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2017 (9) TMI 972 - HC - Income TaxCancelling the Registration granted to the assessee under Section 12A - proof of charitable activities - Director jurisdiction to cancel the registration - whether receipts of income of the assessee were not in the nature of business income and therefore, proviso to Section 2(15) is not attracted to its case? - Held that - Once the Tribunal came to the conclusion that the Director had no jurisdiction to cancel the exemption for the assessment years prior to the amendment, which came in the Act from 1st June, 2010, that being the essential conclusion, the other two arguments noted by the Tribunal and dealt with may have been found in the same order which was not interfered with by this Court, but what we find is that the decision of the coordinate Bench which was followed in rendering the subject decision by the Tribunal and essentially on the point of jurisdiction, was enough to conclude the controversy. The arguments of the assessee s representative on the applicability of proviso to Section 2 Clause (15), therefore, were strictly not required. They were not necessary for the decision on the point involved. Once on jurisdiction, the petitioner was on a sound footing, then, we do not think that the observations of the Tribunal would have any bearing on the assessments that have been framed for the same and subsequent assessment year. In challenging that assessment orders if they are adverse to the petitioner s interest, and if such challenge is raised and is indeed pending, the Tribunal shall decide the issues or grounds in such Appeals pending before it on their own merits and in accordance with law.
Issues involved:
1. Jurisdiction of the Tribunal to cancel registration under Section 12A of the IT Act. 2. Interpretation of proviso to Section 2(15) of the IT Act regarding activities of a charitable trust. 3. Clarification on the impact of Tribunal's observations on assessment orders. Issue 1: Jurisdiction of the Tribunal to cancel registration under Section 12A of the IT Act: The petitioner, a Technical Professional Body for plastics in India, challenged the cancellation of its registration under Section 12A of the IT Act for the assessment year 2009-2010. The Tribunal held that the Director had no jurisdiction to cancel the registration for years prior to the amendment effective from 1st June, 2010. The Tribunal referred to a Circular by the Central Board of Direct Taxes, which limited the cancellation of registration to specific years post the amendment. The Tribunal's decision was based on the lack of jurisdiction of the Director to cancel the registration, rendering the cancellation for the assessment year 2009-2010 unjustified. Issue 2: Interpretation of proviso to Section 2(15) of the IT Act regarding activities of a charitable trust: The Tribunal considered the argument that the petitioner's activities were not in the nature of business income and hence, the proviso to Section 2(15) was not applicable. The Tribunal noted that the petitioner's objects were charitable in nature, focusing on education, training, and manpower development for the plastic industry. The Tribunal analyzed the activities of the petitioner and observed that even if the objects fell under the category of "advancement of any other objects of general public utility," the trust was entitled to exemption. The Tribunal's decision primarily rested on the jurisdictional aspect, making the interpretation of the proviso to Section 2(15) secondary to the essential conclusion regarding jurisdiction. Issue 3: Clarification on the impact of Tribunal's observations on assessment orders: The High Court clarified that the Tribunal's observations on the proviso to Section 2(15) were not necessary for the decision on jurisdiction. The Court emphasized that the Tribunal should not be influenced solely by those observations when deciding on assessment orders for subsequent years. The Court directed that all arguments from both sides should be considered independently by the Tribunal in pending Appeals. Once the writ petition was disposed of with this clarification, the Income Tax Appeal was considered not to survive and was consequently disposed of. In conclusion, the judgment addressed the jurisdictional aspect of the Tribunal's authority to cancel registration under Section 12A of the IT Act, the interpretation of the proviso to Section 2(15) concerning activities of a charitable trust, and provided guidance on the impact of Tribunal's observations on assessment orders for subsequent years.
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