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2014 (11) TMI 1238 - AT - Income TaxExemption u/s 11 - registration under section 12AA denied - Scope of amendment in Sec 2(15) w.e.f. 1.4.2009 - HELD THAT - This issue is squarely covered against the assessee by the decision of Chandigarh Bench of the Tribunal in case of Improvement Trust Malerkotla V CIT 2014 (3) TMI 1178 - ITAT CHANDIGARH wherein identical issue was considered and decided against the assessee. The assessee Trust before us is the Improvement Trust Malerkotla and the facts of the present case are identical to the facts of Improvement Trust Bathinda which is also formulated under the Punjab Town Improvement Trust Act. It was fairly admitted by the ld. AR for the assessee during the course of hearing that the appeals in the case of various Improvement Trusts under the amended provisions of section 2(15) of the Act w.e.f. 01.04.2009 were pending before the Hon ble Punjab Haryana High Court. As the facts of the present case are identical to the facts before the Amritsar Bench of the Tribunal in Improvement Trust Bathinda Vs CIT Bathinda 2015 (9) TMI 1012 - ITAT AMRITSAR and following the same parity of reasoning we uphold the order of Commissioner of Income T ax in withdrawing the registration granted to the assessee under section 12AA - Appeal of the assessee is dismissed.
Issues Involved:
1. Legality of the CIT-II's order. 2. Application of section 12AA read with section 2(15) of the IT Act. 3. Consideration of facts and submissions by the appellant. 4. Charitable nature and profit motive of the Trust's activities. Detailed Analysis: Issue 1: Legality of the CIT-II's Order The appellant contended that the order by CIT-II, Ludhiana, dated 7.2.2013, was "patently against law, erroneous and merits to be quashed." The Tribunal, however, found that the CIT-II's decision was consistent with the amended provisions of section 2(15) of the IT Act and upheld the order. Issue 2: Application of Section 12AA read with Section 2(15) of the IT Act The appellant argued that the invoking of the provisions of section 12AA read with section 2(15) was "against law, invalid and void ab initio." The Tribunal noted that the registration was initially granted to the assessee trust, but due to the amendment in section 2(15) effective from 1.4.2009, a notice for cancellation was issued. The Tribunal referenced the decision in the case of Jammu Development Authority and found that the issue was "squarely covered against the assessee." Issue 3: Consideration of Facts and Submissions by the Appellant The appellant claimed that the CIT failed to appreciate the facts and submissions made. The Tribunal reviewed the records and rival contentions, finding that the CIT's decision was based on a detailed discussion and consistent with the Tribunal's prior decisions in similar cases, such as Improvement Trust, Malerkotla v. CIT. Issue 4: Charitable Nature and Profit Motive of the Trust's Activities The appellant asserted that the activities of the Trust were charitable without any profit motive and that the exemption should not have been refused and canceled. The Tribunal examined the activities of the Trust, which included acquiring land, developing it, and selling plots at reserve prices, generating profits. The Tribunal found that these activities were in the nature of trade, commerce, or business, thus falling under the amended provisions of section 2(15). The Tribunal cited similar cases, such as Improvement Trust, Bathinda, where the registration was withdrawn due to the Trust's activities being deemed non-charitable. Conclusion The Tribunal upheld the CIT-II's order, finding that the appellant's activities were not charitable under the amended provisions of section 2(15) and that the registration under section 12AA was rightly withdrawn. The appeal was dismissed, and the decision was pronounced in the open court on 26.11.2014.
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