TaxTMI 
TaxTMI 
TaxTMI 
2015 (9) TMI 1057
X X X X Extracts X X X X
X X X X Extracts X X X X
....isdictional issue viz: whether the Registration granted under Section 12A of the Act could be withdrawn by the Director of Income Tax under Section 12AA(3) of the Act for violation of conditions other than those specified therein? and (ii) Without prejudice to (i) above, whether the activity carried out by the Appellant is not for charitable purpose as defined under Section 2(15) of the Act being hit by the amended proviso thereto? The basic jurisdictional issue being (i) above was referred to the President of the Tribunal to consider the constituting of a Larger Bench to decide it and the without prejudice issue raised in ground (ii) is decided by the order dated 10th April, 2015. On issue (ii) the Tribunal held that Appellant's activities are not activities for charitable purpose being hit by proviso to Section 2(15) of the Act. It is the grievance of the Appellant that the issue raised in ground (ii) above has been decided without hearing the Appellant on it. 3. We admit the Appeal on the following substantial questions of law:- "(A) Whether on the facts and in the circumstances of the case and in law, the Tribunal was right in deciding Ground No. (ii) of the memorand....
X X X X Extracts X X X X
X X X X Extracts X X X X
....calling upon the Appellant to show cause why the registration granted under Section 12A of the Act should not be withdrawn/cancelled as the activity of the Appellant was in the nature of trade, commerce and/or business and, therefore, not a charitable purpose under Section 2(15) of the Act. The Appellant responded to the said notice inter alia, pointing out that a certificate of Registration once granted under Section 12A of the Act could only be withdrawn under Section 12AA(3) of the Act in case he is satisfied that one or both of the two eventualities mentioned therein are met namely not being genuine or the activity is not carried on in accordance with its objects. It was contended that neither of the two conditions necessary for exercising the jurisdiction under Section 12AA(3) of the Act are satisfied. Thus, the Respondent had no jurisdiction. Without prejudice to the above, the Appellant also submitted that the activities carried out by it would not amount to carrying on any trade, commerce or business as it was essentially concerned with development of Mumbai Metropolitan Region. Therefore, would not be hit by the proviso to Section 2(15) of the Act. 8. On 27th December, 20....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... and recall the order dated 31st December, 2013. The Appellant submitted that the only issue which was argued before the Tribunal leading to the order dated 31st December, 2013 was with regard to the jurisdiction of the Director of the Income Tax to cancel and/or withdraw under Section 12AA(3) of the Act, the registration granted under Section 12A of the Act by relying upon the proviso to Section 2(15)of the Act. The other issue on which observations were made by the Tribunal and restoring to the Respondent to examine and adjudicate were not argued either by the Appellant-Assessee and/or by the Respondent-Revenue at the hearing leading to the order dated 31st December, 2013. 12. The application was heard on 8th August, 2014 and 16th January, 2015 at which time the Appellant also filed a written summary of its arguments. On 10th April, 2015, the Tribunal disposed of the Miscellaneous Application by allowing it and recalling its order dated 31st December, 2013. Thereafter, the Appellants' appeal against the order dated 27th December, 2011 of the Respondent was considered on merits under Section 254(1) of the Act and partly disposed of on merits with regard to issue (ii) and part....
X X X X Extracts X X X X
X X X X Extracts X X X X
....arger Bench. Nevertheless, it proceeds to decide ground (ii). The foundation to decide ground (ii) is only if ground (i) is decided against the AppellantAssessee. In these facts, the legal maxim sublato fundaments credit opus would apply meaning thereby, in case the foundation is removed, the superstructure falls, so far as the Tribunal is concerned. It may be open to the Assessing Officer during the assessment proceedings to consider whether the activities of the Appellant are hit by the proviso to Section 2(15) of the Act and entitled to exemption. There is a difference between Registration and exemption; (d) Accordingly, Question (A) is answered in the negative i.e. in favour of the AppellantAssessee and against the Respondent-Revenue. 16. Regarding Question B (a) The challenge here is to the order dated 10th April, 2015 of the Tribunal to the extent it decides ground (ii) in the memorandum of appeal without hearing the Appellant. (b) The appeal from the order dated 27th December, 2011 was originally disposed of by an order dated 31st December, 2013 of the Tribunal holding that ground (ii) raised in appeal would be required to be examined only if it comes to the conclusio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f a Larger Bench was in the face of seven decisions of the Tribunal concluding the issue of jurisdiction in favour of the Appellant. All these decisions are mentioned in the order passed on 31st December, 2013 (since recalled) in support of the Appellant's submission that the Respondent has no jurisdiction to withdraw / cancel registration granted under Section 12AA of the Act in exercise of its power under Section 12AA(3) of the Act. In fact, the order dated 10th April, 2015 of the Tribunal itself in para 8 thereof records its knowledge of the seven decisions by relying upon the paragraph 3.1 to 3.4 of the order dated 31st December, 2013 where the seven decisions has been set out in seritam. In spite of the above decisions of the Tribunal and also of the High Court of Madras in CIT v/s. Sarvodaya Hakkiya Pannai 343 ITR 300, the impugned order holds that the issue is required to be referred to the President of the Tribunal to consider constitution of a Larger Bench in view of conflicting view of High Courts. No reference to any High Court decisions adverse to the stand taken by the Appellant is found in the order dated 10th April, 2015 of the Tribunal. In support of the stand o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ideration of the issues, the Tribunal could well come to the conclusion that the issue is required to be considered by a Larger Bench of the Tribunal and the same may not be faulted. Thus, we would be restoring the issue to the Tribunal for fresh consideration. However, in view of the above in the present facts in view of lack of consideration, question (C) is answered in the negative i.e. in favour of the AppellantAssessee and against the Respondent-Revenue. 18 Regarding Question D (a) The challenge here is to the manner in which the order dated 10th April, 2015 has been passed. We find that the order dated 10th April, 2015 while dealing with the substantive appeal under Section 254(1) of the Act has finally disposed of the appeal in part. The decision on the issue raised in ground (i) is postponed to be rendered later i.e. after consideration of the issue by the Larger Bench of the Tribunal. While the issue raised in ground (ii) is finally disposed of. (b) As pointed out above, ground (i) is in respect of jurisdiction i.e. it goes to the root of the dispute. Therefore, the normally expected manner would have been to dispose of ground (ii) only after deciding on the issue of ....