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TMI Blog2020 (6) TMI 291X X X X Extracts X X X X X X X X Extracts X X X X ..... ons. In DIT(E) vs. Sabarmati Ashram Gaushala Trust Tax [ 2014 (1) TMI 1539 - GUJARAT HIGH COURT] holds that it is the concerned predominant activity that has to be considered as to whether it was in the nature of trade or commerce regarding general public utility limb u/s 2(15) of the Act. Hon'ble apex court's latest decision in M/s. Ananda Social and Educational Trust [ 2020 (2) TMI 1293 - SUPREME COURT] holds that commencement of charitable activities is not a mandatory condition for claiming 12AA registration. We have quoted the lordship's decision keeping in mind the fact that the CIT(Exemption) has declined the assessee's impugned registration on the ground that it has not filed income tax return for four assessment years (Supra). We thus are of the opinion that the CIT(Exemption) needs to examine the entire issue of assessee's registration afresh as per law. We accept the assessee's instant sole grievance for statistical purposes and restore the instant lis back to the CIT(Exemption) for his fresh adjudication within three effective opportunities of hearing - Assessee's appeal is allowed for statistical purposes - ITA No. 1407/KOL/2018 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Govt, of West Bengal. Para 2 of the order states as under:- The recent months, particularly since early 2012, it is being increasingly decided that Taxi Workers' Unions (in whatever name called) would not be encouraged to arrange and operate pre-paid taxi booths at these important intersections. It has been increasingly felt that the Commissioners of Police/ Police Authorities would be required to take leading, proactive and managerial role in operating, overseeing, superintending and manning (in different combinations), taxi booths at these important junctions/ stations. In some cases, the Commissioners of Police have been made the superintending officials in this connection while in some other cases, the GRP/SP etc. have been made responsible. The objectives of the Society are as under:- a. To establish, operate and manage pre-paid taxi booths opened or to be opened at various places as per order issued by the Transport Department, Govt, of West Bengal vide No. 1481-WT/SM-74/99 Pt. 12-04-2013. b. To provide pre-paid taxi booth facility to tourists and other passengers availing such facility. c. To raise funds through charging a service charge from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of General Public Utility if it is done at the cost of Taxi Workers Unions. Further, the activity of the society is nothing but a mercantile activity based on a contract entered into in pursuance of the order issued by the Transport Department, Govt, of West Bengal. It is nothing but a monopolistic trade practice. It is monopolistic as no one but the state has the right to regulate traffic and provide police activities. This fee is collected for a service which the State is bound to deliver even otherwise. This leads to an inevitable conclusion, that the state is allowing the society to collect service charges systematically for providing police at the booths in a commercial manner. This systematic collection of service charges by the society, based on contracts, is nothing but trading of services. Needless to add, that the state is well within its rights to indulge in legitimate trade activities but here the issue is the activity of the society and not the state government. I am, therefore of the view that the collection of service charges by the society, in pursuance of the order of Transport Department, is in the nature of trade. As per section 2(15) an activity in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommissioner of Police (Traffic) and Treasurer] vide noting dated 06-04-2018. Opportunity was provided to pay taxes voluntarily but the applicant society failed to do so. Hence it is to be decided whether the applicant society is still eligible for grant of registration u/s 12AA even if it does not pay tax on surplus of income, merely because it has applied for registration u/s 12AA. The procedure for registration envisaged in Section 12AA prescribes (1) satisfaction of the Commissioner about the objects of the trust or institution and (2) Genuineness of the activities. Similarly the procedure for cancellation of registration u/s 12AA(3) also empowers the Commissioner to cancel the registration under two circumstances- (1) When the activities are not being carried out in accordance with the objectives of the Trust or institution: and (2) When the activities of the Trust are not Genuine . Therefore, the procedure for grant of registration and cancellation thereof mandates that not only the object of the trust should be charitable, its activities should also be genuine This clearly means that an applicant whose objects are charitable in nature ipso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... right to collect legitimate taxes has to be inconsistent with the Act itself. Since, grant of registration u/s 12AA takes away the right of the AO to bring to tax any income by issuing notice u/s 147, the only logical recourse for the CIT is to refuse registration u/s 12AA so that admitted tax liability is recovered as per the provisions of law. If the provisos are interpreted to mean that after the grant of registration, the income of the trust or institution becomes exempt or eligible for the benefit of section 11 and 12 since its inception and not only in cases of pending assessment proceedings, the then the registration u/s 12AA becomes redundant. No additional benefit will be available to the applicant in case the registration is granted now, even though, no admitted taxes are paid. The conclusion is based on the premise that if the stand of the applicant is correct then irrespective of whether it pays taxes or not and also irrespective of whether it is registered u/s 12AA or not, no tax is payable by it. No entity except those mentioned in Section 10 or otherwise specifically exempted is eligible for de facto exemption. A hypothetical situation will make the u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , I am of the opinion that, the applicant society is not eligible for registration u/s 12AA. In view of the above, registration u/s 12AA is rejected. 3. After giving a thoughtful consideration to the CIT(Exemption)'s detailed discussion extracted herein paragraph, we find no merit to express our agreement with the same in entirety. Ld. CIT(DR) fails to dispute that the CIT(Exemption) herein has nowhere recorded a specific finding as to whether the assessee's dominant activity of providing prepaid taxi booths to railway passengers prima facie involves any profit making or not. We observe in view of the facts and circumstances involved in the instant list that such an establishment of prepaid taxi booths is collaboration with local taxi operators; and that too at the local police level, indeed brings the sense of security amongst the general public. Mr. Meena has sought to highlight the ld. CIT(Exemption)'s findings that the setting up of prepaid taxi booths in the name of assessee society amounts to violation of the scheme of the constitution (supra). And also the assessee's aggregate receipts indicate its profit motive whilst earning surplus of income over expe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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