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TMI Blog2014 (3) TMI 320X X X X Extracts X X X X X X X X Extracts X X X X ..... d second proviso to section 2(15) of the Act it looses its charitable character and by virtue of this change in the status it can no longer be considered as a Trust constituted for charitable purposes. The learned DIT (Exemption) further observed that consequently the Trust becomes non-genuine for the purpose section 11 of the I.T. Act and by invoking the provisions of section 12AA(3) of the Act he is entitled to cancel/withdraw the registration originally granted. 2. The case of the assessee, on the other hand, was that there is no change in the status of the Trust. As per the original constitution of the Trust the same activities were carried on from 1953 onwards and it continued to carry on the same activities even till date. It was als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hence the Trust itself become non-genuine. Accordingly the registration allowed to it in earlier years under section 12AA was cancelled/withdrawn from 2009-10 and the assessee Trust was held to be non-charitable Trust/Institution. 3. Aggrieved, assessee contented before the Tribunal that the DIT (Exemption) should have fulfilled the requirements of section 12AA(3) before cancelling the registration granted to the appellant earlier under section 12A of the I.T. Act and he has not considered the provisions of section 11(1)(b) of the I.T. Act properly. 4. At the time of hearing the learned counsel for the assessee submitted that there is no change in the objects of the Trust or the activities of the Trust since inception and the Trust was al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2AA(3) of the Act. In para 5.4 of the aforementioned order the Bench observed that registration under section 12A of the Act can be cancelled only upon finding that the activities of the Trust are non-genuine or the same were not carried out in accordance with the objects of the Trust. In other words, so long as the assessee Trust is carrying out its activities in accordance with its objects, Revenue cannot invoke provisions of section 12AA(3) of the Act which was introduced by Finance (No. 2) Act, 2009 with retrospective effect from 01.04.2009. As could be noticed from the above provisions, where a Trust or an Institution has been granted registration earlier, it is for the Commissioner to record satisfaction that the activities of such Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .com 343) which in turn was affirmed by the Hon'ble High Court of Jammu and Kashmir and submitted that subsequent to the introduction of first proviso to section 2(15) it looses its character as charitable activity if a Trust is engaged in earning income from trade or any similar activity. He also relied upon the decision of the Hon'ble Bombay High Court in the case of CIT vs. Smt. Godavaridevi Saraf 113 ITR 589 to submit that when there is a lone High Court judgement on an issue all the Tribunals, anywhere in the country, have to respect the law laid down by the High Court, though of a different state, so long as there is no contrary decision of any other High Court on that point. He, thus, strongly supported the order passed by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e.f. 01.04.2003 the assessee had to comply with provisions of section 2(15) and cannot claim exemption by treating itself as local authority. Under these circumstances the case law relied upon by the Revenue is distinguishable on facts. Neither the Amritsar Bench of ITAT nor the High Court of Jammu and Kashmir had taken into consideration the scope and ambit of section 12AA(3) in the peculiar circumstances of the case whereas this precise issue was considered by the Mumbai Bench of the ITAT and thus the decision of the ITAT. Mumbai Bench applies, on all fours, to the facts of this case. 7. We have carefully considered the rival submissions and perused the record. It is not in dispute that the Trust had come into existence in 1953 and it wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y further the gross receipts having exceeded the stipulated monitory limit provided in the second proviso to section 2(15) of the Act, the assessee is not entitled to claim exemption in this year but that fact alone cannot make the Trust non-genuine for the purpose of invoking section 12AA(3) of the Act. We, therefore, set aside the order passed by the DIT (Exemption) and allow the appeal filed by the assessee. Needless to observe that the AO is duty bound to independently verify as to whether the assessee fulfilled the other conditions such as application of income, etc. so as to claim exemption under section 12(15). 9. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court on 26th February, 2014.< ..... X X X X Extracts X X X X X X X X Extracts X X X X
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