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TMI Blog2022 (1) TMI 1446X X X X Extracts X X X X X X X X Extracts X X X X ..... ght to treat the registration granted by the higher authority, i.e. CIT (Exemption) as not valid. We observe from the record that he has rightly brought to the notice of the CIT (Exemption) and it is a fact on record that CIT (Exemption) considered the same facts on record at the time of granting original registration u/s 12A and subsequent withdrawal of the proceedings shows that he is convinced with the submissions of the assessee and the objects were within the charitable activities. Therefore, learned CIT(A) should have taken note of this development and should have cancelled the assessment made by the AO. AO in his order has observed that this trust was formed for benefit of a particular community and thus attracted section 13(1)(d) of the Act. Main object for which the trust was registered was for the benefit of the members of the Daivadnya community. The purpose and objects of the trust was never changed or modified. The amended object clause also for the benefit of members of the Daivadnya community. When the CIT (Exemption) approved the objects of the trust for registration us 12A on 25/04/1975 that means, he has satisfied himself that it is not a particular group, rather, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the registration granted by Commissioner of Income-tax (Exemption) has ceased to be operative in the relevant assessment year. In the absence of registration under section 12A, exemption under sectison 11 of the Act cannot be allowed to the assessee. Accordingly, he proceeded to assess the assessee as AOP without granting any exemption under section 11 of the Act. 4. Aggrieved, assessee preferred appeal before CIT(A)-3, Mumbai. Before the CIT(A), assessee filed the following submissions:- The Appellant most respectfully submits that the action of the Ld. A.O denying exemption u/s. 11 is not in accordance with the Saw as explained below: a. Registration u/s. 12A of the Act, once granted, remains valid until it is cancelled by the Commissioner by due process of law laid down u/s. 12AA(3) of the Act; it cannot cease to be operative unless order u/ s. 12AA(3) of the Act is passed by the Commissioner in accordance with the law for cancellation of registration. The Ld A.O. has no power, nor any jurisdiction in the matter of cancellation of registration, which vests only in the Commissioner. b. The Ld. A.O. sent a proposal to the jurisdiction a f Commissioner for withdrawal of registratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the appellant's stand that there was no statutory requirement at the relevant time to intimate the amendment/modification in the objects of a trust/institution claiming exemption u/s. 11. c. However, the amended Trust Deed incorporating the amended Objects Clause was submitted to the CIT, while seeking renewals for the exemption certificates u/s. 80G(5). The Department has raised pertinent queries vide letter dated 18.01.1990 and reply to it was given by the Appellant vide letter dated 25.05.1991 and thereafter renewal of section 80G exemption was allowed. d. It is not the case that the Department was made aware about the amendment in objects for the first time in the assessment proceedings for the A.Y. 2012-13. The repeated renewals accorded by the Department for exemption u/s. 80G(5) from time to time clearly established that the amended objects also stood the test of charitable nature. e. Registration u/s. 12AA cannot be withdrawn merely because of non- intimation of amendments in trust deed to the Department because statutory requirements contained in section 12AA(3) prescribe that cancellation of registration cannot be made unless a case is made out that new objects do n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e CIT(A); thus, the observations were made by the Court in the limited context of stay and not in any appeal on a substantial question of law. Further, the assessee in that case never intimated the CIT about the amendment made to the Trust Deed that materially altered its objects, while in the Appellant's case, intimation was given to the CIT albeit in the proceedings for renewal of certificate u/s.80-G when the amended Trust Deed was filed, and thus, the Department was made aware of the amended objects and it was within its knowledge. 4. Reliance placed by the Ld. A.O. on the judgment in Sakti Charities vs. CIT (1984) 149 ITR 624)(Madras) is also misplaced because in that case references to Civil Procedure Code and Court's direction for alteration of objects were made as there was no enabling provision in the Trust Deed for amendment of certain objects that would require court intervention. Further, in that case, certain objects were deleted and it was in that context the Court observed that objects of a trust cannot be deleted even by the founder thereof. In the Appellant's case, new objects were added and nothing was deleted and the new objects were duly approved by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mption u/s.11(1A) in respect of LTCG computed by the Ld. AO on sate of immovable property. The appellant submits that it invested the sales proceeds in another capital asset, i.e., fixed deposits with scheduled bank, hence, the resultant LTCG was exempt u/s. 11(1A). Your appellant, therefore, prays that exemption u/s.11(1A) be allowed in respect of LTCG of Rs. 1,72,26,705/- and the addition be deleted. 3. Addition made for transfer entry from 'Building Amenities Fund 2011' to 'Building Fund': Rs. 95.00,000/- On the facts and in the circumstances of the case, and also in law, the Ld. CIT(A) erred in sustaining addition of Rs. 95,00,000/- being the amount transferred from 'Building Amenities Fund 2011' to 'Building Fund' in the books of the appellant- trust in the previous year ended 31.3.2012 on utilization of the ear-marked fund. The Ld. CIT(A) failed to appreciate that passing of this accounting entry in the books of the appellant was not a taxable event, nor did it result in any income to the appellant and therefore, irrespective of whether the appellant is eligible to claim exemption u/s. 11 or not, the addition could not be made in law. Your appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding to the assessing officer, it violates the registration granted u/s 12A of the Act and by relying on the decision of the Hon ble Allahabad High Court in the case of Allahabad Agricultural Institue vs UOI 291 ITR 116, 119 (All). According to the assessing officer, assessee has violated the terms of approval granted u/s 12A, therefore, exemption u/s 11 of the Act cannot be allowed to the assessee. We observe from the records submitted before us, in fact, it was also submitted before Ld.CIT(A) that CIT (Exemption) has initiated the proceedings for withdrawal of the registration u/s 12A on 10/03/2016 and subsequently on 19/12/2016, the proceedings were dropped. We also observe from record that no doubt assessment order was passed on 28/03/2015 and it is a fact on record that the withdrawal proceedings were initiated by CIT (Exemption) on the basis of information from the assessing officer; however, he has dropped the same subsequently. We observe from the record that this information was brought to the notice of the Ld.CIT(A) and Ld.CIT(A) conveniently omitted to take notice of the same and proceeded to toe the line of assessing officer. In our considered view, the assessing office ..... X X X X Extracts X X X X X X X X Extracts X X X X
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