellant association and it is not an allegation of the ld CIT(E) hat the funds including commercial lease rent amount have been diversified or used beyond the charitable objectives of the Association of the Memorandum of Trust. 12. Further, placing reliance on another judgment of Hon'ble Bombay High Court in the case of Director of Income Tax (Exemptions) vs Khar Gymkhana(2016) 385 ITR 162 (Bom), ld counsel submitted that once registration u/s.12A has been granted considering the charitable objectives of the general publ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder to above, ld counsel for the assessee submitted that originally, the assessee filed application seeking registration u/s.12AA of the Act way back in 1997 and thereafter two round of proceedings have been completed at the end of the Tribunal and if the case is restored back to the file of the ld CIT(E) third time, then it would be a great unjustified to the assessee especially when the ld CIT(E) has already in para 8 of the impugned order noted that the objects of the Orissa Olympic Association would fall in the advancement of any other object of general public utility. Ld counsel submitted that from the objects of the Association, it is ample clear that precisely, the Association has been formed to act as official organization in Olympic matters in the State of Odisha to control, supervise, regulate or encourage various sports and have jurisdiction over all matters pertaining to the participation of sportsmen/sportswomen of Orisha in the national and international events and any other games held under the control & supervision of Indian Olympic Association and there is no profit motive therein. Therefore, ld CIT(E) was not correct in restricting the registration upto the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onths from the end of the month in which the application was received under clause (a) or clause (aa) of sub-section (1) of section 12A. (3) Where a trust or an institution has been granted registration under clause (b) of sub-section (1) or has obtained registration at any time under section 12A [as it stood before its amendment by the Finance (No. 2) Act, 1996 (33 of 1996)] and subsequently the [Principal Commissioner or] Commissioner is satisfied that the activities of such trust or institution are not genuine or are not being carried out in accordance with the objects of the trust 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 opportunity of being heard. [(4) Without prejudice to the provisions of sub-section (3), where a trust or an institution has been granted registration under clause (b) of sub-section (1) or has obtained registration at any time under section 12A [as it stood before its amendment by the Finance (No. 2) Act, 1996 (33 of 1996)] and subsequently it is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iding procedure for grant of registration and cancellation of registration, when we consider the facts of the present case and evaluate the validity of the impugned order on the touchstone of the provisions of the Act, then we find that the ld CIT(E) considering the objects of the appellant that they are charitable in nature and not carried out with any object to earn profits, granted registration u/s.12AA of the Act from assessment year 1998-99 to 2008-09. However, in subsequent para 10 and 11 of the impugned order, the ld CIT (E) considering the amended proviso to section 2(15) of the Act and keeping in view the income of the appellant received in the form of commercial lease rent did not continue the registration from assessment year 2009-2010 onwards and this action of the CIT (E) gave rise to this appeal. 21. Undisputedly, in para 8 of the impugned order, the ld CIT (E) noted that the appellant is enjoying exemption u/s.10(23) of the Act w.e.f. 1.4.1974 and in para 9, ld CIT(E) further noted that the objects of the appellant are charitable in nature and are not being carried out with any object to earn profits and with these observations, he granted registration under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant if the case is restored to the file of the CIT(E) for third time. Thus, we decline to accept the prayer of ld CIT DR for restoring the matter to the file of the CIT(E) for fresh consideration. 26. In the facts and circumstances of the case, we are of the considered opinion that the income earned by the assessee from commercial lease rent, which is the only point of denying the continuance of registration from assessment year 2009-2010 is not a sustainable ground for dis-continuing the registration already granted to the assesse. In our humble and considered opinion, when the registration u/s.12A of the Act has been granted to the appellant and ld CIT (E) is satisfied that the activities of the assessee trust falls within the ambit of charitable and OF general public utility and on the same basis, he has granted registration u/s.12A of the Act to the appellant from the assessment years 1998-99 to 2008-09. The barriers created by the ld CIT(E) from 2009-2010 onwards , where he denied to continue the same registration is also not sustainable on this count that the assessee was not provided proper opportunity of hearing before passing such order denying continuance of registra ..... X X X X Extracts X X X X X X X X Extracts X X X X
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