AI Drafter 
TaxTMI 
TaxTMI 
2017 (3) TMI 32
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....f Section 11 by : 2.1). Considering the regular activities of trust in nature of business. 2.2).Considering the rental income of property held under the trust as business income. 3). The appellant craves/leave to add, to amend, alter, delete any of the above grounds of appeal either in full or in part on or before the final hearing of the appeal." 2. The present appeal filed by the assessee therein assailing the order passed by the DIT(exemption) under Sec.12AA(3) involves a delay of 237 days. The assessee had filed an application seeking condonation of delay in filing of the appeal, which is supported by an affidavit of the Chief Accountant of the assessee trust, viz Shri Mahendra Kapadia. It is claimed by the assessee that the order of the DIT(exemption) was received in the month of January, 2012/February, 2012 and the appeal was to be filed within 60 days from the date of receipt of such order, that is latest by the first week of April, 2012. It is stated that as the Chief Accountant of the assessee trust, viz Shri. Mahendra Kapadia who was looking after the accounts and taxation matters of the assessee trust had suffered a brain hemorrhage and had undergone three ma....
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....averred before us. We are of the considered view that the delay involved in filing of the present appeal is absolutely inadvertent and no fault can be attributed to the assessee, and thus in all fairness and in the interest of justice, taking a liberal view therein condone the delay of 237 days involved in filing of the appeal. The application filed by the assessee trust seeking condonation of delay of 237 days in filing the present appeal is thus allowed. 3. The brief facts of the case are that the assessee is a public charitable trust established with the objects for promoting the development of various arts and was registered with the Charity Commissioner under Bombay Public Trust Act, 1950 on 20.04.1978. The assessee trust was thereafter registered under Sec. 12A of the Income tax act, 1961 (for short 'Act') with the Commissioner of Income-tax, Bombay City-IV, Bombay, way back as on 06.11.1979. The revenue after granting registration to the assessee trust, had thereafter on being satisfied about the genuineness of the activities of the assessee trust and recording satisfaction to the said effect, had from time to time also granted approval under Sec. 80G(4) of the 'Act'. ....
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....the nature of systematic commercial exploitation of its assets by the assessee trust and as such constituted a 'business'. (ii). That without prejudice to above, the DIT(Exemption) had gravely erred in law by concluding that on being hit by the first proviso of Sec. 2(15), it would be deemed that the assessee trust was no more existing for a charitable purpose, which as per him would lead to cancellation of its registration under Sec. 12AA(3). (iii).That the DIT(Exemption) had failed to appreciate that though as per the amendment of Sec. 12AA(3) by the Finance (No.2) Act, 1996, the CIT/DIT(Exemption) stood vested with jurisdiction to cancel the registration obtained by an assessee u/s 12A, however as the said amendment was applicable from 01.06.2010 and thus applied to A.Y. 2011-12 and subsequent years, therefore no jurisdiction could have been exercised by him for cancelling the registration of the assessee u/s 12A, w.e.f A.Y. 2009-10. The Ld. A.R in support of his aforesaid contentions had relied on certain case laws and averred that the order of the DIT(Exemption) passed under Sec. 12AA(3), therein cancelling the registration granted to the assessee u/s 12A could not be....
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....the limited extent that where the case of an assessee falls within the sweep of first proviso of Sec. 2(15), then the same would lead to exclusion of the activities from the definition of the term 'Charitable purpose' contemplated in Sec. 2(15), as a result whereof the assessee would stand disentitled for raising a claim under Sec.11. However, the same cannot be stretched to lead to an interpretation that on being hit by the first proviso of Sec. 2(15), the very continuation of the registration of the assessee would stand jeopardized, and the same would lead to cancellation/withdrawal of registration granted to the assessee under Sec. 12A/12AA of the 'Act'. We find substantial force in the contention of the Ld. A.R that even if an assessee is hit by the monetary limits contemplated under Sec. 2(15) w.e.f 01.04.2009, the same would only adversely affect the entitlement of the assessee towards claim of exemption under Sec. 11 of the 'Act' during the year, however the same cannot lead to cancellation/withdrawal of registration granted to the assessee under Sec.12A/12AA of the 'Act'. We are of the considered view that the circumstances which would lead to cancellation of the registrati....
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....tional usage of the term 'Previous year' in the second proviso of Sec. 2(15), therein leaves no scope of doubt that on being hit by the provisions of Sec. 2(15), though the entitlement of the assessee towards claim of exemption u/s 11 would stand adversely effected , but that too would only be restricted to the 'Previous year' in which the assessee is found to have exceeded the 'monetary parameters' contemplated in Sec. 2(15). Thus to be brief and explicit, the assessee trust on being hit by Sec. 2(15) would not to lead to jeopardizing of the very existence of its registration u/s 12A/12AA. That our aforesaid view finds support from Sec. 13(8) as had been made available on the statute vide the Finance Act, 2012,w.r.e.f 01.04.2009. We find that our aforesaid view further stands fortified by the order of the ITAT, 'G' Bench, Mumbai, in the case of: Ghatkopar Jolly Gymkhana,Mumbai Vs. DIT(E), Mumbai (ITA No. 882/Mum /2012), wherein it has been held as under:- "5.2 We may observe that the tax exemption or benefits are granted to a trust or institution because its activities fall within the definition of charitable purposes as defined u/s. 2(15) of the Act. Under section I2AA(3) the ....
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....e of definition of charitable purposes. The limit of receipt upto Rs. 10.00 lacs during the 'previous year' as mentioned in the second proviso, has made the section further liberal mandating to observe the charitable character of the concerned trust/ institution from year to year basis. For the previous year, during which the gross receipt income crosses limit of Rs. 10.00 lacs, the trust will not get exemption or benefit of its being charitable in nature despite its carrying out charitable activities. However, it will get such benefit if it is registered as charitable institution and income from business activities, as mentioned in first proviso to section 2(15), does not cross limit of Rs. 10.00 lacs. Our view in this respect is fortified from the judgment of the co-ordinate Bench decision of the Tribunal in the case of Rajasthan Housing Board vs. CIT (2012)21 Taxmann.com77(Jp). 5.4 Thus, the action of the CIT(A) relying upon the newly inserted proviso from 01.04.2009 in cancelling the registration of the trust, in our view, is not correct or justified. The only effect will be that the Assessee will not be entitled for exemption or tax benefits which otherwise would ha....
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....ended to provide that the Commissioner can also cancel the registration obtained under section 12A as it stood before amendment by Finance (No. 2) Act, 1996. Applicability - This amendment has been made applicable with effect from 1st June, 2010 and shall accordingly apply for assessment year 2011-12 and subsequent assessment years." , had therein averred that as the amendment to Sec. 12AA(3) therein vesting jurisdiction with the CIT/DIT to cancel the registration granted to a trust u/s 12A was made available only w.e.f 01st June, 2010, which as clarified by the CBDT in its aforesaid circular is to be made effective for A.Y. 2011-12 and subsequent years only, therefore the DIT(Exemption) while cancelling the registration granted to the assessee trust u/s 12A, w.e.f A.Y. 2009-10, had thus traversed beyond the scope of his jurisdiction, and as such the order passed by him u/s 12AA(3) cancelling the registration of the assessee trust cannot be sustained and is liable to be vacated. We are unable to persuade ourselves to subscribe to the interpretation arrived at by the Ld. A.R as regards the scope and gamut of the amendment to Sec. 12AA(3) carried out vide the Finance Act, 2010.....