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TMI Blog2015 (5) TMI 671X X X X Extracts X X X X X X X X Extracts X X X X ..... Admn) should revisit the issue of withdrawal of registration afresh after taking into consideration the legislative scheme of powers, incorporation of proviso, inclusive definition of the Charitable Objet as interpreted by plethora of judicial decisions and decide the issue of registration after giving the assessee an opportunity of being heard. Since we have set aside the issue, the additional ground as admitted by us with other pleadings for proper disposal of the same shall be considered by ld. CIT. - Decided in favour of assessee for statistical purposes. - ITA No. 85/JP/2012 - - - Dated:- 28-11-2014 - SHRI R.P. TOLANI AND SHRI T.R. MEENA, JJ. For The Assessee : Shri Manish Agarwal For The Department : Shri A.K. Khandelwal ORDER PER R.P. TOLANI, JM This is an appeal filed by the assessee against the order of the ld. CITII, Jaipur dated 29-12-2011 challenging the registration u/s 12AA(3) r.w.s. 293 of the I.T. Act, 1961 by following grounds:- (i) The ld. CIT has erred on facts and in law in withdrawing registration u/s 12AA of the Act. (ii) That the proviso to Section 2(15) is not applicable to the assessee's case. (iii) The assessee is e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al, educational and other activities for protection of environment and various other charitable activities as described in the Memorandum of Association enclosed on the paper book. The society was granted registration u/s 12AA of the Act w.e.f. 6-12-1974 and the successive assessments have been framed treating the assessee as charitable institution. 3.2 The ld. CIT by the impugned detailed order dated 29-12-2011 passed u/s 12AA(3) read with section 293C of the Act, withdrew the registration of the registered society vide w.e.f 1-4-2009. By following observations: 5. The assessee may take plea that u/s 12AA(3),registration can be withdrawn only in two conditions:- (1) the activities are not genuine or (2) the activities are not as per the objects of the assessee. Since none of these conditions is attracted in this case, registration cannot be withdrawn u/s 12AA(3). This plea will not be tenable as when the activities do not remain charitable in view of the proviso of section 2(15) of the income tax Act 196l, it is implied that the institution does not remain charitable and registration granted earlier is deemed to be withdrawn. Without prejudice to this, reference is made to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... search in this field. Various other main objects include various activities in other charitable areas like agricultural reforms, promotion of Khadi Gramodyog and protection of environment etc. 3.5 Before proceedings to the merits, ld counsel contends that relevant provision of I T Act in this behalf read as under: Procedure for registration. 12AA (1) The 350b[*****] Commissioner, on receipt of an application for registration of a trust or institution made under clause (a) 350c[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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ub-section (15) of section 2 of the Act defines charitable purpose to include relief of the poor, education, medical relief, and the advancement of any other object of general public utility. It has been noticed that a number of entities operating on commercial lines are claiming exemption on their income either under sub-section (23C) of section 10 or section 11 of the Act on the ground that they are charitable institutions. This is based on the argument that they are engaged in the advancement of an object of general public utility as is included in the fourth limb of the current definition of charitable purpose. Such a claim, when made in respect of an activity carried out on commercial lines, is contrary to the intention of the provisions. 5.2 With a view to limiting the scope of the phrase advancement of any other object of general public utility, sub-section (15) of section 2 has been amended to provide that the advancement of any other object of general public utility shall not be a charitable purpose, if it 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m are charitable and thereafter benefits of Sections 11 and 12 are given based on his verification and satisfaction of conditions in this behalf. iii. The procedure of withdrawal of registration is specifically provided in sec. 12 AA itself. Consequently the residuary power contained in sec 293C is not applicable as per this sec. itself. The power of CIT to withdraw the registration granted is stipulated by Sec 12AA subject to the satisfaction of Commissioner that activities of such trust or institution are not genuine or are not being carried out in accordance with the objects of the trust or institution, as the case may be. The legislature has restricted the power of withdrawal or registration on these two conditionality s only. However the withdrawal order of ld CIT reveals that he has commented adversely and held that i. assesses activities are in the nature of trade, commerce or business and ii. It s activities and objects do not remain charitable in view of the proviso to sec. 2(15).Whereas this proviso has not excluded or carved out any charitable objects. It has only clarified that if the objects are advancement of any other objects of general public utility; then it sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of DIT (Exemption) vs. Sabarmati Ashram Gaushala Trust ; 2014 362 ITR 539 wherein under completely identical set of facts and circumstances Hon'ble Gujarat Court has held as under:- The main objectives of the trust are to breed the cattle and endeavour to improve the quality of the cows and oxen in view of the need of good oxen as India is prominently an agricultural country ; to produce and sale the cow milk ; to hold and cultivate agricultural lands ; to keep grazing lands for cattle keeping and breeding ; to rehabilitate and assist Rabaris and Bharwads ; to make necessary arrangements for getting informatics and scientific knowledge and to do scientific research with regard to keeping and breeding of the cattle, agriculture, use of milk and its various preparations, etc. ; to establish other allied institutions like leather work and to recognise and help them in order to make the cow keeping economically viable ; to publish study materials, books, periodicals, monthlies, etc., in order to publicise the objects of the trust as also to open schools and hostels for imparting education in cow keeping and agriculture having regard to the trust objects. All these were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure. It is evident from the perusal of the observation of the Hon'ble Gujarat High judgment that facts of the case of assessee are covered by the aforesaid judgment in terms of both the facts and secondly even if some activities are found as other objects of public utility then also CIT cannot cancel the registration. It will be for the AO to verify the facts, figures and decide the about the extension of benefits of sec 11 and 12.Thus it is the function of AO to decide in assessment and not for the ld. CIT to withdrawal the registration. Therefore, in the light of above submission and case law, the ld. AR submitted that ld. CIT (Admn.) action in withdrawing u/s 12AA(3) the registration of assessee trust is not tenable and being not in conformity of the enabling provisions deserves to be quashed and the registration of assessee granted u/s 12A deserves to be restored. Various other case laws are relied on as mentioned in written submissions. 3.9 Ld. DR supported the order of ld. CIT withdrawing the registration. It is contended that assesses activities were found to be exclusively in the nature of Other objects of general public utilities. Besides it was found that the activ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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