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TMI Blog2017 (3) TMI 103X X X X Extracts X X X X X X X X Extracts X X X X ..... IT(Exemption) had wrongly cancelled the registration of the assessee vide his order passed u/s 12AA(3) of the ‘Act’. We thus set aside the order passed by the DIT(Exemption) u/s 12AA(3) and therein restore the registration granted to the assessee u/s Sec.12AA(1)(b)(i). - Decided in favour of assessee - ITA No. 1265/Mum/2012 - - - Dated:- 28-2-2017 - SHRI D. KARUNAKARA RAO, AM AND SHRI RAVISH SOOD,JM For The Applicant : Shri. Sunil Nahta For The Respondent : Shri. N.P. Singh (CIT DR) ORDER PER RAVISH SOOD, JM: The brief facts of the case are that the assessee is a wholly owned subsidiary of National Commodity Derivatives Exchange Limited (NCDEX), registered as a company which was incorporated as on 08.09.2007 under Sec. 25 of the Companies Act, 1956 (No. 1 of 1956). The assessee had been registered under Sec. 12AA(1)(b)(i) of the Income-tax Act, 1961 (for short Act ) by the Director of Income-tax (Exemption), Mumbai, vide his order dated. 31.03.2009, w.e.f 01.04.2008. The main objects of the assesee as stands gathered from its Memorandum of Association (Page 25 of APB ) are:- To operate as a Charitable, Statistical Research Institution carryi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o appreciate that the receipts by way of running courses and franchisee fees of ₹ 18,56,401/- were received by the assessee in furtherance of its objects by operating as a Charitable, Statistical Research Institution, carrying on activities to promote knowledge and research relating to commodity markets and associated derivatives and disseminating information for the benefit of the participants in markets for products, goods or commodities, currency, bonds, fixed income, intangibles, indices etc., for which it was established, and thus had wrongly held that it was systematically generating income from activities which were in the nature of trade, commerce or business. (ii). That without prejudice to above, the DIT(Exemption) had gravely erred in law by concluding that on being hit by the first proviso of Sec. 2(15), it would be deemed that the assessee trust was no more existing for a charitable purpose, which would lead to cancellation of its registration under Sec. 12AA(3). The Ld. A.R in support of his aforesaid contentions had relied on certain case laws and averred that the order of the DIT(Exemption) passed under Sec. 12AA(3), therein cancelling the registration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ec.11. However, the same cannot be stretched to lead to an interpretation that on being hit by the first proviso of Sec. 2(15), the very continuation of the registration of the assessee would stand jeopardized, and on the said count would lead to cancellation/withdrawal of the registration granted to the assessee under Sec. 12A/12AA of the Act . We find substantial force in the contention of the Ld. A.R that even if an assessee is hit by the monetary limits contemplated under Sec. 2(15) w.e.f 01.04.2009, the same would only adversely affect the entitlement of the assessee towards claim of exemption during the year under Sec. 11 of the Act , however the same cannot lead to cancellation/withdrawal of registration granted to the assessee under Sec.12A/12AA of the Act . We are of the considered view that the circumstances which would lead to cancellation of the registration of a Trust are loudly spelt out in Sec. 12AA(3), which reads as under:- (3). Where a trust or an institution has been granted registration under clause (b) of sub-section (1) [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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und to have exceeded. Thus to be brief and explicit, an assessee on being hit by Sec. 2(15) would not lead to jeopardizing of the very existence of its registration u/s 12A/12AA. We find that our aforesaid view stands fortified by the order of the ITAT, G Bench, Mumbai , in the case of : Ghatkopar Jolly Gymkhana, Mumbai Vs. DIT(E), Mumbai (ITA No. 882/Mum/2012) , wherein it was held as under:- 5.2 We may observe that the tax exemption or benefits are granted to a trust or institution because its activities fall within the definition of charitable purposes as defined u/s. 2(15) of the Act. Under section I2AA(3) the registration of such trust/ institution can be cancelled if its activities have become non genuine or it is not carrying out activities as per objects of the institution. Once the activities of a registered charitable institution cease to be charitable or do not fall within the purview of definition of 'charitable purpose' as per the relevant provisions/ definitions given under the Act, then, such institution would not be entitled to tax exemption or benefits granted under the Act. Even despite the fact that such an institution, otherwise, is carrying out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such benefit if it is registered as charitable institution and income from business activities, as mentioned in first proviso to section 2(15), does not cross limit of ₹ 10.00 lacs. Our view in this respect is fortified from the judgment of the co-ordinate Bench decision of the Tribunal in the case of Rajasthan Housing Board vs. CIT (2012)21 Taxmann.com77(Jp). 5.4 Thus, the action of the CIT(A) relying upon the newly inserted proviso from 01.04.2009 in cancelling the registration of the trust, in our view, is not correct or justified. The only effect will be that the Assessee will not be entitled for exemption or tax benefits which otherwise would have been available to it being registered as charitable institution, for the relevant year during which its income has crossed the limit of ₹ 10.00 lacs. Subject to our above observations cancellation of registration granted to Assessee u/s. 12A is hereby set aside and same is hereby ordered to be restored. 8. We are thus of the considered view that now when it is neither the case of the revenue that the assessee which after verification of the genuineness of its objects and activities had been granted registrati ..... X X X X Extracts X X X X X X X X Extracts X X X X
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