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TMI Blog2013 (11) TMI 516X X X X Extracts X X X X X X X X Extracts X X X X ..... o to section 2(15) is attracted. This follows trite law that exemption u/s. 11 r/w s. 12 is to be, notwithstanding grant of registration, only by the Assessing Officer, whose powers in the matter of assessment are plenary, on the satisfaction of the condition/s of those sections. Exemption u/s. 11(1) is only upon the application of income for charitable purpose/s, so that it is only where so applied, reading the term 'charitable purpose' as per the extant law, that it could be allowed. The insertion of section 13(8) by the Finance Act, 2012 (w.e.f. 1.4.2009, i.e., A.Y. 2009-10 onwards), from which period the changed section 2(15) becomes operative, removes the matter beyond the pale of any doubt. The matter/issue of exemption u/s. 11 would thus have to be reviewed by the Assessing Officer in assessment on a year to year basis. The primary onus to return its income each year in accordance with the law, it may be appreciated, is on the assessee. The argument advanced as to the inapplicability of even the substituted s. 2(15) in view of 'low' profitability, even as we find no reference to any criteria qua the same therein, is rendered out of place or superfluous in view of our afo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... :- "Provided further that the first proviso shall not apply if the aggregate value of the receipts from the activities referred to therein is ten lakh rupees (*) or less in the previous year;" [(*) enhanced to Rs. 25 lakhs by the Finance Act, 2011 w.e.f. 1.4.2012] 3.2 In view of the learned DIT(E), the assessee's activities, which fell in the last category of the specified activities, i.e., 'advancement of any other object of general public utility' were hit by first proviso to section 2(15) of the Act, so that they could no longer be regarded as charitable or as constituting a 'charitable purpose/s'. The assessee's receipts for the previous year relevant to A.Y. 2009-10 were at Rs. 114.48 crores. That is, the assessee had since lost its character as a public charitable institution. Accordingly, registration was withdrawn w.e.f. 01/4/2009 (A.Y. 2009-10) by invoking section 12AA(3) vide the impugned order after show-causing the assessee. 4. The assessee's first objection is to the power with the ld. DIT(E) to do so, i.e., to withdraw or cancel the registration. This is as the registration granted to the assessee was u/s. 12A and not u/s. 12AA(1)(b)(i). No doubt sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under challenge before the hon'ble jurisdictional High Court in the case of Sinhagad Technical Education Society v. (2012) 343 ITR 23 (Bom), relied upon by ld. Departmental Representative before us. The hon'ble court held it to be intra vires. The scope of the section, including as to its retrospectivity, was also examined by, on being brought to question before, it, as it is now being before us. The provision, it was explained, would also cover cases where the registration had been obtained at any time u/s. 12A as it stood prior to the amendment by the Finance (No.2) Act, 1996. Section 12AA, it may be noted, came on the statute-book by the said annual Act w.e.f. 1.4.1997. Prior thereto, the registration under the Act as a charitable trust or institution was granted only u/s. 12A. In other words, registration as a charitable trust/institution, after the coming into effect of the Finance (No. 2) Act 1996, is only under section 12AA(1)(b)(i). In the instant case, the assessee moved an application u/s. 12A(a) on 19.8.2002, and was granted registration on 24.2.2003 w.e.f. 1.4.2002. The said registration, thus, notwithstanding that the communication in its respect by the Department (da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... either not genuine or are being not carried out in accordance with its objects. There is neither any charge, nor could possibly be, in this regard by the Revenue; the assessee undertaking the same activities, consistent with its objects, since incorporation. The assessee - an authority constituted under the MHAD Act for the purposes of, as its preamble would show, meet the need for housing accommodation in the urban areas of the Maharashtra; improvement of housing infrastructure in slum areas; and undertaking the task of repairs and reconstruction of old and dilapidated buildings, and in fact is an endeavor by the State to secure the Directive Principles of State Policy enshrined in Part IV of the Constitution of India (COI). Reference was also made by him to the relevant part of the said Act as well as Part IV of the COI (Articles 39 to 43), placing copies thereof on record. How could one even allege of the activities of the assessee as being not genuine or being not carried out in accordance with its objects? In fact, even the hon'ble apex court, on a challenge to the vires of sections 44(3) and 44(4) of the MHAD Act 1976, held them to be as not in infringement of Articles 14,19, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is hit by the first proviso to section 2(15): "13(8) Nothing contained in section 11 or section 12 shall operate so as to exclude any income from the total income of the previous year of the person in receipt thereof if the provisions of first proviso to clause (15) of section 2 become applicable in the case of such person in the said previous year." 6.2 The ld. DR, on the other hand, would base his case on the application of the first proviso to section 2(15). There is no merit in the argument that even after the amendment to the Act, prescribing a test for the residual category of activities, i.e., 'for advancement of any other object of general public utility', to be regarded as charitable under the Act, the entity registered as charitable in its respect would continue to be regarded as so even where its objects are no longer charitable in view of the said proviso. The amendment in law would serve as a fundamental basis for grant or otherwise of registration. The word 'genuine' in section 12AA(3) has to be construed as with reference to the same being charitable, as otherwise activities, admittedly not charitable, would stand or continue to be regarded as charitable, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12AA(1), i.e., the provision under which the registration is granted. The same is where the Commissioner is satisfied about: (a) the objects of the trust or institution; and (b) genuineness of the activities thereof. Thus, it is only upon being satisfied about the objects of the applicant, as well as about the genuineness of its activities that the Commissioner is obliged to register a trust/institution as charitable, by an order in writing, being also required to do so where not so satisfied. Clearly, the satisfaction qua the 'objects' is only with regard to their being for a charitable (or religious) purpose/s. It cannot but be otherwise; the registration being only toward the applicant being a public charitable trust or institution under the Act. This, in fact, is the edifice or the terra firma on which provision rests. As such, even though the registration certificate or the communication in its respect may not, or is not required to, contain an explicit finding or mention as to the satisfaction with regard to the objects of the trust or institution being for charitable purpose/s, that is the basis upon which, or a condition precedent to the grant of the status ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Allahabad Agricultural Institute v. Union of India (2007) 291 ITR 116 (All.)). Conclusion 8. In view of the foregoing, in our view though the ld. DIT(E) was empowered to exercise his power for cancellation of registration in December, 2011 w.e.f. A.Y. 2009-10, i.e., as sought to be done by him, the same (the cancellation of registration) is not sustainable in the instant case in view of the limited mandate of section 12AA(3), which we have found to exclude a condition of continuing satisfaction by the Commissioner as to the objects being or, rather, continuing to be, for charitable purpose/s. That is, such a satisfaction, though a primary condition for grant of registration, has been found to be outside the scope of the review by him u/s.12AA(3) of the Act, provided of course the objects themselves remain unchanged. The first proviso to the provision (s.2(15)), it would be noted, does not impinge directly on the objects per se, but the manner in which those are to be attained or achieved, and herein lies the controversy or the dichotomy attending the respective view points of the assessee and the Revenue. The review of registration subsequent thereto, as spoken of by the tribu ..... 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