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TMI Blog2010 (9) TMI 737X X X X Extracts X X X X X X X X Extracts X X X X ..... ization 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 with the Commissioner. By virtue of section 12AA(2) of the Act, the commissioner was required to pass an order granting or refusing registration before the expiry of six months from the end of the month in which the application was received by him. No such order was passed within the prescribed period, therefore, the registration was deemed to have been granted as confirmed by a letter dated 22-05-2009 issued by the Commissioner. Almost simultaneously on 25-05-2009, he Commissioner issued a show cause notice requiring the assessee to explain why the registration granted should not be withdrawn in terms of section 12AA(3) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al 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- Book filed before us. 4. On the other hand, Ld DR vehemently defended the order of the Commissioner withdrawing registration u/s 12AA(3) of the Act. According to the Ld DR, the discussion made by the Commissioner in paras 5 to 5.5 of the impugned order clearly establish that the activities carried out by the assessee are not in accordance with its objectives. Therefore, the said aspect satisfies the requirement of section 12AA(3) of the Act. Further, it is submitted by the Ld DR that the Commissioner is justified in inferring that the income derived from services rendered in relation to setting up of small hydro po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iso 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 granting registration u/s 12AA of the Act. To illustrate, we may point out that at the time of evaluating the application of registration u/s 12AA(1) of the Act, the Commissioner is to satisfy himself on two conditions i.e. that the activities are genuine and, that the objects of the applicant fall within the meaning of "charitable purpose" as per section 2(15) of the Act. In contrast, at the time of cancelling of registration under section 12AA(3) of the Act, the Commissioner has to satisfy himself about either of the two conditions prescribed therein, namely, that the activities are not genuine or that the activities are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra 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 plans of the Central and States Govt. Such lights are also provided in some other places at subsidized rates. (c) Portable micro hydel generator sets are set up in certain remote areas of the State under specific schemes of the Central Govt. and nominal user charges are recovered from the beneficiaries. (d) The agency also acts as a Nodal Agency of the State Govt. for harnessing small hydro potential upto 5ME capacity, by itself and through private sector participation. The brochure brought out by the agency in this regard, which is sold at a price, states that such projects are being implemented under UNDP and other pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 to be in accordance with the objects of the appellant society. The reason advanced by the Commissioner is that the expression "research. development and popularization" appearing in the object clause of the Assessee's Memorandum of Association is to be read together. According to the Commissioner, 'research' means exploration of new areas of knowledge, which is thereafter developed and popularized. According to him, the activities of the assessee do not involve 'research'. In our view the Commissioner has erred in understanding and interpreting the contents of the Memorandum of Association as if it was a statute. The assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h. 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 are listed at points 1 to 17 in clause 2 (b) of the Memorandum of Association, which are partly listed out by the Commissioner also in para 4.2 of his order. A perusal of the same reveal that the appellant society is expected to identify, formulate proposals and set-up units (including demonstration projects) of non-conventional and renewable energy requirements of remote villages and other selective habitation centres. The society is also empowered to sponsor, coordinate or promote research programme of developmental nature in the areas of new sources of alternate energy. As per sub-clause 7, the society is empowered to adv ..... X X X X Extracts X X X X X X X X Extracts X X X X
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