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TMI Blog2014 (4) TMI 525X X X X Extracts X X X X X X X X Extracts X X X X ..... rightly cancelled registration granted to assessee under Section 12AA by passing impugned order under Section 12AA(3) of Act - Uphold impugned order passed by learned CIT, Bathinda – Decided against Assessee. - I.T.A. No. 320 (Asr)/2013 - - - Dated:- 9-12-2013 - H.S. SIDHU AND B.P. JAIN, JJ. For the Appellant : Vinod Kumar Garg. For the Respondent : Amrik Chand. ORDER The assessee has filed the present appeal against the impugned order dated 18.02.2013 passed by Commissioner of Income Tax, Bathinda, on the following grounds: i. That on the facts and in the circumstances of the case and in law. The learned CIT erred in upholding that the applicant Institution does not qualify to be treated as Charitable Institution and the activities of the institutions are not charitable in nature and passed the order u/s 12AA(3). ii. That on the facts and in the circumstances of the case and in law, the learned CIT erred in upholding the findings that all the activities of the applicant are not charitable in nature and the applicant Institution does not qualify to be treated as Charitable Institution. iii. That any other relief may kindly be granted to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... J Chd. 988, as well as the definition of Section 2(15), Section 12AA and Section 12AA(3) of the Act, learned CIT, Bathinda, finally held that in view of the facts and circumstances of the assessee's case, he was satisfied that the activities of the assessee-institution were not charitable in nature within the meaning of proviso to Section 2(15) of the Act and the assessee does not qualify to be treated as a charitable institution. Consequently, he passed the impugned order on 18.02.2013 under Section 12AA(3) of the Act. 5. Aggrieved with impugned order dated 18.02.2013 passed by learned CIT, Bathinda, assessee filed the present appeal. 6. At the time of hearing, Sh. Vinod Garg, CA, learned Authorized Representative strongly opposed the impugned order and vehemently argued the case of the assessee. He stated that the assessee-trust was constituted under the legislation of Punjab Town Improvement Act, 1922 and it had applied for registration under Section 12AA of the Act on 15.09.2005, which was lastly granted to the assessee by the learned CIT, Bathinda, w.e.f. 12.06.2003 vide order dated 23.08.2010. He further stated that the assessee-trust has not acquired any land after the y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... involves the carrying on of any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business, for a cess of fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity." Section 12AA: (1) The Commissioner, on receipt of an application for registration of a trust or institution made under clause(a) or clause (aa) of sub-section (1) of Section 12A, shall (a) call for such documents or information from the trust or institution as he thinks necessary in order to satisfy himself about the genuineness of activities of the trust or institution and may also make such inquiries as he may deem necessary in this behalf; and (b) after satisfying himself about the objects of the trust or institution and the genuineness of its activities, he (i) shall pass an order in writing registering the trust or institution; (ii) shall, if he is not so satisfied, pass an order in writing refusing to register the trust or institution, and a copy of such order shall be sent to the applicant: Provided t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... doing only public utility services by way of building of roads, electrification, water supply and sewerage etc, which are not in the nature of trade, commerce or business. 12. Learned CIT, Bathinda, held that whereas commercial properties are sold on the basis of auctions, the residential properties are partly sold through auction and partly through draw of lots, means that the assessee is selling the land to the general public by purchasing of undeveloped land in bulk, leveling and clearing of the land, cutting it into plots, providing access to roads and providing electricity, water and sewerage facilities at its own costs, which results in tremendous value addition in the land. It brings the land in the same category as of the other real estate products available in the market, offered by the private colonizers and real estate agents. Learned CIT, Bathinda has also observed that the assessee advertised this product widely in print and electronic media so as to attract a large number of customers from all strata of the general public including the financially affluent. Thus, the assessee-institution sells off these plots, residential as well as commercial, by organizing a publi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business for a cess or fee or any other consideration irrespective of the nature of use or application, or retention, of the income from such activity. 17. Thus, the activities of the assessee are aimed at earning profit as it is carrying on activity in the nature of trade, commerce or business. Further profit making by the assessee is not mere incidental or byproduct of the activity of the assessee. The main pre-dominant purpose of assessee is making profit, it is real object of the assessee and also there is no spending of the income exclusively for the purpose of charitable activities and profits of the assessee not used for charitable purpose under the terms of the object and there is no obligation on the part of the assessee to spend it on 'charitable purposes' only. 18. It is now pertinent to refer to the observations of the Income Tax Appellate Tribunal Chandigarh vide their judgment dated 01.06.2006 in the case of Punjab Urban Planning Development Authority (supra) with regard to the provisions of section 2(15) of the Income Tax Act, 1961. It is held in the said order that this issue requires deliberation from a different angle whether the assessee was constituted to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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