2018 (5) TMI 640 - HC - Income Tax

Cancellation of Registration u/s 12AA(3) - Tribunal set aside the cancellation - Held that - In the present facts, we find that the Tribunal has rendered a finding of fact that the respondent is not carrying on any activity in the nature of trade, commerce or business to be hit by the proviso to Section 2(15) of the Act. This finding of fact has not been shown to be perverse in any manner. Thus, in the present facts, the question for consideration does not give rise to a question of law. Question stands concluded by the decision of this Court in North Indian Association (2017 (3) TMI 37 - BOMBAY HIGH COURT) and Khar Gymkhana (2016 (6) TMI 489 - BOMBAY HIGH COURT) against the Revenue.

Summary

Issues:
Challenge to order under Section 260A of the Income Tax Act, 1961 regarding cancellation of Registration u/s 12AA(3) for Assessment Year 2009-10.

Analysis:
The appellant challenged the order passed by the Income Tax Appellate Tribunal (the Tribunal) regarding the cancellation of Registration under Section 12AA(3) of the Income Tax Act, 1961 for the Assessment Year 2009-10. The main question of law raised was whether the Tribunal was correct in setting aside the cancellation of Registration u/s 12AA(3) of the Act. The respondent, an Association for Civil and Construction Industry, had its Registration under Section 12A of the Act granted in 1989. The Director of Income Tax (Exemptions) cancelled this registration in 2011, stating that the respondent was engaged in business activities exceeding ?10 lakhs, thus not falling under charitable purposes as per Section 2(15) of the Act.

The respondent appealed to the Tribunal against the cancellation. The Tribunal found that the respondent's activities, such as member subscriptions, exhibitions, seminars, and journals, were not commercial but for its members. It concluded that the cancellation under Section 12AA(3) required either non-genuine activities or activities not aligned with the registered objects, which were not the case for the respondent. The Tribunal's factual finding that the respondent was not engaged in commercial activities was upheld. The appellant acknowledged that previous court decisions favored the respondent on similar grounds.

The High Court observed that the Tribunal's factual finding was not perverse, and the issue did not raise a question of law. Citing previous decisions, the Court noted that the question was settled against the Revenue. Consequently, the proposed question did not present any substantial legal issue and was not entertained. The appeal was dismissed, and no costs were awarded.

In conclusion, the High Court upheld the Tribunal's decision regarding the cancellation of Registration under Section 12AA(3) for the respondent for the Assessment Year 2009-10. The Court found that the respondent's activities were not commercial and aligned with the registered charitable purposes, thus not warranting cancellation. The legal question raised did not give rise to any substantial issue, as per previous court decisions, leading to the dismissal of the appeal.