SLUM REHABILITATION AUTHORITY,MUMBAI vs. DIT (E), MUMBAI

This appeal is filed by the assessee against the order dated 27.03.2014 passed u/s 12AA(3) of the Income Tax Act, 1961 passed by the Director of Income Tax (Exemption), Mumbai.

The grounds raised

Being Aggrieved by the order of the Director of Income Tax (Exemption), the assessee is before us. The Ld. AR submitted that the nature and purpose as well as the object of the Slum Rehabilitation Authority had no point of time has changed which has been duly taken note by the Director of Income Tax (Exemption) in para 5. Merely putting the interest income and fees received cannot be the criteria for cancelling the registration with the retrospective effect. The proviso came into effect from assessment year 2009- 10 and the registration was granted to the assessee i.e. Slum Rehabilitation Authority w.e.f. 01.04.2009, therefore, the registration may be restored. The Ld. AR relied upon the following case laws: a) Kapurthala Improvement Trust vs. CIT 2015-TIOL-945-ITAT-Amritsar b) BCCI vs. Pr. CIT (ITA No. 3301/Mum/2019 order dated 02.11.2021 Mum. Tri.) c) Karnataka Industrial Area Development Board vs. Add. DIT (E) 2020- TIOL-1892-HC-KAR-IT Slum Rehabilitation Authority 4 d) Karnataka Industrial Area Development Board vs. Add. DIT (E) (ITA No. 378/Bang/2013 order dated 04.09.2015 Bang. Tri.) e) Mumbai Metropolitan Region Development Authority vs. DIT (E) (ITA No. 625/Mum/2012 order dated 31.12.2013 Mum. Tri.) f) CIT (E) vs. Mumbai Metropolitan Region Development Authority (ITA No. 2010 of 2017 order dated 24.01.2020 Bombay High Court) 5. The Ld. DR relied upon the order of the Director of Income Tax (Exemption). The Ld. DR further submitted that the assessee is generating huge income by charging premium which is mentioned as premium income which is over and above its regular fees that it is charging. The Ld. DR relied upon the order of the Tribunal in case of Improvement Trust, Bathinda vs. CIT (ITA No. 36/Asr/2012 order dated 18.12.2012) 6. We have heard both the parties and perused all the materials on record. It is pertinent to note that the DIT (E) nowhere in the order dated 27.03.2014 observed that the activities of the Slum Rehabilitation Authority are not genuine or that the activities carried out are not in accordance with its objects. The requirement for rejecting the registration under Section 12AA(3) is that if the trust or institution is carrying out non-genuine activities and the activities beyond the scope of its defined objects. But in the present case, the DIT(E) has not pointed out any such violation of the conditions. The DIT(E) is solely stated that the assessee is generating huge income by charging premium which over and above and the amount is invested in Fixed Deposit and not transmitted to the government body. As per the Maharashtra Slum Areas (Improvement, Clearance and Rehabilitation) Act, 1971 more specifically Slum Rehabilitation Authority 5 Section 3M, the Slum Rehabilitation Authority is utilizing and investing its fund as per the guidelines set out in the said Act. The Tribunal in case of Board of Control for Cricket in India vs. Pr. CIT (supra) held as under: 26. What essentially follows is that the remedy to the proviso to Section 2(15) coming into play is not denial of registration under section 12A or 12AA but denial of benefits of exemption under section 11 under section 13(8). That is the reason that along with the insertion of proviso to Section 2(15), effective from the same date, sub section 13(8) was also inserted and these two provisions are thus clearly complementary in nature. It is important to note that the Explanatory Memorandum to the Finance Bill categorically states that “there is need to ensure that if the purpose of a trust or institution does not remain charitable due to application of first proviso on account of commercial receipt threshold provided in second proviso in a previous year. Then, such trust or institution would not be entitled to get benefit of exemption in respect of its income for that previous year for which such proviso is applicable. Such denial of exemption shall be mandatory by operation of law and would not be dependent on any withdrawal of approval or cancellation of registration or a notification being rescinded”. The application of proviso to Section 2(15) is to be thus done on a year to year basis, while the grant of registration is a one time exercise.” The Hon’ble Bombay High Court in case of Mumbai Metropolitan Region Development Authority (supra) held as under: “28. In North Indian Association (supra) this court in similar circumstances observed that there is difference between registration and exemption.