2010 (2) TMI 1169 - AT - Income Tax

Summary

Issues Involved:
The issues involved in this judgment include the cancellation of registration under section 12 AA(3) of the Income Tax Act, 1961, the applicability of section 12 AA for registration of a State Government Authority, the charitable nature of the activities of the appellant, and the correctness of withdrawing the registration already granted.

Cancellation of Registration under Section 12 AA(3):
The appellant's appeal was against the order cancelling the registration under section 12 AA(3) of the Income Tax Act, 1961. The grounds of appeal included errors in law and facts in the cancellation decision, incorrect reasoning applied, and ignoring the registration granted to similar Development Authorities by other benches of the ITAT.

Applicability of Section 12 AA to State Government Authority:
The impugned order withdrew the registration granted to the appellant, Muzaffarnagar Development Authority (MDA), stating that MDA is a State Government Authority and not a trust/society/institution (TSI). It was observed that MDA's activities, such as selling land for profit and following commercial accounting principles, do not qualify as charitable. The learned counsel argued that MDA's activities aim at the systematic planning and development of the area, and previous tax exemptions under section 10(20 A) were accepted until its omission.

Charitable Nature of Activities and Registration Withdrawal:
The appellant contended that MDA's activities are for the advancement of general public utility and should be eligible for registration under section 12 AA. Citing precedents like "Mormugao Port Trust v. CIT" and "CIT v. Gujarat Maritime Board," it was argued that a statutory Authority created under a statute is entitled to charitable status. Various decisions were cited to support the eligibility of Development Authorities for registration under section 12AA.

Decision and Remittance for Reconsideration:
After considering the arguments and precedents, the Tribunal found the matter to be covered by previous decisions regarding Development Authorities' eligibility for registration. The case was remitted to the CIT for a fresh decision in accordance with law and judicial precedents. The appeal of the assessee was treated as allowed for statistical purposes.

Conclusion:
The judgment addressed the issues of registration cancellation under section 12 AA(3), the applicability of section 12 AA to a State Government Authority, the charitable nature of activities, and the correctness of withdrawing the registration. The decision remitted the matter for reconsideration based on legal principles and precedents, ultimately allowing the appeal for statistical purposes.