TaxTMI 
TaxTMI 
TaxTMI 
2019 (9) TMI 753
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.... (1) of Income Tax Act, 1961 vide his office order No. CIT/PTA/TECH/12A/2006-07/406, dated 26/04/2006 & has erred in interpretation of advancement of any other object of general public utility which shall not be a charitable purpose if it involves carrying on of any activity in the nature of trade, commerce or business owing to amendment made in the definition of Charitable Purpose U/s 2(15) of the Income Tax Act, 1961 by Finance Act, 2008 ii) The appellant has made no change in the objects of the trust since registration U/s 12AA which has not been considered by the Learned Commissioner of Income Tax, Patiala iii) The appellant is a public sector organization performing state function having no profit motive & is providing public utility services to the society at a large. iv) The learned CIT has erred in interpretation of law by erroneously treating the appellant as a commercial organization carrying on the objects in the nature of trade, commerce or business. v) That Appellant leaves to add, amend, or withdraw any ground of appeal before appeal is heard & disposed off." 4. Brief facts relating to the case are that originally the assessee had been granted registrati....
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....r benefitting the public at large without any commercial angle. It was stated that a major share of the income of the assessee trust was on account of acquisition of land, its development and sale through auction or by draw of lots fetching astronomical prices for the assessee trust in the process, thus clearly indicating commercial motive of the assessee trust. It was also stated by the Ld.CIT that the net profits earned by the assessee trust in assessment year 2009-10 were far better than that shown by the builders and developers and thus the commercial motive of the trust could not be denied, considering the activities of the trust. Accordingly, the Ld.CIT withdrew the registration granted to the assessee trust u/s 12A of the Act, for the reason that the activities undertaken by it were in the nature of trade, commerce or business and thus not in accordance with the provisions of section 12AA of the Act. 5. Before us, the Ld. counsel for assessee contended that the activities carried out by the Improvement trust constituted under the Punjab Town Improvement Trust, 1922 had been considered in detail for the purposes of grant of exemption as carrying out charitable activities as....
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....It is not the case of the Revenue that there is any change in the stated objects or activities of the assessee improvement trust. The sole reason for withdrawing the exemption is the amendment made to section 2(15) of the Act providing that the advancement of any other object of general public utility shall not be a charitable purpose if it involves carrying on and activities in the nature of trade, commerce or business. 10. We find that the issue of cancellation of registration on account of the insertion of the first & second proviso to section 2(15) of the Act has been dealt with by the Hon'ble Bombay High Court in the case of Director of Income Tax (Exemption) vs North Indian Association reported in 79 taxmann.com 410(Bombay) & in the case of Director of Income Tax (Exemption) vs Khar Gymkhana (2016) 385 ITR 162 (Bom).It may be relevant to point out that while the first proviso states that advancement of any other activity of general public utility shall not be a charitable purpose if it involves carrying out of commercial activities, the second proviso restricts the applicability of the first proviso stating that it would apply only if quantum of the commercial activity exce....
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....only because the receipts on account of business are in excess of the limits in the proviso to Section 2(15) of the Act would also apply in the present case. The impugned order has held that cancellation of a Registration under Section 12AA(3) of the Act, can only take place in case where the activities of trust or institution are not genuine and/or not carried on in accordance with its objects. The aforesaid Circular No.21 of 2016 is in line of the finding of the Tribunal in the impugned order. The submission on behalf of the Revenue that the Trust is not genuine because it is hit by proviso to Section 2(15) of the Act, is in fact, negatived by Circular No.21 of 2016. In fact, the above Circular No.21 of 2016 clearly provides that mere receipts on account of business being in excess of the limits in the proviso would not result in cancellation of Registration granted under Section 12AA of the Act unless there is a change in nature of activities of the institution. Admittedly, there is no change in nature of activities of the institution during the subject Assessment Year. The further submission on behalf of the Revenue that looking at the quantum of receipts on account of commerci....