2012 (5) TMI 100 - AT - Income Tax

Withdrawal of registration granted u/s 12AA Held that - Objectives of the institution does not fall under the provisions of section 2(15) and therefore, the assessee was entitled to registration u/s 12AA of the Act - CIT was not correct in withdrawing registration already granted by the order of the Tribunal to the Institution - if in any year, the gross receipts of the Institution exceeds Rs. 10 lakhs or Rs. 25 lakhs then in that year, the AO is empowered to examine the allowability of exemption u/s 11 but the same has no effect on granting the registration u/s 12AA of the Act amended provisions of section 2(15) of the Act does not fall within the permissible limit of section 12AA(3)- in favour of assessee.

Summary

Issues:
Withdrawal of registration granted u/s 12AA w.e.f. Assessment Year 2009-10.

Analysis:
The appellant, M/s Rajasthan Housing Board, was granted registration u/s 12AA in 2009. The CIT withdrew the registration due to an amendment in section 2(15) of the Act, stating that the Institution no longer qualified as a charitable institution. The appellant argued that the Tribunal had already considered the effect of the amendment while granting registration. The Tribunal found that the withdrawal procedure is provided under sub section (3) of section 12AA, which is different from the provisions of section 2(15). The Tribunal held that the CIT was not justified in withdrawing the registration, as the objectives of the Institution remained charitable. Citing similar cases, the Tribunal concluded that the CIT's decision was incorrect and restored the registration granted u/s 12AA.

The amended provisions of section 2(15) stated that if an institution's receipts exceed Rs. 10 lakhs, then exemption u/s 11 may not be allowed. The Tribunal clarified that the exemption u/s 11 is to be examined yearly and has no impact on the grant of registration u/s 12AA. The Tribunal noted that the objectives of the Institution had been previously examined and found to be charitable. Therefore, the withdrawal of registration was deemed unjustified.

In similar cases, the Tribunal found that the withdrawal of registration based on amended provisions of section 2(15) was not justified. The Tribunal emphasized that the CIT's decision did not align with the permissible limits of section 12AA(3) and reinstated the registration. Consequently, the Tribunal allowed the appeal of the Institution and dismissed the Stay Petition as infructuous.

In conclusion, the Tribunal held that the CIT's withdrawal of registration was unwarranted, as the Institution's objectives remained charitable. The Tribunal reinstated the registration granted u/s 12AA, emphasizing that the exemption u/s 11 is to be assessed yearly and does not impact the registration process.