TaxTMI 
TaxTMI 
TaxTMI 
2013 (8) TMI 590
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....1961 w.e.f. A.Y. 2009-10]. 4. That having regard to the facts and circumstances of the case, the Ld. CIT has erred in holding that the activities carried out by the assessee are covered by the proviso to section 2(15) inserted by Finance Act, 2008 and are not for "charitable purposes". 5. That having regard to the facts and circumstances of the case, the Ld. CIT has erred in law in cancelling the registration granted to the assessee u/s 12A of the Income Tax Act, 1961 and that too by recording incorrect facts and findings. 6. That having regard to the facts and circumstances of the case, Ld. CIT has erred in law and on facts in holding that assessee society is not eligible for the benefit of exemption u/s 12AA of the Income Tax Act, 1961 and the activities carried out by the assessee are in the nature of trade and business. 7. That having regard to the facts and circumstances of the case, Ld. CIT while applying has erred in law and on facts of other statutory bodies referred to in para 8 of his order. Ld. CIT failed to appreciate the order of Hon'ble ITAT, Amritsar Bench in the case of Jalandhar Development Authority, relied upon by him, relates to grant registration and not ca....
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....nd activities like Punjab Urban Development Authority, Haryana Urban Development Authority, Indore Development Authority, Jalandhar Development Authority etc. were not provided with exemption u/s 12AA even when proviso to section 2(15) was not added by the Finance Act, 2008. Even at that time these authorities were held to be not for 'charitable purpose' as per then definition u/s 2(15). Hon'ble ITAT, Amritsar in the case of Jalandhar Development Authority vs. CIT (ITA No.562/Agr/2008) has discussed various case laws and upheld the order of CIT, Jalandhar who had rejected the registration of Jalandhar Development Authority u/s 12AA holding that the authority is not for 'charitable purpose' as mentioned in sec. 2(15). This position of law has now changed considerably by insertion of proviso to section 2(15) by Finance Act, 2008 which has considerably restricted and limited the exemption claimed by the assessee who's claimed activity for "charitable purpose" falls in the fourth limb i.e. any other object of general public utility. 10. From the facts discussed above, I am fully convinced that the activities under consideration of the assessee are covered by the proviso to section 2(1....
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.... granted to the assessee, Mathura Vrindavan Development Authority, w.e.f. 01.04.2002 vide order dated 18.02.2008. The power of cancellation of registration obtained under section 12A/12AA is provided under section 12AA(3) of the Act. The registration of the assessee, Mathura Vrindavan Development Authority, has been cancelled by the CIT by exercising power under section 12AA(3) w.e.f. 2009-10. We find that the issue is covered by the order of I.T.A.T., Agra Bench in the case of Agra Development Authority in ITA No.166/Agra/2012, order dated 11.01.2013. The finding of the I.T.A.T. in that case is reproduced as under :- "14. We have heard the ld. Representatives of the parties, records perused and gone through the decisions cited. Some admitted and other important facts of the case are that the assessee, Agra Development Authority was granted registration under section 12A of the Act w.e.f. 01.04.2003 vide order dated 24.09.2003. The said registration under section 12A of the Act has been cancelled by the CIT by the impugned order dated 04.04.2012 w.e.f. 2009-10. Before that, i.e. till 31.03.2003 the assessee was claiming exemption under section 10(20A) of the Act which has been omi....
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....pplications under that sub-section from the stage at which they were on that day.] (2) Every order granting or refusing registration under clause (b) of sub-section (1) shall be passed before the expiry of six months 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 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.] 16. Section 2(15) has been substituted by the Finance Act, 2008, w.e.f. 01.04.2009 as under :- "2(15) "Charitable purpose" includes re....
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.... If he is not so satisfied, he will pass an order refusing registration. However, an opportunity of being heard shall have to be provided to the applicant before an order of refusal to grant registration is passed by the Chief Commissioner or Commissioner. The reason for refusal of registration shall also have to be mentioned in that order. The order granting or refusing registration has to be passed within six months from the end of the month in which the application for registration is received by the Chief Commissioner or Commissioner and a copy of such order shall be sent to the applicant." "Income-tax : Explanatory Notes to the provisions of the Finance Act, 2010 Circular No. 1/2011 [F.No. 142/1/2011-SO(TPL)], dated 6-4-2011 ......................................................... ......................................................... ......................................................... 7. Cancellation of registration obtained under section 12A 7.1 Section 12AA provides the procedure relating to registration of a trust or institution engaged in charitable activities. Section 12AA(3) previously provided that if the activities of the trust or institution are found....
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....o empower the Commissioner to cancel the registration granted to a trust or institution. The same is not applicable retrospectively and in the assessee's case for the assessment years under consideration. The object of this provision is not clarificatory or explanatory, so prior to that date, the authorities granting registration had no inherent power to withdraw or revoke the registration already granted. The order cancelling the registration granted to a trust or institution under section 12AA of the Act being a quasi-judicial order does not fall within the category of orders mentioned under section 21 of the General Clauses Act, 1897, which provides that the power conferred on an authority empowers to issue orders including the power to rescind such orders and the Commissioner would not have power to rescind the order passed by the Commissioner earlier granting the registration to a trust or institution." 19. The heading of section 12A 'Conditions for applicability of sections 11 and 12' was substituted with effect from 01.06-2007 in place of previous title 'Conditions as to registration of the Trusts etc. It means that prior to 01.06.2007, this section itself provided conditio....
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....2A]. But this power of cancellation of registration obtained under section 12A came to be incorporated by way of amendment introduced by the Finance Act, 2010 with effect from 01.06.2010. That being the interpretation of sub-section (3), it is amply clear that the power to cancel the registration once granted was only confined to the registration granted under clause (b) of sub-section (1) of section 12AA till before 01.06.2010. Of course, now with effect from 01.06.2010, the power vests with the Commissioner even to cancel the registration granted under any of the clauses of sub-section (1) of section 12A. Thus, for exercising power of cancellation of registration under section 12A/12AA and under section 12AA(3) of the Act by the CIT only on the following conditions:- i) That the trust or society has already been granted registration under section 12AA(1)(b) of the Act. Or ii) W .e .f. 01.06.2010 - registration has been granted at any time under section 12A as stood before its amendment by the (Finance No.2) Act 1996 iii) The CIT subsequently found and satisfied that :- a) activities of such trust or institution are not genuine, or b) are not being carried out in accordance w....
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....the sake of argument if we accept the view of CIT, there may be a case of activities which are not charitable but it cannot be said that those activities of the assessee, Agra Development Authority, are non-genuine or not being carried out in accordance with the object of the assessee. The activities and objects of the assessee, Agra Development Authority are the same which were there at the time of granting registration under section 12A of the Act and at the time when CIT cancelled the registration granted under section 12A w.e.f from 2009-2010. Thus, we find that this condition of cancellation of registration already granted under section12A has not been satisfied. Where the condition stipulated under section 12AA (3) is not satisfied, the CIT cannot cancel or withdraw registration granted under section 12A of the Act. In the case under consideration, the condition stipulated in section 12AA(3), that activities of the assessee, Agra Development Authority are non-genuine or not being carried out in accordance with the object of the assessee, Agra Development Author is not satisfied. The CIT by his own motion added one more condition in section 12AA (3) that the object of the asse....
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....e Bench) & Moradabad Development Authority vs. ITO (ITAT, Delhi Bench) after amendment in section 2(15), as per proviso to section 2(15) assessee does not remain charitable w.e.f. 2009-10 does not help to the assessee as we have not expressed any opinion on the issue. 21.3. One of the contention of the ld. Departmental Representative that Section 12AA(3) has been amended w.e.f. 01.06.2010 wherein power has been given to cancel registration under section 12A(1) of the Act. In that case the CIT cancelled registration under section 12A of the Act after 01.06.2010, therefore, the fact is different than case under consideration. This contention of the ld. Departmental Representative is not acceptable in the light of above discussions that the CIT cancelled registration under section 12A w.e.f. 2009-10 which is the period prior to 01.06.2010. The C.B.D.T. has also clarified that the amendment in section 12AA(3) is applicable from A.Y. 2011-12. 22. In the light of above discussion, the order of CIT is not in accordance with law. We, therefore, set aside the order of CIT and restore the registration under section 12A of the Act which has been cancelled w.e.f. 2009-10. Since the issue rai....