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TMI Blog2012 (8) TMI 634X X X X Extracts X X X X X X X X Extracts X X X X ..... intention was to enter in business of purchase and sale of commercial property inasmuch as we are in year 2012, the property was purchased in FY 2004-05 and the Trust still retains this property - assessee's investment charitable in nature - assessee's registration u/s 12A should not have been cancelled, the same is restored - assessee's appeal is allowed - IT APPEAL NO. 386 (DELHI) OF 2012 - - - Dated:- 30-3-2012 - R.P. TOLANI, T.S. KAPOOR, JJ. R.S. Singhvi for the Appellant. Mrs. Anusha Khurana for the Respondent. ORDER R.P. Tolani, Judicial Member This is assessee's appeal against the order of Director of Income-tax (E) passed u/s 12AA(3) r.w.s. 12 of the I.T. Act, 1961, cancelling registration granted u/s 12A. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment order, DIT(E) issued a show cause notice as to why Society's registration 12A also should not be withdrawn as the assessee had applied its income for non-charitable purposes. 3.2 In reply, assessee, inter alia, pleaded: ( i ) The bylaws of the Society permitted the activity of purchasing any immovable property and investment of surplus fund. ( ii ) The management of the Trust was eligible to invest in any immovable property including a commercial property which could be let out on rent; the rent would be recurring income and the investment and recurring income were for promotion of the objects of the Trust. ( iii ) The management was eligible to let out the property on rent and rental income received, has been o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... created. 8. Keeping in view the above facts and nature of income, it is clear that the intention of the assessee society behind investment in commercial property is to earn rental income which is not an activity of "charitable purpose" specifically after the amendment in proviso to Section 2(15) from AY 2009-10 onwards. To sum up, though the aim of the trust is to impart education, one of the activities so far is centered around generating surplus buying properties and renting out the same to different parties. The properties purchased, namely, UB Plaza, Bangalore and Sigma Softech Park, Ramagondanahalli Village, Bangalore are out rightly commercial properties located in a shopping Arcade cum-office Complex, and are not such properties wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be not the application of income of society. ( ii ) In cases, a part of application of income is held not to be the application of society's income in terms of sec. 11 12, it can entail at the most in addition to income, it cannot be a basis for withdrawing the registration u/s 12A already granted to assessee. ( iii ) The Bylaws of the Trust enabled the Management to invest the surplus funds in a manner to ensure safety of investment and its being viable investment. 6. Ld. DR on the other hand relied on DIT(E)'s order. 7. We have heard rival contentions and gone through the relevant material available on record. Relevant provisions of section 11, read as under: " Income from property held for charitable or religious purpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... modes specified in sub-sec. (5). 7.2 Clause (x) of Sub-sec. (5) to sec. 11 prescribes one of the modes of investment as "investment in immovable property". Thus, the surplus income can be applied to investment in immovable property. The charitable purposes will include the educational activities and acquiring the income yielding assets to promote the educational objects of the Society. Consequently, combined reading of these provisions make it clear that the assessee can set apart or invest its income in an "immovable property". The word "immovable property" by natural reading, will include any type of land, residential or commercial property or any other form of property, which can be termed as immovable property as defined in the Tran ..... X X X X Extracts X X X X X X X X Extracts X X X X
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