M/S THE IMPROVEMENT TRUST KHANNA, PUNJAB vs. COMMISSIONER OF INCOME TAX, LUDHIANA AND ANOTHER

PDF · subscribers
ITA/533/2017HC Punjab & HaryanaPHHC01117759201722 October 2018Author: MR. JUSTICE AJAY KUMAR MITTAL,MR. JUSTICE AVNEESH JHINGAN4 pages
AI SummaryRemanded

What did the High Court hold?

The High Court allowed the present appeal. It set aside the order dated 26.11.2014 passed by the Income Tax Appellate Tribunal. The matter was remanded back to the Tribunal to decide afresh. This decision was made in terms of the High Court's previous order dated 16.3.2017 in ITA-236-2015 (M/s The Improvement Trust, Malerkotla v. Commissioner of Income Tax, Ludhiana-II and another). In that prior order, the High Court had set aside the Tribunal's order and remanded the matter to the Tribunal to decide afresh after affording an opportunity of hearing to the parties, in accordance with law. The High Court noted that the issues in the present appeal were similar to those in the Malerkotla case. The principle is that when a similar matter has been remanded by the High Court, subsequent appeals with identical issues should also be remanded to the Tribunal for a fresh adjudication.

What were the facts?

The assessee, M/s The Improvement Trust Khanna, was granted registration under Section 12AA of the Income Tax Act, 1961, on 13.11.2009. This registration was withdrawn by the Commissioner of Income Tax (CIT) on 7.2.2013, on the grounds that the trust was not charitable in nature as per the Proviso to Section 2(15) of the Act. The assessee appealed to the Income Tax Appellate Tribunal (ITAT), which dismissed the appeal on 26.11.2014, relying on a previous decision in a similar case involving Improvement Trust Malerkotla. The assessee then filed an appeal before the High Court. The High Court had previously, in a related matter (ITA-236-2015), set aside the ITAT's order and remanded the case back to the ITAT. The present appeal by the assessee is against the ITAT's order dated 26.11.2014.

What were the issues?

The High Court had to decide the following substantial questions of law: 1. Whether the respondent (CIT) could cancel the registration granted to the trust when no conditions under Section 12AA(3) of the Act were satisfied. 2. Whether the respondent could cancel the registration without recording a specific finding that the trust's activities were not genuine. 3. Whether, after granting registration under Section 12A, the Assessing Officer could question the objects and deem them non-charitable, and if so, whether the ITAT was justified in holding that the appellant trust's activities did not qualify for exemption. 4. Whether the impugned orders were legally sustainable, given the apparent contradiction where the CIT's relied-upon case laws pertained to granting registration under Section 12A, not exemption under Sections 11 and 12, while the ITAT relied on a judgment (PUDA Vs. CIT) related to the grant of registration under Section 12A. 5. Whether the impugned orders were legally sustainable. Assessee's contentions (implied through the questions of law): The assessee argued that the cancellation of registration was illegal as the conditions under Section 12AA(3) were not met, no finding of non-genuine activities was recorded, and the CIT/ITAT erred in re-examining the objects and denying exemption based on case laws related to registration rather than exemption. Revenue's contentions: Not recorded in the judgment.

Which sections of the Income-tax Act were involved?

Section 260A,Section 12AA,Section 12AA(3),Section 2(15),Section 12A,Section 12

AI-generated summary — verify with the full judgment below

ITA-533-2017 -1- IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH ITA-533-2017 (O&M) Date of Decision: 22.10.2018 M/s The Improvement Trust Khanna ....Appellant. Versus Commissioner of Income Tax, Ludhiana-II and another ...Respondents. CORAM:- HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. HON'BLE MR. JUSTICE AVNEESH JHINGAN. PRESENT: Mr. Sanjay Ghalawat, Advocate for Mr. Rohit Sud, Advocate for the appellant. Mr. Denesh Goyal, Sr. Standing Counsel for the respondents. *** AJAY KUMAR MITTAL, J.

1.

Delay of 979 days in filing the appeal is condoned.

2.

This appeal has been preferred by the assessee under Section 260A of the Income Tax Act, 1961 (in short “the Act”) against the order dated 26.11.2014 (Annexure A-3) passed by the Income Tax Appellate Tribunal, Chandigarh Bench, Chandigarh (hereinafter referred to as “the Tribunal”) in ITA No. 406/Chd/2013 for the assessment year 2009-10, claiming the following substantial questions of law:- i) Whether in the facts and circumstances of the present case, the respondent could have cancelled the registration already granted to the trust when no condition under Section 12AA(3) of the Act GURBACHAN SINGH 2018.11.02 16:55 I attest to the accuracy and integrity of this document

ITA-533-2017 -2- had been satisfied? ii) Whether in the facts and circumstances of the present case, the respondent could have cancelled the registration without recording any specific finding that the activities of the trust or institution are not genuine? iii) Whether in facts and circumstances of the present case, after the grant of registration under Section 12A of the Act can the Assessing Officer go into the objects and hold them to be non-charitable. If know, whether the learned Tribunal was justified to hold that the activities done by the appellant trust does not qualify for exemption? Act making it contradictory? v) Whether in facts and circumstances of the present case, the action of the authorities below, the GURBACHAN SINGH 2018.11.02 16:55 I attest to the accuracy and integrity of this document

ITA-533-2017 -3- impugned orders Annexures A-1 and A-2 are legally sustainable in the eyes of law?

3.

A few facts necessary for adjudication of the instant appeal as narrated therein may be noticed. The assessee was granted registration under Section 12AA of the Act vide order dated 13.11.2009 (Annexure A-1) by the Commissioner of Income Tax-respondent No.

1.

The said registration was withdrawn by respondent No.1 vide order dated 7.2.2013 (Annexure A- 2) on the ground that the assessee-Trust was not charitable in nature within the meaning of Proviso to Section 2(15) of the Act. Feeling aggrieved, the assessee filed an appeal before the Tribunal who vide order dated 26.11.2014 (Annexure A-3) dismissed the appeal by relying upon the order dated 27.3.2014 passed in ITA No. 380/Chd/2013 (Improvement Trust Malerkotla v. Commissioner of Income Tax) wherein identical issues were considered. Against the order dated 27.3.2014, the assessee filed ITA- 236-2015 in this Court and this Court vide order dated 16.3.2017 (Annexure A-4) set aside the order of the Tribunal and remanded back the matter to the Tribunal. Hence, the present appeal by the assessee.

4.

We have heard learned counsel for the parties.

5.

It is not disputed that similar issues came up before this Court in ITA-236-2015 (M/s The Improvement Trust, Malerkotla v. Commissioner of Income Tax, Ludhiana-II and another) wherein this Court vide order dated 16.3.2017 (Annexure A-4) while setting aside the order of the Tribunal, had remanded the matter back to the Tribunal to decide afresh in the light of submissions made by the learned counsel for the parties therein after affording an opportunity of hearing to the parties in accordance with law. GURBACHAN SINGH 2018.11.02 16:55 I attest to the accuracy and integrity of this document

ITA-533-2017 -4-

6.

Accordingly, the present appeal is allowed, order dated 26.11.2014 (Annexure A-3) passed by the Tribunal is set aside and the matter is remanded back to the Tribunal to decide afresh in terms of order dated 16.3.2017 (Annexure A-4). (AJAY KUMAR MITTAL) JUDGE October 22, 2018 (AVNEESH JHINGAN) gbs JUDGE Whether Speaking/Reasoned Yes/No Whether Reportable Yes/No GURBACHAN SINGH 2018.11.02 16:55 I attest to the accuracy and integrity of this document

More judgments on Section 12AA

All 4,243 judgments and leading authorities on Section 12AA →

Recent GST High Court judgments

Search GST case law →