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TMI Blog2019 (9) TMI 753X X X X Extracts X X X X X X X X Extracts X X X X ..... OUNTANT MEMBER Assessee by: Written Submissions Revenue by: Shri Gulshan Raj, CIT DR ORDER Per Annapurna Gupta, Accountant Member The present appeal has been filed by the assessee against the order of the Commissioner of Income Tax, Patiala (in short 'CIT') dated 19.1.2012, passed u/s 12AA(3) of the Income Tax Act, 1961 (hereinafter referred to as 'Act'), withdrawing the exemption granted u/s 12A of the Act. 2. Earlier the appeal of the assessee was dismissed by the Tribunal vide order dated 1604.2014,against which the assessee filed appeal before the Hon'ble High Court, who in turn remanded the case back to the ITAT ,for adjudication afresh, vide their order dated 16-03-17 in ITA No.47 of 2016.Hence the present appeal was heard afresh. 3. Grounds of appeal raised by the assessee read as under: "i) The Learned C.I.T, Patiala has erred in cancellation of registration, duly granted to appellant U/s 12AA (1) of Income Tax Act, 1961 vide his office order No. CIT/PTA/TECH/12A/2006-07/406, dated 26/04/2006 & has erred in interpretation of advancement of any other object of general public utility which shall not be a charitable purpose if it involves carrying on of any act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ility and the same was registered as charitable trust u/s 12AA of the Act. As far as the contention of the Ld.CIT that the assessee was engaged in business activities, the assessee pointed out that it was engaged in a number of activities and all amounts charged by it from the public was only for meeting its cost and for further improvement of towns by making new schemes. It was also pointed out that these activities were being carried out by it since its inception, adhering to all rules and regulations made under the Punjab Town Improvement Trust Act, 1922. It was thus contended that it was not carrying out any activity in the nature of trade, commerce or business and, therefore, there was no reason to withdraw the registration granted to it u/s 12AA of the Act. The Ld.CIT dismissed the contention of the assessee stating that no evidence had been filed that all activities of the assessee trust was were aimed only for benefitting the public at large without any commercial angle. It was stated that a major share of the income of the assessee trust was on account of acquisition of land, its development and sale through auction or by draw of lots fetching astronomical prices for the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s stated by the Hon'ble High Court that predominant purpose of the trust was the advancement of the object of the general public utility. The assessee also contended that the issue be decided on the basis of the written submissions filed by it. 8. We have heard the rival contentions carefully, perused the order of the Ld.CIT and have also gone through the decisions of the Hon'ble Jurisdictional High Court in the case of Improvement Trust, Moga (supra) and also the decision of the ITAT Chandigarh Bench in the case of Chandigarh Lawn Tennis Association (supra). 9. It is an admitted fact that the assessee trust was formed under the Punjab Town Improvement Trust Act, 1922 and with the stated object of improvement of towns. Further it is an admitted fact that considering the stated objects and activities carried out by the assessee improvement trust it was granted registration u/s 12AA of the Act on 26.4.2006 It is not the case of the Revenue that there is any change in the stated objects or activities of the assessee improvement trust. The sole reason for withdrawing the exemption is the amendment made to section 2(15) of the Act providing that the advancement of any other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7; 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 w.e.f. 1st April, 2016 is also not sustainable. The amendment in Section 2(15) of the Act brought about by Finance Act, 2016 w.e.f. 1st April, 2016, is essentially that where earlier the receipts in excess of ₹ 25 lakhs on commercial activities would exclude it from the definition of 'charitable purpose' is now substituted by receipts from commercial activities in excess 20% of the total receipts of the institution. In the above view, Circular No.21 of 2016 directs the Officer of the Revenue not to cancel Registration only because the receipts on account of business are in excess of the limits in the proviso to Section 2(15) of the Act would also apply in the present case. The impugned order has held that cancellation of a Registration under Section 12AA(3) of the Act, can on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trust so as to hold it ingenuine and considering the Circular No.20 of 2016 issued by the CBDT stating so in very clear terms. 12. We have also gone through the order of the ITAT in the case of Chandigarh Lawn Tennis Association (supra) and find that the same is distinguishable, since it interprets the first and the second proviso to section 2(15) of the Act, in the context of grant of exemption u/s 11/12 of the Act. The ITAT, we find, has held that while the main definition of charitable purpose includes activities for the advancement of general public utility, the first and second provisos to the section, limit the carrying on of incidental activities in the course of carrying out general public utility activities to the limit specified in the second proviso. It has further held that these provisos prescribing a limit to the commercial activities carried out as incidental to the main activity would not impact its charitable character for the purpose of grant of registration u/s 12A of the Act. Therefore the said decision, we hold would not have any impact on the issue before us. 13. In view of the above we hold that considering the entire facts and circumstances of the case, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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