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TMI Blog2019 (1) TMI 608X X X X Extracts X X X X X X X X Extracts X X X X ..... ess of the decision of the Income Tax Appellate Tribunal ("the Tribunal" for short) of reversing the order of the Commissioner cancelling the registration of trust under Section 12AA of the Income Tax Act, 1961 ("the Act" for short). The Commissioner noted that the trust had parted with the possession of part of the immovable property in favour of one M/s Ashoka Buildcon Ltd. The Commissioner noted that the assessee trust and said M/s Ashoka Buildcon Ltd. would be the persons referred to in clause (c), sub-section (1) and sub-section (2) of Section 13 of the Act and as listed in sub-section 3 thereof on the premise that before entering into such an agreement, no permission from the Charity Commissioner was obtained by the trust, the Commiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble property of the trust in favour of a company which was connected with the trust. This was done without obtaining permission of the Charity Commissioner. The Commissioner, therefore, correctly exercised the powers and cancelled the registration of the trust. Learned counsel relied on a decision of the Division Bench of Kerala High Court in the case of Commissioner of Income Tax, Kottayam Vs Annadan Trust reported in (2018) 258 Taxman 54 (Kerala) in support of his contentions. 6. On the other hand, learned counsel Mr Naniwadekar for the assessee opposed the appeals containing that there are special reasons for parting with the possession of portion of the immovable property of the trust. The activities of the trust are educational in nat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person in respect thereof in case of a trust for charitable or religious purposes or a charitable or religious institution, any income thereof if any part of such income or property of the trust or institution is during the previous year unused or applied directly or indirectly for the benefit of any person referred to in sub-section (3). 17. From the above provisions, it can be immediately seen that the event of cancellation of registration of a Trust in exercise of powers under sub-section (3) of section 12AA of the Act would arise when 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. Mere breach of the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... siness is in excess of Rs. 25 lakhs. In such case, the Assessing Officer while framing the assessment for the subject assessment year would be entitled to deny the benefit of exemption to such a trust for that year. 11. The submission made on behalf of the Revenue that the Circular No. 21 of 2016 would have only prospective effect in respect of assessment made subsequent to the amendment under section 2(15) of the Act, with effect from April 1, 2016 is also not sustainable. The amendment in section 2(15) of the Act brought about by Finance Act, 2016, with effect from April 1, 2016, is essentially that where earlier the receipts in excess of Rs. 25 lakhs on commercial activities would exclude it from the definition of 'charitable purpos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsequent assessment years, the receipts would fall below Rs. 25 lakhs and therefore, the Commissioner is entitled to cancel the Registration. The aforesaid submission made on behalf of the Revenue is based not on facts as existing but on probability of future events. We are unable to accept the submission based on clairvoyance. Further, we are unable to understand what prejudice is caused to the Revenue since whenever the receipts on account of commercial activities is in excess of the limits provided in proviso to section 2(15) of the Act, the Assessing Officer is mandated/required to deny exemption under section 11 of the Act as provided in Circular No. 21 of 2016 dated May 27, 2016. Accordingly, the issue stands covered in favour of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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