2015 (7) TMI 169

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..... 2. The assessee, Karnataka Industrial Area Development Board, (for short hereinafter referred to as 'KIADB') was granted registration under Section 12A of the Act vide order dated 20.6.1988 passed by the Commissioner of Income Tax (Exemption). A notice was issued to the assessee under Section 12AA(3) of the Act calling upon to show cause as to why the said registration should not be cancelled on the ground that case falls under first proviso to Section 2(15) of the Act. The assessee appeared, contested the matter. The authorities took note of the fact that the accounts for the year ended 31.3.2009 shows receipts by way of gain on disposal of land to the extent of Rs. 18,69,72,000/- and excess of income over expenditure at Rs. 155,76,64....

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....ny services in relation to trade, commerce or business and therefore, the consideration received irrespective of the nature o f the use or application, or retention, of the income, from such activity would take the case out of Section 2(15) of the Act and therefore after referring to the various judgments relied on it, proceed to pass an order cancelling the registration granted under Section 12AA with effect from the assessment year 2009-10. Aggrieved by the said order, the assessee preferred an appeal to the Tribunal. The Tribunal relying on the judgment in the case of Karnataka Badminton Association in ITA No.1272/Bang/2011 held ; the registration already granted under Section 12A cannot be revoked for the reason that the Charitable Trus....

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....ith effect from 1.4.2009. The activity carried on by the assessee is in the nature of trade, commerce or business or at any rat e activity of rendering any services in relation to any trade, commerce or business and the aggregate value of the receipts from the said activities exceeds Rs. 25,00, 000/- and therefore, it squarely falls under the first proviso to Section 2(15) of the Act and therefore it ceases to be an institution for charitable purpose. Therefore, rightly the registration under Section 12A of the Act was cancelled which has been erroneously interfered with by the Tribunal. 6. Per contra, learned counsel appearing for the assessee contended, once a person is granted regist ration under Section 12A of the Act, the said benef....

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.... 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.] 8. A reading of the aforesaid provision makes it very clear, a registration granted earlier under Section 12A of the Act can be cancelled under two circumstances; ( a) If the activities of such trust or institution are not genuine, (b) The activities of trust or institution not being carried out in accordance with the object of the trust or institution. Only on those two conditions being satisfied, the registration granted under Section 12A of the Act could be cancelled by the authorities. 9. It is not in dispute that there is no violation of the said two conditions by the assessee. ....