2011 (3) TMI 1654 - AT - Income Tax

Summary

Issues involved: Appeal against withdrawal of registration u/s 12A of the Income Tax Act, 1961 and refusal to renew exemption u/s 80G.

Issue 1: Registration u/s 12A

The appellant, a charitable trust, appealed against the withdrawal of registration granted under section 12A of the Income Tax Act, 1961. The CIT had withdrawn the registration on the grounds that the activities of the trust were not genuine or in accordance with its objects. The appellant contended that there was no provision in section 12AA to cancel the registration granted under section 12A. The Tribunal agreed, noting that the relevant provision, section 12AA(3), did not apply to the present case as the trust was registered under section 12A(a) and not under clause (b) of subsection (1) of section 12AA. Although an amendment in 2010 allowed cancellation of registration granted under section 12A, it was effective from June 2010, while the CIT's order was issued in January 2010. Therefore, the Tribunal upheld the appellant's objection and annulled the CIT's order for lack of jurisdiction.

Issue 2: Exemption u/s 80G

The CIT refused to renew the exemption certificate u/s 80G for the appellant trust, citing violations of section 13(1)(b) and non-charitable activities. The CIT held that certain activities of the trust, including running a Kalyan Mandapam, were not charitable as per the amended provision of section 2(15). Consequently, the CIT concluded that the income from these activities could not be exempt under section 11 of the Act. The Tribunal, however, found that the CIT's reliance on section 293C, which pertains to the power to withdraw approval, was misplaced. Section 293C deals with approval, not registration, and therefore could not validate the CIT's order. As a result, the Tribunal allowed the appeal of the assessee, annulling the CIT's order without costs.

In summary, the Tribunal upheld the appellant's objection regarding the withdrawal of registration u/s 12A due to lack of jurisdiction under section 12AA(3). Additionally, the Tribunal annulled the CIT's order refusing to renew the exemption u/s 80G, as the CIT's reliance on section 293C was deemed inappropriate. The appeal was allowed with no order as to costs.