TaxTMI 
TaxTMI 
2020 (2) TMI 787
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....2015 for the A.Y. 2009-10 assessee has raised the following grounds. ''1. On the facts and in the circumstances of the case the ld. CIT(E),Jaipur has grossly erred in withdrawing registration u/s 12AA(3) of the I.T. Act, 1961 for A.Y. 2009-10 and onwards, without appreciating that he was not empowered under the said section to withdraw the registration granted to appellant u/s 12A(1)(a) in the year 1974, as the empowering provision i.e. section 12AA(3) was made operative w.e.f. 01-06-2010 i.e. A.Y. 2011-12 onwards only with retrospective effect as held by CBDT as well as various Courts. Thus the order of the ld. CIT(E), Jaipur cancelling the registration w.e.f. 2009-10 onwards deserves to be held bad in law. 2. On the facts and in the circumstances of the case the ld. CIT(E),Jaipur has grossly erred in withdrawing registration u/s 12AA(3) of the I.T. Act, 1961 vide his impugned order passed u/s 12AA(3) of the I.T. Act, 1961 arbitrarily by holding that the caseof the assessee is hit by proviso to Section 2(15) without interpreting the proviso to section 2(15) in its true perspective. Thus, the order of the ld. CIT(E) deserves to be held bad in law and be quashed. 2.1 On the fa....
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....herefore, the impugned order is bad in the eyes of law and is liable to be struck down. The ld.AR of the assessee further submitted that Section 12AA(3) of the Act empowers the Commissioner to cancel the registration granted u/s 12AA/12A of the Act in specified circumstances where the Commissioner is satisfied that the activities of the trust/institution are not genuine or are not being carried out in accordance with the objects of the trust/intuition. 2.4 The ld.AR of the assessee has referred to the objects of the assessee society/ trust and submitted that the objects of the assessee trust includes the preservation of environment, Medical relief to ailing persons, Relief to the Poor, Imparting the education. Thus the dominant functions of the assessee trust are to provide (i) an asylum to old, maimed, sick and stray cows and further to provide relief to cows in famine affects areas, (ii) to educate and to hold camps to impart training for preparation of medicines produced from cow products and (iii) to educate milkmen in order to improve the quality of milk and thereby working for their upliftment which are very well covered within the ambit of relief to poor and education. The ....
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....e balanced and nutritious fodder for the cows so that the milkmen can have good quality of milk & milk products. Similarly, the milk and ghee is purchased through 'Jaipur Gau Samverdhan Samiti'' which procures the same from local milkmen at a better price and sell it through its three counters/ centres. Thus all these activities are being carried out by the assessee trust with the main object to protect the cows as well as environment. In support of his contentions, the ld.AR of the assessee relied on the following decisions. (i) DIT(Exemptions) vs Sabarmati Ashram Gaushala Trust (2014) 362 ITR 538 (Guj). (ii) DIT (Exemptions), Mumbai vs Shree Nashik Panchvati Panjrapole (2017) 81 Taxmann.com 375 (Bom) (iii) Bhartiya Govansh Rakashan Samvardhan Parishad vs CIT, (2015) 58 Taxmann.com 37 (Gauhati Trib) (iv) Shree Nashik Panchvati Panjrapole (2014) 45 Taxmann.com 220 (Mumbai - Trib) (v) CIT vs Swastik Textile Trading Company (P) Ltd, (1978), 113 ITR 853 (Guj) Alternatively the ld.AR of the assessee submitted that impugned order was originally passed on 29-12-2011 making it effective from 01-04-2009 whereas the amendment brought to the provisions of Section 12AA(3) was w.e.f....
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....assessee trust and particularly the activity of purchase and sale of milk, ghee, cattle feed etc. is in the nature of trade, commerce or business as provided in the proviso to section 2(15) of the Act and consequently the activities are not carried out for achieving the object of the assessee trust. The said order was challenged by the assessee trust before this Tribunal and vide order dated 28-11-2014 this Tribunal set aside the matter to the record of the ld. CIT(Admm) in para 3.10 and 3.11 as under:- ''3.10 We have heard the rival contentions and perused the material available on record. The arguments of the ld counsel about the legislative scheme of provisions with regard to registration of trust u/s 12AA, wider meaning of Charitable Object; power of withdrawal of registration u/s 12AA(3) have some merit. The conclusion of order of ld. CIT in withdrawing the registration does not appear to conform to the specific conditions laid down in sec 12AA(3). An order withdrawing the registration of trust is a drastic action and the law provided a statutory mechanism of assessment, verification of trust activities, and apportionment of income and expenditure of various activities of th....
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....d commerce and turnover from these activities is more than the prescribed limit as per proviso to section 2(15) of the Act and consequently the same are not charitable in nature. The ld. CIT(E) has given more emphasis on the powers for cancellation/ withdrawal of the registration granted u/s 12A of the Act by virtue of the amendment brought in Section 12AA(3) w.e.f. 01-06-2010. For ready reference, we reproduce section 12AA(3) of the Act as under:- ''Sub-Section (3) of Section 12AA :-[(3) Where a trust or an institution has been granted registration under clause (b) of sub-section (1) [or has obtained registration at any time under section 12A [as it stood before its amendment by the Finance (No.2) Act, 1996 (33 of 1996) and subsequently the [Principal Commissioner or ] Commissioner is satisfied that the activities of such trust or institution are not genuine or are not being carried out in accordance with the objects of the trust or institution, as the case may be, he shall pass an order in writing cancelling the registration of such trust or institution: Provided that no order under this sub-section shall be passed unless such trust or institution has been given a reasonable....
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....s of purchase and sale of milk, ghee and cattle feed is done through another society namely Jaipur Gau Samvardhan Samiti. The sole object & purpose of purchase and sell of the milk, milk products and cattle feed is to provide the financial help to the persons in occupation of animal husbandry and particularly selling of milk. There is no allegation that the assessee is carrying out these activities with sole motive of earning profit rather the assessee has brought on record the details to show that the assessee is not earning any profit but only charging some commission to facilitate the better service, price and good products to the needy persons and particularly in the field of rearing the cows and production of milk. The income so earned by the assessee trust from these activities is applied for the main objects of the assessee trust and therefore, it cannot be said that all these activities are not being carried out in accordance with the object of the assessee trust rather these activities are being carried out to attain the main objects of the assessee trust. In the case of DIT (Exemptions), Mumbai vs Shree Nasik Panchvati Panjrapole (supra), the Hon'ble Mumbai High Court....
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.... of trade, commerce or business but are carried out under the guise of activities in the nature of 'public utility'. Delhi High Court in case of Institute of Chartered Accountants of India & Anr. Vs. Director General of Income-Tax (Exemption) and Ors. reported in (2012) 347 ITR 99 (Delhi) considered these very provisions in the context of activities of the Institute of Chartered Accountants holding that the fundamental or dominant function of the Institute was to exercise overall control and regulate the activities of the members / enrolled chartered accountants and merely because the Institute was holding coaching classes which also generate income, the Court held that proviso to Section 2(15) of the Act would not be applicable. It thus held and observed as under :- "Section 2(15) defines the term "Charitable purpose". Therefore, while construing the term "business" for the said section, the object and purpose of the section has to be kept in mind. We do not think that a very broad and extended definition of the term "business' is intended for the purpose of interpreting and applying the first proviso to Section 2(15)of the Act to include any transaction for a fe....
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....t and cannot be interpreted to mean any activity which is carried on in an organised manner. The purpose and the dominant object for which an institution carries on its activities is material to determine whether the same is business or not. The purport of the first proviso to section 2(15) of the Act is not to exclude entities which are essentially for charitable purpose but are conducting some activities for a consideration or a fee. The object of introducing the first proviso is to exclude organizations which are carrying on regular business from the scope of "charitable purpose". The purpose of introducing the proviso to section 2(15) of the Act can be understood from the Budge Speech of the Finance Minister while introducing the Finance Bill, 2008. ... .... The expression "business", "trade" or "commerce" as used in the first proviso must, thus, be interpreted restrictively and where the dominant object of an organisation is charitable any incidental activity for furtherance of the object would not fall within the expressions "business", "trade" or "commerce".' (Emphasis supplied) 19. In fact the Revenue has not been able to show that the view taken by the Apex Court....
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....efore, the findings of the ld. CIT(E) is contrary to the undisputed facts regarding the objects of the assessee trust and the activities of the trust are being carried out for attainment of main objects of the trust. Hence in view of the above facts and circumstances of the case, the impugned order of the ld. CIT(E) is set aside and grant of registration u/s 12A is restored. Thus the appeal of the assessee is allowed. 3.1 The assessee in ITA No.113/JP/2014 for the Assessment Year 2009-10 has raised the following grounds:- ''1. On the facts and in the circumstances of the case the ld. CIT(E),Jaipur has grossly erred in upholding the action of the AO in treating the income declared by the appellant as income from business, arbitrarily on mere assumptions and presumptions, thus the action of the AO deserves to be held bad in law. 2. On the facts and in the circumstances of the case the ld. CIT(E), Jaipur has grossly erred in sustaining the addition of Rs. 15,55,000/- made on account of surplus on sale of land on protective basis more particularly when the land under question was sold in F.Y. 2007-08 relevant to Assessment Year 2008-09. Hence, the addition of Rs. 15,55,000/- mad....