Jhansi Development Authority, Jhansi V. C.I.T.-II, Agra

ITA 316/AGR/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1978 (ITAT-AGRA)
• Duration Of Justice: 1 year(s) 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-04-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: misc
• Appeal Filed On: 20-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R K AGRAWAL SH RAHUL AGRAWAL
• Keywords: Charitable institution; Principle of natural justice; Earning of tax free income; Retrospective amendment; Benefit of exemption; Cancellation of registration
• Section: 12A; 12AA; 11

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. ANNAPURNA MEHROTRA, ACCOUNTANT MEMBER ITA NO.316/AG/2014 UNDER SECTION 12AA JHANSI DEVELOPMENT AUTHORITY, VS. THE CIT-II, COMMISSIONERY CAMPUS, AAYKAR BHAWAN, JHANSI, SANJAY PLACE AGRA(U.P.) PAN NO. AAALJ0068K (APPELLANT) (RESPONDENT) APPELLANT BY : SH. R.K. AGRAWAL SH. RAHUL AGRAWAL RESPONDENT BY : SH. RAJARSHI DWIVEDY DATE OF HEARING : 09/02/2016 DATE OF PRONOUNCEMENT : 12/04/2016 ORDER PER ANNAPURNA MEHROTRA A.M. THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT-II, AGRA, DATED 15.09.2014 PASSED U/S 12AA(3) OF THE IN COME TAX ACT, 1961, CANCELLING REGISTRATION GRANTED TO THE ASSESSEE U/S 12A OF THE INCOME TAX ACT. BRIEFLY STATED THE ASSESSEE IS A BODY CORPORATE FOR MED UNDER UP URBAN PLANNING AND DEVELOPMENT ACT, 1973 (UPUPD ACT) WITH THE FOLL OWING OBJECT:- THE OBJECTS OF THE AUTHORITY SHALL BE TO PROMOTE AND SECURE THE DEVELOPMENT OF THE DEVELOPMENT AREA ACCORDING TO PLAN AND FOR THAT PURPOSE AND AUTHORITY SHALL HAVE THE POWER TO ACQUIRE, HOLD, MANAGE AND D ISPOSE OF LAND AND OTHER PROPERTY, TO CARRY OUT BUILDING, ENGINEERING, MININ G AND OTHER OPERATIONS, TO EXECUTE WORKS IN CONNECTION WITH THE SUPPLY OF WATE R AND ELECTRICITY, TO DISPOSE OF SEWAGE AND TO PROVIDE AND MAINTAIN OTHER SERVICE S AND AMENITIES AND GENERALLY TO DO ANYTHING NECESSARY OR EXPEDIENT FOR PURPOSES OF SUCH DEVELOPMENT AND FOR PURPOSES INCIDENTAL THERETO. 2. THE ASSESSEE HAD APPLIED FOR REGISTRATION ON 02/ 03/2007, UNDER SECTION 12A WHICH WAS REJECTED BY THE THEN COMMISSIONER VID E ORDER DT. 27.09.2007. WHEN THE ORDER DECLINING REGISTRATION WAS CARRIED I N APPEAL BEFORE THE TRIBUNAL, 2 THE GRIEVANCE OF THE ASSESSEE WAS UPHELD AND WAS TH US GRANTED REGISTRATION U/S 12A OF THE ACT, W.E.F. 01.04.2003 VIDE ORDER DATED 21.10.2010. SUBSEQUENTLY THE DEFINITION OF THE TERM CHARITABLE PURPOSE PROVIDE D IN CLAUSE (15) OF SECTION 2 WAS AMENDED BY FINANCE ACT, 2008 W.E.F. A.Y. 2009-1 0 AND A PROVISO WAS INCLUDED WHICH STATED THAT ADVANCEMENT OF ANY OTHE R OBJECT OF GENERAL PUBLIC UTILITY WOULD NOT BE A CHARITABLE PURPOSE I F IT INVOLVED THE CARRYING ON OF ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BU SINESS. THE LD. CIT HELD THAT THE ACTIVITIES CARRIED OUT BY THE ASSESSEE WERE IN THE NATURE OF COMMERCE OR BUSINESS AND THEREFORE FELL UNDER THE EXCLUSION PRO VIDED IN THE FIRST PROVISO TO SECTION 2(15). HE THEREFORE, HELD THAT THE ACTIVITI ES OF THE ASSESSEE WERE NOT FOR CHARITABLE PURPOSE AND HENCE NOT GENUINE. HE THEREF ORE CANCELLED THE REGISTRATION GRANTED TO THE ASSESSEE U/S 12A BY EXE RCISING HIS POWERS U/S 12AA(3) OF THE ACT. 3. AGGRIEVED BY THE SAME THE ASSESSEE FILED THE PRE SENT APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS : 1. THAT, HAVING REGARD TO THE FACTS AND CIRCUMSTANC ES OF THE CASE, THE LD. COMMISSIONER OF INCOME TAX-II (HEREINAFTER REFERRED TO AS CIT-II)HAS ERRED IN CANCELING THE REGISTRATION U/S 12AA(3) AND THAT TOO RETROSPECTIVELY FROM A.Y. 2009- 10. 2. THAT, IN THE ABSENCE OF ANY CHANGE IN THE OBJECT S OR THE ACTIVITIES OF THE APPELLANT, THE ACTION OF LD. CIT-II CANCELING THE R EGISTRATION BY IMPUGNED ORDER U/S 12AA(3) IS BAD IN LAW. THE ORDER OF LD. CIT-II IS BASED ON INCORRECT FACTS, FINDINGS AND UTTER DISREGARD TO THE ESTABLISHED JUD ICIAL PRECEDENCE. 3. THAT, HAVING REGARD TO THE FACTS AND CIRCUMSTANC ES OF THE CASE, LD. CIT-II GROSSLY ERRED BOTH IN LAW AND FACTS BY CANCELING RE GISTRATION U/S 12AA(3) IN THE LIGHT OF AMENDMENT IN SECTION 2(15) OF THE I.T. ACT . THE ORDER PASSED BY THE LD. CIT-II IS CONTRARY TO THE CIRCULAR ISSUED BY CBDT. 4. THAT, HAVING REGARD TO THE FACTS AND CIRCUMSTANC ES OF THE CASE, THE LD. CIT-II HAS ERRED IN HOLDING THAT THE ACTIVITIES CAR RIED OUT BY THE ASSESSEE ARE COMMERCIAL BY VIRTUE OF PROVISO TO SECTION 2(15). T HE FINDINGS OF LD. CIT-II, HOLDING THAT THE APPELLANT IS NOT ELIGIBLE FOR THE REGISTRA TION U/S 12AA CIT-II, HOLDING THAT THE APPELLANT IS NOT ELIGIBLE FOR THE REGISTRATION U/S 12AA OF THE I.T. ACT, 1961 AS THE ACTIVITIES CARRIED OUT BY THE APPELLANT ARE IN THE NATURE OF TRADE AND BUSINESS ARE CONTRARY TO FACTS AND MATERIAL ON RECORD. 5. THAT, HAVING REGARD TO THE FACTS AND CIRCUMSTANC ES, THE IMPOUGNED ORDER U/S 12AA(3) PASSED BY THE LD. CIT-II IS PATENTLY IN VALID, CONTRARY TO PROVISION OF LAW, CONTRARY TO ALL CANONS OF NATURAL JUSTICE AND IS VO ID ABINITIO. 6. THAT, HAVING REGARD TO THE FACTS AND CIRCUMSTANC ES OF THE CASE, THE LD. CIT-II GROSSLY ERRED IN LAW AND ON FACTS IN HOLDING THAT THE APPELLANT IS DOING THE ACTIVITIES FOR A CESS OR FEE AND AS SUCH ITS AC TIVITIES ARE IN THE NATURE OF TRADE 3 AND BUSINESS. THE FINDINGS ARE PATENTLY WRONG AND E XPOSE THE GROSS IGNORANCE. THE IMPUGNED ORDER DEPICTS DELIBERATE LEGAL MALICE AND BIAS AGAINST THE APPELLANT. 7. THAT, HAVING REGARD TO THE FACTS AND CIRCUMSTANC ES OF THE CASE, THE LD. CIT-II HAS ERRED IN LAW AND ON FACTS IN PLACING REL IANCE ON THE ORDER OF COORDINATE BENCHES OF HONBLE ITAT AND HONBLE HIGH COURTS AS WELL. IN DOING SO, THE LD. CIT-II HAS ERRONEOUSLY AND ILLEGALLY IGNORED THE BINDING P RECEDENCE ON THE IDENTICAL ISSUE. 8. BECAUSE THE ORDER IS AGAINST LAW AND FACTS. 4. BRIEFLY STATED IN ALL THE GROUNDS RAISED, THE AS SESSEE HAS AGITATED AGAINST THE CANCELLATION OF REGISTRATION UNDER SECTION 12AA (3) OF THE ACT. 5. BEFORE US LD. AR ARGUED AT LENGTH, THE GIST OF H IS ARGUMENTS BEING THAT THE POWER OF CANCELLATION OF REGISTRATION U/S 12AA(3) C AN BE EXERCISED ONLY WHEN THE LD.CIT IS SATISFIED THAT THE ACTIVITIES OF THE TRUST OR INSTITUTION ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS AS AVAILABLE AT THE TIME OF GRANT OF REGISTRATION. THE PROVISO TO SECTI ON 2(15) CANNOT BE APPLIED TO REVIEW / WITHDRAW/ CANCEL REGISTRATION U/S 12AA(3). LD. AR STATED THAT THE ASSESSEE IS CARRYING OUT ACTIVITIES IN ACCORDANCE W ITH ITS OBJECTS AND THE RECEIPTS BEING EARNED BY IT ARE AS PRESCRIBED BY THE STATE G OVERNMENT, WHICH THE ASSESSEE HAS NO POWER TO CHANGE. 6. LD. AR RELIED UPON A NUMBER OF CASE LAWS IN SUPP ORT OF ITS ARGUMENTS: 1. CIT VS. VARANASI CATHOLIC EDUCATION SOCIETY [(2014) 47 TAXMANN.COM 184 (HIGH COURT, ALLAHABAD)] 2. CIT VS. LUCKNOW DEVELOPMENT AUTHORITY [( 2013) 38 TAXMANN.COM 246 (HIGH COURT, ALLAHABAD ) 3. AGRA DEVELOPMENT AUTHORITY VS. CIT [(2013) 31 TAXMANN.COM 40 (ITAT AGRA BENCH) 4. MATHURA DEVELOPMENT AUTHORITY VS. CIT [(ITA NO. 13/AGRA/2013 DT. 19.07.2013 (ITAT AGRA BE NCH)] 5. JAIPUR DEVELOPMENT AUTHORITY VS. CIT [(2014) 52 TAXMANN.COM 25 (ITAT JAIPUR BENCH)] 6. KAPURTHALA DEVELOPMENT TRUST VS. CIT [(ITA NO. 732 OF 2013 DT. 11.06.2015 (ITAT AMRITSA R BENCH)] 7. BOMBAY CHAMBER OF COMMERCE AND INDUSTRY VS. ITO 4 [ITA NO. 6525 OF 2014 & 843 OF 2012 DT. 15.01.2016 (ITAT MUMBAI BENCH)] 8. TAMIL NADU CRICKET ASSOCIATION VS. DIT (EX) [(2013) 40 TAXMANN.COM 250 (HIGH COURT, MADRAS)] 9. M/S PATIALA URBAN PLANNING & DEVELOPMENT AUTHORI TY VS. CIT [ITA NO. 775 OF 2015 DT. 04.12.2015 (ITAT, CHANDIG ARH)] 7. LD. DR ON THE OTHER HAND RELIED UPON THE ORDER O F THE LD. CIT AND STATED THAT THE ACTIVITIES CARRIED OUT BY THE ASSESSEE WER E IN THE NATURE OF COMMERCE AND BUSINESS AND THEREFORE BY VIRTUE OF THE FIRST P ROVISO TO SECTION 2(15) WERE NOT CHARITABLE IN NATURE. THE ACTIVITIES THEREFORE, COU LD NOT BE SAID TO BE GENUINE AND THE REGISTRATION WAS RIGHTLY CANCELLED U/S 12AA (3) BY THE COMMISSION. LD. DR RELIED UPON THE FOLLOWING CASE LAWS IN SUPPO RT OF ITS CONTENTION. 1. JAMMU DEVELOPMENT AUTHORITY [2012] 23 TAXMANN.CO M 343 (AMRITSAR) DATED 14.06.2012 2. JAMMU DEVELOPMENT VS. UOI & ANR. (ITA NO. 164 OF 2012 DATED 07.11.2013) (HC OF J&K) 3. JALANDHAR DEVELOPMENT AUTHORITY VS. CIT [2010] 3 5 SOT 15 (ASR) (URO) DATED 12.06.2009 4. PUNJAB URBAN DEVELOPMENT AUTHORITY [2006] 156 TA XMAN 37 (CHD) 5. IMPROVEMENT TRUST VS. CIT BHATINDA [2014] 41 TAX MANN.COM 403 (AMRITSAR TRIB.) DATED 09.12.2013 6. M/S HARYANA URBAN DEVELOPMENT AUTHORITY, PANCHKU LA VS. CIT IN ITA NO. 628/CHD/2004 DATED 10.09.2015 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDER OF THE AUTHORITY BELOW AS ALSO THE DOCUMENTS PLACED BEFORE US. 9. AS PER THE PROVISIONS OF SECTION 12AA(3) THE SCO PE OF POWER OF THE COMMISSIONER FOR CANCELLATION OF REGISTRATION ALREA DY GRANTED CAN BE INVOKED ONLY WHEN (1) THE ACTIVITIES OF THE TRUST ARE NOT G ENUINE AND (II) THE ACTIVITIES ARE NOT BEING CARRIED ON IN ACCORDANCE WITH THE OBJECTS OF THE TRUST. IN THE PRESENT 5 CASE, THE CIT HAS HELD THAT BOTH THE CONDITIONS FOR CANCELLING REGISTRATION ARE FULFILLED SINCE THE ASSESSEE HAS BEEN FOUND TO BE C ARRYING ON ACTIVITIES IN THE NATURE OF BUSINESS AND COMMERCE AND ON ACCOUNT OF T HE FIRST PROVISO TO SECTION 2(15) THE ACTIVITIES ARE NO LONGER CHARITABLE IN NA TURE. THUS, REGISTRATION IN THE PRESENT CASE HAS BEEN CANCELLED ON ACCOUNT OF THE F IRST PROVISO TO SECTION 2(15) COMING INTO PLAY IN THE FACTS OF THE CASE. 10. WE FIND THAT ON THE ISSUE WHETHER ON THE BASIS OF AMENDMENT TO SECTION 2(15), THE COMMISSIONER HAS THE POWER TO CANCEL REG ISTRATION OR NOT HAS BEEN DEALT BY THE HONBLE MADRAS HIGH COURT IN THE CASE OF TAMIL NADU CRICKET ASSOCIATION VS. DIT (EXEMPTION) (2013) 40 TAMANN.CO M 250, DECIDING THE ISSUE IN FAVOUR OF THE ASSESSEE. THE HONBLE HIGH COURT HELD THAT CANCELLATION OF REGISTRATION GRANTED UNDER SECTION 12A COULD ONLY B E IN TERMS OF SECTION 12AA(3) OF THE INCOME TAX ACT, AS PER WHICH IF THE COMMISSI ONER IS SATISFIED THAT THE ACTIVITIES OF THE INSTITUTION ARE NOT GENUINE OR TH EY ARE NOT CARRIED ON IN ACCORDANCE WITH THE TRUST / INSTITUTION HE COULD PA SS AN ORDER IN WRITING CANCELLING THE REGISTRATION OF SUCH TRUST OR INSTIT UTION. THEREAFTER, THE HONBLE HIGH COURT HELD THAT THE POWER OF CANCELLATION HAS TO BE SEEN WITH REFERENCE TO THE REGISTRATION AND THE OBJECT SATISFYING THE DEFINITI ON OF CHARITABLE PURPOSE AS IT STOOD AT THE TIME OF REGISTRATION. THE HONBLE HIGH COURT HELD AT PARA 43 45 AND 48 OF ITS ORDER AS FOLLOWS: 43. LEAVING THAT ASIDE, THERE BEING NO DISPUTE RAI SED BY THE REVENUE AS TO THE GENUINENESS OF THE TRUST, OR AS TO THE ACTIVITI ES OF THE TRUST NOT BEING IN ACCORDANCE WITH THE OBJECT OF THE TRUST, THE QUESTI ON OF CANCELLATION UNDER SECTION 12AA OF THE ACT DOES NOT ARISE. WE FURTHER HOLD THAT AT THE TIME OF GRANT OF REGISTRATION ON 28.03.2003, THE SAME WAS MADE TA KING INTO CONSIDERATION THE OBJECTS OF THE INSTITUTION FITTING IN WITH THE DEFI NITION OF CHARITABLE PURPOSE DEFINED UNDER SECTION 2(15) OF THE ACT AND THE SUBS TITUTION OF THE SECTION ITSELF CAME ONLY 2008, WITH EFFECT FROM 01.04.2009. AS RIG HTLY POINTED OUT BY THE LEARNED SENIOR COUNSEL APPEARING FOR THE ASSESSEE, THE CIRC ULAR CLEARLY BRINGS OUT THE OBJECT OF THE AMENDMENT AND THE AMENDED PROVISIONS HAS NO RELEVANCE TO THE CASE. THE POWER REGARDING CANCELLATION, HENCE HAS T O BE SEEN WITH REFERENCE TO THE REGISTRATION AND THE OBJECT SATISFYING THE DEFI NITION ON CHARITABLE PURPOSE, AS IT STOOD AT THE TIME OF REGISTRATION AND NOT BY THE SUBSEQUENT AMENDMENT TO SECTION 2(15) OF THE INCOME TAX ACT. 44. LEARNED STANDING COUNSEL APPEARING FOR THE REVE NUE PLACED HEAVY RELIANCE ON THE PROVISO TO SECTION 12AA(3) OF THE A CT AND SUBMITTED THAT WHEN THE ASSESSEE HAS INCOME RECEIVED FROM CONDUCT OF TH E MATCHES, WHICH ARE 6 COMMERCIAL IN NATURE, AS HAD BEEN FOUND BY THE INCO ME TAX APPELLATE TRIBUNAL, THE OBJECTS OF THE TRUST CEASED TO BE CHARITABLE. H E SUBMITTED THAT GOING BY THE DEFINITION OF SECTION 2(15) OF THE ACT, RIGHTLY, TH E COMMISSIONER ASSUMED JURISDICTION UNDER SECTION 12AA(3) OF THE ACT TO CA NCEL THE REGISTRATION. HE FURTHER POINTED OUT THAT FOR THE FINDING TO BE RECORDED THA T THE ACTIVITIES OF THE TRUST ARE NOT GENUINE, ONE MUST NECESSARILY LOOK INTO THE OBJ ECTS OF THE ASSOCIATION; IF THE OBJECTS OF THE ASSOCIATION REVEAL COMMERCIAL NATURE IN THE CONDUCT OF MATCHES, THE ASSOCIATION CANNOT BE ONE FOR CHARITABLE PURPOS E AS DEFINED UNDER SECTION 2(15) OF THE ACT. THUS, THERE COULD BE NO INHIBITIO N FOR THE COMMISSIONER TO ASSUME JURISDICTION TO ISSUE SHOW CAUSE NOTICE CALL ING UPON THE ASSESSEE TO STATE WHETHER THE ASSOCIATION IS GENUINE OR NOT. HE FURTH ER SUBMITTED THAT ON LOOKING AT THE ACTIVITIES OF THE ASSOCIATION, THE COMMISSIONER HAD RIGHTLY COME TO THE CONCLUSION THAT THE ASSESSEES REGISTRATION WAS LIA BLE TO BE WITHDRAWN. 45. WE DO NOT ACCEPT THE SUBMISSION OF LEARNED STA NDING COUNSEL APPEARING FOR THE REVENUE. AS RIGHTLY OBSERVED BY L EARNED SENIOR COUNSEL APPEARING FOR THE ASSESSEE, THE REVENUE GRANTED REG ISTRATION UNDER SECTION 12AA OF THE ACT SATISFYING ITSELF AS TO THE OBJECTS OF T HE ASSOCIATION BEFITTING THE STATUS AS CHARITABLE PURPOSE AS DEFINED UNDER SECTION 2(15), AS IT STOOD IN 2003 AND AFTER GRANTING THE REGISTRATION, IF THE REGISTRATION IS T O BE CANCELED, IT MUST BE ONLY ON THE GROUNDS STATED UNDER SECTION 12AA(3) OF THE ACT WITH REFERENCE TO THE OBJECTS ACCEPTED AND REGISTERED UNDER SECTION 12AA, AS PER THE LAW THEN STOOD UNDER THE DEFINITION OF SECTION 2(15) OF THE INCOME TAX ACT. EVEN THEREIN, COURTS HAVE DEFINED AS TO WHEN AN INSTITUTION COULD BE HEL D AS ONE FOR ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY. THUS, I F A PARTICULAR ACTIVITY OF THE INSTITUTION APPEARED TO BE COMMERCIAL IN CHARACTER, AND IT IS NOT DOMINANT, THEN IT IS FOR THE ASSESSING OFFICER TO CONSIDER THE EFF ECT OF SECTION 11 OF THE ACT IN THE MATTER OF GRANTING EXEMPTION ON PARTICULAR HEAD OF RECEIPT. THE MERE FACT THAT THE SAID INCOME DOES NOT FIT IN WITH SECTION 11 OF THE ACT WOULD NOT, BY ITSELF, HEREIN LEAD TO THE CONCLUSION THAT THE REGISTRATION GRANTED UNDER SECTION 12AA IS BAD AND HENCE, TO BE CANCELLED. 48. IT IS NO DOUBT TRUE THAT THE DECISION REPORTED IN THE CASE OF SURAT CITY GYMKHANA (SUPRA) WAS IN THE CONTEXT OF SECTION 10(2 3) OF THE INCOME TAX ACT, 1961, NEVERTHELESS, THE FACT REMAINS THAT THE UNDER STANDING OF THE SCOPE OF THE EXPRESSION GENERAL PUBLIC UTILITY WOULD NEVERTHEL ESS IS OF RELEVANCE HEREIN. ADMITTEDLY WHEN THE ASSESSEE WAS GRANTED REGISTRATI ON, THE REVENUE RECORDED ITS SATISFACTION THAT THE OBJECTS ARE OF CHARITABLE PUR POSE. THUS ONLY POSSIBLE ENQUIRY UNDER SECTION 12AA OF THE ACT FOR CANCELLATION IS T O FIND OUT WHETHER THE ACTIVITIES OF THE TRUST ARE GENUINE OR IN ACCORDANCE WITH THE OBJECTS OF THE TRUST. IF ANY OF THE INCOME ARISING ON THE ACTIVITIES ARE NOT IN ACC ORDANCE WITH THE OBJECTS OF THE TRUST, THE ASSESSEES INCOME, AT BEST, MAY NOT GET THE EXEMPTION UNDER SECTION 11 OF THE ACT. BUT THIS, BY ITSELF, DOES NOT RESULT IN STRAIGHT REJECTION OF THE REGISTRATION AS TRUST UNDER SECTION 12AA OF THE ACT. CONSEQUEN TLY, WE REJECT THE PRAYER OF THE REVENUE THAT SECTION 12AA(1) OF THE INCOME TAX ACT, 1961 MUST BE READ ALONG WITH SECTION 12AA(3) OF THE INCOME TAX ACT, 1 961 BEFORE CONSIDERING THE CANCELLATION. THE HONBLE HIGH CURT FURTHER HELD THAT AFTER HAVIN G GRANTED REGISTRATION UNDER SECTION 12A, THE ONLY INQUIRY WHICH THE COMMISSIONE R COULD MAKE FOR CANCELLING REGISTRATION IS TO FIND OUT WHETHER THE ACTIVITIES OF THE TRUST ARE GENUINE OR IN ACCORDANCE WITH THE OBJECTS OF THE TRUST. IT WAS HE LD THAT THE OBJECTS CANNOT BE CALLED INTO QUESTION BY VIRTUE OF THE INSERTION OF THE PROVISO TO SECTION 2(15) FOR THE PURPOSE OF CANCELLING REGISTRATION UNDER SECTIO N 12AA(3). THE COURT HELD THAT SECTION 12AA(1) COULD NOT BE READ ALONGWITH SECTION 12AA(3). THE COURT HELD AT PARA 48 OF ITS ORDER AS FOLLOWS: 7 48. IT IS NO DOUBT TRUE THAT THE DECISION REPORTED IN THE CASE OF SURAT CITY GYMKHANA (SUPRA) WAS IN THE CONTEXT OF SECTION 10(2 3) OF THE INCOME TAX ACT, 1961, NEVERTHELESS, THE FACT REMAINS THAT THE UNDER STANDING OF THE SCOPE OF THE EXPRESSION GENERAL PUBLIC UTILITY WOULD NEVERTHEL ESS IS OF RELEVANCE HEREIN. ADMITTEDLY WHEN THE ASSESSEE WAS GRANTED REGISTRATI ON, THE REVENUE RECORDED ITS SATISFACTION THAT THE OBJECTS ARE OF CHARITABLE PUR POSE. THUS ONLY POSSIBLE ENQUIRY UNDER SECTION 12AA OF THE ACT FOR CANCELLATION IS T O FIND OUT WHETHER THE ACTIVITIES OF THE TRUST ARE GENUINE OR IN ACCORDANCE WITH THE OBJECTS OF THE TRUST. IF ANY OF THE INCOME ARISING ON THE ACTIVITIES ARE NOT IN ACC ORDANCE WITH THE OBJECTS OF THE TRUST, THE ASSESSEES INCOME, AT BEST, MAY NOT GET THE EXEMPTION UNDER SECTION 11 OF THE ACT. BUT THIS, BY ITSELF, DOES NOT RESULT IN STRAIGHT REJECTION OF THE REGISTRATION AS TRUST UNDER SECTION 12AA OF THE ACT. CONSEQUEN TLY, WE REJECT THE PRAYER OF THE REVENUE THAT SECTION 12AA(1) OF THE INCOME TAX ACT, 1961 MUST BE READ ALONG WITH SECTION 12AA(3) OF THE INCOME TAX ACT, 1 961 BEFORE CONSIDERING THE CANCELLATION. THE COURT FURTHER HELD AT PARA 51 OF ITS ORDER THAT THE QUESTION WHETHER A PARTICULAR INCOME (BEING INCOME FROM HOLDING OF MAC HES IN THE IMPUGNED CASE) QUALIFIED UNDER SECTION 11 OF THE ACT WAS NOT THE SAME AS THE ACTIVITY BEING GENUINE OR NOT AND WHICH WAS THE ISSUE TO BE ADDRESSED FOR THE PURPOSE OF CANCELLING REGISTRATION UNDER SECTION 12AA(3) OF THE ACT. THE COURT FURTHER HELD THAT UNDENIABLY THE COMMISSIONER HAVING SATISF IED HIMSELF ABOUT THE OBJECTS OF THE TRUST AND THE GENUINENESS OF THE ACT IVITIES AS FALLING WITHIN THE MEANING OF CHARITABLE PURPOSE, WHILE GRANTING REGIS TRATION AND THERE BEING NO CHANGE IN THE OBJECTS OF THE ASSESSEE FOR INVOKING SECTION 12AA R.W.S 2(15) OF THE ACT, THE REVENUE WOULD HAVE TO DEMONSTRATE THAT THE ACTIVITIES DID NOT FIT WITH THE OBJECTS OF THE ASSOCIATION AND THE DOMINANT ACT IVITIES WERE IN THE NATURE OF TRADE, COMMERCE, AND BUSINESS. THE COURT FURTHER HE LD THAT VOLUME OF ACTIVITY ALONG WOULD NOT LEAD TO THE INFERENCE THAT IT WAS C OMMERCIAL IN NATURE. THUS THE HONBLE HIGH COURT HELD THAT THE REVENUE HAD NOT MA DE OUT ANY GROUND TO CANCEL REGISTRATION. THE COURT HELD AT PAR 45 AND 5 6 OF ITS ORDER AS FOLLOWS. 45. WE DO NOT ACCEPT THE SUBMISSION OF LEARNED STA NDING COUNSEL APPEARING FOR THE REVENUE. AS RIGHTLY OBSERVED BY L EARNED SENIOR COUNSEL APPEARING FOR THE ASSESSEE, THE REVENUE GRANTED REG ISTRATION UNDER SECTION 12AA OF THE ACT SATISFYING ITSELF AS TO THE OBJECTS OF T HE ASSOCIATION BEFITTING THE STATUS AS CHARITABLE PURPOSE AS DEFINED UNDER SECTION 2(15), AS IT STOOD IN 2003 AND AFTER GRANTING THE REGISTRATION, IF THE REGISTRATION IS T O BE CANCELED, IT MUST BE ONLY ON THE GROUNDS STATED UNDER SECTION 12AA(3) OF THE ACT WITH REFERENCE TO THE OBJECTS ACCEPTED AND REGISTERED UNDER SECTION 12AA, AS PER THE LAW THEN STOOD UNDER THE DEFINITION OF SECTION 2(15) OF THE INCOME TAX ACT. EVEN THEREIN, COURTS HAVE DEFINED AS TO WHEN AN INSTITUTION COULD BE HEL D AS ONE FOR ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY. THUS, I F A PARTICULAR ACTIVITY OF THE INSTITUTION APPEARED TO BE COMMERCIAL IN CHARACTER, AND IT IS NOT DOMINANT, THEN 8 IT IS FOR THE ASSESSING OFFICER TO CONSIDER THE EFF ECT OF SECTION 11 OF THE ACT IN THE MATTER OF GRANTING EXEMPTION ON PARTICULAR HEAD OF RECEIPT. THE MERE FACT THAT THE SAID INCOME DOES NOT FIT IN WITH SECTION 11 OF THE ACT WOULD NOT, BY ITSELF, HEREIN LEAD TO THE CONCLUSION THAT THE REGISTRATION GRANTED UNDER SECTION 12AA IS BAD AND HENCE, TO BE CANCELLED. 56. THE ASSESSEE IS A MEMBER OF BOARD OF CONTROL F OR CRICKET IN INDIA(BCCI), WHICH IN TURN IS A MEMBER OF ICC(INTERNATIONAL CRIC KET COUNCIL). BCCI ALLOTS TEST MATCHES WITH VISITING FOREIGN TEAM AND ONE DAY INTE RNATIONAL MATCHES TO VARIOUS MEMBER CRICKET ASSOCIATION WHICH ORGANIZE THE MATCH ES IN THEIR STADIA. THE FRANCHISEES CONDUCT MATCHES IN THE STADIA BELONGING TO THE STATE CRICKET ASSOCIATION. THE STATE ASSOCIATION IS ENTITLED TO A LL IN-STADIA SPONSORSHIP ADVERTISEMENT AND BEVERAGE REVENUE AND IT INCURS EX PENSES FOR THE CONDUCT OF THE MATCHES. BCCI EARNS REVENUE BY WAY OF SPONSORSH IP AND MEDIA RIGHTS AS WELL AS FRANCHISEE REVENUE FOR IPL AND IT DISTRIBUTES 70 % OF THE REVENUE TO THE MEMBER CRICKET ASSOCIATION. THUS THE ASSESSEE IS ALSO THE RECIPIENT OF THE REVENUE. THUS, FOR INVOKING SECTION 12AA READ WITH SECTION 2(15) OF TH E ACT, REVENUE HAS TO SHOW THAT THE ACTIVITIES ARE NOT FITTING WITH THE OBJECT S OF THE ASSOCIATION AND THAT THE DOMINANT ACTIVITIES ARE IN THE NATURE OF TRADE, COM MERCE AND BUSINESS. WE DO NOT THINK THAT BY THE VOLUME OF RECEIPT ONE CAN DRA W THE INFERENCE THAT THE ACTIVITY IS COMMERCIAL. THE INCOME TAX APPELLATE TR IBUNALS VIEW THAT IT IS AN ENTERTAINMENT AND HENCE OFFENDED SECTION 2(15) OF T HE ACT DOES NOT APPEAR TO BE CORRECT AND THE SAME IS BASED ON ITS OWN IMPRESS ION ON FREE TICKET, PAYMENT OF ENTERTAINMENT TAX AND PRESENCE OF CHEER GROUP AN D GIVEN THE IRRELEVANT CONSIDERATION. THESE CONSIDERATIONS ARE NOT GERMANE IN CONSIDERING THE QUESTION AS TO WHETHER THE ACTIVITIES ARE GENUINE OR CARRIED ON IN ACCORDANCE WITH THE OBJECTS OF THE ASSOCIATION. WE CAN ONLY SAY THAT TH E INCOME TAX APPELLATE TRIBUNAL RESTED ITS DECISION ON CONSIDERATION WHICH ARE NOT RELEVANT FOR CONSIDERING THE TEST SPECIFIED UNDER SECTION 12AA(3 ) TO IMPOSE COMMERCIAL CHARACTER TO THE ACTIVITY OF THE ASSOCIATION. IN TH E CIRCUMSTANCES, WE AGREE WITH THE ASSESSEE THAT THE REVENUE HAS NOT MADE OUT ANY GROUND TO CANCEL THE REGISTRATION UNDER SECTION 12AA(3) OF THE ACT. 11. THE FACTS IN THE PRESENT CASE, WE FIND, ARE IDE NTICAL TO THE FACTS IN THE CASE OF TAMIL NADU CRICKET ASSOCIATION (SUPRA). IN THE PRESENT CASE THE ASSESSEE HAD BEEN GRANTED REGISTRATION U/S 12AA AFTER CONSID ERING ITS STATED OBJECTS. UNDENIABLY THERE HAS BEEN NO CHANGE IN THE OBJECTS OF THE ASSESSEE. THE REGISTRATION HAS BEEN LATER ON CANCELLED ONLY ON AC COUNT OF THE PROVISO TO SECTION 2(15). IT IS NOT THE CASE OF THE LD. CIT TH AT THE ACTIVITIES ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE A SSESSEE TRUST ON THE BASIS OF WHICH REGISTRATION WAS GRANTED UNDER SECTION 12A. T HUS WE FIND THAT THE DECISION OF THE HONBLE MADRAS HIGH COURT SQUARELY APPLIES T O THE CASE OF THE ASSESSEE. WE THEREFORE HOLD THAT THE AMENDMENT TO SECTION 2(1 5) OF THE ACT CANNOT BE THE BASIS FOR CANCELLATION OF REGISTRATION GRANTED EARLIER UNDER SECTION 12A OF THE ACT, AND THAT THE LD. CIT HAD ERRED IN HOLDING THAT THE ACTIVITIES OF THE ASSESSEE WERE NOT GENUINE SINCE IT WAS NOT CHARITABLE IN VIE W OF THE FIRST PROVISO TO SECTION 2(15) OF THE ACT. 9 FURTHER IN OUR CONSIDERED VIEW THE FIRST PROVISO TO SECTION 2(15) HAS NO ROLE TO PLAY IN MATTERS RELATING TO REGISTRATION OF A TRUST OR I NSTITUTION U/S 12A OR 12AA, WHETHER IN RESPECT OF GRANTING, DECLINING OR CANCELLING REG ISTRATION. A BARE PERUSAL OF THE PROVISION OF SECTION 2(15) AND ITS PROVISOS WOULD R EVEAL THAT THE DISABLING CLAUSE COMES INTO PLAY NOT ONLY ON ACCOUNT OF THE NATURE O F THE ACTIVITY BUT ALSO THE LEVEL OF ACTIVITY WHICH MAY VARY FROM YEAR TO YEAR , ATTRACTING THE PROVISO IN ONE YEAR AND REMAINING OUT OF ITS PURVIEW IN ANOTHER. T HUS, THE APPLICABILITY OF THE PROVISO WILL HAVE TO BE EXAMINED EVERY YEAR AND THU S CANNOT BE THE BASIS OF GRANTING OR CANCELLING REGISTRATION U/S 12AA. MOREO VER, THE LEGISLATURE HAS PROVIDED A SAFEGUARD AGAINST THE OBJECTS BEING VITI ATED ON ACCOUNT OF THE FIRST PROVISO BY VIRTUE OF SECTION 13(8), WHICH WAS BROUG HT INTO EFFECT FROM THE SAME POINT OF TIME WHEN PROVISO TO SECTION 2(15) WAS INT RODUCED I.E. W.E.F. 01.04.2009, WHICH PROVIDES FOR DENIAL OF EXEMPTION OF INCOME U/ S 11 IN THE YEAR IN WHICH THE FIRST PROVISO BECOMES APPLICABLE. THUS, LEGALLY THE IMPACT OF THE PROVISO TO SECTION 2(15) BEING ATTRACTED IS THAT THE ASSESSEE WILL NOT BE ELIGIBLE FOR EXEMPTION U/S 11 OF THE ACT. AS A COROLLARY TO THIS LEGAL POSITION, REGISTRATION U/S 12AA CANNOT BE IMPACTED BY THE OBJECT BEING HIT BY THE FIRST PROVISO TO SECTION 2(15). THIS VIEW HAS BEEN UPHELD BY THE AMRITSAR BE NCH OF ITAT IN THE CASE OF KAPURTHALA DEVELOPMENT TRUST VS. CIT IN ITA NO 732 OF 2013 DT. 11/06/2015 WHEREIN IT WAS HELD AS FOLLOWS: 10. THERE IS, HOWEVER, A MUCH MORE FUNDAMENTAL A R EASON FOR THE ASSESSEE SUCCEEDING IN THIS APPEAL. IN OUR CONSIDERED VIEW, THE CONSIDERATIONS WITH RESPECT TO THE FIRST PROVISO TO SECTION 2(15) COMIN G INTO THE PLAY AND, FOR THAT REASON, THE OBJECTS OF AN ASSESSEE TRUST OR INSTITU TION BEING HELD TO BE NOT COVERED BY THE DEFINITION OF CHARITABLE PURPOSES, HAVE NO ROLE TO PLAY IN THE MATTERS RELATING TO REGISTRATION OF A TRUST OR INSTITUTION UNDER SECTION 12A OR 12AA- WHETHER IN RESPECT OF GRANTING OR DECLINING OF A REGISTRATI ON OR IN RESPECT OF CANCELLATION, EVEN IF OTHERWISE PERMISSIBLE, OF A REGISTRATION. A CLOSER LOOK AT THE SCHEME OF THE ACT WOULD UNAMBIGUOUSLY SHOW THIS ASPECT OF THE MAT TER. 11. LET US BEGIN BY TAKING A LOOK AT SECTION 2(15) WHICH DEFINES CHARITABLE ACTIVITIES AND FIRST AND SECOND PROVISOS THERETO. T HESE STATUTORY PROVISIONS ARE AS FOLLOWS: (15) 'CHARITABLE PURPOSE' INCLUDES RELIEF OF THE P OOR, EDUCATION, MEDICAL RELIEF, PRESERVATION OF ENVIRONMENT (INCLUDING WATE RSHEDS, FORESTS AND WILDLIFE) AND PRESERVATION OF MONUMENTS OR PLACES O R OBJECTS OF ARTISTIC OR HISTORIC INTEREST,] AND THE ADVANCEMENT OF ANY OTHE R OBJECT OF GENERAL PUBLIC UTILITY: PROVIDED THAT THE ADVANCEMENT OF AN Y OTHER OBJECT OF 10 GENERAL PUBLIC UTILITY SHALL NOT BE A CHARITABLE PU RPOSE, IF IT INVOLVES THE CARRYING ON OF ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS, OR ANY ACTIVITY OF RENDERING ANY SERVICE IN RELATIO N TO ANY TRADE, COMMERCE OR BUSINESS, FOR A CESS OR FEE OR ANY OTHE R CONSIDERATION, IRRESPECTIVE OF THE NATURE OF USE OR APPLICATION, O R RETENTION, OF THE INCOME FROM SUCH ACTIVITY; PROVIDED FURTHER THAT THE FIRST PROVISO SHALL NOT APPLY IF THE AGGREGATE VALUE OF THE RECEIPTS FROM THE ACTIVI TIES REFERRED TO THEREIN IS TWENTY-FIVE LAKH RUPEES OR LESS IN THE PREVIOUS YEAR; (EMPHASIS BY UNDERLINING SUPPLIED BY US) 12. WHAT IS CLEAR FROM THE RIDERS IN THE ABOVE DEFI NITION OF CHARTABLE PURPOSES IS THAT RIDER SET OUT THEREIN, UNDER FIRST PROVISO TO SECTION 2(15), CAN ONLY COME INTO PLAY I.T.A. NO. 732 (ASR) OF 2013 ASSESSMENT YEAR: 2009-10 PAGE 8 OF 12 ON YEAR TO YEAR BASIS AND NOT IN ABSOLUTE TERMS. THE SAME ACTI VITY CAN BE HIT BY THIS RIDER IN ONE YEAR AND THUS THE ASSESSEE TRUST OR INSTITUTION MAY NOT QUALIFY TO BE EXISTING FOR CHARITABLE PURPOSES, AND THAT VERY ACTIVITY OF TH E ASSESSEE TRUST OR INSTITUTION MAY REMAIN UNAFFECTED BY THE SAME DISABLING PROVISION F OR ANOTHER YEAR. THE REASON IS THAT IT IS NOT ONLY THE NATURE OF THE ACTIVITY BUT ALSO THE LEVEL OF ACTIVITY WHICH, TAKEN TOGETHER, DETERMINE WHETHER THIS DISABLING CL AUSE CAN COME INTO PLAY. THE SAFEGUARD AGAINST THE OBJECTS OF THE TRUST BEING VI TIATED INSOFAR AS THEIR CHARACTER OF CHARITABLE ACTIVITIES IS CONCERNED, IS INBUILT IN THE PROVISIONS OF SECTION 13(8) WHICH WAS BROUGHT INTO EFFECT WITH EFFECT FROM THE SAME POINT OF TIME WHEN PROVISO TO SECTION 2(15) WAS INTRODUCED I.E. WITH EFFECT FROM 1ST APRIL 2009. SECTION 13(8) PROVIDES AS FOLLOWS: SECTION 13- SECTION 11 NOT TO APPLY IN CERTAIN CAS ES. . (8) NOTHING CONTAINED IN SECTION 11 OR SECTION 12 SHALL OPERATE SO AS TO EXCLUDE ANY INCOME FROM THE TOTAL INCOME OF THE PRE VIOUS YEAR OF THE PERSON IN RECEIPT THEREOF IF THE PROVISIONS OF THE FIRST PROVISO TO CLAUSE (15) OF SECTION 2 BECOME APPLICABLE IN THE CASE OF SUCH PERSON IN THE SAID PREVIOUS YEAR. 13. WHILE INTRODUCING THIS AMENDMENT, EXPLANATORY M EMORANDUM TO THE FINANCE BILL 2012 (HTTP://INDIABUDGET.NIC.IN/BUDGET2012-201 3/UB2012-13/MEM/MEM1.PDF) EXPLAINED THE REASONS AND BACKDROP OF THIS LEGISLAT IVE AMENDMENT AS FOLLOWS: ASSESSMENT OF CHARITABLE ORGANIZATION IN CASE COMME RCIAL RECEIPTS EXCEED THE SPECIFIED THRESHOLD SECTIONS 11 AND 12 O F THE ACT EXEMPT INCOME OF ANY CHARITABLE TRUST OR INSTITUTION, IF S UCH INCOME IS APPLIED FOR CHARITABLE PURPOSES IN INDIA AND SUCH INSTITUTION I S REGISTERED UNDER SECTION 12AA OF THE ACT. ... SECTION 2(15) OF THE ACT P ROVIDES DEFINITION OF CHARITABLE PURPOSE. IT INCLUDES ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY AS CHARITABLE PURPOSE PROVI DED THAT IT DOES NOT INVOLVE CARRYING ON OF ANY ACTIVITY IN THE NATURE O F TRADE, COMMERCE OR BUSINESS. 2ND PROVISO TO SAID SECTION PROVIDES THAT IN CASE WHERE THE ACTIVITY OF ANY TRUST OR INSTITUTION IS OF THE NATU RE OF ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY, AND IT INVO LVES CARRYING ON OF ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINE SS; BUT THE AGGREGATE VALUE OF RECEIPTS FROM THE COMMERCIAL ACTIVITIES DO ES NOT EXCEED RS. 25,00,000 IN THE PREVIOUS YEAR, THEN THE PURPOSE OF SUCH INSTITUTION SHALL BE CONSIDERED AS CHARITABLE, AND ACCORDINGLY, THE BENE FITS OF EXEMPTION SHALL BE AVAILABLE TO IT. THUS, A I.T.A. NO. 732 (A SR) OF 2013 ASSESSMENT YEAR: 2009-10 PAGE 9 OF 12 CHARITABLE TRUST OR INSTITUTIO N PURSUING ADVANCEMENT OF OBJECT OF GENERAL PUBLIC UTILITY MAY BE A CHARIT ABLE TRUST IN ONE YEAR AND NOT A CHARITABLE TRUST IN ANOTHER YEAR DEPENDIN G ON THE AGGREGATE VALUE OF RECEIPTS FROM COMMERCIAL ACTIVITIES. THERE IS, THEREFORE, NEED TO EXPRESSLY PROVIDE IN LAW THAT NO EXEMPTION WOULD BE AVAILABLE FOR A PREVIOUS YEAR, TO A TRUST OR INSTITUTION TO WHICH F IRST PROVISO OF SUBSECTION 2(15) BECOME APPLICABLE FOR THAT PARTICULAR PREVIOU S YEAR. HOWEVER, THIS TEMPORARY EXCESS IN ONE YEAR MAY NOT BE TREATED AS ALTERING THE VERY NATURE OF THE TRUST OR INSTITUTION SO AS TO LEAD TO CANCELLATION OF REGISTRATION OR WITHDRAWAL OF APPROVAL OR RESCINDING OF NOTIFICA TION ISSUED IN RESPECT OF TRUST OR INSTITUTION. THEREFORE, THERE IS NEED TO E NSURE THAT IF THE PURPOSE OF A TRUST OR INSTITUTION DOES NOT REMAIN CHARITABLE D UE TO APPLICATION OF FIRST PROVISO ON ACCOUNT OF COMMERCIAL RECEIPT THRESHOLD PROVIDED IN SECOND PROVISO IN A PREVIOUS YEAR. THEN, SUCH TRUST OR INS TITUTION 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 11 EXEMPTION SHALL BE MANDATORY BY OPERATION OF LAW AN D WOULD NOT BE DEPENDENT ON ANY WITHDRAWAL OF APPROVAL OR CANCELLA TION OF REGISTRATION OR A NOTIFICATION BEING RESCINDED. IT IS, THEREFORE , PROPOSED TO AMEND . SECTION 13.. OF THE ACT TO ENSURE THAT SUCH ORGAN IZATION DOES NOT GET BENEFIT OF TAX EXEMPTION IN THE YEAR IN WHICH ITS RECEIPTS FROM COMMERCIAL ACTIVITIES EXCEED THE THRESHOLD WHETHER OR NOT THE REGISTRATION OR APPROVAL GRANTED OR NOTIFICATION ISSUED IS CANCELLED, WITHDR AWN OR RESCINDED. THIS AMENDMENT WILL TAKE EFFECT RETROSPECTIVELY FROM 1ST APRIL, 2009 AND WILL, ACCORDINGLY, APPLY IN RELATION TO THE ASSESSMENT YE AR 2009-10 AND SUBSEQUENT ASSESSMENT YEARS. (EMPHASIS BY UNDERLING SUPPLIED BY US) 14. IT IS THUS CLEAR THAT THE IMPACT OF THE PROVISO TO SECTION 2(15) BEING HIT BY THE ASSESSEE WILL BE THAT, TO THAT EXTENT, THE ASSESSEE WILL NOT BE ELIGIBLE FOR EXEMPTION UNDER SECTION 11 OF THE ACT. THE MERE FACT THAT THE ASSESSEE IS GRANTED REGISTRATION UNDER SECTION 12 A OR 12AA AS A CHARIT ABLE INSTITUTION WILL HAVE NO BEARING ON THIS DENIAL OF REGISTRATION. AS A COROLL ARY TO THIS LEGAL POSITION, THE FACT THAT THE OBJECTS OF THE ASSESSEE MAY BE HIT BY THE PROVISO TO SECTION 2(15) CANNOT HAVE ANY BEARING ON THE GRANT, DENIAL OR WITHDRAWAL OF THE REGISTRATION UNDER SECTION 12AA. 15. IT IS ALSO IMPORTANT TO BEAR IN MIND THE FACT T HAT IN TERMS OF THE SECOND PROVISO TO SECTION 2(15), WHICH WAS INTRODUCED BY THE FINAN CE ACT 2010 WITH RETROSPECTIVE EFFECT FROM 1ST APRIL 2009, THE LEGAL PRESCRIPTION SET OUT IN FIRST PROVISO TO SECTION 2(15) CANNOT COME INTO PLAY IF THE AGGR EGATE VALUE OF THE RECEIPTS FROM THE ACTIVITIES REFERRED TO THEREIN IS TWENTY-F IVE LAKH RUPEES OR LESS IN THE PREVIOUS YEAR. CLEARLY, THEREFORE, IN ORDER THAT T HE BENEFITS UNDER SECTION 11 ARE DECLINED TO THE ASSESSEE ON THE GROUND I.T.A. NO. 7 32 (ASR) OF 2013 ASSESSMENT YEAR: 2009-10 PAGE 10 OF 12 THAT IT IS ENGAGED IN S UCH ACTIVITIES AS MAY BE HIT BY THE FIRST PROVISO TO SECTION 2(15), NOT ONLY THE AS SESSEE MUST BE ENGAGED IN CARRYING OUT SUCH ACTIVITIES AS MAY HIT THE FIRST P ROVISO TO SECTION 2(15) BUT ALSO THE RECEIPTS OF THE ASSESSEE FROM SUCH ACTIVITIES MUST EXCEED A SPECIFIED LIMIT. THE SECOND LIMB OF THIS DISABILITY CLAUSE NEEDS TO BE S ATISFIED WITH RESPECT TO EACH ASSESSMENT YEAR. OBVIOUSLY, THEREFORE, THIS ASPECT OF THE MATTER CANNOT BE EXAMINED AT THE STAGE OF THE GRANT OR WITHDRAWAL OF REGISTRATION SINCE THE REGISTRATION EXERCISE IS A ONE TIME EXERCISE AND NO T SOMETHING WHICH MUST BE DONE FOR EACH ASSESSMENT YEAR SEPARATELY. THAT IS P RECISELY THE REASON, AS NOTED IN THE EXPLANATORY MEMORANDUM, AS TO WHY THE REMEDY FOR THE ACTIVITIES BEING HIT BY THE FIRST PROVISO TO SECTION 2(15) LIES NOT IN G RANT, DECLINE OR WITHDRAWAL OF REGISTRATION BUT IN DECLINING THE BENEFITS OF EXEMP TION UNDER SECTION 11 ON THAT COUNT, ON YEAR TO YEAR BASIS, NOTWITHSTANDING THE S TATUS OF REGISTRATION. 16. THE SCHEME OF THE ACT, IN THIS RESPECT, IS THUS CLEAR. THE STATUS OF REGISTRATION UNDER SECTION 12A OR 12AA HAS NO BEARING, AS RECOGN IZED IN SECTION 13(8), ON THE AVAILABILITY OF EXEMPTION UNDER SECTION 11. TO THE EXTENT INCOME OF THE ASSESSEE ARISES FROM THE ACTIVITIES HIT BY THE FIRST PROVISO TO SECTION 2(15) IN ANY ASSESSMENT YEAR, THE ASSESSEE WILL BE DISENTITLED FOR EXEMPTIO N UNDER SECTION 11 TO THAT EXTENT. IT IS ALSO IMPORTANT TO BEAR IN MIND THE FA CT THAT THE DISENTITLEMENT FOR EXEMPTION UNDER SECTION 11, AS A RESULT OF THE ACTI VITIES OF AN ASSESSEE BEING HELD TO BE NOT FOR CHARITABLE PURPOSES UNDER SECTION 2(1 5) READ WITH PROVISOS THERETO, IS IN RESPECT OF ENTIRE INCOME OF THE ASSESSEE TRUST O R INSTITUTION BUT ONLY FOR THE ASSESSMENT YEAR IN RESPECT OF WHICH THE FIRST PROVI SO TO SECTION 2(15) IS TRIGGERED. 17. IF THE STATUS OF REGISTRATION IS TO BE DECLINED TO AN ASSESSEE ONLY ON THE GROUND THAT SOME OF THE OBJECTS MAY BE HIT BY THE FIRST PR OVISO TO SECTION 2(15) BUT THE ASSESSEES RECEIPTS FROM SUCH ACTIVITIES DONOT EXCE ED SPECIFIED THRESHOLD IN A PARTICULAR ASSESSMENT YEAR, THE ASSESSEE WILL BE SU BJECTED TO UNDUE HARDSHIP IN THE SENSE THAT WHILE THE ASSESSEE WILL BE DISENTITL ED TO EXEMPTION UNDER SECTION 11 DUE TO DENIAL OF REGISTRATION UNDER SECTION 12 A OR 12AA WHICH IS SINE QUA NON FOR ADMISSIBILITY OF EXEMPTION UNDER SECTION 11. ON THE OTHER HAND, IF THE STATUS OF REGISTRATION IS GRANTED TO THE ASSESSEE EVEN WHEN S OME OF THE OBJECTS MAY BE HIT BY THE FIRST PROVISO TO SECTION 2(15) AND THE ASSES SEES RECEIPTS FROM SUCH ACTIVITIES DO EXCEED SPECIFIED THRESHOLD, NO I.T.A. NO. 732 (A SR) OF 2013 ASSESSMENT YEAR: 2009-10 PAGE 11 OF 12 PREJUDICE WILL BE CAUSED TO T HE LEGITIMATE INTERESTS OF THE REVENUE BECAUSE, NOTWITHSTANDING THE STATUS OF REGI STRATION AND BY THE VIRTUE OF SECTION 13(8), THE ASSESSEE WILL NOT BE ELIGIBLE FO R EXEMPTION UNDER SECTION 11 IN RESPECT OF SUCH INCOME. IT IS ONLY ELEMENTARY THAT A STATUTORY PROVISION IS TO BE INTERPRETED UT RES MAGIS VALEAT QUAM PEREAT, I.E., TO MAKE IT WORKABLE RATHER THAN REDUNDANT. 12 18. THE CONSIDERATIONS ABOUT THE POSSIBILITIES OF T HE FIRST PROVISO TO SECTION 2(15) COMING INTO PLAY AFFECTING THE GRANT, DECLINE OR WI THDRAWAL OF REGISTRATION UNDER SECTION 12AA WILL THUS LEAD TO WHOLLY AVOIDABLE UND UE HARDSHIPS TO THE ASSESSEE, WILL BE UNWORKABLE IN PRACTICE AND BE CONTRARY TO T HE SCHEME OF THE ACT. 19. IN VIEW OF THE ABOVE DISCUSSIONS, IN OUR CONSID ERED VIEW, THE CONSIDERATIONS ABOUT THE POSSIBILITIES OF FIRST PROVISO TO SECTION 2(15) INTO PLAY ARE WHOLLY EXTRANEOUS IN THE PRESENT CONTEXT. AS THE WITHDRAWA L OF REGISTRATION IS SOLELY BASED ON THESE CONSIDERATIONS, THE VERY FOUNDATION OF THE LEARNED COMMISSIONERS ACTION IS UNSUSTAINABLE IN LAW AND CONSISTS OF REAS ONS WHICH ARE NOT AT ALL RELEVANT IN THE CONTEXT OF REGISTRATION STATUS UNDER SECTION 12A OR 12AA OF THE ACT. FOR THIS REASON ALSO, THE ACTION OF THE LEARNED COMMISSIONER IS WHOLLY DEVOID OF ANY LEGALLY SUSTAINABLE MERITS. 12. IN VIEW OF THE ABOVE ALSO, WE HOLD THAT THE AC TION OF THE LD. CIT IN CANCELLING THE REGISTRATION IS NOT AS PER LAW. 13. THE CASE LAWS RELIED UPON BY THE LD. DR HAVE NO RELEVANCE SINCE THEY ARE DISTINGUISHABLE ON FACTS. IN THE CASE OF JAMMU DEVE LOPMENT AUTHORITY [2012] 23 TAXMANN.COM 343 (AMRITSAR), AND JAMMU DEVELOPMENT V S. UOI & ANR. (ITA NO. 164 OF 2012 DATED 07.11.2013) (HC OF J&K) RELIED UP ON BY THE LD. DR THE FACTS WERE THAT REGISTRATION U/S 12AA WAS GRANTED WITHOUT TAKING INTO CONSIDERATION THE PROVISO TO SECTION 2(15) WHICH WAS VERY MUCH TH ERE ON THE STATUTE WHILE GRANTING REGISTRATION. THE HONBLE HIGH COURT UPHEL D THE VIEW OF THE TRIBUNAL THAT BY NOT TAKING INTO CONSIDERATION THE FIRST PROVISO TO SECTION 2(15) WHILE GRANTING REGISTRATION, AN ERROR IN LAW HAD OCCURRED WHICH CO ULD NOT BE ALLOWED TO BE PERPETUATED AND HENCE THE REGISTRATION WAS CANCELLE D. IN THE PRESENT CASE THE FACTS ARE TOTALLY DISTINGUISHABLE SINCE, WHEN REGIS TRATION UNDER SECTION 12AA WAS GRANTED IN THE IMPUGNED CASE THE PROVISION TO SECTI ON 2(15)WAS NOT ON THE STATUTE AND THE HONBLE MADRAS HIGH COURT IN THE CA SE OF TAMIL NADU CRICKET ASSOCIATION (SUPRA) HAS CATEGORICALLY HELD THAT POW ER REGARDING CANCELLATION HAS TO BE SEEN WITH REFERENCE TO THE REGISTRATION A ND THE OBJECTS SATISFYING THE DEFINITION OF CHARITABLE PURPOSE AS IT STOOD AT T HE TIME OF REGISTRATION AND NOT BY SUBSEQUENT AMENDMENT TO SECTION 2(15) OF THE ACT . THE DECISION IN THE CASE OF JALANDHAR DEVELOPMENT A UTHORITY (SUPRA), PUNJAB URBAN PLANNING & DEVELOPMENT AUTHORITY (SUPRA), IMP ROVEMENT TRUST VS. CIT (BHATINDA)(SUPRA)& HARYANA URBAN DEVELOPMENT, PANCH KULA VS. CIT RELIED UPON 13 BY THE LD. DR HAVE BEEN RENDERED IN THE CONTEXT OF GRANT OF REGISTRATION U/S 12AA WHICH STANDS ON A SLIGHTLY DIFFERENT FOOTING A S COMPARED TO CANCELLATION OF REGISTRATION U/S 12AA(3). THE GRANT OF REGISTRATION U/S 12AA(1)(B) REQUIRES SATISFACTION ABOUT THE OBJECTS OF THE TRUST AS WELL AS GENUINENESS OF THE ACTIVITIES, WHILE FOR CANCELLATION U/S 12AA(3) ALL THAT IS INSI STED UPON IS THE SATISFACTION AS TO WHETHER THE ACTIVITIES OF THE TRUST OR INSTITUTION ARE GENUINE OR NOT AND WHETHER THE ACTIVITIES ARE BEING CARRIED ON IN ACCORDANCE W ITH THE OBJECTS OF THE TRUST. FURTHER WE FIND THAT ON THE ISSUE UNDER ADJUDICATIO N IN THE PRESENT CASE, THERE ARE DECISIONS OF THE HONBLE TRIBUNAL IN FAVOUR OF THE ASSESSEE AS POINTED OUT BY THE LD. AR AND IN SUCH A SITUATION IT IS SETTLED LA W THAT THE VIEW FAVOURABLE TO THE ASSESSEE HAS TO BE TAKEN. MOREOVER THE DECISION OF THE HONBLE MADRAS HIGH COURT HAS PRECEDENCE ON THE DECISIONS OF THE HONBL E TRIBUNAL ON THIS ISSUE FOLLOWING THE PRINCIPLES OF JUDICIAL PRECEDENCE. 14. IN VIEW OF THE ABOVE DISCUSSION, IN OUR CONSIDE RED VIEW, THE ACTION OF THE LD. COMMISSIONER IN CANCELING REGISTRATION UNDER SE CTION 12AA(3) IS WHOLLY DEVOID OF ANY LEGALLY SUSTAINABLE MERIT. 15. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (BHAVNESH SAINI) (ANNAPURNA MEHROTRA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 12/04/2016 AG COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT, TH E CIT(A), THE DR