IMPROVEMENT TRUST ABOHAR vs. COMMISSIONER OF INCOME TAX

Delay in refiling the appeal is condoned.

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 9.12.2013 (Annexure A-6) passed by the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar (hereinafter referred to as “the Tribunal”) in ITA No. 320(ASR)/2013, claiming the following substantial questions of law:- i. Whether on the facts and in the circumstances of the case and in view of the legal provisions GURBACHAN SINGH 2015.10.07 16:01 authenticity of this document High Court Chandigarh -2- the ITAT Amritsar was justified in confirming the order of the CIT Bathinda in cancelling the registration of the appellant- Trust u/s 12AA of the Income Tax Act, 1961 on the grounds of its carrying out the activities in accordance with statutes and thereby holding it to be carrying out activities of trade, business or commerce with a profit motive? ii. Whether on the facts and in the circumstances of the case the ITAT Amritsar was justified in cancelling the registration of the appellant-Trust u/s 12AA of the Income Tax Act, 1961 from retrospective effect and holding that the appellant is liable to pay tax w.e.f. 1.04.2003?

The facts, in short, necessary for adjudication of the instant appeal as narrated therein are that the appellant-Trust was constituted under the Punjab Town Improvement Trust Act, 1922 (for brevity, "the 1922 Act"). Income of the Trust was exempt under section 10(20A) of the Act upto assessment year 2002-03. However, the said Section was omitted by Finance Act, 2002 w.e.f 2003. The Trust was granted registration under Section 12AA of the Act w.e.f. 12.6.2003 on the directions of the Tribunal issued in misc. application vide order dated 4.3.2010 (Annexure A-1). The Commissioner of Income Tax, Bathinda (CIT) vide order dated 23.8.2010 (Annexure A-2) granted registration to the Trust under Section 12AA of the Act on the directions of the Tribunal. The CIT issued notices dated 22.6.2012 (Annexure A-3) and dated 23.10.2012 (Annexure A-4) to the Trust to show cause as to why the GURBACHAN SINGH 2015.10.07 16:01 authenticity of this document High Court Chandigarh -3- registration granted under Section 12AA of the Act be not cancelled under Section 12AA(3) of the Act. Vide order dated 18.2.2013, the CIT cancelled the registration under Section 12AA of the Act of the Trust by holding that its income was not exempted since 1.4.2003 and was, therefore, taxable. The registration was cancelled in view of the amended provision of Section 2(15) of the Act w.e.f. 1.4.2009 and holding that the Trust is engaged in the business, trade and commerce. Feeling aggrieved, the Trust filed an appeal before the Tribunal who vide order dated 09.12.2013 (Annexure A-6) upheld the order of the CIT and dismissed the appeal. Hence, the present appeal.