THE LUDHIANA IMPROVEMENT TRUST,LUDHIANA vs. CIT III, LUDHIANA

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ITA 898/CHANDI/2014Status: DisposedITAT Chandigarh19 August 2021AY 2009-105 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the proviso to Section 2(15) of the Act has no role to play in the matters of granting, declining, or cancelling registration under Section 12AA. The power to cancel registration under Section 12AA(3) is limited to cases where activities are not genuine or not in accordance with the trust's objects.

What were the facts?

The Commissioner cancelled the assessee's registration granted under Section 12AA of the Income Tax Act, 1961. This cancellation was based on the finding that the assessee's activities were in the nature of trade, commerce, or business, falling under the proviso to Section 2(15).

What were the issues?

Whether the proviso to Section 2(15) of the Income Tax Act is relevant for the cancellation of registration granted under Section 12AA of the Act.

Which sections of the Income-tax Act were involved?

Section 12AA,Section 2(15),Section 13(8)

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Income Tax Appellate Tribunal, CHANDIGARH BENCH ‘A’, CHANDIGARH

Before: SHRI SANJAY GARG & SMT.ANNAPURNA GUPTA

For Appellant: Shri Ashwani Kumar, CA &, Shri Aditya Kumar, CA
Hearing: 16.08.2021Pronounced: 19.08.2021

आदेश/ORDER Per Annapurna Gupta, Accountant Member:

1.

The present appeal has been preferred by the assessee against the order of the Commissioner of Income Tax –III, Ludhiana dated 19.08.2014 relating to assessment year 2009-10, passed u/s 12AA(3) of the of the Income Tax Act, 1961 (hereinafter referred to as ‘Act’), cancelling the A.Y. 2009-10 Page 2 of 5 registration granted to the assessee u/s 12AA of the Act.

2 . I t t r a n s p i r e s f r o m t h e o r d e r o f t h e L d . C I T t h a t t h e r e g i s t r a t i o n g r a n t e d t o t h e a s s e s s e e u / s 1 2 A A o f t h e A c t v i d e l e t t e r d a t e d 2 5 . 0 3 . 2 0 1 1 i n t h e c o u r s e o f g i v i n g e f f e c t t o t h e d e c i s i o n o f t h e I TA T C h a n d i g a r h B e n c h i n t h e c a s e o f t h e a s s e s s e e a l l o w i n g t h e a p p e a l o f t h e a s s e s s e e f o r s e e k i n g r e g i s t r a t i o n u / s 1 2 A A o f t h e A c t , w a s c a n c e l l e d v i d e t h e i m p u g n e d o r d e r i n c h a l l e n g e b e f o r e u s , b y t h e C o m m i s s i o n e r o f I n c o m e Ta x - I I I o n a c c o u n t o f h i s f i n d i n g t h a t t h e a c t i v i t i e s i n d u l g e d i n b y t h e a s s e s s e e i n v o l v e d c a r r y i n g o n a l l a c t i v i t i e s i n t h e n a t u r e o f t r a d e , c o m m e r c e o r b u s i n e s s a n d a c c o r d i n g l y , t h e c a s e o f t h e a s s e s s e e w a s c o v e r e d b y t h e p r o v i s o t o s e c t i o n 2 ( 1 5 ) o f t h e A c t a n d t h e a s s e s s e e c o u l d n o t b e s a i d t o b e c a r r y i n g o n a n y c h a r i t a b l e a c t i v i t y .

3.

This issue, we find, has already been adjudicated by the ITAT in a number of decisions in favour of the assessee holding that the proviso to section 2(15) of the Act has no role to play in the matters relating to registration of the trust u/s 12A of the Act in respect of granting or declining or cancelling the registration. A copy of the order passed by A.Y. 2009-10 Page 3 of 5 the Coordinate Bench of the ITAT in the case of Patiala Improvement Trust Vs. CIT in dated 17.06.2016 was placed before us by the Ld.Counsel for the assessee in respect of his contention to the above effect. A perusal of the same reveals that while adjudicating an identical issue of cancellation of registration granted u/s 12AA of the Act in view of the amendment to section 2(15) of the Act, the ITAT noted that the Amritsar Bench of the ITAT in the case of Kapurthala Improvement Trust Vs. CIT, 60 Taxman.com 301 had laid down that;

i) the scope of power of the Commissioner u/s 12AA(3) for cancellation of registration already granted is very limited in as much as it can be invoking only when the activities of the trust are not genuine or the activities are not being carried out in accordance with the objects of the trust; ii) the consideration of the 1st proviso to section 2(15) of the Act have no role to play in the grant or cancellation of registration u/s 12A of the Act and that the 1 s t proviso to section 2(15) of the Act comes to play only on year to year basis and not in absolute terms; A.Y. 2009-10 Page 4 of 5 iii) the safeguard of the objects of the trust being vitiated in so far as their character of charitable activities is same on account of the 1s t proviso to section 2(15) of the Act is in built in the provisions of section 13(8) of the Act, which was brought in effect from the same point of time when the 1 st proviso to section 2(15) of the Act was introduced.

4.

Thus the said judgment categorically laid down and held that the 1 st proviso to section 2(15) of the Act, cannot be attracted for the purpose or cancellation of registration granted u/s 12AA of the Act.

5.

The issue involved in the present case is admittedly identical. No contrary decision has been brought to our notice by the Revenue, nor any distinguishing facts pointed out to us.

6.

In view of the above, the issue stands squarely covered by the judgement of the ITAT in the case of Patiala Improvement Trust(supra) following which we hold that the order of the Commissioner of Income Tax-III cancelling the registration in the present case on account of the first proviso to section 2(15 ) of the Act is not in accordance with A.Y. 2009-10 Page 5 of 5 law. The order of the Ld.CIT(E) is therefore set aside.

7.

In the result, the appeal of the assessee is allowed.

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