9911796707
TMI Blog2010 (9) TMI 737X X X X Extracts X X X X X X X X Extracts X X X X ..... the Commissioner on the grounds that neither in law and nor on facts the impugned order is justified. 2. In brief, the only dispute in this appeal revolves around the justification for invoking the provisions of Section 12AA(3) or the Act by the Commissioner to withdraw the registration granted to the assessee under section l2AA(l)(b) of the Act. The facts relevant to the said controversy can be understood as follows. The appellant is a Society registered under the Societies Registration Act, 1860. The main objective-of the Society as per the Memorandum of Association is to promote the research, development and popularization of non-conventional and renewable sources of energy and thereby to deal with the problems caused on account of the rapid depletion of non renewable energy sources. The members of the Society comprise of people drawn from the Govt.of Himachal Pradesh, either as ex-officio by virtue of offices held in the State Govt. or other employees/representatives of the State Govt., and also include a representative of the Department of Non-Conventional Energy Sources, Govt. of India. In this background the assessee had applied for registration u/s 12AA on 09-06-2008 wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceived from independent power producers. The assessee was carrying out the task assigned to it by the State Government and it has no role to play in actual running of any such business or commercial activity. The amounts received by way of application fees, sale of brouchers, upfront premium received and additional security charges received, etc. from such prospective power producers are as per the mandate of the State Government and the surplus remaining with assessee, if any, is to be appropriated to the State Government. In this connection, a reference was invited to a letter dated 01 January, 2010 issued by Special Secretary (Power) to the Government of Himachal Pradesh, which is placed on record. On this basis it is contended that the amended definition of "charitable purpose" in section 2(15) does not disentitle the activities of the assessee from being termed as charitable. It is further contended that the activities of the assessee are neither in-genuine and nor in violation of the objectives for which it has been set up by the State Government A reference was made to the written submission filed before the Commissioner and other material which has been placed in the Paper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re genuine. 7. Sub-section (3) of section 12AA permits the Commissioner to cancel the registration granted in terms of section 12AA(1)(b) of the Act. In order to do so: Sub- section (3) mandates that the Commissioner ought to be satisfied on two counts, - firstly, that the activities of the Trust or Institution are not genuine; and, secondly, that the activities are not being carried out in accordance with the objects of the Trust or Institution, as the case may be. Notably, the Commissioner is empowered to invoke section 12AA(3) of the Act on being satisfied about either of the two ingredients mentioned therein. Proviso below sub-section (3) of section 12AA of the Act further prescribes that no order cancelling the registration shall be passed unless such Trust or Institution has been given a reasonable opportunity of being heard. 8. In view of aforesaid discussion, it is evident that the power of the Commissioner to cancel the registration is not unfettered. It is circumscribed by the conditions prescribed in section 12AA(3) of the Act. It is also clear that such power does not permit wholesale review of the ingredients which have been considered by the Commissioner while gra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order. The Commissioner has noted the objective of the assessee per its Memorandum of Association in para 4.1 of the order which is as under:- "The objective of the Agency is to promote the research, development and popularization of Non-Conventional and renewable sources of Energy and thereby to deal with the problems caused on account of rapid depletion of non renewable energy sources." 10. The Commissioner further noticed the functions which are to be carried out by the society as per clause 2(b) of the Memorandum of Association. Such functions have been enumerated by the Commissioner in para 4.2 of his order. In para 4.3 of the impugned order the Commissioner has noticed the activities being carried by the assessee over the years. which are as under:- (a) Various energy saving devices like solar cookers, photo voltaic lamps etc. are provided at subsidized prices to various persons resident in the State, who are identified under different rural development programmes such as the IRDP. The subsidy involved is met from grants received from the Govt. (b) Photo voltaic street lights are provided in various remote localities under special component plans and other special pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the generating capacity is enhanced, additional security charges are levied by the agency. The Central Govt. provides a capital subsidy in respect of such hydro power projects approved. This subsidy is routed through the agency. Thus, the entire functions relating to the setting up of the small hydro projects with private sector participation are carried out by the agency, even though the final approvals are given by the State Govt. and agreements are signed by the State Govt. 11. In the context of the aforesaid activities, the conclusion of the Commissioner is that the same are not as per the objects of the Society. The Commissioner has made the relevant discussion in per para 5.2 of the impugned order. We have carefully examined the same. In our considered opinion the Commissioner has misdirected himself in reaching to the aforesaid conclusion. As per the Commissioner, none of the activities involved an element of research. According to him, all the activities to be undertaken by the assessee, including development and popularization of the non-conventional and renewable source of energy, ought to be preceded by an element of research and it is only then, it shall be regarded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urces of energy qualify to be the activities in accordance with the objectives for which the appellant society has been set up by the Government of Himachal Pradesh. 13. Now, we may discuss the activity noted by the Commissioner in point (d) of 4.3 of para his order. In this regard, the assessee is designated as a nodal agency by the State Government for harnessing small hydel potential upto 5 MW capacity. In this connection, assessee is mandated by the Government of Himachal Pradesh to receive and process proposals from independent power producers and thereafter make its recommendation to the. Government of Himachal Pradesh. It is also permitted to receive income in relation to such activities on account of application fee, sales of brouchers, processing fee. security deposits, upfront premium, etc. The assessee is incurring expenditures out of such receipts. Whether or not such activities are as per its objects is required to be analyzed in the context of the objectives and functions formulated in the Memorandum of Association and the rules and regulations of the appellant society, a copy of which has been placed in the Paper Book at pages 29 to 49. The functions of the society ..... X X X X Extracts X X X X X X X X Extracts X X X X
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