TaxTMI 
TaxTMI 
TaxTMI 
2016 (2) TMI 603
X X X X Extracts X X X X
X X X X Extracts X X X X
....essee made an application in form no.10A, before the learned DIT(E), Bombay, for registration under section 12A of the Act. The learned DIT(E) granted registration under section 12A r/w section 12AA(1) of the Act on 22nd September 1998, though prospectively. The registration granted to the assessee under section 12AA(1) of the Act continued till the year 2011. As could be seen from the material on record, on the basis of a proposal received from the Income Tax Officer (Exemption)-1(1), Mumbai, for cancellation of registration granted under section 12AA(1), on the ground that assessee is carrying on activity in the nature of trade commerce or business receipts of which are in excess of Rs. 10 lakh thereby attracting the proviso to section 2(15) of the Act, the learned DIT(E) on 14th October 2011, issued a notice to the appellant institution directing to show cause as to why the registration granted under section 12A, should not be cancelled / withdrawn as the activity carried on by the assessee is in the nature of trade, commerce and business, hence, is not for charitable purpose as per the proviso to section 2(15) of the Act. In response to the said show cause notice, though, the a....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... submitted, there is also no material on record to show that the assessee has not carried on activities in accordance with its objects. He submitted, as neither of the two conditions as prescribed under section 12AA(3) are satisfied, cancellation / withdrawal of registration under section 12AA(3) is impermissible in law. Learned counsel submitted, merely because there is a change in "charitable purpose" after its substitution by Finance Act, 2008, w.e.f. 1st April 2007, the activities of the assessee institution cannot be treated as non-genuine. Learned counsel submitted, for the purpose of withdrawal / cancellation of registration under section 12AA(3), the conditions prescribed therein only have to be satisfied. He submitted, section 12AA(3) has no reference to the first proviso to section 2(15) of the Act. He submitted, when the DIT(E) being satisfied with the objects of the assessee, had granted registration under section 12AA(1) there being no change in the object nor there being any material brought on to indicate that the assessee has not carried on activities in accordance with its object, cancellation / withdrawal of registration is invalid in law. For such proposition, he....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion under section 12AA(1) vide order dated 22nd September 1998. It is also a fact on record that the registration granted under section 12AA(1) continued till the year 2011. On a reading of the provisions of section 12A of the Act, it is very much clear that the income / contribution received by a trust / institution existing for charitable purpose would not be exempt under sections 11 and 12 of the Act unless the trust / institution has made an application for registration under section 12A of the Act and such trust / institution in case of an application for registration being made after 1st June 2007 is registered under section 12AA of the Act. On a perusal of the provisions of section 12AA, which was introduced in the statute w.e.f. 1st April 1997, it is to be noted that as per sub-section (1), the registering authority i.e., Principal Commissioner or Commissioner on receipt of an application for registration under section 12A, shall call for such document / information from the trust / institution to satisfy himself about the genuineness of the activities of the trust or institution and may also conduct such inquiry in that behalf. Only after he has satisfied himself about the....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... it is very much clear that the conditions of section 12AA(3) of the Act, have not been fulfilled. Merely because appellant institution has earned income from certain activities, which are in accordance with its objects, neither the institution nor its activities would become non-genuine as a result of the proviso to section 2(15). As we have already observed the power to cancel / withdraw registration granted under section 12AA(1) of the Act, has been provided under section 12AA(3), subject to fulfillment of conditions enshrined therein. In the present case, admittedly, at the time of grant of registration under section 12AA(1), the learned DIT(E) was satisfied with the charitable nature of assessee's objects and also genuineness of its activities. There being no material on record to support the conclusion that the activities of the trust are not genuine or they are not carried out in accordance with its object, conditions of section 12AA(3), have not been satisfied in the instant case. As the registering authority has been vested with power to cancel / withdraw the registration only under sub-section (3), he must satisfy the conditions prescribed therein before cancellation ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... against the order dated 28th August 2014, passed by the learned Commissioner (Appeals)-I, Mumbai, for the assessment year 2009-10. 8. Briefly stated the facts are, for the year under consideration, the assessee filed its return of income on 30th September 2009, claiming exemption under section 11 of the Act. In the course of assessment proceedings, the Assessing Officer noticing that learned DIT(E) has cancelled / withdrawn the registration granted under section 12AA(1), held that assessee is not eligible for exemption under section 11. Of-course, the Assessing Officer also opined that earning of income from holding seminars, conference, exhibition, advertisements are purely commercial activities, hence, cannot b e considered to be for charitable purpose. Accordingly, the Assessing Officer completed the assessment by treating the income / receipts of the assessee as business income as a result of which the total income of the assessee was determined at Rs. 4,03,58,639. Being aggrieved of the assessment order, assessee filed appeal before the learned Commissioner (Appeals). The learned Commissioner (Appeals) also upheld the assessment order. 9. We have considered the submissions ....