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TMI Blog2019 (12) TMI 496X X X X Extracts X X X X X X X X Extracts X X X X ..... m commercial lease rent, which is the only point of denying the continuance of registration from assessment year 2009-2010 is not a sustainable ground for dis-continuing the registration already granted to the assesse. When the registration u/s.12A of the Act has been granted to the appellant and ld CIT (E) is satisfied that the activities of the assessee trust falls within the ambit of charitable and OF general public utility and on the same basis, he has granted registration u/s.12A of the Act to the appellant from the assessment years 1998-99 to 2008-09. The barriers created by the CIT(E) from 2009-2010 onwards, where he denied to continue the same registration is also not sustainable on this count that the assessee was not provided proper opportunity of hearing before passing such order denying continuance of registration as per mandate of sub-section(3) of Section 12AA of the Act. We dismiss the observation of ld CIT(E) recorded for the purpose of restricting the registration u/s.12AA of the Act from 2009-2010 onwards. CIT (E) has granted registration u/s.12A of the Act, then, same is required to be continued till it is cancelled by way of following the procedure provided i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts from A.Y. 2009-10 onwards, thus being entitled to exemption as per section ll(l)(a) of the Income Tax Act, 1961. 3) That the Ld. CIT(E) having granted registration upto A.Y. 2008- 09, erred in having refused registration from A.Y. 2009-10 onwards holding that the proviso to section 2(15) of the Income Tax Act, 1961 was applicable since the assessee had receipts above ₹ 25 lakhs from A.Y. 2009-10 onwards in ignorance of the Circular No. 21/2016 [F.NO.197/17/2016-ITA-I], dated 27.05.2016 issued by CBDT holding that registration already granted u/s 12AA to a charitable institution shall not be cancelled merely on the ground that the cut-off specified in the proviso to section 2(15) of the Act is exceeded without there being any change in the nature of activities of the institution. 4) a.) That on the facts and circumstances of the case, the Ld. CIT(E) erred in having refused registration to the assessee from A.Y. 2009-10 onwards in ignorance of the findings of the Hon'ble ITAT, Cuttack in the assessee's own case vide order dated 04.07.2014 in ITA No. 334/CTK/2011 holding that the proviso to section 2(15) of the Income Tax Act, 1961 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onducted in the business premises of the assessee Association and demands were raised for the A.Ys.2002-2003 to 20.07-08 and the same were confirmed by the first Appellate authority. The Assessee society preferred second appeal against the orders of lower authority before this Tribunal and pleaded that the application filed in 1997 seeking registration U/S.12A of the I.T. Act, 1961 is still pending with the Competent Income Tax Authorities for consideration. The Tribunal accepted such plea put forth by the assessee Association and set aside the assessment orders framed for the A.Ys.2002-03 to 2007-08 for denovo examination pending disposal of the petition filed by the Association u/s.12A of the I.T. Act by the Income tax Authority. Accordingly, following the directions of the Tribunal, the Commissioner of Income Tax, Cuttack called for information from the assessee society vide fetter dated 06.01.2010 and after considering the submissions of the assessee Association, the Commissioner of Income Tax, Cuttack vide order dated 22.03.2010, rejected the application of the assessee Association/ for the reasons stated therein. 5. Aggrieved by the order of the Commission of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inted out that the assessee is enjoying exemption u/s.10(23) of the I.T.Act, 1961 w.e.f. 1.4.1974 and application of the assessee for grant of registration u/s.12A of the Act has not been decided in right perspective and the assessee is running between pillar to post seeking such registration. 9. Ld counsel further pointed out that from paras 9, 10 11 of the impugned order, it is clear that considering the charitable objects of the appellant, the CIT(E) in para 9 of the order, clearly held that the objects of the appellant are charitable in nature and thus not carried out with any object to earn profits, and he granted registration u/s.12A of the Act from 1998-99 to 2008-09. Ld counsel further explained that after granting said registration for a limited period, the ld CIT(E) in para 10 pressed into service amended provisions of section 2(15) of the Act and contended that the second proviso to said section w.e.f. 1.4.2009 provided that in case where the activities of any trust or institution is of the nature of advancement any other object of general public utility and it involves carrying out of any activity in the nature of trade, commerce, or business but the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or for less than it costs or for less than the ordinary price. Ld counsel submitted that the incomes received as per financial statement of the appellant in the form of commercial lease rent was incurred for the charitable objects of the appellant association and it is not an allegation of the ld CIT(E) hat the funds including commercial lease rent amount have been diversified or used beyond the charitable objectives of the Association of the Memorandum of Trust. 12. Further, placing reliance on another judgment of Hon ble Bombay High Court in the case of Director of Income Tax (Exemptions) vs Khar Gymkhana(2016) 385 ITR 162 (Bom), ld counsel submitted that once registration u/s.12A has been granted considering the charitable objectives of the general public utility of the applicant, then disqualification without examination where receipts from commercial activities exceeds ₹ 25 lakhs is not tenable in a case where there is no change in the nature of activities of the appellant and keeping in view the effect of CBDT Circular No.21 of 2016 dated 27th may, 2016, the assessee is entitled to continue the registration u/s.12A of the Act. 13. Furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee especially when the ld CIT(E) has already in para 8 of the impugned order noted that the objects of the Orissa Olympic Association would fall in the advancement of any other object of general public utility. Ld counsel submitted that from the objects of the Association, it is ample clear that precisely, the Association has been formed to act as official organization in Olympic matters in the State of Odisha to control, supervise, regulate or encourage various sports and have jurisdiction over all matters pertaining to the participation of sportsmen/sportswomen of Orisha in the national and international events and any other games held under the control supervision of Indian Olympic Association and there is no profit motive therein. Therefore, ld CIT(E) was not correct in restricting the registration upto the assessment year 2008-09 only and not continuing the same from the subsequent assessment year 2009-2010 onwards. Therefore, it was his prayer that the CIT(E) may kindly be directed to continue the registration from 2009-2010 onwards. 16. On careful consideration of the rival submissions, we are of the considered opini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stitution 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 1996)] and subsequently the [Principal Commissioner or] 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. [(4) Without prejudice to the provisions of sub-section (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 1996)] and subsequently it is noticed that the activities of the trust or the institution are being carried out in a manner that the provisions of sections 11 and 12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on, when we consider the facts of the present case and evaluate the validity of the impugned order on the touchstone of the provisions of the Act, then we find that the ld CIT(E) considering the objects of the appellant that they are charitable in nature and not carried out with any object to earn profits, granted registration u/s.12AA of the Act from assessment year 1998-99 to 2008-09. However, in subsequent para 10 and 11 of the impugned order, the ld CIT (E) considering the amended proviso to section 2(15) of the Act and keeping in view the income of the appellant received in the form of commercial lease rent did not continue the registration from assessment year 2009-2010 onwards and this action of the CIT (E) gave rise to this appeal. 21. Undisputedly, in para 8 of the impugned order, the ld CIT (E) noted that the appellant is enjoying exemption u/s.10(23) of the Act w.e.f. 1.4.1974 and in para 9, ld CIT(E) further noted that the objects of the appellant are charitable in nature and are not being carried out with any object to earn profits and with these observations, he granted registration under section 12A of the Act from 1998-99 to 2008-09. At thus junctur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce to the appellant if the case is restored to the file of the CIT(E) for third time. Thus, we decline to accept the prayer of ld CIT DR for restoring the matter to the file of the CIT(E) for fresh consideration. 26. In the facts and circumstances of the case, we are of the considered opinion that the income earned by the assessee from commercial lease rent, which is the only point of denying the continuance of registration from assessment year 2009-2010 is not a sustainable ground for dis-continuing the registration already granted to the assesse. In our humble and considered opinion, when the registration u/s.12A of the Act has been granted to the appellant and ld CIT (E) is satisfied that the activities of the assessee trust falls within the ambit of charitable and OF general public utility and on the same basis, he has granted registration u/s.12A of the Act to the appellant from the assessment years 1998-99 to 2008-09. The barriers created by the ld CIT(E) from 2009-2010 onwards , where he denied to continue the same registration is also not sustainable on this count that the assessee was not provided proper opportunity of hearing before passing such order den ..... X X X X Extracts X X X X X X X X Extracts X X X X
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