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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 ..... additional ground of appeal as under:- That in the facts and circumstances of the case, the CIT, Jaipur -II has erred in withdrawing registration u/s 12AA(3) of the I.T. Act , 1961 for assessment year 2009-10 and onwards, without appreciating that he was not empowered under the said section to withdraw the registration granted to appellant u/s 12A(1)(a) in the year 1974 as the empowering provision i.e. Section 12AA(3) was made operative w.e.f. 01-06-2010 i.e. assessment year 2011-12 onwards only with prospective effect as held by CBDT as well as various Court. Thus the order of the ld. CIT (Admin.) canceling the registration w.e.f. A.Y. 2009- 10 onwards deserves to be held bad in law.'' 2.2 At the time of hearing, the ld. Counsel for the assessee contends that inadvertently this ground remained to be incorporated in Form No. 36. The ground is purely legal in nature and it does not require any verification of facts. Thus it is pleaded that the same may be admitted as additional ground. 2.3 The ld. DR relied on letter dated 20-08-2014 from the office of CIT - 2, Jaipur relying on the case of Sinhagad Technical Educational Society vs. CIT (2012) 343 ITR 23 (Bom.) and opposed the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istration granted u/s 12AA 12A of the I.T. Act 1961. So, even if it is held by appellate authorities later on that withdrawal on registration on account of proviso to section 2(15) cannot be made u/s 12AA(3), then also it can always be withdrawn u/s 293C. 6. With the above legal interpretation, the case of the assessee has been examined and it has been seen that the assessee is in the receipts of following species of income which can be considered as receipts arising out of assessee activity in the nature of trade, commerce or business:- a.Sale of ghee b. Sale of milk c. Sale of cattle feed d .Commission Thus it is clear that the total value of receipts which can be considered to be in the nature of trade, commerce or business is much more than 10 lakhs and in view of specific mandate of proviso of section 2(15), the assessee institution's objects cannot be considered as charitable from A.Y. 2009-10 and onwards. 6.1 In view of the above discussion, it is held that the assessee is carrying out activities in the nature of trade, commerce or business and because of this, its activities and object do not remain charitable in view of the proviso to section 2(15) of I.T. Act , 196 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Every order granting or refusing registration under clause (b) of sub-section (1) shall be passed before the expiry of six months from the end of the month in which the application was received under clause (a) [or clause (aa) of sub-section (1)] of section 12A.] 350e[(3) Where a trust or an institution has been granted registration under clause (b) of sub-section (1) 350f[or has obtained registration at any time under section 12A {as it stood before its amendment by the Finance (No. 2) Act, 1996 (33 of 2009)}] and subsequently the Commissioner is satisfied that the 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, he shall pass an order in writing cancelling the registration of such trust or institution: Provided that no order under this sub-section shall be passed unless such trust or institution has been given a reasonable opportunity of being heard.] Charitable purpose has defined and amended wef 1-4-2009 as under: Sec 2(15) Definitions- " Charitable purpose"- includes relief of poor, education medical relief, [preservation of environment (including watersheds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s ten lakh rupees or less in the previsions year." Vide Finance Act, 2011 w.e.f. 01/04/20012, the limit of Rs. 10 lakh was raised to Rs. 25 lakh. 2.4 It has been held that as per newly added proviso to section 2(15), 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, for a cess or fee or any other consideration, irrespective or the nature of use or application, or retention of the income from such activity, if such receipts exceeds Rs. 10/25 lakh. Sec. 293C for other power of withdrawals by CIT reads as under: Power to withdraw approval Where the Central Government or the Board or an income-tax authority, who has been conferred upon the power under any provision of this Act to grant any approval to any assessee, the Central Government or the Board or such authority may' notwithstanding that a provision to withdraw such approval has not been specifically provided for in such provision, withdraw such approval at any time :" Provided that the Central Government or Board or income-tax authority shall, after giving a reasonable opportunity of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out the charitable and other objects of general public utility. Amount of turnover, segregation of income etc.. The trust has multifarious objects; in one year one may be les and other may be more. It is not for the CIT to recourse to a process of verification in such a manner to tantamount to almost an assessment and withdraw or cancel the registration for future years. This action does not fit in the legislative scheme which is demarcated and defines the broad powers of assessment and withdrawal of registration only in two limited eventualities. Besides withdrawal of registration being a drastic action amounting to cutting of life line of a trust must adhere to letter of law and not on common perception. 3.7 It is pleaded that the definition of charitable purpose in an inclusive one and not exclusive in nature. Legislature has nowhere provided any straight jacket meaning of charitable purpose as it has attributes of dynamism and the nature and scope thereof changes with efflux of time and evolution of humanity. It is evident that the definition mentions the words includes and further includes. Besides conservation and protection cows and providence of nutritional food to public ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usive definition the same is to be viewed in larger framework. The ld. CIT has harbored an impression that charitable purpose means only few activities which are specifically mentioned in sec. 2(15). From this angle, it is to be seen whether the inclusive definition of the word 'charitable purpose' excludes the activities carried out by the assessee. The Cow has been regarded as basis of rural economy as it provides sustenance to the rural folks as well as urban masses. The preservation of cow to ensure better breed and better quality and quantity of milk has been regarded as charitable purpose since long times and no law has been made till now which including the amendment of bringing the proviso to Section 2(15) which specifically lays down that conservation of cow and better breed is not a charitable activity. Similarly environment means not only the external condition influencing the development or growth of people, but environment in its trust sense means the inter-relations which exists between water, air , land on side and human beings, living creatures such as plants and animals and the other side. The definition of Environment as provided u/s 2(a) of the Environment (Prote ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hdrawing the registration of trust is a drastic action and the law provided a statutory mechanism of assessment, verification of trust activities, and apportionment of income and expenditure of various activities of the trust. Benefits of sec 11 and 12 can be extended on the basis of scrutiny and verification by the AO. Ld. CIT has not pointed out any specific instance of any activity, income or expenditure being nongenuine. Sec. 293C is not applicable to approvals which specifically provide manner of withdrawal of approval as held by this bench of ITAT in the case of Jaipur Development Authority vs. CIT in ITA No.182/JP/2012 vide order dated 30-09-2014 as under:- The learned CIT also erred in applying the provisions of Section 293(c) of the Act, in this case, which applied withdrawal of approval granted under any provision of this Act, notwithstanding that a provision to withdraw such approval has not been specifically provided for in such provision. For cancellation of registration, the specific provision U/s 12AA is provided. 3.11 In view of entirety of facts, circumstances and case laws, we are of considered opinion that the impugned order of ld. CIT (Admn.) withdrawing the r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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