Improvement Trust, Abohar V. The Commissioner of Income-tax, Bathinda

ITA 320/ASR/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68243 (ITAT-AMRITSAR)
• Duration Of Justice: 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-12-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 09-12-2013
• Assessment Year: misc
• Appeal Filed On: 13-05-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: AMRIK CHAND
• Assessee Lawyers: VINOD KUMAR GARG
• Keywords: Charitable institution; Opportunity of being heard; Cancellation of registration
• Section: 12AA; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P. JAIN, ACCOUNTANT MEMBER I.T.A. NO. 320 (ASR)/2013 ASSESSMENT YEAR: NIL PAN: AAATI4901J IMPROVEMENT TRUST, ABOHAR VS. COMMISSIONER OF INCO ME TAX, BATHINDA (APPELLANT) (RESPONDENT) APPELLANT BY: SH. VINOD KUMAR GARG, CA RESPONDENT BY: SH. AMRIK CHAND, DR DATE OF HEARING: 09.12.2013 DATE OF PRONOUNCEMENT: 09.12.2013 ORDER PER BENCH 1. THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE IMPUGNED ORDER DATED 18.02.2013 PASSED BY COMMISSIONER OF IN COME TAX, BATHINDA, ON THE FOLLOWING GROUNDS: I. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW. THE LEARNED CIT ERRED IN UPHOLDING THAT THE APPLICA NT INSTITUTION DOES NOT QUALIFY TO BE TREATED AS CHARITABLE INSTIT UTION AND THE ACTIVITIES OF THE INSTITUTIONS ARE NOT CHARITABLE I N NATURE AND PASSED THE ORDER U/S 12AA(3). 2 I.T.A. NO. 320 (ASR)/2013 II. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LEARNED CIT ERRED IN UPHOLDING THE FINDINGS THA T ALL THE ACTIVITIES OF THE APPLICANT ARE NOT CHARITABLE IN N ATURE AND THE APPLICANT INSTITUTION DOES NOT QUALIFY TO BE TREATE D AS CHARITABLE INSTITUTION. III. THAT ANY OTHER RELIEF MAY KINDLY BE GRANTED TO THE APPELLANT TO WHICH HE IS FOUND ELIGIBLE DURING THE COURSE OF APP ELLATE PROCEEDINGS AND THE APPELLANT CAN CRAVE, ADD OR LEA VE ANY GROUND(S) OF APPEAL BEFORE THE DISPOSAL OF APPEAL. IV. THE APPEAL IS WELL IN TIME. 2. THE FACTS RELATING TO THE ISSUE IN DISPUTE ARE T HAT THE ASSESSEE- TRUST I.E. IMPROVEMENT TRUST, ABOHAR, IS A TRUST CO NSTITUTED UNDER THE LEGISLATION OF PUNJAB GOVERNMENT STYLED AS PUNJAB TOWN IMPROVEMENT ACT 1922 AND THE REGISTRATION UNDER SE CTION 12AA OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT) WA S GRANTED TO THE ASSESSEE-TRUST W.E.F. 12.06.2003. IN VIEW OF THE AM ENDED DEFINITION OF SECTION 2(15) OF THE ACT WITH EFFECT FROM 01.04.200 9, SHOW CAUSE NOTICES WERE ISSUED TO THE ASSESSEE ON 27.05.2011, 22.06.20 12 & 30.10.2012 AS TO WHY THE REGISTRATION U/S 12AA GRANTED TO THE ASS ESSEE ON 23.08.2010 MAY NOT BE CANCELLED U/S 12AA(3) OF THE ACT. IN RES PONSE TO THE SAME, THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE ATTEN DED THE PROCEEDINGS AND ALSO SUBMITTED AUDITED FINAL ACCOUNTS STATEMENTS AN D AUDIT REPORTS FOR THE ASSESSMENT YEARS 2008-09 TO 2011-12. AFTER PERUSING THE DOCUMENTARY EVIDENCE FILED BY THE ASSESSEE AS WELL AS THE ACTIV ITIES OF THE ASSESSEE- 3 I.T.A. NO. 320 (ASR)/2013 TRUST, LEARNED CIT, BATHINDA, FOUND THAT THE ASSESS EE PURCHASES LAND AT NOMINAL COST, DEVELOPS IT, DIVIDES IT INTO PLOTS AN D SELL THE PLOTS AT MUCH HIGHER PRICES, THUS EARNING HUGE PROFITS. THIS IS I TS ONLY ACTUAL AND PREDOMINANT ACTIVITY, WHICH IS TO BE EVALUATED IN T HE LIGHT OF THE PROVISIONS OF SECTION 2(15) OF THE ACT FOR GRANT OF REGISTRATION U/S 12AA. 3. THE COUNSEL OF THE ASSESSEE HAS SUBMITTED HIS WR ITTEN SUBMISSION, WHEREIN HE HAS GIVEN THE BRIEF HISTORY OF THE ASSESSEE-TRUST ALONG WITH THE ACTIVITIES OF THE ASSESSEE-TRUST AND MAINLY STATED THAT THE ASSESSEE-TRUST IS NOT DOING ANY BUSINESS OR TRADE, AS PER THE CONTENTION RAISED BY LEARNED CIT, BATHINDA, IN HIS NOTICE. AFT ER CONSIDERING THE REPLY FILED BY THE ASSESSEE-TRUST, LEARNED CIT, BATHINDA, CONCLUDED THAT THE ASSESSEE-TRUST IS CHARGING FEES AND FINES ON ACCOUN T OF COMPOSITION FEES, FINES AND PENALTIES, TRANSFER FEES, SANCTION OF MAP S, INTEREST, MISC. INCOME, ENLISTMENT FEES, SALE OF TRUST LAND (ADDITI ONAL AREA), COPYING FEES, INCREASE IN VALUATION OF SALEABLE PROPERTIES AND TENDER FEE. 4. AFTER DISCUSSING IN DETAIL THE ORDER OF I.T.A.T. , CHANDIGARH BENCH, CHANDIGARH, IN THE CASE OF PUDA VS. CIT , REPORTED IN (2006) 103 TTJ CHD. 988, AS WELL AS THE DEFINITION OF SECTION 2(15), SECTION 12AA AND SECTION 12AA(3) OF THE ACT, LEARNED CIT, BATHI NDA, FINALLY HELD 4 I.T.A. NO. 320 (ASR)/2013 THAT IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE ASSESSEES CASE, HE WAS SATISFIED THAT THE ACTIVITIES OF THE ASSESSEE-INSTI TUTION WERE NOT CHARITABLE IN NATURE WITHIN THE MEANING OF PROVISO TO SECTION 2(15) OF THE ACT AND THE ASSESSEE DOES NOT QUALIFY TO BE TREATED AS A CH ARITABLE INSTITUTION. CONSEQUENTLY, HE PASSED THE IMPUGNED ORDER ON 18.02 .2013 UNDER SECTION 12AA(3) OF THE ACT. 5. AGGRIEVED WITH IMPUGNED ORDER DATED 18.02.2013 P ASSED BY LEARNED CIT, BATHINDA, ASSESSEE FILED THE PRESENT A PPEAL. 6. AT THE TIME OF HEARING, SH. VINOD GARG, CA, LEAR NED AUTHORIZED REPRESENTATIVE STRONGLY OPPOSED THE IMPU GNED ORDER AND VEHEMENTLY ARGUED THE CASE OF THE ASSESSEE. HE STAT ED THAT THE ASSESSEE- TRUST WAS CONSTITUTED UNDER THE LEGISLATION OF PUNJ AB TOWN IMPROVEMENT ACT, 1922 AND IT HAD APPLIED FOR REGISTRATION UNDER SECTION 12AA OF THE ACT ON 15.09.2005, WHICH WAS LASTLY GRANTED TO THE ASSESSEE BY THE LEARNED CIT, BATHINDA, W.E.F. 12.06.2003 VIDE ORDER DATED 23.08.2010. HE FURTHER STATED THAT THE ASSESSEE-TRUST HAS NOT A CQUIRED ANY LAND AFTER THE YEAR 2002 TILL DATE AND RECEIPTS SHOWN IN THE B ALANCE-SHEET ARE THE COLLECTION OUT OF INSTALLMENTS OF SOLD PROPERTY FRO M THE OLD SCHEMES. IN VIEW OF THE AUDIT REPORTS FOR THE PRECEDING YEARS, THE ASSESSEE-TRUST HAS 5 I.T.A. NO. 320 (ASR)/2013 ONLY BANK INTEREST AND OTHER PETTY RECEIPTS BUT NOT DONE ANY BUSINESS AND THERE WAS ALWAYS LOSS EXCEPT ONE YEAR. HE FURTHER S TATED THAT THE ASSESSEE- TRUST IS PROVIDING PUBLIC UTILITY SERVICE BY WAY OF BUILDING OF ROADS, ELECTRIFICATION, WATER SUPPLY AND SEWERAGE ETC. AND THESE ARE NOT IN THE NATURE OF TRADE, COMMERCE OR BUSINESS. 7. LEARNED COUNSEL FOR THE ASSESSEE FURTHER STATED THAT THE CASE-LAW RELIED UPON BY THE LEARNED CIT, BATHINDA, IN THE IM PUGNED ORDER ARE REGARDING THE GRANT OF REGISTRATION UNDER SECTION 1 2AA OF THE ACT AND NOT ABOUT THE CANCELLATION OF REGISTRATION UNDER SECTIO N 12AA(3) OF THE ACT, THEREFORE, THE CASE LAW RELIED UPON BY LEARNED CIT, BATHINDA, ARE NOT APPLICABLE IN THE CASE OF ASSESSEE. AT LAST, HE REQ UESTED THAT THE IMPUGNED ORDER MAY BE CANCELLED BY ALLOWING THE APPEAL FILED BY THE ASSESSEE. NO OTHER ARGUMENT HAS BEEN ADVANCED BY LEARNED COUNSEL FOR THE ASSESSEE NOR HAS FILED ANY PAPER BOOK TILL DATE. 8. LEARNED DR RELIED UPON THE IMPUGNED ORDER PASSED BY LEARNED CIT, BATHINDA, AND STATED THAT THE ISSUE IN DISPUTE HAS ALREADY BEEN DECIDED IN FAVOUR OF THE REVENUE AND AGAINST THE AS SESSEE IN VARIOUS CASES. THEREFORE, THE APPEAL FILED BY THE ASSESSEE MAY BE DISMISSED. 6 I.T.A. NO. 320 (ASR)/2013 9. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ELEVANT RECORDS AVAILABLE WITH US, ESPECIALLY THE IMPUGNED ORDER PA SSED BY LEARNED CIT, BATHINDA, AND WE ARE OF THE VIEW THAT LEARNED CIT, BATHINDA, HAS GIVEN ADEQUATE OPPORTUNITY TO THE ASSESSEE BEFORE PASSING THE IMPUGNED ORDER AND DISCUSSED IN DETAIL THE PROVISIONS OF LAW AS WE LL AS THE VARIOUS CASE- LAWS ON THE ISSUE IN DISPUTE DECIDED BY I.T.A.T. BE NCHES. FOR THE SAKE OF CONVENIENCE, PROVISIONS OF SECTIONS 2(15), 12AA AND 12AA(3) ARE REPRODUCED AS UNDER: SECTION 2(15) CHARITABLE PURPOSE INCLUDES RELIEF OF THE POOR, EDU CATION, MEDICAL RELIEF, PRESERVATION OF ENVIRONMENT (INCLUD ING WATERSHEDS, FORESTS AND WILDLIFE) AND PRESERVATION OF MONUMENTS OR PLACES OR OBJECTS OF ARTISTIC OR HISTORIC INTERE ST, AND THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC U TILITY: PROVIDED THAT THE ADVANCEMENT OF ANY OTHER OBJECT O F GENERAL PUBLIC UTILITY SHALL NOT BE A CHARITABLE PURPOSE, I F IT INVOLVES THE CARRYING ON OF ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS, OR ANY ACTIVITY OF RENDERING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS, FOR A CESS OF FEE OR ANY OTHER CONSIDERATION, IRRESPECTIVE OF THE NATURE OF USE OR APPLICATION, OR RETENTION, OF THE INCOME FROM SUCH ACTIVITY. SECTION 12AA: (1) THE COMMISSIONER, ON RECEIPT OF AN APPLICATION FOR REGISTRATION OF A TRUST OR INSTITUTION MADE UNDER C LAUSE(A) [OR CLAUSE (AA) OF SUB-SECTION (1)] OF SECTION 12A, SHA LL- (A) CALL FOR SUCH DOCUMENTS OR INFORMATION FROM TH E TRUST OR INSTITUTION AS HE THINKS NECESSARY IN ORDER TO SATI SFY 7 I.T.A. NO. 320 (ASR)/2013 HIMSELF ABOUT THE GENUINENESS OF ACTIVITIES OF THE TRUST OR INSTITUTION AND MAY ALSO MAKE SUCH INQUIRIES AS HE MAY DEEM NECESSARY IN THIS BEHALF; AND (B) AFTER SATISFYING HIMSELF ABOUT THE OBJECTS OF THE TRUST OR INSTITUTION AND THE GENUINENESS OF ITS ACTIVITIES, HE- (I) SHALL PASS AN ORDER IN WRITING REGISTERING THE TRUST OR INSTITUTION; (II) SHALL, IF HE IS NOT SO SATISFIED, PASS AN ORD ER IN WRITING REFUSING TO REGISTER THE TRUST OR INSTITUTI ON, AND A COPY OF SUCH ORDER SHALL BE SENT TO THE APPLICANT: PROVIDED THAT NO ORDER UNDER SUB-CLAUSE (II) SHALL BE PASSE D UNLESS THE APPLICANT HAS BEEN GIVEN A REASONABLE OP PORTUNITY OF BEING HEARD. [(1A) ALL APPLICATIONS, PENDING BEFORE THE CHIEF C OMMISSIONER ON WHICH NO ORDER HAS BEEN PASSED UNDER CLAUSE(B) O F SUB- SECTION (1) BEFORE THE 1 ST DAY OF JUNE, 1999, SHALL STAND TRANSFERRED ON THAT DAY TO THE COMMISSIONER AND THE COMMISSIONER MAY PROCEED WITH SUCH APPLICATIONS UND ER THAT SUB-SECTION FROM THE STAGE AT WHICH THEY WERE ON TH AT DAY.] (2) EVERY ORDER GRANTING OR REFUSING REGISTRATION UNDER CLAUSE (B) OF SUB-SECTION (1) SHALL BE PASSED BEFO RE THE EXPIRY OF SIX MONTHS FROM THE END OF THE MONTH IN WHICH TH E APPLICATION WAS RECEIVED UNDER CLAUSE (A) [OR CLAUS E (AA) OF SUB-SECTION (1)] OF SECTION 12A] [(3) WHERE A TRUST OR AN INSTITUTION HAS BEEN GRANT ED REGISTRATION UNDER CLAUSE (B) OF SUB-SECTION (1) AN D SUBSEQUENTLY THE COMMISSIONER IS SATISFIED THAT THE ACTIVITIES OF SUCH TRUST OR INSTITUTION ARE NOT GENUINE OR ARE NO T BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE T RUST OR INSTITUTION, AS THE CASE MAY BE, HE SHALL PASS AN O RDER IN WRITING CANCELLING THE REGISTRATION OF SUCH TRUST OR INSTIT UTION: 8 I.T.A. NO. 320 (ASR)/2013 PROVIDED THAT NO ORDER UNDER THIS SUB-SECTION SHALL BE PASS ED UNLESS SUCH TRUST OF INSTITUTION HAS BEEN GIVEN A R EASONABLE OPPORTUNITY OF BEING HEARD] 10. LEARNED CIT, BATHINDA, HAS MENTIONED THE ACTIVIT IES OF THE ASSESSEE-TRUST IN THE IMPUGNED ORDER AT PARA 3 (PAG E 2), WHICH ARE AS UNDER: PERUSAL OF THE AUDIT REPORTS AS WELL AS THE ACTIVIT IES OF THE TRUST REVEALS THAT THEY ARE CARRYING OUT THE FOLLOWING AC TIVITIES:- (I) PURCHASE OF LAND AT NOMINAL COST, THEN LEVEL A ND CLEAR IT, CUT INTO PLOTS AND SELL THE PLOTS AT MUCH HIGHER PRICES, THU S EARNING HUGE PROFITS. (II) CHARGING OF FEES AND FINES AS UNDER: (A) SALE OF FORMS (B) LAND ENHANCEMENT FEE (C) BUILDING PLANS FEES (D) ROAD CUTTING FEES (E) TRANSFER FEE (F) FINE AND PENALTIES (G) NON CONSTRUCTION CHARGES. 11. LEARNED CIT, BATHINDA, HAS CONFRONTED ALL THESE ACTIVITIES DONE BY THE ASSESSEE-TRUST, BUT IN THE REPLY, THE ASSESS EE-TRUST ONLY GAVE EMPHASIS UPON THE FACT THAT THE ASSESSEE IS HAVING THE REGISTRATION GRANTED UNDER SECTION 12AA W.E.F. 12.06.2003 VIDE ORDER DAT ED 23.08.2010 AND PLEADED THAT IT IS NOT REVOCABLE BECAUSE THE ASSESS EE-TRUST IS NOT DOING ANY BUSINESS AND IS DOING ONLY PUBLIC UTILITY SERVICES BY WAY OF BUILDING OF 9 I.T.A. NO. 320 (ASR)/2013 ROADS, ELECTRIFICATION, WATER SUPPLY AND SEWERAGE E TC, WHICH ARE NOT IN THE NATURE OF TRADE, COMMERCE OR BUSINESS. 12. LEARNED CIT, BATHINDA, HELD THAT WHEREAS COMMER CIAL PROPERTIES ARE SOLD ON THE BASIS OF AUCTIONS, THE R ESIDENTIAL PROPERTIES ARE PARTLY SOLD THROUGH AUCTION AND PARTLY THROUGH DRAW OF LOTS, MEANS THAT THE ASSESSEE IS SELLING THE LAND TO THE GENERAL PUB LIC BY PURCHASING OF UNDEVELOPED LAND IN BULK, LEVELING AND CLEARING OF THE LAND, CUTTING IT INTO PLOTS, PROVIDING ACCESS TO ROADS AND PROVIDING ELEC TRICITY, WATER AND SEWERAGE FACILITIES AT ITS OWN COSTS, WHICH RESULTS IN TREMENDOUS VALUE ADDITION IN THE LAND. IT BRINGS THE LAND IN THE SAM E CATEGORY AS OF THE OTHER REAL ESTATE PRODUCTS AVAILABLE IN THE MARKET, OFFER ED BY THE PRIVATE COLONIZERS AND REAL ESTATE AGENTS. LEARNED CIT, BAT HINDA HAS ALSO OBSERVED THAT THE ASSESSEE ADVERTISED THIS PRODUCT WIDELY IN PRINT AND ELECTRONIC MEDIA SO AS TO ATTRACT A LARGE NUMBER OF CUSTOMERS FROM ALL STRATA OF THE GENERAL PUBLIC INCLUDING THE FINANCIA LLY AFFLUENT. THUS, THE ASSESSEE-INSTITUTION SELLS OFF THESE PLOTS, RESIDEN TIAL AS WELL AS COMMERCIAL, BY ORGANIZING A PUBLIC AUCTION THROUGH BIDDING PROCESS, AS A RESULT OF WHICH, THE PRICE OF LAND ESCALATES AND FI NALLY, THE LAND IS SOLD OFF TO THE HIGHEST BIDDER, THUS GENERATING HUGE PROFITS . 10 I.T.A. NO. 320 (ASR)/2013 13. LEARNED CIT, BATHINDA, IN THE IMPUGNED ORDER ALS O GIVEN VARIOUS INSTANCES WHERE THE ASSESSEE IS CHARGING FE ES AND FINES ON ACCOUNT OF COMPOSITION FEES, FINES AND PENALTIES, TRANSFER FEES, SANCTION OF MAPS, INTEREST, MISC. INCOME, ENLISTMEN T FEES, SALE OF TRUST LAND (ADDITIONAL AREA), COPYING FEES, INCREASE IN V ALUATION OF SALEABLE PROPERTIES AND TENDER FEE AND LASTLY HELD THAT KEEP ING IN VIEW ALL THESE DOCUMENTARY EVIDENCES FILED BY THE ASSESSEE-TRUST, HE WAS FULLY SATISFIED THAT THE ACTIVITIES OF THE ASSESSEE-INSTITUTION WER E NOT CHARITABLE IN NATURE WITHIN THE MEANING OF PROVISO TO SECTION 2(15) OF T HE ACT AND THE ASSESSEE DOES NOT QUALIFY TO BE TREATED AS A CHARIT ABLE INSTITUTION. 14. KEEPING IN VIEW THE AFORESAID FACTS AND CIRCUMST ANCES OF THE CASE, LEARNED CIT, BATHINDA, HAS PASSED IMPUGNED OR DER ON THE BASIS OF VARIOUS DECISIONS PASSED BY THIS BENCH AS WELL AS T HE CHANDIGARH BENCH, AS MENTIONED IN THE IMPUGNED, AND THE DECISION OF H ON'BLE HIGH COURTS AND CANCELLED THE REGISTRATION GRANTED TO THE ASSES SEE UNDER SECTION 12AA BY EXERCISING THE POWER OF SECTION 12AA(3) OF THE A CT. 15. AS PER THE AMENDED DEFINITION OF CHARITABLE PURP OSE UNDER SECTION 2(15) OF THE ACT, W.E.F. 01.04.2009, ADVANC EMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY SHALL NOT BE A CHA RITABLE PURPOSE, IF IT 11 I.T.A. NO. 320 (ASR)/2013 INVOLVES THE CARRYING ON OF ANY ACTIVITIES IN THE N ATURE OF TRADE, COMMERCE OR BUSINESS, OR ANY ACTIVITY OF RENDERING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS, FOR A CESS OF F EE OR ANY OTHER CONSIDERATION, IRRESPECTIVE OF THE NATURE OF USE OR APPLICATION, OR RETENTION, OF THE INCOME FROM SUCH ACTIVITY. 16. AS DISCUSSED ABOVE SINCE THE APPLICANT IS ENGAGE D IN THE ACTIVITY IN THE NATURE OF TRADE, COMMERCE AND BUSIN ESS AND IS ENGAGED IN THE TRADE OF REAL ESTATE BUSINESS PREDOMINANTLY WIT H A PROFIT MOTIVE, ITS ENGAGEMENT IN ANY OF THE ACTIVITIES AS STATED ABOVE WILL NOT AFFECT ITS CHARACTER AS SUCH SINCE THE PROVISO PROVIDES THAT T HE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY SHALL NOT BE REGARDED AS CHARITABLE PURPOSE IF IT INVOLVES IN CARRYING ON ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS OR RENDERING ANY SERVICE IN RE LATION TO ANY TRADE, COMMERCE OR BUSINESS FOR A CESS OR FEE OR ANY OTHER CONSIDERATION IRRESPECTIVE OF THE NATURE OF USE OR APPLICATION, O R RETENTION, OF THE INCOME FROM SUCH ACTIVITY. 17. THUS, THE ACTIVITIES OF THE ASSESSEE ARE AIMED AT E ARNING PROFIT AS IT IS CARRYING ON ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS. FURTHER PROFIT MAKING BY THE ASSESSEE IS NOT MERE I NCIDENTAL OR BYPRODUCT 12 I.T.A. NO. 320 (ASR)/2013 OF THE ACTIVITY OF THE ASSESSEE. THE MAIN PRE-DOMIN ANT PURPOSE OF ASSESSEE IS MAKING PROFIT, IT IS REAL OBJECT OF THE ASSESSEE AND ALSO THERE IS NO SPENDING OF THE INCOME EXCLUSIVELY FOR THE PURPO SE OF CHARITABLE ACTIVITIES AND PROFITS OF THE ASSESSEE NOT USED FOR CHARITABLE PURPOSE UNDER THE TERMS OF THE OBJECT AND THERE IS NO OBLIGATION ON THE PART OF THE ASSESSEE TO SPEND IT ON CHARITABLE PURPOSES ONLY . 18. IT IS NOW PERTINENT TO REFER TO THE OBSERVATIONS OF THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH VIDE THEIR JUDGME NT DATED 01.06.2006 IN THE CASE OF PUDA VS. CIT (2006) 103 TTJ CHD. 988 WITH REGARD TO THE PROVISIONS OF SECTION 2(15) OF THE INCOME TAX ACT, 1961. IT IS HELD IN THE SAID ORDER THAT THIS ISSUE REQUIRES DELIBERATION FR OM A DIFFERENT ANGLE WHETHER THE ASSESSEE WAS CONSTITUTED TO PROVIDE ANY CHARITY TO THE PUBLIC AT LARGE OR TO SATISFY THE NEEDS FOR HOUSING ACCOMM ODATION FOR THE PEOPLE OF PUNJAB AND ALSO PLANNING AND DEVELOPMENT OF THE CITIES, TOWNS AND VILLAGES OR WHETHER THE DEVELOPMENT IN SUCH A WAY I S OF CHARITABLE NATURE. A PLEA WAS RAISED BY THE LEARNED COUNSEL FOR THE AS SESSEE THAT FUNDS ARE PROVIDED BY THE PUNJAB GOVERNMENT OR GENERATED BY T HE ASSESSEE ITSELF. TO GENERATE ITS FUNDS FOR CARRYING OUT ITS OBJECTS, THE ASSESSEE IS ACQUIRING LANDS, DEVELOPING THEM ARE SELLING THE PLOTS TO THE GENERAL PUBLIC WHO 13 I.T.A. NO. 320 (ASR)/2013 APPLY FOR THE SAME. EVEN THE ECONOMICALLY WEAKER ST RATA OF THE SOCIETY IS GENERALLY APPLYING. IT IS NOT THE CASE THAT THE ASS ESSEE IS ALLOTTING HOUSES TO THE POOR MASSES FREE OF COST. WHILE DELIVERING T HE JUDGMENT IN THE CASE OF PUDA, THE CHANDIGARH BENCH OF INCOME TAX APPELLA TE TRIBUNAL HAS ALSO REFERRED TO A CASE ADJUDICATED BY HON'BLE APEX COURT IN THE CASE OF ASSTT. CIT V. THANTHI TRUST (2001) 165 CTR (SC) 681 : (2001) 247 ITR 785 (SC) WHERE THE HON'BLE COURT HAS DELIBERATED UP ON THE ISSUE OF CHARITABLE PURPOSES AND HELD THAT WHERE CERTAIN ACT IVITIES OF AN ASSESSEE CLAIMING EXEMPTION U/S 12AA OF THE INCOME TAX ACT, 1961 ARE SUCH WHERE PROFIT MOTIVE IS INVOLVED AND WHERE NO CHARIT Y TOWARDS GENERAL PUBLIC IS BEING DONE, THE APPLICABILITY OF SECTION 2(15) IS CERTAINLY ESTABLISHED AND BENEFITS OF EXEMPTION U/S 12AA OF T HE INCOME TAX ACT, 1961 ARE NOT ALLOWABLE TO SUCH AN ASSESSEE. 19. KEEPING IN VIEW THE AFORESAID DISCUSSION, WE ARE OF THE CONSIDERED VIEW THAT THE LEARNED CIT, BATHINDA, HAS RIGHTLY CANCELLED THE REGISTRATION GRANTED TO THE ASSESSEE UNDER SECTION 12AA ON 23.08.2010 BY PASSING THE IMPUGNED ORDER UNDER SECTION 12AA(3) OF THE ACT. ACCORDINGLY, WE DISMISS THE APPEAL FILED BY THE ASS ESSEE AND UPHOLD THE IMPUGNED ORDER DATED 18.02.2013, PASSED BY LEARNED CIT, BATHINDA, 14 I.T.A. NO. 320 (ASR)/2013 20. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH DECEMBER, 2013 SD/./- SD/./- (B.P. JAIN) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 9 TH DECEMBER, 2013 /RK/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE: IMPROVEMENT TRUST, ABOHAR 2. COMMISSIONER OF INCOME TAX, BATHINDA 3. THE SR DR, I.T.A.T., ASR TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.