2016 (10) TMI 1402

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..... e reasons may, therefore, cause additional hardship to an assessee institution due to attraction of tax-liability on accreted income. The field authorities are, therefore, advised not to cancel the registration of a charitable institution granted u/s 12AA just because the proviso to section 2(15) comes into play. Substantial questions of law, so framed by this Court, on which the appeal came to be admitted, no longer arises for consideration, as it is for the appropriate authority i.e. the AO to examine the matter in the light of the returns furnished by the assessee and the material placed by the parties with regard to the income generated with respect to each financial year. Revenue stands advised to take appropriate action in terms of th .....

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..... so accorded under the Act. 3. In exercise of such power, the Commissioner of Income Tax, Shimla, issued show cause notice dated 24.11.2008 and pursuant thereto, vide order dated 9.1.2009 (Annexure P-2) cancelled the registration of the assessee under the provisions of Section 12AA (3) of the Act. 4. The said order came to be assailed by the assessee before the Income Tax Appellate Tribunal and the appeal, in terms of impugned order dated 12.01.2012 (Annexure P-A), came to be allowed. 5. Aggrieved thereof the revenue has filed the present appeal, which stands admitted on the following substantial questions of law: 1. Whether the pursuit of charitable purposes is a necessary condition for the grant and continuance of registration u/s 12AA of .....

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..... y lead to a charitable institution getting hit by sub section (3) of Section 115TD and becoming liable to tax on accreted income. The cancellation of registration without justifiable reasons may, therefore, cause additional hardship to an assessee institution due to attraction of tax-liability on accreted income. The field authorities are, therefore, advised not to cancel the registration of a charitable institution granted u/s 12AA just because the proviso to section 2(15) comes into play. The process for cancellation of registration is to be initiated strictly in accordance with section 12AA(3) and 12AA(4) after carefully examining the applicability of these provisions. [Emphasis supplied] 7. In view of the intervening developments which .....

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