2014 (9) TMI 1102 - AT - Income Tax

Appeal granted for assessee-trust, registration cancellation deemed unlawful. Trust activities, law amendments, and precedent considered.

Chembur Gymkhana Versus DIT (E), Parel, Mumbai

Chembur Gymkhana Versus DIT (E), Parel, Mumbai - TMI Issues:Cancellation of registration granted to the assessee Trust under Section 12AA(3) of the Income tax Act.Analysis:The Director of Income-tax-Exemption received a proposal for cancellation of registration due to the trust's activities being considered as trade, commerce, or business, leading to the withdrawal of registration. The DIT-E held that the trust's activities were non-genuine and not for charitable purposes, citing specific earnings from catering services and additional facility charges. The DIT-E invoked the proviso to section 2(15) of the Act, indicating a change in the trust's status, leading to the cancellation of registration from AY 2009-10.The Authorized Representative argued that the trust was not involved in commercial activities, emphasizing services provided to members without commercial intent. The AR referenced relevant cases and provisions to support the trust's position. The Departmental Representative supported the DIT-E's order.The Tribunal found that the DIT-E could only cancel registration if the trust's activities were not genuine or not aligned with its objectives. The Tribunal highlighted the changes introduced in the law, empowering authorities to cancel registrations based on trust activities. The Tribunal referenced judicial rulings and the requirement for specific findings to cancel registration.The Tribunal emphasized that the receipt from caterers could not be the basis for invoking Section 12AA(3) and highlighted the applicability of amendments from AY 2011-12. Referring to the Agra Development Authority case, the Tribunal clarified the conditions for cancellation of registration under Section 12AA(3) and the limitations on the Commissioner's power before June 2010.In line with previous decisions and considering the registration date of the trust, the Tribunal ruled in favor of the assessee-trust, allowing the appeal. The Tribunal cited the Maharashtra Housing and Area Development Authority case to support the decision, emphasizing the need for continuing satisfaction for registration withdrawal.In conclusion, the appeal filed by the assessee was allowed, and the registration cancellation was deemed against the provisions of the law. The Tribunal's decision was based on the trust's activities, the effective date of the law amendments, and consistent decisions from coordinating benches.