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TMI Blog2014 (3) TMI 1178X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tribunal. 3. That the Ld. Commissioner of Income Tax-II, Ludhiana is not justified in holding that the activities of the appellant trust do not fall within the meaning of "Charitable Purpose" as per the amended provisions of Section 2(15) of the Income Tax Act, 1961 and thereby withdrawing the registration u/s 12A with retrospective effect from A.Y. 2009-10 onwards is against established principles of law and thus perverse. 4. That the appellant challenges the applicability of impugned amendment qua the appellant since the appellant is providing charitable services only and the finding of CIT-II, Ludhiana holding the activities of appellant trust in the nature of trade, commerce or business and of activity of rendering service in relation to the trade, commerce or business for a fee is against established legal provisions and facts on record and thus perverse." 3. The issue raised in the present appeal is against the withdrawal of exemption granted under section 12AA of the Act vide order passed under section 12AA(3) of the Act. 4. The brief facts of the case are that registration under section 12AA(l)(b)(ii) of the Act was allowed by the Hon'ble Punjab & Haryana High C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the plots through bidding resulted in generation of huge profits, was held by Commissioner of Income Tax. In addition, the assessee was charging various fees under different heads like building application fee, transfer fee, road cutting fee, non-construction charges, etc. and the Commissioner of Income Tax thus held that such activity of the assessee trust was in the nature of trade, commerce or business or activity of rendering services in relation to trade, commerce or business. Even the object of the institution i.e. proper development or the area falling in and around Malerkotla city did not establish that the activities undertaken by the assessee were philanthropic and charitable in nature. Levy of fines and penalties by the assessee trust implied an element of forceful acceptance of money and condition to avail of any benefit. In view of the ratio laid down by the Amritsar Bench of the Tribunal in Jammu Development Authority (supra) wherein it was held that the activities amounted to trade, commerce or business for fee, cess or other consideration and the amount being more than the amount specified in second proviso to section 2 (15) of the Act, the assessee therein was he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Amritsar Bench of the Tribunal in Improvement Trust, Bathinda Vs CIT, Bathinda ITA No. 366/Asr/2012 order dated 18.12.2012. It was further pointed out by the Id. DR for the revenue that the Commissioner of Income Tax had placed reliance on the ratio laid down by the Tribunal in the case of Jammu Development Authority which has been confirmed by the Hon 'ble High Court of Jammu & Kashmir in Jammu Development Authority Vs Union of India & another ITA No. 164/2012 CMA No. 2/2012 vide judgement dated 07.1 1.2013. 8. We have heard the rival contentions and perused the record. The assessee Trust had originally filed an application for registration under section 12AA of the Act on 25.5.2006 and as the assessee was found not to have fulfilled the conditions under section 2 (15) of the Act, the Commissioner of Income Tax rejected the grant of registration under section 12 A of the Act. The appeal of the assessee before the Tribunal was also dismissed in ITA No. 640/Chd/2006 vide order dated 28.09.2007. The Hon'ble Punjab & Haryana High Court, in view of the order passed in the case of the Improvement Trust, Moga in IT Appeal No. 620 of 2008 vide order dated 16.01.2009 granted r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of general public utility shall not be a charitable purpose, if it involves the carrying on of any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity:] [Provided further that the first proviso shall not apply if the aggregate value of the receipts from the activities referred to therein is [twenty-five lakh rupees] or less in the previous year; ] 10. The issue arising before us is in relation to the amended provisions of section 2 (15) of the Act under which the proviso I & Il are introduced w.e.f. 01.04.2009 and in case the Trust is found to be engaged in the advancement of any other object of general public utility, then such advancement of any other object of general public utility shall not be for charitable purpose wherein it involves the carrying on of such activity in the nature of trade, commerce or business or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other considerati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity. " 7.1. Keeping in view the aforesaid provisions, the charitable purpose include relief to the poor, education, medical relief and advancement of any other object of general public utility. In the present case, we found that the assessee-trust is carrying on various activities in the nature of trade, commerce or business and rendering its services for the purpose of trade, commerce and business because as stated above, the assessee-trust is charging huge fees on account of various facts, as mentioned above. No doubt, the assessee has given some explanation for charging fees for the afore-mentioned activities by stating that the assessee-trust is charging fees as per rules framed by the Punjab Local Bodies Govt. which is clearly the admission by the assessee-trust that the assessee-trust is doing activities not for charitable purpose but for business purpose only. No doubt, these penalties charged by the assessee-trust are in the nature of compensatory but that is not permissible for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the welfare of such handicap students. (p) Land reserved for 'Yatri Niwas" in Bathinda near to New Bus Stand in 49.5 Acre (free of cost). (q) Land provided for 'Approach Road' nearly 60 wide 382.4 sq. mtr. Construction cost is nearly Rs. 23.67 lacs approved vide Resolution No.2l dated 11.10.2007 (free of cost)." After perusing the aforesaid activities, we are of the view that-the Id. appellate authority has rightly held that the land of the assessee trust is the same category of other real estate products available in the market offered by the private colonizers and real estate agents. Because the assessee advertised this value added product widely in print as well as electronic media so as to attract a large number of customers/clients from all the general public including the financially sound persons from the public. 12. The assessee Trust before us is the Improvement Trust, Malerkotla and the facts of the present case are identical to the facts of Improvement Trust, Bathinda which is also formulated under the Punjab Town Improvement Trust Act. It was fairly admitted by the Id. AR for the assessee during the course of hearing that the appeals in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Commissioner of Income Tax, in the order passed under section 1 2 AA (3) of the Act had relied upon the ratio laid down by the Amritsar Bench of Tribunal in the case of Jammu Development Authority (supra), which has been confirmed by the Hon' ble Jammu & Kashmir High Court (supra) wherein it has been held as under : "1. The instant appeal under Section 260-A of the Income Tax Act, 1967 (for brevity, the Act) is directed against order dated 14.06.2012 passed by the Income Tax Appellate Tribunal, 'Amritsar, upholding the order withdrawing the status of Charitable Institution given to the appellant-assessee under Section 12AA(l)(b)(i) of the Act, The Tribunal has reached a categorical conclusion that the assessee-Jammu Development Authority cannot be regarded as an institution or trust which may have been set up to achieve the objects enumerated under Section 2 of the Act particularly in view of the addition of first and second proviso made by the Finance Act, 2008 w.e.f, 01.04.2009 to Section 12 AA of the Act. There are findings of fact that the assessee-appellant has riot been acting to advance any of the object concerning genera] public utility. Even otherwise the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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