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2017 (3) TMI 32 - AT - Income TaxCancelling /withdrawing the registration u/s 12AA - Held that - When it is neither the case of the revenue that the assessee trust which for years had been acknowledged as a haritable trust had during the year embarked on to any such new activities, which can safely be characterized as non-genuine activities, nor is it the claim of the revenue that the assessee trust is found to be carrying out activities which are not in accordance with its objects, therefore in the absence of satisfaction by the assessee of either of the aforesaid preconditions which forms the foundation for exercising the jurisdiction by him for cancelling the registration of the assessee trust under Sec. 12AA(3), it can safely be concluded that the DIT(Exemption) had wrongly cancelled the registration of the assessee trust vide his order passed u/s 12AA(3) of the Act . We thus in light of our aforesaid observations thus set aside the order passed by the DIT(Exemption) u/s 12AA(3) and therein restore the registration of the assessee trust. The contention of the Ld. A.R that the DIT(Exemption) had exceeded his jurisdiction by cancelling the registration of the assessee trust u/s 12A, w.e.f A.Y. 2009-10, despite the fact that he was seized of such jurisdiction only w.e.f 01st June, 2010, is found to be misconceived and as such does not merit acceptance, is thus rejected. We thus in light of our aforesaid observations therein set aside the order of the DIT(Exemption) cancelling the registration granted to the assessee trust u/s 12A of the Act . We may however clarify that as we have set aside the cancellation of the registration of the assessee trust by the DIT(Exemption) vide his order passed under Sec. 12AA(3), which was assailed before us by the assessee, therefore we refrain from adjudicating the issue as to whether the activities of the assessee trust, viz collection of Auditorium fees would be hit by the provisions of Sec. 2(15), or not, which thus is left open, and the assessee shall remain at a liberty to raise and contest the same before the A.O. Thus the Ground of appeal No. 2 is disposed of by us in terms of our aforesaid observations, and as such is partly allowed.
Issues Involved:
1. Condonation of delay in filing the appeal. 2. Cancellation of registration under Section 12A by the DIT(Exemption). 3. Interpretation and application of Section 2(15) and Section 12AA(3) of the Income Tax Act, 1961. 4. Jurisdiction of the DIT(Exemption) to cancel registration for periods prior to the amendment of Section 12AA(3). Detailed Analysis: 1. Condonation of Delay in Filing the Appeal: The assessee filed the appeal with a delay of 237 days, supported by an affidavit from the Chief Accountant, who suffered a brain hemorrhage and subsequent memory loss. The Tribunal reviewed the medical reports and affidavit, concluding the delay was due to the accountant's ill health and not due to negligence by the assessee trust. The Tribunal condoned the delay, emphasizing fairness and justice. 2. Cancellation of Registration under Section 12A: The DIT(Exemption) cancelled the registration of the assessee trust under Section 12AA(3) for the Assessment Year 2009-10, citing that the trust's activities were in the nature of business, specifically pointing to 'Auditorium collections' of ?42.43 lacs. The DIT(Exemption) deemed these activities as systematic commercial exploitation, thus not for charitable purposes under Section 2(15). 3. Interpretation and Application of Section 2(15) and Section 12AA(3): The Tribunal analyzed the relationship between Section 2(15) and Section 11, noting that exceeding monetary limits under Section 2(15) affects the entitlement to exemption under Section 11 but does not automatically lead to cancellation of registration under Section 12A/12AA. The Tribunal emphasized that the conditions for cancellation under Section 12AA(3) are specific: the activities must be non-genuine or not in accordance with the trust's objects. The Tribunal found no evidence that the trust's activities were non-genuine or deviated from its objects. 4. Jurisdiction of the DIT(Exemption) to Cancel Registration: The Tribunal addressed the applicability of the amendment to Section 12AA(3) effective from 01.06.2010, which allowed the DIT(Exemption) to cancel registrations granted under Section 12A. The Tribunal referred to the Bombay High Court's judgment in Singhad Technical Education Society Vs. CIT, which held that the power to cancel registration applies to trusts registered before the amendment. Thus, the Tribunal rejected the assessee's contention that the DIT(Exemption) lacked jurisdiction to cancel the registration for periods prior to the amendment. Conclusion: The Tribunal set aside the DIT(Exemption)'s order cancelling the registration of the assessee trust under Section 12A, restoring the registration. The Tribunal clarified that the issue of whether the trust's 'Auditorium collections' are hit by Section 2(15) remains open for the Assessing Officer to decide. The Tribunal dismissed the ground of appeal regarding the non-affording of reasonable opportunity as infructuous, and another ground as not pressed. The appeal was partly allowed. Order: The appeal of the assessee is partly allowed as per the observations. Order pronounced in the open court on 08/02/2017.
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