2018 (8) TMI 280 - HC - Income Tax

Registration granted u/s 12AA withdrawn - proviso to Section 2(15) applicability - Held that - There is no factual dispute. We do not find any merit in the appeal. The proviso to Section 2(15) of the Act has been made applicable w.e.f. 1st April, 2009, therefore, the registration of the respondent-authority under Section 12AA of the Act could not have been withdrawn with effect from 1st April, 2008 on the ground that proviso was added on 1st April, 2008. Accordingly, we affirm the finding recorded by the Tribunal. - Decided in favour of assessee

Summary

Issues:
1. Interpretation of Section 2(15) of the Income Tax Act, 1961
2. Validity of withdrawal of registration under Section 12AA
3. Applicability of proviso to Section 2(15) from a specific date

Analysis:
The case involved an appeal under Section 260 A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal regarding the withdrawal of registration granted under Section 12AA to the respondent, Meerut Development Authority. The main question of law revolved around whether the Tribunal was justified in concluding that the registration could not be withdrawn from 1st April, 2008, due to the proviso to Section 2(15) becoming applicable from 1st April, 2009. The respondent was granted registration under Section 12AA on 31st May, 2007, and the withdrawal was ordered by the Commissioner of Income Tax, Meerut on 26th March, 2009, citing the addition of the proviso to Section 2(15) by the Finance Act, 2008.

The proviso to Section 2(15) introduced by the Finance Act, 2008 stated that activities not of charitable nature involving trade, commerce, or business would not be considered charitable purposes. The Tribunal allowed the appeal, emphasizing that the proviso was made applicable from 1st April, 2009, and hence the registration could not have been withdrawn from 1st April, 2008. The High Court, after hearing both parties, upheld the Tribunal's decision, stating that the proviso to Section 2(15) was effective from 1st April, 2009, and therefore, the withdrawal of registration from 1st April, 2008, was not justified. The Court affirmed the Tribunal's finding, ruling in favor of the respondent-authority and against the department, ultimately dismissing the appeal.