TMI Blog2020 (2) TMI 787X X X X Extracts X X X X X X X X Extracts X X X X ..... e of cow products. Therefore, the findings of the CIT(E) is contrary to the undisputed facts regarding the objects of the assessee trust and the activities of the trust are being carried out for attainment of main objects of the trust. Hence impugned order of the CIT(E) is set aside and grant of registration u/s 12A is restored. Thus the appeal of the assessee is allowed. - ITA No. 748/JP/2015, ITA No. 113/JP/2014 - - - Dated:- 7-2-2020 - Shri Vijay Pal Rao, JM And Shri Vikram Singh Yadav, AM For the Assessee : Shri Manish Agarwal, CA And Shri O.P. Agarwal, CA For the Revenue : Shri B.K. Gupta, CIT-DR ORDER PER VIJAY PAL RAO, JM These two appeals by the assessee are directed against the order dated 11-09-2015 of ld. CIT(Exemptions), Jaipur passed u/s 12AA(1)(b) of the Act as well as order dated 17-12-2013 of ld. CIT(A)-II, Jaipur arising from assessment order passed u/s 143(3) of the Act for the Assessment Year 2009-10 respectively. 2.1 Since the issue of cancellation/ withdrawal of registration u/s 12A(1)(a) of the Act goes to the root of the matter and shall have bearing on the assessment order and consequential impugned order of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11 and 12 of the I.T. Act, 1961 till 29-12-2011 when the registration was withdrawn by the CIT-II, Jaipur as well as the AO denied the benefit u/s 11 and 12 of the Act to the assessee while passing the assessment order on the same date i.e. 29-12-2011. The assessee challenged the order of the ld. CIT withdrawing the registration granted to the assessee u/s 12AA(1)(b) of the Act before this Tribunal and vide order dated 28-11-2014 in ITA No.85/JP/2012 this Tribunal set aside the order of the ld. CIT withdrawing the registration u/s 12AA(3) of the Act and remanded the matter to the record of the ld. CIT (Admn.) to decide the same afresh. In pursuance to the said order of the Tribunal dated 28-11-2014, the ld. CIT (Exemptions) has again passed the impugned order dated 11-09-2015 whereby registration granted u/s 12AA was withdrawn by invoking the provisions of Section 12AA(3) of the Act. The ld. CIT (Exemptions) concluded that the assessee society carried out the activities which are not in accordance with the objects of the society and turnover from the commercial activities exceeds the prescribed limit provided under proviso to Section 2(15) of the I.T. Act, 1961. 2.3 Before us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the society and it becomes the ancillary activity for upliftment of the main objects of the assessee trust. The ld.AR of the assessee further contended that purchase and sale of milk, ghee, cattle feed etc. has not been done on commercial lines or to earn the profit but it is a part of providing financial support to milkmen who belongs weaker and poor sections of the society. Thus the milkmen in the absence of much knowledge and net work are forced to sell their products at low prices. The assessee trust provides better quality of cattle feed so as to enable the cow owners/ milkmen to get better quality of milk products. The ld.AR of the assessee submitted that the assessee is maintaining 11 Gaushalas and 14 Famine Relief Centres and they are run at various places in the State of Rajasthan whereas the milk and ghee are being sold only from 03 counters / centres i.e. Jaipur, Bikaner and Jodhpur. The assessee trust is procuring the milk and ghee from Jaipur Gau Samverdhan Samiti which is formed for upliftment of milkmen. Thus the activity of purchase and sale of milk is not to earn the profit or to carry out the activities on commercial lines but to support the milkmen throu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s nothing but a pure trading in the nature of trade and commerce. The total turnover from the activities of sale and purchase is ₹ 13.15 crores which is beyond the threshold limit provided in the proviso to Section 2(15) of the Act. The decisions relied on by the ld.AR of the assessee are distinguishable on facts and cannot be applied in the facts of the present case. The ld. DR relied on the decision of ITAT Banglore Bench in the case of Sri Vidyaranya Seva Sangha vs CIT (2016) 71 Taxmann.com 152 (Banglore Trib). The ld. DR also relied on the impugned order of the ld. CIT(A). 2.6 We have considered the rival submissions as well as relevant materials available on record. There is no dispute that the assessee trust was granted registration u/s 12A(1)(a) of the Act on 6-12-1974. We further note that there is no change since the assessee trust was formed and registered under Societies Registration Act, 1860 vide Registration Certificate dated 14-10-1954 as a public charitable society, either in the object of the assessee trust or in the memorandum of association of the society. Therefore, the object of the assessee trust cannot be questioned being charitable in nature when ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gned order of ld. CIT (Admn.) withdrawing the registration u/s 12AA(3) is not in conformity with the language of this section. We are of the view that ld. CIT(Admn) should revisit the issue of withdrawal of registration afresh after taking into consideration the legislative scheme of powers, incorporation of proviso, inclusive definition of the Charitable Objet as interpreted by plethora of judicial decisions and decide the issue of registration after giving the assessee an opportunity of being heard. Since we have set aside the issue, the additional ground as admitted by us with other pleadings for proper disposal of the same shall be considered by ld. CIT. The Tribunal has observed in that set aside order that order dated 29-12- 2011 passed by the ld. CIT (Admn.) withdrawing the registration does not appear in conformity with the specific conditions laid down u/s 12AA(3) of the Act. Accordingly, earlier order was set aside and the matter was remanded to the record of the ld. CIT(Admn) for reconsideration of the matter as per the scheme of the provisions of section 12AA(3) of the Act as well as in accordance with the judicial precedents on the issue after giving opportunity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e objects of the trust. It is pertinent to note that once the objects of the assessee trust are found to be charitable in nature then in order to hold that the activities are not being carried out in accordance with the object the same must not be in the nature of achieving or attainment of the purpose and objects of the trust. There is no dispute that the main dominant functions of the assessee trust is to provide an asylum/shelter to old sick, ,maimed, and stray cows. The assessee is maintaining 11 Gaushalas and14 Famine Relief Centres particularly for providing the shelter to the cows. It is also not in dispute that for last more than 45 years the assessee has been providing asylum/ shelter to the cows and maintaining these Gaushalas as well as Famine Relief Centres with the object to provide proper treatment and fodder to the needy stray cows. Apart from maintaining Gaushalas and Famine Relief Centres, the assessee trust is also carrying out various activities of providing research and training centres for development of medical treatment and use of cow products in the medicine. The assessee is also imparting education and other training necessary for animal husbandry and parti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... viso and the CBDT Circular issued in the context of newly added proviso to Section 2(15) of the Act, observing as under :- 'It is not aimed at excluding the genuine charitable trusts of general public utility but is aimed at excluding activities in the nature of trade, commerce or business which are marked as charitable purpose . Many activities of genuine charitable purposes which are not in the nature of trade, commerce or business may still generate marketable products. After setting off of the cost, for production of such marketable products from the sale consideration, the activity may leave a surplus. The law does not expect the Trust to dispose of its produce at any consideration less than the market value. If there is any surplus generated at the end of the year, that by itself would not be the sole consideration for judging whether any activity is trade, commerce or business - particularly if generating 'surplus' is wholly incidental to the principal activities of the trust; which is otherwise for general public utility, and therefore, of charitable nature. .... .. Merely because while carrying out the activities for the purpos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case, therefore, has to be examined on its own facts.' (Emphasis supplied) 17. We find ourselves in complete agreement with the reasoning set out by the Gujarat High Court in its order dated 15th January, 2014 in DIT (Exemption) v. Sabarmati Ashram Gaushala Trsut [2011] 362 ITR 539/223 Taxman 43/44 taxmann.com 141. Although the same was rendered in the context of exemption being denied under Section 11 of the Act and it was not a case of withdrawal of registration. Nevertheless, the reasoning therein would be equally applicable to the present facts as it considered the applicability of the proviso to Section 2(15) of the Act as arising in this case. One more fact that may be noted is that Mr. Malhotra sought to rely upon the order passed by the CIT(A) in Section 11 proceedings to establish that the milk is sold at market price. However, it would make no difference as there is no bar in law to a Trust selling its produce at market price as observed above by the Gujarat High Court. In fact, the above factor alone will not make it an activity of trade, commerce or business or even in its nature. 18. We may also refer to another decision of the Delhi High Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s inserted, is found to be not to bring the incidental activity for furtherance of the object within the expression business, trade or commerce. It is pertinent to note that when the assessee is maintaining various Gaushalas then production of milk is bound to happen and dealing in purchase and sale of milk milk products as well as cattle feed is nothing but the activity in furtherance of the objects of the assessee trust. The ld.DR of the assessee relied on the decision of ITAT Bangalore Bench in the case of Sri Vidyaranya Seva Samiti vs CIT (supra) wherein the Tribunal has specifically noted that the assessee society is not carrying out any activity since 2001. Therefore, the genuineness of the activity itself was not even in existence. Hence, the said decision cannot be applied in the present case where there is no dispute about the activities being carried out by the assessee trust and it has maintained 11 Gaushalas and 14 Famine Relief Centres which is the main and pre-dominant object of the assessee trust. Hence, the impugned order passed by the ld. CIT(E) is based on the presumption of incorrect facts that the activities of the assessee trust are not in accordance with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on received from various organizations since appellant s registration u/s 12A is withdrawn by CIT. Appellant argued that the withdrawal of registration is not sustainable however it is not in dispute that order of CIT withdrawing registration u/s 12A is appealable only before ITAT. Till such time, ITAT decide the issue, appellant is not a charitable trust registered u/s 12A and is not entitled for exemption u/s 11,12 and 13. Accordingly appellant s arguments against withdrawal of registration are not required to be discussed here. Assessing Officer made the addition of surplus of land which was sold last year on protective basis. Appellant submitted that property was sold and registered last year and entire payment was also received in that year therefore, there is no question of taxing the surplus during the current year. However, it is not in dispute that appellant reflected surplus on sale of land only during the year and not in earlier year therefore, as far as AO is concerned, he has taxed the surplus on the basis of sale disclosed by the appellant. Appellant did not explain as to why sale of property which was complete last year, was not reflected in the accounts last ye ..... X X X X Extracts X X X X X X X X Extracts X X X X
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