TaxTMI 
TaxTMI 
2015 (7) TMI 198
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.... sec.2(15) of the Act. The reply of the assessee was that its activities fell within the definition of charity viz., relief of poor, education, medical relief and advancement of any other object of general utility. As per the assessee, its predominant object was to secure a balanced development of Bangalore metropolitan area and it was having functions which were otherwise the duty of the State Government. The assessee pointed out that a registration granted under section 12A could be cancelled only if the activities of the assessee were not genuine or if the activities were not carried out in accordance with the objects. 3. However, the DIT(E) was not impressed by the above reply. According to him, objects of BDA were hit by proviso to sec.2(15) of the Act as amended w.e.f. 1/4/2009. As per the ld.DIT(E), the assessee was also involved in commercial activities like development of shopping complex. Ld.DIT(E) noted that the assessee had receipts of Rs. 12,083/- lakhs on sale of houses/sites. The assessee was also conducting auctions of the sites. These activities had no element of charity as per the ld.DIT(E). Ld.DIT(E) also noted from schedule 15 of the Income & Expenditure Acco....
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....n disposal of land, forfeiture of deposit and interest. Their Lordships, on an appeal filed by the Revenue against the order of the Tribunal, wherein it had set aside the cancellation of registration held as under at paras.2 to 9 of its judgment dated 7/11/2014: "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. 155,76,64,004. An extract of the Income and Expenditure account for the financial year 2008-09 is reproduced as under: INCOME AND EXPENDITURE ACCOUNT FOR THE YEAR ENDED 31.3.2009 EXPE....
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....eal. 4. This appeal is admitted to consider the following substantial questions of law: i). Whether the Tribunal was correct in holding that the assessee is entitled to continue registration under Section 12A of the Act, without appreciating the fact that, in view of the amendment to Section 2(15) of the Act, the activities carried on by the assessee were commercial in nature and therefore cannot be considered as charitable under Section 2(15) of the Income Tax Act? ii). Whether the Tribunal was correct in holding that Director of Income Tax (Exemption) has not given any finding with regard to genuineness of the activities or the activities not in accordance with the objects of the institutions, without appreciating that clear finding is recorded holding activities of the assessee were not in accordance with the objects and the objects are amended without approval of the department and therefore, provisions of Section 12AA(3) of the Act were applicable and recorded a perverse finding? 5. Learned counsel for the revenue assailing the impugned order contended that the definition of charitable institution has undergone a change with effect from 1.4.2009. The activity carri....
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....akes 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. The activities carried on by the assessee is a genuine one. As could be seen from the profits they have generated, the said profit is earned by carrying on the activities in accordance with the object of the trust. Therefore, the two conditions stipulated in subsection (3) of Section 12AA of the Act, which empowers the authority to cancel registration, do not exists in this case. The registration granted is cancelled in view of the amendment of first proviso to Section 2(15) of the Act. That is not a ground specified in the Statute for cancellation of the registration. In fact, sub-section(8) to Section 13 which is introduced by Financial Ac....