MUMBAI RAILWAY VIKAS CORPN LTD, MUMBAI V. DIT (E), MUMBAI

ITA 1057/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3729 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 22-09-2015
• Assessment Year: 2013-2014
• Appeal Filed On: 14-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Charitable institution; Principle of natural justice; Maximum Marginal Rate; Cancellation of registration
• Section: 143(3); 12A; 12AA; 154; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A, MUMBAI BEFORE SHRI G.S.PANNU, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI, JUDICIAL MEMBER ITA NO. 1057/MUM/2014 ITA NO.2626/MUM/2014 MUMBAI RAILWAY VIKAS CORPN. LTD. 2 ND FLOOR, CHURCHGATE STATION BLDG., CHURCHGATE, MUMBAI -51 PAN:AACCM1284 B ...... APPELLANT VS. THE DIT(E), R.NO.616, 6 TH FLOOR, PIRAMAL CHAMBERS, LALBAUG, MUMBAI 400 012. .... RESPONDENT APPELLANT BY : SHRI VIPUL JOSHI RESPONDENT BY : S/SHRI E. SANKARAN/ SHI DDARAMAPPA KOPPAATTANVAR DATE OF HEARING : 03/06/2016 DATE OF PRONOUNCEMENT : 03/08/2016 ORDER PER G.S.PANNU,A.M: THE CAPTIONED ARE TWO APPEALS BY THE ASSESSEE, WH ICH SUBSTANTIVELY INVOLVE A SOLITARY ISSUE, ARISING F ROM THE ACTION OF THE DIRECTOR OF INCOME TAX (EXEMPTION) (IN SHORT THE D IRECTOR) IN CANCELLING/WITHDRAWING THE REGISTRATION GRANTED TO THE ASSESSEE UNDER SECTION 12A OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT). 2 MUMBAI RAILWAY VIKAS CORPN. LTD 2. ITA NO.1057/MUM/2014 IS AN APPEAL DIRECTED AGAIN ST THE ORDER PASSED BY THE DIRECTOR DATED 10/1/2014 UNDER SECTI ON 12AA(3) OF THE ACT, WHEREBY THE REGISTRATION GRANTED UNDER SECTION 12A OF THE ACT HAS BEEN CANCELLED. THE OTHER APPEAL OF THE ASSESSEE I N ITA NO.2626/MUM/2014 IS AGAINST AN ORDER PASSED BY THE DIRECTOR UNDER SECTION 154 OF THE ACT DATED 24/03/2014, WHEREBY T HE REGISTRATION CANCELLED EARLIER BY ORDER DATED 10/01/2014 HAS BEE N HELD TO BE EFFECTIVE FROM 29/01/2001. EACH OF THE AFORESAID ACTIONS OF THE DIRECTOR HAVE BEEN CHALLENGED BY THE ASSESSEE, BY R AISING MULTIPLE GROUNDS OF APPEAL, WHICH ARE AS UNDER:- GROUNDS OF APPEAL IN ITA NO.1057/MUM/2014: 1. BREACH OF THE PRINCIPLES OF ATURAL JUSTICE 1.1 THE DIRECTOR OF INCOME - TAX (EXEMPTION), MUMBA I ['THE DIT (E)'] ERRED IN NOT GRANTING PROPER, SUFFICIENT AND ADEQUATE OPPORT UNITY OF BEING HEARD TO THE APPELLANT WHILE PASSING THE ORDER CANCELLING RE GISTRATION U/S 12AA OF THE INCOME TAX ACT, 1961 ['THE ACT'] OF THE APPELLANT. 1.2 IT IS SUBMITTED THAT IN THE FACTS AND THE CIRCU MSTANCES OF THE CASE, AND IN LAW, THE ORDER SO PASSED BE HELD AS BAD IN LAW, AS THE SAME IS FRAMED IN GROSS BREACH OF THE PRINCIPLES OF NATURAL JUSTICE. WITHOUT PREJUDICE TO THE ABOVE: 2.1 THE DIT (E) ERRED IN CANCELLING THE REGISTRATI ON U/S. 12AA OF THE INCOME - TAX ACT, ['THE ACT'] OF THE APPELLANT. 2.2 IT IS SUBMITTED THAT IN THE FACTS AND THE CIRC UMSTANCES OF THE CASE, AND IN LAW, THE ORDER PASSED BY THE DIT (E) IS BAD, ILL EGAL AND VOID, AS THE SAME IS PASSED - WITHOUT JURISDICTION / IN EXCESS OF THE JU RISDICTION CONFERRED UPON HIM U/S. - 12AA (3) OF THE ACT. WITHOUTFURTHER PREJUDICE TO THE ABOVE: 3.1 EVEN ON MERITS, THE DIT (E) ERRED IN CANCELLIN G THE REGISTRATION U/S. 12AA OF THE ACT, ALREADY GRANTED TO THE APPELLANT IN 200 1. 3.2 WHILE DOING SO, THE DIT (E) ERRED IN: (I) BASING HIS ACTION ON SUSPICIOUS, SURMISES AND CONJECTURES; 3 MUMBAI RAILWAY VIKAS CORPN. LTD (II) TAKING INTO ACCOUNT IRRELEVANT AND EXTRANEOUS CONSIDERATIONS; AND (III) IGNORING RELEVANT MATERIAL AND CONSIDERATION. 3.3 IT IS SUBMITTED THAT IN THE FACTS AND CIRCUMS TANCES OF THE CASE, AND IN LAW, NO SUCH CANCELLATION WAS CALLED FOR. GROUNDS OF APPEAL IN ITA NO.2626/MUM/2014:- 1.1 THE DIRECTOR OF INCOME - TAX (EXEMPTION), MUMBA I ['THE DIT (E)'] ERRED IN PASSING THE ORDER U/S. 154 OF THE INCOME TAX ACT, 1 961 ['THE ACT']. 1.2 IT IS SUBMITTED THAT IN THE FACTS AND THE CIRCU MSTANCES OF THE CASE, AND IN LAW, THE ORDER SO PASSED IS BAD, ILLEGAL AND WITHOU T JURISDICTION AS THE NECESSARY PRECONDITIONS FOR INITIATING THE PROCEEDI NG AND COMPLETION THEREOF WERE NOT FULFILLED. 1.3 WITHOUT PREJUDICE TO THE GENERALITY OF THE ABO VE, IT IS SUBMITTED THAT IN THE CASE OF THE APPELLANT, THERE WAS NO 'MISTAKE AP PARENT FROM THE RECORDS' WITHIN THE MEANING OF SECTION 154 OF THE ACT. WITHOUT PREJUDICE TO THE ABOVE: 2.1 ASSUMING - BUT NOT ADMITTING - THAT THE DIT (E) HAD NECESSARY JURISDICTION, THE DIT (E) ERRED IN WITHDRAWING THE REGISTRATION U /S. 12A OF THE ACT GRANTED TO THE APPELLANT WITH EFFECT FROM THE DATE ON WHICH IT WAS GRANTED, THAT IS, 29.10.2001. 2.2 WITHOUT PREJUDICE TO THE GENERALITY OF THE ABO VE, IT IS SUBMITTED THAT THE REGISTRATION COULD HAVE BEEN WITHDRAWN, IF AT ALL, ONLY WITH EFFECT FROM THE DATE OF HIS ORDER OR, IN ANY CASE, NOT EARLIER TO 0 1.06.2012. 3. ALTHOUGH THE ASSESSEE HAS RAISED MULTIPLE GROUND S OF APPEAL BUT THE ACTION OF THE DIRECTOR IN CANCELLING/WITHDRAWIN G REGISTRATION GRANTED UNDER SECTION 12A OF THE ACT HAS BEEN SOUGH T TO BE CHALLENGED ON TWO GROUNDS. FIRSTLY, ON THE GROUND THAT THE D IRECTOR EXCEEDED HIS JURISDICTION BY INVOKING SECTION 12AA(3) OF THE ACT AND CANCELLING THE REGISTRATION ON EVENTUALITIES, WHICH ARE NOT SPECIF IED THEREIN. SECONDLY, IT IS ALSO SOUGHT TO BE CANVASSED THAT EVEN OTHERWI SE, ON MERITS TOO, THE ACTIVITIES BEING CARRIED OUT BY THE ASSESSEE ARE FOR A CHARITABLE PURPOSE AS DEFINED IN SECTION 2(15) OF THE ACT A ND, THERE IS NO 4 MUMBAI RAILWAY VIKAS CORPN. LTD JUSTIFICATION FOR CANCELLING/WITHDRAWING THE REGIST RATION, EVEN AFTER THE INSERTION OF PROVISO BELOW SECTION 2(15) BY THE FIN ANCE ACT,2008 W.E.F. 01/04/2009. 4. IN THIS BACKGROUND, THE RIVAL PARTIES HAVE MADE THEIR SUBMISSIONS. THE RELEVANT MATERIAL ON RECORD HAS ALSO BEEN PERUS ED IN ORDER TO DISPOSE OF THE CAPTIONED APPEALS. THE APPELLANT BEF ORE US IS A GOVERNMENT COMPANY INCORPORATED UNDER SECTION 617 O F THE COMPANIES ACT, 1956. ITS SHAREHOLDING IS JOINTLY OWNED BY THE MINISTRY OF RAILWAYS (GOVERNMENT OF INDIA) AND THE GOVERNMEN T OF MAHARASHTRA IN THE RATIO OF 51:49. BROADLY SPEAKING, THE APPELL ANT IS A PROJECT IMPLEMENTING AGENCY FOR THE RAILWAY COMPONENT OF T HE MUMBAI URBAN TRANSPORT PROJECT (MUTP). THE APPELLANT WAS G RANTED REGISTRATION UNDER SECTION 12A OF THE ACT BY THE DI RECTOR ON 29/10/2001 W.E.F. 12/07/1999. IT HAS BEEN STATED BEFORE US TH AT THEREAFTER SCRUTINY ASSESSMENTS UNDER SECTION 143(3) OF THE ACT HAVE BEEN FINALIZED FOR ALMOST 10 YEARS AND THE BENEFIT OF SECTIONS 11/12 O F THE ACT HAS BEEN GRANTED. SUBSEQUENTLY, THE DIRECTOR ISSUED A SHOW -CAUSE NOTICE DATED 3/12/2013, PROPOSING TO CANCEL THE REGISTRATION GRA NTED UNDER SECTION 12A OF THE ACT FOR THE REASONS MENTIONED IN THE SAI D NOTICE, A COPY OF WHICH HAS BEEN PLACED IN THE PAPER BOOK AT PAGES 51 6 TO 529. NOTABLY, A DETAILED SHOW-CAUSE NOTICE HAS BEEN ISSUED BUT IN SUM AND SUBSTANCE THE CHARGES MADE AGAINST THE ASSESSEE WERE (I) THAT IT IS A PUBLIC SECTOR COMPANY UNDER SECTION 617 OF THE COMPANIES ACT, 195 6 AND NOT A NON- PROFIT MAKING ORGANIZATION UNDER SECTION 25 OF THE COMPANIES ACT,1956 OR A TRUST; (II) THAT MAJORITY OF THE OBJECTS SHOW THAT IT EXISTS FOR THE PURPOSES OF PROFIT; AND, (III) THAT IN TERMS OF THE PROVISO TO SECTION 2(15) 5 MUMBAI RAILWAY VIKAS CORPN. LTD OF THE ACT AND TAKING INTO ACCOUNT THE OBJECTS, ASS ESSEE IS ENGAGED IN NON-CHARITABLE ACTIVITIES. IN RESPONSE, ASSESSEE C OMPANY MADE DETAILED SUBMISSIONS, WHICH HAVE ALSO BEEN REPRODUCED BY THE DIRECTOR IN THE IMPUGNED ORDER. THE ASSESSEE MADE VARIED SUBMISSIO NS, VIZ. THAT IT WAS A NON-PROFIT MAKING ORGANIZATION FINANCED BY THE GO VERNMENT OF MAHARASHTRA AND MINISTRY OF RAILWAYS(GOVERNMENT OF INDIA), FORMED WITH THE OBJECT OF ADVANCING GENERAL PUBLIC UTILIT Y; THAT THE ACTIVITIES ARE BEING CARRIED OUT AS PER ITS OBJECTS AND IT WAS ASSISTING INDIAN RAILWAYS, AND THE GOVERNMENT OF THE STATE OF MAHARA SHTRA IN EXECUTING VARIOUS PROJECTS TO IMPROVE SUB-URBAN RAILWAY SYSTE M ALONGWITH INFRASTRUCTURE REQUIRED TO CATER TO THE SUB-URBAN N EEDS OF THE TRAIN COMMUTERS. IT WAS THUS, CONTENDED THAT IT WAS NOT CARRYING OUT ANY ACTIVITY OF NON-CHARITABLE OR COMMERCIAL IN NATURE. ONE PERTINENT SUBMISSION PUT-FORTH BY THE ASSESSEE WAS TO THE EF FECT THAT ON AN EARLIER OCCASION A NOTICE WAS ISSUED ON 06/02/2002 PROPOSING TO WITHDRAW THE REGISTRATION GRANTED UNDER SECTION 12A OF THE ACT BY THE THEN DIRECTOR ON THE PLEA THAT CERTAIN CLAUSES OF THE MEMORANDUM AND ARTICLES OF ASSOCIATION SUGGESTED THAT THE ENTIRE INCOME WAS NOT WHOLLY MEANT FOR THE UTILIZATION TOWARDS THE OBJECTS OF TH E ASSESSEE-COMPANY. IT WAS POINTED OUT THAT THE NECESSARY AMENDMENTS WE RE MADE TO THE MEMORANDUM AND ARTICLES OF ASSOCIATION AND ON THE S TRENGTH OF THE SAME, THE THEN DIRECTOR DROPPED THE PROCEEDINGS INI TIATED FOR WITHDRAWAL VIDE AN ORDER DATED 15/12/2003, A COPY O F WHICH HAS ALSO BEEN PLACED IN THE PAPER BOOK FILED BEFORE US. ON THE BASIS OF SUCH SUBMISSIONS, ASSESSEE CONTENDED THAT THE PROCEEDING S INITIATED TO CANCEL/WITHDRAW REGISTRATION BE DROPPED. 6 MUMBAI RAILWAY VIKAS CORPN. LTD 4.1 HOWEVER, THE DIRECTOR WAS NOT IMPRESSED WITH SU BMISSIONS PUT- FORTH BY THE ASSESSEE AND INSTEAD HE HELD THAT THE ACTIVITIES OF THE ASSESSEE WERE NOT IN ACCORDANCE WITH ITS OBJECTS A ND, THEREFORE, THE CONDITION LAID DOWN UNDER SECTION 12AA(3) OF THE AC T HAS BEEN FULFILLED; AND, HENCE HE CANCELLED THE REGISTRATION GRANTED UN DER SECTION 12A OF THE ACT. THE MAIN POINTS WHICH THE DIRECTOR HAS NO TED IN ORDER TO ARRIVE AT AFORESAID CONCLUSION CAN BE SUMMARIZED AS FOLLOW S- THAT THE OBJECTS CLAUSE CONTAINED IN THE MEMORANDUM AND ARTICLES OF ASSOCIATION ALLOWS THE ASSESSEE TO DO BUSINESS, AND THAT TOO FOR PRO FITS; THAT IN TERMS OF THE AMENDED PROVISO TO SECTION 2(15) OF THE ACT, EV EN IF ASSESSEE HAD APPLIED INCOME FOR GENERAL PUBLIC UTILITY IT WOUL D BE DEEMED TO BE NON-CHARITABLE PURPOSE AS IT INVOLVED CARRYING ON O F BUSINESS; THAT ENTIRE EXPENSES WERE INCURRED FOR ESTABLISHMENT AN D ADMINISTRATION/ DEPRECIATION AND IT WAS LEVERAGING ITS FUNDS TO EA RN INCOME, WHICH WAS ALSO NOT BEING APPLIED FOR THE OBJECT FOR ANY GENE RAL PUBLIC UTILITY. 4.2 IN THE ABOVE BACKGROUND, THE LD. REPRESENTATIVE FOR THE ASSESSEE HAS VEHEMENTLY POINTED OUT THAT THE DIRECTOR ERRE D IN LAW AS ALSO ON FACTS IN INVOKING THE PROVISIONS OF SECTION 12AA(3) OF THE ACT FOR CANCELLING REGISTRATION ORIGINALLY GRANTED TO THE A SSESSEE UNDER SECTION 12A ON 29/10/2001. IT IS SOUGHT TO BE CANVASSED TH AT REGISTRATION WAS GRANTED AFTER MAKING DUE ENQUIRIES AND VERIFICATION ON ALL ASPECTS, INCLUDING THE OBJECTS CLAUSE CONTAINED IN THE MEM ORANDUM AND ARTICLES OF ASSOCIATION AND THAT WITHDRAWING/ CAN CELLING OF REGISTRATION ALREADY GRANTED WAS INVALID, AS THERE IS NO CHANGE IN THE ACTIVITIES BEING CARRIED OUT. THE LD.REPRESENTATIVE FOR THE ASSESSEE ALSO EMPHASIZED THAT EVEN AFTER THE GRANT OF REGISTRATION, ON 06/0 2/2002 THE THEN 7 MUMBAI RAILWAY VIKAS CORPN. LTD DIRECTOR SOUGHT TO WITHDRAW IT IN VIEW OF CERTAIN C LAUSES IN THE MEMORANDUM AND ARTICLES OF ASSOCIATION, WHICH WERE APPROPRIATELY AMENDED BY THE ASSESSEE AND CONSEQUENTLY, THE PROCE EDINGS TO CANCEL/WITHDRAW THE REGISTRATION WAS DROPPED BY WAY OF A WRITTEN ORDER DATED 15/12/2003. IT WAS THEREFORE, CONTENDE D THAT ON MORE THAN ONE OCCASION THE OBJECTS CLAUSE AND THE ACTIVI TIES BEING CARRIED OUT BY THE ASSESSEE HAVE BEEN EXAMINED BY THE DIRECTOR AND IN THE ABSENCE OF ANY CHANGE IN EITHER OF THEM, IT IS NOT PERMISSI BLE FOR THE DIRECTOR NOW TO SAY THAT THE ACTIVITIES ARE NOT FOR CHARITA BLE PURPOSE WITHIN THE MEANING OF SECTION 2(15) OF THE ACT. IT IS ALSO PO INTED OUT THAT EVEN IN THE SCRUTINY ASSESSMENTS FRAMED FROM YEAR TO YEAR UNDER SECTION 143(3) OF THE ACT, THE OBJECTS CLAUSE AS WELL AS NA TURE OF ACTIVITIES WERE EXAMINED AND BENEFIT OF SECTIONS 11/12 OF THE ACT W AS DULY GRANTED FOR ALMOST TEN YEARS. 4.3 ON THE POINT OF JURISDICTION, IT WAS SOUGHT TO BE CANVASSED THAT THE POWER OF WITHDRAWAL UNDER SECTION 12AA(3)OF THE ACT, AS IT STOOD FOR THE RELEVANT PERIOD UNDER CONSIDERATION, WAS RE STRICTIVE AND LIMITED ONLY IN A SITUATION WHERE THE DIRECTOR WAS SATISFIE D, (A) THAT THE ACTIVITIES ARE NOT GENUINE; OR (B) THAT THE ACTIV ITIES ARE NOT BEING CARRIED ON IN ACCORDANCE WITH THE OBJECTS OF THE AS SESSEE. IT WAS POINTED OUT THAT BOTH THE ASPECTS ARE MISSING IN TH E PRESENT CASE, INASMUCH AS, THE REASONS ADVANCED BY THE DIRECTOR T O CANCEL THE REGISTRATION ARE OTHER THAN THOSE SPECIFIED IN SEC TION 12AA(3) OF THE ACT. 5. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATI VE HAS PRIMARILY RELIED UPON THE ORDER OF THE DIRECTOR IN SUPPORT OF THE CASE OF 8 MUMBAI RAILWAY VIKAS CORPN. LTD THE REVENUE. THE LD. DEPARTMENTAL REPRESENTATIVE P OINTED OUT THAT THE ACTIVITIES OF THE ASSESSEE CANNOT BE SAID TO BE FOR CHARITABLE PURPOSE AS THE ASSESSEE COULD NOT SUBSTANTIATE BE FORE THE DIRECTOR THAT ITS ACTIVITIES ARE FOR GENERAL PUBLIC UTILITY . IT WAS ALSO POINTED OUT THAT THE DIRECTOR HAS BROUGHT OUT IN THE IMPUGNED ORDER THAT THE INCOME BEING EARNED WAS BY WAY OF INTEREST ON FIX ED DEPOSITS WITH BANKS, ETC. AND, THEREFORE, IT COULD BE SAID THAT A SSESSEE WAS ONLY LEVERAGING ITS FUNDS TO EARN INCOME, AND SUCH INCOM E WAS BEING USED TO DEFRAY ESTABLISHMENT AND ADMINISTRATIVE EXPENSES ON LY AND NOT OBJECTS OF ANY GENERAL PUBLIC UTILITY. IT WAS, THEREFORE, C ONTENDED THAT ITS ACTIVITIES COULD NOT BE SAID TO BE BEING CARRIED OU T FOR ANY CHARITABLE PURPOSE, AND THE DIRECTOR WAS JUSTIFIED IN CANCELL ING THE REGISTRATION FOR THE REASONS CONTAINED IN THE ORDER. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. THE CRUX OF THE CONTROVERSY BEFORE US ARISES FROM THE ACTION OF THE DIRECTOR TO CANCEL THE REGISTRATION ALREADY GRANTED TO THE ASSE SSEE UNDER SECTION 12A OF THE ACT. IN DOING SO, THE DIRECTOR HAS INVO KED THE POWERS ENSHRINED ON HIM BY SECTION 12AA(3) OF THE ACT. TH E FIRST AND THE FOREMOST ARGUMENT SET-UP BY THE ASSESSEE IS THAT TH E POWER OF CANCELLATION ENSHRINED IN SECTION 12AA(3)OF THE ACT HAS NOT BEEN JUSTIFIABLY EXERCISED BY THE DIRECTOR, AS THE REQUI SITE CONDITIONS SPECIFIED THEREIN ARE NOT FULFILLED. NOTABLY, SECT ION 12AA(3) OF THE ACT PRESCRIBES THAT REGISTRATION ONCE GRANTED UNDER SEC TION 12A OF THE ACT CAN BE CANCELLED/WITHDRAWN ONLY IF ONE OR BOTH OF T HE CONDITIONS CONTAINED THEREIN ARE FULFILLED, NAMELY- THAT THE ACTIVITIES ARE NOT GENUINE OR THAT THE ACTIVITIES ARE NOT BEING CARRIE D OUT IN ACCORDANCE 9 MUMBAI RAILWAY VIKAS CORPN. LTD WITH ITS OBJECTS. SO FAR AS THE AFORESAID LEGAL POSITION IS CONCERNED, IT IS SUPPORTED BY THE PHRASEOLOGY OF SECTION 12AA(3) OF THE ACT ITSELF. BEFORE US, THE LD. REPRESENTATIVE FOR THE ASSESSEE HAS RELIED UPON THE JUDGMENT OF THE HONBLE MADRAS HIGH COURT IN THE CA SE OF CIT VS. SARVODAYA ILAKKIYA PANNAI. 343 ITR 300(MAD) IN SUPP ORT OF THE AFORESAID PREMISE. IN THE CASE BEFORE HONBLE MADRAS HIGH COU RT, THE ASSESSEE WAS GRANTED REGISTRATION UNDER SECTION 12A(1)(A) OF THE ACT AND LATER, IT WAS REVOKED BY INVOKING SECTION 12AA(3) OF THE ACT ON THE GROUND THAT THE ASSESSEE WAS NOT ENTITLED TO EXEMPTION UNDER S ECTION 11(1)(A) OF THE ACT. THE TRIBUNAL NOTED THAT THE ACTIVITIES BE ING CARRIED OUT BY THE ASSESSEE WERE NOT CONTRARY TO ITS OBJECTS AND THER EFORE, IT WAS HELD THAT THE POWER UNDER SECTION 12AA(3) WAS NOT PROPER LY EXERCISED AND IT RESTORED THE REGISTRATION ALREADY GRANTED. THE H ONBLE HIGH COURT OF MADRAS AFFIRMED THE ORDER OF THE TRIBUNAL BY NOTICI NG THAT THE POWER TO CANCEL REGISTRATION ENSHRINED UNDER SECTION 12AA (3) OF THE ACT CAN BE EXERCISED ONLY ON EXISTENCE OF THE TWO CONDITIONS CONTAINED THEREIN. ACCORDING TO THE HONBLE HIGH COURT, WHETHER AN IN COME DERIVED BY THE ASSESSEE IS ASSESSABLE TO TAX OR IS ENTITLED TO EXEMPTION UNDER SECTION 11 IS A MATTER ENTIRELY LEFT TO THE ASSESS ING OFFICER AND THE SAME IS NOT RELEVANT FOR THE PURPOSES OF APPLYING SECTION 12AA(3) OF THE ACT. TO THE SIMILAR EFFECT IS THE SUBSEQUENT JUDGMENT OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF TAMIL NAD U CRICKET ASSOCIATION .V. DDIT(E) (2014) 360 ITR 633 (MAD.). IN THE SAID JUDGMENT ALSO, THE HONBLE HIGH COURT RE-AFFIRMED THE PROPOS ITION THAT THE CANCELLATION OF REGISTRATION IS PERMISSIBLE ONLY UN DER CIRCUMSTANCES CONTAINED IN SECTION 12AA(3) OF THE ACT. SIMILARLY , IN THE CASE OF CIT VS. 10 MUMBAI RAILWAY VIKAS CORPN. LTD VED NIKETAN DHAM, PUBLIC CHARITABLE TRUST, 219 TAXM AN 115(P&H), THE HONBLE HIGH COURT SET-ASIDE THE CANCELLATION OF RE GISTRATION EFFECTED BY THE COMMISSIONER UNDER SECTION 12AA(3) OF THE ACT O N THE GROUND THAT THERE WAS NO SATISFACTION RECORDED BY THE COMMISSIO NER AS TO HOW THE TWO CONDITIONS SPECIFIED IN SECTION 12AA(3) WERE FU LFILLED. APART FROM THE AFORESAID DECISIONS OF THE HONBLE HIGH COURT S, THERE ARE A PLETHORA OF DECISIONS OF VARIOUS BENCHES OF THE TR IBUNAL ON THE SAID PROPOSITION WHICH ARE NOT BEING DETAILED HEREIN FO R THE SAKE OF BREVITY. BE THAT AS IT MAY, THE PHRASEOLOGY OF SECTION 12AA( 3) OF THE ACT AS WELL AS AFORESAID JUDGMENTS JUSTIFY AN INFERENCE THAT TH E POWER OF CANCELLATION CONTAINED IN SECTION 12AA(3) IS NOT UN FETTERED. IT IS CIRCUMSCRIBED BY THE CONDITIONS PRESCRIBED IN SECTI ON 12AA(3) OF THE ACT. IT IS ALSO CLEAR THAT SUCH POWER DOES NOT PERM IT A WHOLESALE REVIEW OF THE INGREDIENTS WHICH HAVE BEEN CONSIDERED BY TH E DIRECTOR WHILE GRANTING REGISTRATION UNDER SECTION 12A OF THE ACT . TO ILLUSTRATE, WE MAY POINT OUT THAT AT THE TIME OF EVALUATING THE APPLIC ATION OF REGISTRATION UNDER SECTION 12AA (1) OF THE ACT, THE DIRECTOR IS MANDATED TO SATISFY HIMSELF ON TWO CONDITIONS I.E. THAT THE ACTIVITIES ARE GENUINE AND THAT THE OBJECTS OF THE APPLICANT FALL WITHIN THE MEANIN G OF 'CHARITABLE PURPOSE' AS PER SECTION 2(15) OF THE ACT. IN CONTRA ST, AT THE TIME OF CANCELLING OF REGISTRATION UNDER SECTION 12AA (3) O F THE ACT, THE DIRECTOR HAS TO BE SATISFIED ABOUT EITHER OR BOTH OF THE CONDITIONS PRESCRIBED THEREIN, NAMELY, THAT THE ACTIVITIES ARE NOT GENUIN E OR THAT THE ACTIVITIES ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OB JECTS OF THE TRUST OR INSTITUTION, AS THE CASE MAY BE. PERTINENTLY, THE S ATISFACTION ABOUT THE OBJECTS OF THE TRUST OR INSTITUTION BEING IN ACCOR DANCE WITH SECTION 11 MUMBAI RAILWAY VIKAS CORPN. LTD 2(15) OF THE ACT, IS NOT A CONDITION MENTIONED IN S ECTION 12AA(3) OF THE ACT TO CANCEL THE REGISTRATION ALREADY GRANTED UNDE R SECTION 12A OF THE ACT. THE GROUND AVAILABLE WITH THE DIRECTOR TO CA NCEL THE REGISTRATION IS TO EITHER ESTABLISH THAT THE ACTIVITIES ARE NOT G ENUINE OR THAT THE SAME ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OB JECTS OF THE INSTITUTION. IN OUR CONSIDERED OPINION, THE DIRECT OR, WHO IS A STATUTORY AUTHORITY UNDER THE ACT, IS BOUND TO FUNCTION STRIC TLY IN ACCORDANCE WITH THE PROVISIONS OF THE ACT, AND HAS NO POWER, JURISD ICTION OR DISCRETION TO GO BEYOND THE STATUTORY PROVISIONS. IT IS QUITE WEL L SETTLED THAT NO POWER CAN BE ASSUMED IN THE ABSENCE OF ANY SPECIFIC PROVISION. THEREFORE, WE MAY PROCEED FURTHER ON THE PREMISE TH AT THE REGISTRATION ALREADY GRANTED UNDER SECTION 12A OF THE ACT COULD HAVE BEEN CANCELLED BY THE DIRECTOR ONLY ON THE FULFILMENT OF THE CONDITIONS MENTIONED IN SECTION 12AA (3) OF THE ACT AND NOT FO R ANY OTHER REASONS. 6.1 IN THE ABOVE BACKGROUND, WE MAY NOW EXAMINE THE IMPUGNED ORDER OF THE DIRECTOR AS TO WHETHER THE CONDITIONS PRESCRIBED IN SECTION 12AA(3) OF THE ACT ARE SATISFIED. BEFORE WE PROCEE D FURTHER, WE FIND IT APPROPRIATE TO BRIEFLY TOUCH UPON THE PECULIAR FEAT URES OF THE APPELLANT BEFORE US. AS NOTED EARLIER, THE APPELLANT BEFORE US IS A GOVERNMENT COMPANY INCORPORATED ON 12/07/1999 UNDER SECTION 61 7 OF THE COMPANIES ACT, 1956. ITS SHAREHOLDING IS OWNED BY THE MINISTRY OF RAILWAYS (GOVERNMENT OF INDIA) AND THE STATE GOVERN MENT OF MAHARASHTRA. AT CERTAIN POINT OF TIME, BEFORE APPE LLANT COMPANY WAS INCORPORATED, CERTAIN PROJECTS RELATING TO THE TRAN SPORT NEEDS OF MUMBAI METROPOLITAN REGION (MMR) COMMUTERS WERE IDE NTIFIED UNDER MUTP. SUCH PROJECTS RELATED TO THE URBAN TRANSP ORT INFRASTRUCTURE IN 12 MUMBAI RAILWAY VIKAS CORPN. LTD MMR, WHICH INCLUDED THE SUB-URBAN RAIL NET WORK OF MUMBAI ALSO. SUCH PROJECTS INVOLVED HUGE FINANCIAL RESOURCES, AN D THE RAILWAYS WERE ALREADY FACING SEVERE OPERATIONAL PROBLEMS IN MMR, THE GOVERNMENT AT THE CENTRE AND IN THE STATE OF MAHARASHTRA FOUND A RESOLUTION BY SETTING-UP A SPECIAL PURPOSE VEHICLE(SPV) FOR SPEE DY AND EFFICIENT IMPLEMENTATION OF RAILWAY COMPONENT OF MUTP. ACCO RDINGLY, ASSESSEE COMPANY WAS SET-UP AS A SPV FOR TAKING UP PROJECT S CONCERNING MUMBAI SUB-URBAN RAIL NETWORK. IN FACT, A PERUSAL O F THE MAIN OBJECTS CLAUSE IN THE MEMORANDUM AND ARTICLES OF ASSOCIATI ON OF THE ASSESSEE- COMPANY BEARS TESTIMONY TO THE ABOVE, AND IT READS AS UNDER:- A. MAIN OBJECTS OF THE COMPANY TO BE PURSUED ON I TS INCORPORATION: (I) TO DEVELOP COORDINATED PLANS AND IMPLEMENT THE RAIL INFRASTRUCTURE PROJECTS, INTEGRATE URBAN DEVELOPMEN T PLAN FOR MUMBAI WITH RAIL CAPACITY AND PURPOSE INVESTMEN TS, UNDERTAKE COMMERCIAL DEVELOPMENT RAILWAY LAND AND A IR SPACE, COORDINATE AND FACILITATE IMPROVEMENTS OF TR ACK, DRAINAGE AND REMOVAL OF ENCROACHMENTS AND TRESPASSE RS AND COORDINATE WITH ORGANIZATIONS OPERATING THE TRA IN SERVICES AND RESPONSIBLE FOR PROTECTION OF RAILWAY S RIGHT OF WAY AND URBAN DEVELOPMENT FOR PURPOSEFUL RESOLUTIO N OF ALLIED ISSUES AND PROBLEMS, AND DISCHARGE ITS LIABI LITIES ARISING DUE TO SUCH PROJECTS AND ACTION. BEFORE US, IT HAS BEEN ELABORATELY BROUGHT OUT THAT UNDER THE FIRST PHASE OF MUTP (AT A COST OF RS.4501 CRORES) 101 EMU RAKES HAVE BEEN PROCURED, WHICH HAVE MADE 418 ADDITIONAL TRAIN SERV ICES POSSIBLE AND GENERATED AN ADDITIONAL 33% CARRYING CAPACITY IN LOCAL TRAINS IN MUMBAI. IT HAS ALSO BEEN POINTED OUT THAT A STATE OF THE ART EMU MAINTENANCE CAR SHED HAS BEEN SET UP AT VIRAR AND A DDITIONAL 93 TRACK KILOMETRES HAVE BEEN ADDED, WHICH HAS FACILITATED SEGREGATING MAINLINE OPERATIONS FROM SUBURBAN OPERATIONS. IT WAS EXTEND ED FURTHER TO 13 MUMBAI RAILWAY VIKAS CORPN. LTD NETWORK EXPANSION, SERVICE EFFICIENCY IMPROVEMENT, ROLLING STOCK PROCUREMENT, INSTITUTIONAL STRENGTHENING AND R&R IS UNDER PROGRESS UNDER MUTP-II AT APPROXIMATE COST OF RS.7000 CRORE . ALTHOUGH DETAILED WRITTEN SUBMISSIONS HAVE BEEN FILED POINTI NG OUT VARIOUS ACTIVITIES UNDERTAKEN, BUT WE DO NOT DILATE FURTHER ON IT; IT WOULD SUFFICE TO NOTICE THAT THE PROJECTS WHICH ARE BEING UNDERTAKEN BY THE ASSESSEE COMPANY ARE IN PUBLIC INTEREST WITH THE UL TIMATE AIM OF IMPROVING TRANSPORTATION INFRASTRUCTURE IN MMR. IT WAS ALSO EMPHAZISED BEFORE US, WITH REFERENCE TO THE MATERIA L ON RECORD, THAT THE PROJECTS UNDERTAKEN BY THE ASSESSEE COMPANY WE RE BEING EARLIER EXECUTED BY MINISTRY OF RAILWAYS ITSELF DEPARTMENTA LLY. IT HAS ALSO BEEN POINTED OUT THAT THE WORK UNDERTAKEN BY THE ASSESSE E COMPANY IS TREATED AT PAR WITH RAILWAYS AND REFERENCE HAS BE EN MADE TO THE MEMORANDUM OF UNDERSTANDING BETWEEN THE GOVERNMENT OF INDIA (MINISTRY OF RAILWAYS) AND ASSESSEE IN THIS REGARD , A COPY OF WHICH IS PLACED IN THE PAPER BOOK AT PAGES 13-18. IT IS ALS O CLEAR THAT THE FUNDS FOR SUCH PROJECTS ARE DISBURSED TO THE ASSESSEE OU T OF BUDGETARY ALLOCATION OF INDIAN RAILWAYS, INCLUDING THE SPECIF IC FUNDS RECEIVED FROM THE WORLD BANK. THE LD. REPRESENTATIVE FOR THE AS SESSEE HAD EMPHASIZED THAT ALL OPERATING ASSETS CREATED UNDE R MUTP, THROUGH ASSESSEE ARE TRANSFERRED TO / RETAINED BY THE RAILW AYS FOR OPERATIONS, MAINTENANCE AND REPLACEMENT. 6.2 IT WAS ALSO POINTED OUT THAT THE DIRECTION & GE NERAL (D&G) CHARGES BEING RECEIVED BY THE ASSESSEE ARE NOTHING BUT INTER- DEPARTMENTAL ALLOCATIONS TO COVER ADMINISTRATIVE OV ERHEADS. IT HAS BEEN EXPLAINED THAT THE D&G CHARGES FOR WORK UNDER MUTP IS BASED ON 14 MUMBAI RAILWAY VIKAS CORPN. LTD THE QUANTUM OF WORK TO BE CARRIED OUT BY THE ASSESS EE AND ARE DETERMINED IN TERMS OF A STANDARD POLICY OF THE RA ILWAYS. IT IS ALSO CLEAR THAT ASSESSEE COMPANY FUNCTIONS UNDER COMPLET E SUPERINTENDENCE AND CONTROL OF GOVERNMENT OF INDIA , EXERCISED THROUGH THE MINISTRY OF RAILWAYS. IT IS ALSO ASSE RTED BEFORE US, AND WITHOUT ANY CONTROVERTION, THAT ASSESSEE HAS NOT UN DERTAKEN ANY ACTIVITY FOR ANY PARTY OTHER THAN THE GOVERNMENT OF INDIA, AND THAT THE PROJECTS BEING UNDERTAKEN BY THE ASSESSEE COMPANY A RE FUNDED BY THE WORLD BANK AND/OR BY THE BUDGETARY SUPPORT PROVIDE D BY THE STATE EXCHEQUER, AND NO FUNDS ARE RECEIVED FROM ANY OUT SIDE PARTY. ALL THE AFORESAID FEATURES DO SHOW THAT THE TASK OF THE AS SESSEE IS TO ACT AS AN OVERALL CO-ORDINATION AND IMPLEMENTING AGENCY FOR THE RAILWAY COMPONENT OF MUTP WORKS. 6.3 BE THAT AS IT MAY, IN THE BACKGROUND OF THE AFO RESAID FEATURES OF ASSESSEE COMPANY, WE NOW REFER TO THE SPECIFIC POIN TS RAISED BY THE DIRECTOR TO SAY THAT THE ACTIVITIES OF THE ASSESSEE ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH ITS OBJECTS IN ORDER TO JUST IFY HIS INVOKING OF SECTION 12AA(3) OF THE ACT. AS PER THE DIRECTOR, T HE ACTIVITIES CARRIED ON BY THE ASSESSEE ARE NOT IN ACCORDANCE WITH THE OBJE CTS BECAUSE (I)ASSESSEE IS ONLY LEVERAGING ITS FUNDS TO EARN IN TEREST INCOME AND THE SAME IS NOT APPLIED FOR ITS OBJECTS; AND (II) THE EXPENSES ARE INCURRED FOR ESTABLISHMENT, ADMINISTRATIVE FUNCTIONS AND NO T FOR ANY CHARITABLE OR GENERAL PUBLIC UTILITY PURPOSE. ON BOTH THE ASP ECTS, LD. REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT TH E ACTIVITIES OF ASSESSEE ARE TOTALLY CONTROLLED/MANAGED BY GOVERNME NT OF INDIA AND SUBJECT TO REVIEW BY THE COMPTROLLER AND AUDITOR GE NERAL OF INDIA. IT 15 MUMBAI RAILWAY VIKAS CORPN. LTD HAS ALSO BEEN POINTED OUT THAT THE ACTIVITIES OF THE ASSESSEE HAVE BEEN SCRUTINIZED BY THE ASSESSING OFFICER IN THE COURSE OF SCRUTINY ASSESSMENTS MADE UNDER SECTION 143(3) OF THE ACT F OR VARIOUS ASSESSMENT YEARS STARTING FROM 2003-04 TO 2010-11 WITHOUT ANY ADVERSE FINDINGS, AND COPIES OF SUCH ASSESSMENT ORD ERS HAVE BEEN PLACED IN THE PAPER BOOK AT PAGES 399 TO 472. LD. REPRESENTATIVE FOR THE ASSESSEE EXPLAINED THAT NO PROFITS ARE EARNED FROM THE ACTIVITY OF EXECUTING PROJECTS OF MUTP AND THE INFLOW BY WA Y OF D&G CHARGES IS AN INTER-DEPARTMENTAL ALLOCATION TO MEET THE AD MINISTRATIVE COSTS. IT WAS POINTED OUT THAT SUCH CHARGES ARE NOT EVEN SUFF ICIENT TO COVER THE ENTIRE ADMINISTRATIVE COST, AND THE ONLY OTHER SOUR CE OF INCOME IS INTEREST EARNINGS ON BANK DEPOSITS, WHICH IS BEI NG EARNED FROM A PERMITTED MODE OF INVESTMENT. IT WAS POINTED OUT T HAT EVEN INTEREST INCOME IS UTILIZED TOWARDS THE OBJECTS OF THE ASSE SSEE COMPANY AND IN SUPPORT REFERENCE HAS BEEN MADE TO A COMMUNICATION FROM RAILWAY BOARD, A COPY OF WHICH IS PLACED AT PAGE 53 OF THE PAPER BOOK TITLED INDEX OF NOTES FILED BEFORE US. IT IS ALSO PRESC RIBED THEREIN THAT ANY SURPLUS WITH THE ASSESSEE IS ALSO TO BE PLOUGHED FO R FUNDING OF THE MUTP PROJECTS. IT IS ALSO POINTED OUT THAT NO COMME RCIAL ACTIVITY HAS BEEN CARRIED OUT AND THAT ALL ITS ACTIVITIES ARE FO R THE PURPOSE FOR WHICH ASSESSEE WAS SET-UP. IN THIS CONTEXT, WE HAVE CARE FULLY PERUSED THE IMPUGNED ORDER OF THE DIRECTOR AND FIND THAT HIS AV ERMENT IN THE CONCLUDING PARAGRAPH THAT THE ACTIVITIES OF THE TRUST ARE NOT IN ACCORDANCE WITH THE OBJECTS IS ONLY A BALD ASSERTION, DEVOID OF ANY FACTUAL SUPPORT. IN FACT, THE MAIN OBJECT OF THE ASSESSEE, AS REPRODUCED EARLIER, IS TO DEVELOP COORDINATED PLANS AND THE RAILWAY 16 MUMBAI RAILWAY VIKAS CORPN. LTD INFRASTRUCTURE PROJECTS, INTEGRATE URBAN DEVELOPMEN T PLAN FOR MUMBAI WITH RAIL CAPACITY, ETC. IN ORDER TO ACHIEVE THE A FORESAID, ASSESSEE COMPANY IS AN SPV TASKED TO EXECUTE THE SUB-URBAN R AIL PROJECTS IDENTIFIED UNDER MUTP. IN OUR CONSIDERED OPINION, THE DIRECTOR HAS COMPLETELY MISDIRECTED HIMSELF IN CONSTRUING THE AC TIVITIES OF THE ASSESSEE. THE VARIOUS PROJECTS BEING UNDERTAKEN BY THE ASSESSEE HAVE BEEN COMPLETELY LOST SIGHT OF AND RATHER MUCH HAS B EEN MADE OF THE ITEMS OF RECEIPTS BY WAY OF D&G CHARGES, INTEREST I NCOMES AND EXPENSES ON ADMINISTRATIVE AND ESTABLISHMENT OVERHE ADS. QUITE CLEARLY, ANY ORGANIZATION WOULD REQUIRE TO SPEND ON ADMINIST RATIVE OVERHEADS IN ORDER TO CARRY OUT ITS OBJECTIVES. SO HOWEVER, THE FUNCTION OF MAINTAINING AN ADMINISTRATIVE SET-UP CANNOT BE CONF USED WITH THE OBJECTS FOR WHICH THE ASSESSEE COMPANY HAS BEEN SET -UP, AND WHICH IT HAS BEEN UNDERTAKING EVER SINCE NAMELY, THE EXECUTI ON OF THE RAILWAY COMPONENT OF THE MUTP. IN FACT, AT NO STAGE HAS R EVENUE DISPUTED THE FACT THAT THE ASSESSEE COMPANY IS EXECUTING RAIL PR OJECTS IDENTIFIED UNDER THE MUTP. IN OUR CONSIDERED OPINION, THE DIR ECTOR ERRED IN NOT APPRECIATING THE DIFFERENCE BETWEEN THE FUNCTIONING OF ADMINISTRATIVE SET-UP, WHICH IS ESSENTIAL TO EXECUTE THE OBJECTS E NTRUSTED TO THE ASSESSEE AND, THE ACTIVITY OF EXECUTING THE RAILWAY COMPONENT OF THE MUTP. THE ADMINISTRATIVE SET-UP AND ITS FUNCTION S CANNOT BE VIEWED IN ISOLATION TO SAY THAT ASSESSEE COMPANY IS NOT CA RRYING OUT ACTIVITIES IN ACCORDANCE WITH ITS OBJECTIVES, WHICH IN THE PRESEN T CASE IS QUITE CLEARLY BEING UNDERTAKEN BY THE ASSESSEE BY EXECUTING THE R AILWAY COMPONENT OF THE PROJECTS UNDER MUTP. THEREFORE, IN OUR CONS IDERED OPINION, THE DIRECTOR HAS CLEARLY MISDIRECTED HIMSELF IN COMING TO CONCLUDE THAT 17 MUMBAI RAILWAY VIKAS CORPN. LTD ASSESSEE HAS CARRIED OUT ACTIVITIES THAT ARE NOT IN ACCORDANCE WITH ITS OBJECTS. THUS, FACTUALLY SPEAKING, WE FIND NO REAS ON TO UPHOLD THE INFERENCE OF THE DIRECTOR THAT THE ACTIVITIES ARE N OT IN ACCORDANCE WITH ITS OBJECTS. 6.4 SECONDLY, IN SO FAR AS, THE OTHER CONDITION IN SECTION 12AA(3) OF THE ACT REGARDING GENUINENESS OF THE ACTIVITIES IS CONCERNED, THERE IS NO ADVERSE FINDING ON THIS ASPECT BY THE DIRECTOR IN T HE IMPUGNED ORDER. THUS, HAVING REGARD TO THE MATERIAL AND EVIDENCE ON RECORD THERE IS NO GROUND TO INFER THAT THE TWO EVENTUALITIES MENTIONE D IN SECTION 12AA(3) OF THE ACT ARE MET, NAMELY, ACTIVITIES NOT BEING GE NUINE OR THAT THE SAME ARE NOT CARRIED OUT IN ACCORDANCE WITH ITS OB JECTS. THUS, INVOKING OF SECTION 12AA(3) BY THE DIRECTOR HAS TO FAIL IN T HE PRESENT CASE. THEREFORE, ON THIS PRELIMINARY ASPECT ITSELF WE FIN D THAT THE DIRECTOR EXCEEDED HIS JURISDICTION PRESCRIBED IN SECTION 12A A(3) BY CANCELLING THE REGISTRATION ORIGINALLY GRANTED TO THE ASSESSEE UND ER SECTION 12A OF THE ACT DATED 29/10/2001. 6.5 BEFORE PARTING, WE MAY ALSO REFER TO THE DISCUS SION MADE BY THE DIRECTOR IN PARA-15 OF HIS ORDER TO SAY THAT THE MA JOR INCOME BEING EARNED BY THE ASSESSEE IS ON ACCOUNT OF INTEREST AN D MISCELLANEOUS RECEIPTS. ON THIS BASIS, IT IS SOUGHT TO BE INFERR ED THAT ASSESSEE WAS ONLY LEVERAGING ITS FUNDS TO EARN INTEREST INCOME. BEFO RE US ALSO, IT HAS BEEN CONTENDED THAT SUCH INCOME CANNOT BE SAID TO BE USE D FOR A CHARITABLE PURPOSES SO AS TO BE ENTITLED FOR EXEMPTION UNDER S ECTIONS 11/12 OF THE ACT. WHETHER SUCH INCOME IS ELIGIBLE FOR THE BENEF IT OF SECTIONS 11/12 OF THE ACT OR NOT, IN OUR VIEW, IS NOT A RELEVANT C RITERIA TO JUSTIFY INVOKING OF SECTION 12AA(3) OF THE ACT. WHETHER OR NOT SUCH INCOMES ARE 18 MUMBAI RAILWAY VIKAS CORPN. LTD ENTITLED TO EXEMPTION UNDER SECTION 11 OF THE ACT A RE MATTERS, WHICH ARE TO BE DECIDED IN THE COURSE OF THE QUANTUM ASSE SSMENT PROCEEDINGS BY THE ASSESSING AUTHORITIES AND DO NOT ENTER THE R EQUISITES CONTAINED IN SECTION 12AA(3) OF THE ACT. THUS, SO FAR AS, THE P RESENT CONTROVERSY IS CONCERNED, IN OUR VIEW, THE AFORESAID REASONS ADVAN CED BY THE DIRECTOR ARE EXTRANEOUS FOR THE PURPOSES OF INVOKING SECTION 12AA(3) OF THE ACT. SO, HOWEVER, WE MAY STATE HERE THAT IT WOULD BE OPE N FOR THE ASSESSING AUTHORITIES TO EXAMINE SUCH ASPECTS IN APPROPRIATE PROCEEDINGS, IF SO ADVISED IN LAW, BUT CERTAINLY THE SAME ARE OUTSIDE THE PURVIEW OF THE PRE-REQUISITES CONTAINED IN SECTION 12AA(3) OF THE ACT. ANOTHER ASPECT RAISED BY THE DIRECTOR WAS THAT SOME OF THE CLAUSES IN THE MEMORANDUM AND ARTICLES OF ASSOCIATION ALLOWED ASSE SSEE TO DO BUSINESS AND, THEREFORE, IT IS HIT BY THE AMENDED P ROVISO TO SECTION 2(15) OF THE ACT. ON THIS POINT ALSO, IT IS SUFFIC IENT TO NOTICE THAT THE SAME IS NOT A RELEVANT CRITERIA FOR CANCELLATION OF REGISTRATION ENVISAGED IN SECTION 12AA(3) OF THE ACT. OF COURSE, AS NOTED EARLIER, SUCH ISSUES ARE OPEN FOR EXAMINATION BY THE ASSESSING AUTHORITY IN THE QUANTUM ASSESSMENT PROCEEDINGS, IF SO ADVISED IN LAW. CERT AINLY, THE SAME CANNOT BE CONSIDERED FOR THE PURPOSES OF JUSTIFYING INVOKING OF SECTION 12AA(3) OF THE ACT. THUS, ON THESE ASPECTS ALSO, WE FIND NO REASON TO UPHOLD THE FINDING OF THE DIRECTOR. THEREFORE, WE S ET-ASIDE THE ORDER OF THE DIRECTOR DATED 10/01/2014 AND RESTORE THE CERTI FICATE OF REGISTRATION DATED 29/10/2001 GRANTED UNDER SECTION 12A OF THE ACT. 19 MUMBAI RAILWAY VIKAS CORPN. LTD 6.6 AS A CONSEQUENCE, THE ORDER OF THE DIRECTOR DAT ED 24/03/2014, WHICH IS THE SUBJECT MATTER OF APPEAL IN ITA NO.262 6/MUM/2014 IS ALSO LIABLE TO BE QUASHED. WE HOLD SO. 7. RESULTANTLY, BOTH THE CAPTIONED APPEALS ARE ALLO WED, AS ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 03/08/2016 SD/- SD/- (RAM LAL NEGI) (G.S. PANNU) JUDICIAL MEMBER ACCOCUNTANT MEMBER MUMBAI, DATED 03/08/2016 VM , SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT , 2. THE RESPONDENT. 3. THE CIT(A)- 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI