AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2021 (1) TMI 1076
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....he Act on 31.07.2006 and that registration was cancelled by the Ld. CCIT by order dated 04.05.2012 on the ground that the assessee has been engaged in commercial activities and has been rendering services for fee and as per amendment to Sec. 2(15) which came into effect from 01.04.2009 clearly lays down that the advancement of any other object of general public utility shall not be of charitable purpose, if it involves carrying on of any activity in the nature of trade, commerce or business, or any activity of rendering any services in relation to trade, commerce or business for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention of the income from such activity, and if such income from above mentioned activity exceeds Rs. 25 lakhs. Ultimately, the Ld. CCIT order dated 28.11.2019 has rejected Form No.10 filed by the assessee on the ground that the assessee is not fit for registration u/s. 12AA of the Act mainly for the reason that the registration granted already earlier was cancelled by order dated 04.05.2012 and the same is pending before ITAT and also the commercial receipts of the assessee for this period exceeding 25% of the....
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.... there is no material to say that the assessee is carrying the activities not in accordance with the objects or the activities of the assessee are not genuine. The Ld. CCIT has cancelled the registration on presumptions and assumptions without having proper material. For the sake of convenience, the entire portion of the order is extracted as under: "5. We have heard both the parties and perused the material placed on record and gone through the orders of the Ld.CCIT. The Ld.CCIT had cancelled the registration granted u/s 12AA(3) w.e.f. 2006 onwards. The assessee was granted registration u/s 12AA(3) in 2006 w.e.f. 01.04.2003. The reason for cancellation of registration of the assessee is under the impression that the assessee is engaged in commercial activity, acted as an agent of Government of Andhra Pradesh, sold the lands indiscriminately belonging to State Government, from 2008 onwards it had lost sight of the objects and acted like realtor and lastly for the reason that being engaged in the commercial activity, Ld.CCIT held that the assessee is hit by amendment to section 2(15) of the Act which has come into force w.e.f. 01.04.2009. In brief, the Ld.Counsel of the assessee....
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....unctions, constitute as many committees as it thinks fit, in such mariner as may be prescribed, and provide by regulations made in this behalf for rules of procedure at the meeting of the Committees and allowances to members thereto. As per the objects, the assessee has power to acquire the land by purchase or otherwise to carry out its objects. 5.1. Section 19 of the APUDA Act provides the procedure for disposal of the lands and section 19 reads as under: Section19 (1) Subject to any directions given by the Government under this Act, the authority or, as the case may be, the local authority concerned may dispose of (a) any land acquired by the Government and transferred to it, without undertaking or carrying out any development thereon ; or (b) any such land after taking or carrying out such development as it thinks fit; to such persons in such manner and subject to such terms and conditions as it considers expedient for securing the development of the area concerned according to plan. (2) The powers of the Authority, or as the case may be, of the local authority concerned with respect to the disposal of land under subsection (l)shall be so exercised as to secure so ....
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....e objects and argued that the assessee is continuously engaged in the activities for development of the area in its jurisdiction and carried on various activities which are discussed in detail in para No.3 of this order, such as construction of houses for low income groups, widening of roads, development of various areas as per the master plan, sports complex, maintenance of schools, parks, bridges etc. and given a note on the projects which were undertaken and the projects in progress vide note dated 04.10.2019 and argued that the assessee is continuously taking all possible steps for overall development of the areas entrusted to it for orderly growth of the area as per the objects. Thus submitted that the observation of the Ld.CCIT is misplaced and without any evidence or without any foundation. During the appeal hearing, the Ld.Standing Counsel did not controvert the developmental activities undertaken by the assessee, therefore, we hold that the observation of the Ld.CCIT that the assessee has lost sight of its objects is not based on proper appreciation of facts, hence, we are unable to accept the same. 6. The next issue for rejection of the registration is selling of vacant....
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....the construction of commercial buildings are against the objects of VUDA. Therefore, we hold that construction of commercial complexes, Malls etc., and entering into joint ventures for construction of the houses does not violate the objects of APUDA Act. 8. The next contention of the Ld.CCIT as well as the Ld.Standing Counsel of the revenue is that the assessee is the owner of the lands alienated to VUDA, thus the assessee becomes the absolute owner of the lands, hence the assessee ought to have utilized the funds instead of remitting the funds back to Government. For this purpose, the Standing Counsel has referred page No.181 to 187 of the paper book and various pages of paper book No.3. More particularly, the agreement with Global Entropolis Asia Pvt. Ltd. We observe from the paper book that the development agreement entered with Global Entropolis Asia Pvt Ltd enclosed in page No.391 to 426 was cancelled vide cancellation deed dated 01.04.2008 which is furnished in page Number 427 to 432 of paper book and a fresh agreement was entered with Global Entropolis Pvt. Ltd. which is also enclosed in page No.433 to 445. The Ld.DR did not demonstrate whether this land in survey number....
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.... the vacant lands by public auction or otherwise on such terms and conditions as may be prescribed. Even the Ld.CCIT made observation in the order that the Government is permitted to sell their vacant lands by public auction. In general District Collector auctions the lands by public auction. In the instant case, the assessee sold the lands which does not belong to the assessee, but belonged to the Government for which the Govt. of Andhra Pradesh has issued the GO in G.O.Ms.No.1401. Government has given the lands to VUDA for which the VUDA did not make any payment and sold the lands for mobilization of resources to Government account as per para No.6 of G.O.No.1401. There is no evidence brought on record by the department in the order that VUDA has sold the lands allotted to it for development purpose or for any other purpose. The Government has given the lands with a clear direction to auction and remit the proceeds to Government account as provided in para No.7 of G.O.No.1401 and the VUDA is permitted to collect service charges for the services rendered. Whether VUDA can act as an agent for sale of Government lands or not is not an issue in this case and the Ld.CCIT has not dwe....
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.... persons or for the benefit of any individual or the persons or the association or the profits being remitted to Government account. In the instant case, whatever surplus generated was used for the activities of the assessee society, therefore, the same cannot be held to be the commercial activities. Even otherwise, through Circular No.21 of CBDT dated 27.11.2016, it has directed the field authorities not to cancel the registration of charitable institution already granted u/s 12AA of the Act just because the provision to section 2(15) comes into play. The process for cancellation of registration to be initiated strictly in accordance with the provisions of section 12AA(3) and 12AA(4) of the Act after carefully examining the provisions. The assessee also relied on the following decisions which support the assessee that sale of lands and collection of gross receipts exceeding Rs. 25 lakhs does not automatically cancel the registration. 1. Rajasthan Housing Board Vs. Commissioner of Income Tax (2012) 19 ITR (Trib) 524 (Jaipur) held that "cannot cancel registration given to assessee u/s 12AA. If gross receipts exceed Rs. 10 lakhs or Rs. 25 lakhs, then AO can examine and the allowabi....