Gujarat Maritime Board, Gandhinagar V. The CIT., Gandhinagar, Ahmedabad

ITA 36/AHD/2011

• Counselvise Citation: 3620514 RSA 2011
• Duration Of Justice: 1 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 30-12-2011
• Assessment Year: misc
• Appeal Filed On: 06-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AWIJI RAKSHIT
• Assessee Lawyers: S N SOPARKAR
• Keywords: Charitable institution; Retrospective amendment; Cancellation of registration
• Section: 12AA; 12

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD , .. !', #$ # % BEFORE SHRI MUKUL KR.SHRAWAT, JUDICIAL MEMBER AND SHRI B.P.JAIN, ACCOUNTANT MEMBER ./ I.T.A. NO.36/AHD/2011 ( ' ' ' ' ' ' ' ' / / / / ASSESSMENT YEAR : N.A.) GUJARAT MARITIME BOARD GMB BHAVAN SECTOR 10-A OPP.AIR FORCE SECTOR 10A GANDHINAGAR ' ' ' ' / VS. THE CIT GANDHINAGAR, AHMEDABAD ( #$ ./ ) ./ PAN/GIR NO. : AABCG 6676 L ( (* / // / APPELLANT ) .. ( +,(*/ RESPONDENT ) (* - #/ APPELLANT BY : SHRI S.N.SOPARKAR, A.R. +,(* . - # / RESPONDENT BY : SHRI AWIJI RAKSHIT SR. D.R. '/ . 0$/ // / DATE OF HEARING : 30/12/2011 12' . 0$ / DATE OF PRONOUNCEMENT : 20/01/2012 #3/ O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THIS IS AN APPEAL AT THE BEHEST OF THE ASSESSEE-APP ELLANT EMANATES FROM THE ORDER OF COMMISSIONER GANDHINAGAR DATED 7/ 12/2010 PASSED U/S.12AA(3) OF THE IT ACT. SEVERAL GROUNDS HAVE BE EN RAISED, HOWEVER REVOLVE AROUND A SINGLE ISSUE A CANCELLATION OF REG ISTRATION GRANTED U/S.12AA OF THE IT ACT. ITA NO .36/AHD/2011 GUJARAT MARITIME BOARD VS. CIT - 2 - 2. THE LD.COMMISSIONER HAS OBSERVED THAT THE ACTIVI TY OF THE APPELLANT RELATES TO CHARGE OF FEES FROM THE USERS OF THE SEE-PORT FOR THE FACILITIES SUCH AS PORT INFRASTRUCTURE FACILITY, MA RINE SERVICE, CLEARING AND FORWARDING, USE OF STORAGE AREA, LAND RENTAL, HARBO URING, ETC. ON ONE HAND, THE FEES IS CHARGED AND ON THE OTHER HAND, PA YMENTS ARE TO BE MADE TO GOVERNMENT OF GUJARAT. FROM THE DESCRIPTION OF THE RECEIPTS AND EXPENDITURE, IT WAS IN THE NATURE OF RUNNING OF A P ROFESSIONAL ACTIVITY, MORE LIKE IN THE MANNER OF A BUSINESS ACTIVITY, LD. COMMISSIONER HAS OBSERVED. IN HIS OPINION, ASSESSEE HAS DERIVED PRO FIT OUT OF VARIOUS BUSINESS ACTIVITIES. THE ACTIVITIES OF THE BOARD A RE OF COMMERCIAL NATURE AND THERE WAS NO CHARITY WITHIN THE MEANING OF SECT ION 2(15) OF THE IT ACT. A SHOW-CAUSE NOTICE WAS ISSUED. IN THE SHOW -CAUSE NOTICE IT WAS INFORMED THAT DUE TO THE AMENDED PROVISIONS OF SECT ION 2(15) OF THE IT ACT WITH RETROSPECTIVE EFFECT FROM 1.4.2008, THE AS SESSEE SEIZES TO BE A CHARITABLE ORGANIZATION. IT WAS INFORMED THAT THE AGGREGATE VALUE OF RECEIPTS HAD EXCEEDED THE PRESCRIBED MINIMUM LIMIT OF RS.10 LACS. LD.COMMISISONER HAS ALSO FOUND THAT WHILE FURNISHIN G THE RETURN FOR A.Y.2009-10 A NOTE WAS APPENDED THAT THE ASSESSEE H AD BEEN GRANTED REGISTRATION U/S.12AA BY CIT GANDHINAGAR VIDE AN OR DER DATED 15/06/2005. THE INCOME WAS COMPUTED BY CLAIMING EX EMPTION U/S.11 OF IT ACT. IN THE SAID NOTE IT WAS CLAIMED THAT IN SP ITE OF THE INSERTION OF A PROVISO TO SECTION 2(15) OF IT ACT BY THE FINANCE A CT, 2008, THE ASSESSEE HAS CONTINUED TO BE A CHARITABLE INSTITUTION BEING A REGISTRATION WAS GRANTED U/S.12AA OF IT ACT. HOWEVER, LD.COMMISSIO NER WAS NOT CONVINCED AND DENIED THE REGISTRATION AS FOLLOWS:- ITA NO .36/AHD/2011 GUJARAT MARITIME BOARD VS. CIT - 3 - 11. HOWEVER, IF MAY BE CLARIFIED THAT AFORESAID DE CISIONS AND DECISIONS CITED BY THE ASSESSEE FOUND MENTIONED EAR LIER IN THIS ORDER ARE BASED ON THE PROVISION OF DEFINITION OF CHARITABLE PURPOSE AS PER SECTION 2(15) OF THE IT ACT. WHERE AS THE SHOW CAUSE NOTICE PRESENTLY ISSUED IS BASED ON THE DEFIN ITION OF CHARITABLE PURPOSE AS AMENDED BY THE FINANCE ACT 2010 WITH APPLICABILITY WITH RETROSPECTIVE EFFECT FROM 1-4-20 08, PARTICULARLY THE INSERTION OF PROVISO WHICH PROVIDES THAT IN THE CASE WHERE THE GROSS RECEIPTS FROM ALL ACTIVITIES IN THE NATURE OF TRADE, COMMERCE OR ANY ACTIVITY RENDERING SERVICES IN RELATION TO A NY TRADE, COMMERCE FOR A CESS OR ANY CONSIDERATION, IRRESPECT IVE OF THE NATURE OF USE OF APPLICABILITY OR RETENTION OF THE INCOME FROM SUCH ACTIVITY EXCEEDS AN AMOUNT OF RS.10 LAKHS, THE UNIT/ENTITY/INSTITUTION CEASES TO BE OF CHARITABLE INSTITUTION UNDER THE FOURTH LIMB, I.E. ADVANCEMENT OF ANY OTHER OBJE CT OF GENERAL PUBLIC UTILITY OTHER THAN THE RELIEF OF THE POOR, E DUCATION AND MEDICAL RELIEF WHICH ARE OTHER 3 LIMBS UNDER THE HE AD CHARITABLE PURPOSE. 12. UNFORTUNATELY, THE ASSESSEE HAS CHOSEN NOT THE SUBMIT ANY REPLY ON THIS CORE ISSUE OF ELIGIBILITY OF CHARITAB LE PURPOSE U/S.2(15) UNDER THE FOURTH LIMB, I.E. CARRYING ON A NY ACTIVITY OF ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC U TILITY HAVING GROSS RECEIPT OF LESS THAN RS.10 LAKHS BUT ON THE C ONTRARY, THEY HAVE PLACED RELIANCE ON THE PROVISION OF SECTION 12 AA(3) OF THE IT ACT WHICH PROVIDES METHODOLOGY TO CANCEL THE REGIST RATION ALREADY GRANTED U/S.12AA(3) OF THE IT ACT. IN FACT WHAT IS RELEVANT IS THAT WHERE A TRUST OR AN INSTITUTION HAS BEEN GRANTED RE GISTRATION UNDER CLAUSE (B) OR SUB-SECTION (1) AND SUBSEQUENTLY THE COMMISSIONER IS SATISFIED THAT THE ACTIVITIES OF SUCH TRUST OR INST ITUTION ARE NOT GENUINE OR NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF TRUST WITH REFERENCE TO THE DEFINITION OF CHARITABL E PURPOSE AS PROVIDED SECTION 2(15) OF THE IT ACT, AS THE CASE M AY BE, HE SHALL PASS AN ORDER IN WRITING CANCEL THE REGISTRATION OF SUCH TRUST OR INSTITUTION. THUS, THE PROVISION FOR SECTION 12AA( 3) ARE ENABLING PROVISION FOR THE CIT TO EXAMINE WHETHER, THE TRUST /INSTITUTION IS CARRYING OUT ACTIVITIES WHICH ARE FALLING IN THE DE FINITION OF CHARITABLE PURPOSE OR NOT AND IT IS NOT SO, THE CIT CAN CANCEL SUCH ITA NO .36/AHD/2011 GUJARAT MARITIME BOARD VS. CIT - 4 - REGISTRATION W.E.F. 1-4-08 EVEN IF REGISTRATION IS ALREADY GRANTED EARLIER TO SUCH ENTITY/TRUST. 13. ACCORDINGLY, I AM SATISFIED THAT THE ACTIVITY O F THE GUJARAT MARITIME BOARD WERE NOT CARRIED OUT IN ACCORDANCE W ITH THE OBJECT OF INSTITUTION AS PER DEFINITION OF CHARITA BLE PURPOSE FOR WHICH REGISTRATION WAS GRANTED ON 15-6-2005 W.E.F. 1-4-2002 IN VIEW OF THE AMENDMENT MADE IN THE DEFINITION OF CH ARITABLE PURPOSE W.E.F 1-4-2008 BY THE AMENDMENT BY THE FIN ANCE ACT 2010 AS THE SAID INSTITUTION IS NOT ELIGIBLE FOR RE GISTRATION THEREAFTER AS THE TOTAL RECEIPTS FOR THE YEAR UNDER CONSIDERATION IS MORE THAN RS.10 LAKHS AS PRESCRIBED FOR ELIGIBLE C HARITABLE PURPOSE UNDER THE FOURTH LIMB OF CHARITABLE PURPO SE I.E. ADVANCEMENT OF OBJECT OF GENERAL PUBLIC UTILITY; IS CANCELLED U/S.12AA(3) OF THE IT ACT W.E.F. 01-04-2008 APPLICA BLE TO A.Y. 2009-10. 3. BEING AGGRIEVED NOW THE ASSESSEE IS BEFORE US. AT THE OUTSET, FOLLOWING TWO DECISIONS HAVE BEEN CITED BY LD.AR. (I) ITAT D BENCH AHMEDABAD IN THE CASE OF GUJAR AT INDUSTRIAL SECURITY VS. DIT (EXEMPTION) IN ITA NO.902/AHD/2010, ORDER DATED 30.12.2011. (II) ITAT A BENCH AHMEDABAD IN THE CASE OF AHMEDABAD URBAN DEVELOPMENT AUTHORITY IN ITA NO.754/AHD/2010 FOR A.Y.2009-10, ORDER DATED 21/05/2010. 3.1 IN THE CASE OF GUJARAT INDUSTRIAL SECURITY(SUP RA), THE RELEVANT PORTION IS REPRODUCED BELOW:- 3. THE LD. COUNSEL FOR THE ASSESSEE INVITED OUR AT TENTION TO THE RULES AND REGULATIONS OF THE SOCIETY. THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE HAS BEEN DECLARING ITS INCOME FRO M THE ASSESSMENT YEAR 2001-02 TO 2005-06 AS BUSINESS INCO ME AS IS EVIDENT FROM PAGE 3 OF DIT(EXEMPTION) ORDER. THERE AFTER, THE ASSESSEE APPLIED FOR THE REGISTRATION U/S 12AA WHIC H WAS GRANTED TO IT ONLY W.E.F. 01.04.2005 AND THE REGISTRATION S OUGHT FORM 1997 ITA NO .36/AHD/2011 GUJARAT MARITIME BOARD VS. CIT - 5 - WAS REFUSED BY NOT CONDONING THE DELAY. AS A MATTE R OF FACT, WE FIND NO MATERIAL ON RECORD WHERE THE FUNDS HAVE BEE N UTILIZED FOR PROFIT MOTIVE OR FOR NON CHARITABLE PURPOSE AND THE RE IS NO BASIS FOUND IN THIS REGARD IN THE ORDER OF DIT (EXEMPTION ). THE ASSESSEE HAS ALSO INVITED OUR ATTENTION TO THE P & L ACCOUNT UP TO THE YEAR ENDED 31.03.2008 IN WHICH THE ASSESSEE HAS USED 85% OF THE FUNDS COLLECTED. THERE IS NOTHING ON RECORD THAT THE AS SESSEE HAS VIOLATED ANY CONDITIONS LAID DOWN U/S 12AA(3) OF TH E ACT. RELIANCE WAS PLACED ON THE DECISION OF ITAT AHMEDABAD A BE NCH IN I.T.A.NO. 754/AHD/2010 DATED 21.05.2010 AND THE DEC ISION OF ITAT A BENCH CHENNAI IN I.T.A.NO. 987/MD/2010 DATED 19 .09.2011 WHICH ARE DIRECTLY ON THE ISSUE IN HAND. THUS, FOL LOWING THESE TRIBUNAL ORDERS OF AHMEDABAD BENCH AND CHENNAI BENC H MENTIONED HEREINABOVE AND IN THE FACTS AND CIRCUMST ANCES OF THE PRESENT CASE AND IN THE ABSENCE OF ANY VIOLATION OF SECTION 12AA(3) OF THE ACT, THE REGISTRATION GRANTED U/S 12 AA CANNOT BE CANCELLED. THEREFORE, WE CANCEL THE ORDER OF DIT(E XEMPTION) DATED 22.01.2010 AND DIRECT THE DIT (EXEMPTION) TO RESTORE THE ORDER OF REGISTRATION GRANTED U/S 12AA OF THE ACT. 3.2. IN THE CASE OF AHMEDABAD URBAN DEVELOPMENT A UTHORITY(SUPRA), THE RELEVANT PORTION IS REPRODUCED BELOW:- 7. IN VIEW OF THE ABOVE, WE ARE SATISFIED THAT N ONE OF THE CONDITIONS AS PRESCRIBED UNDER SECTION 12AA(3) IS S ATISFIED IN THE CASE OF THE ASSESSEE SO AS TO CANCEL THE REGISTRATI ON GRANTED UNDER SECTION 12AA. WE THEREFORE QUASH THE ORDER OF THE DIT(EXEMPTION) PASSED UNDER SECTION 12AA(3) AND RES TORE THE ORDER OF THE REGISTRATION PASSED BY THE DIT(EXEMPTI ON) UNDER SECTION 12AA(1) DATED 23-10-2003. 8. BEFORE WE PART WITH THE MATTER, WE MAY POINT OUT THAT THE LEARNED COUNSEL FOR THE ASSESSEE HAD ARGUED AT LENG TH THAT THE ACTIVITIES OF THE ASSESSEE ARE CHARITABLE AND THERE FORE THE ASSESSEE IS ENTITLED FOR REGISTRATION UNDER SECTION 12AA. IN SUPPORT OF THIS CONTENTION, HE HAS RELIED UPON THE DECISION OF HON' BLE APEX COURT AS WELL AS THE HON'BLE JURISDICTIONAL HIGH COURT. THE LEARNED DR ITA NO .36/AHD/2011 GUJARAT MARITIME BOARD VS. CIT - 6 - HAS ALSO ARGUED AT LENGTH TO SUPPORT REVENUES POIN T THAT THE ASSESSEE IS NOT ENTITLED TO REGISTRATION UNDER SECT ION 12AA. IN SUPPORT OF HIS CONTENTION, HE HAS ALSO RELIED UPON VARIOUS DECISIONS. HOWEVER, THE ISSUE BEFORE US IS NOT WHE THER THE ASSESSEE IS ENTITLED TO REGISTRATION OR NOT BECAUSE THE ASSESSEE- INSTITUTION IS ALREADY REGISTERED VIDE ORDER OF THE DIT (EXEMPTION) UNDER SECTION 12AA (1) DATED 23-10-2003. THE LIMIT ED ISSUE IN THIS APPEAL BEFORE US WHETHER THE DIT (EXEMPTION) W AS JUSTIFIED IN CANCELING SUCH REGISTRATION BY INVOKING THE POWER UNDER SECTION 12AA(3). 4. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES, THE PROVISIONS OF SECTION 12AA(3) PRESCRIBES THAT ONCE A TRUST OR AN INSTITUTION HAS BEEN GRANTED REGISTRATION U/S.12AA(3) AND SUBSEQUENTLY I F THE COMMISSIONER FINDS THAT ONE OF THE CONDITION, VIZ. THE ACTIVITY OF THE TRUST IS NOT GENUINE OR THAT THE ACTIVITY OF TRUST NOT BEEN CARRIED OUT, THEN THE COMMISSIONER HAS POWER TO CANCEL THE REGISTRATION GRANTED U/S.12 AA(1) OF IT ACT. IN THE ABOVE CITED DECISION OF AHMEDABAD URBAN DEVELOP MENT(SUPRA), IT WAS HELD THAT WHEN UNDER THE ACT A SPECIFIC PROVISI ON FOR CANCELLATION OF REGISTRATION IS PRESCRIBED AND THE CANCELLATION IS POSSIBLE UNDER SPECIFIC CONDITION THEN FULFILLMENT OF THOSE CONDITIONS ARE NECESSARY FOR INVOKING THE JURISDICTION U/S.12AA(3). IN THE PRESENT CASE THE REASON FOR CANCELLATION FOR REGISTRATION WAS THAT THE DEFINITI ON OF CHARITABLE PURPOSE U/S.2(15) HAS BEEN AMENDED THEREFORE THE ASSESSEE HAS NOT CARRIED OUT THE ACTIVITY AS PER THE DEFINITION OF CHARITABLE P URPOSES. THIS VERY ISSUE HAS ALREADY BEEN DEALT WITH BY THE RESPECTED BENCHES, THEREFORE RESPECTFULLY FOLLOWING THESE DECISIONS WE HEREBY RE VERSE THE VIEW TAKEN BY THE LD.COMMISSIONER AND DIRECT NOT TO CANCEL THE REGISTRATION ITA NO .36/AHD/2011 GUJARAT MARITIME BOARD VS. CIT - 7 - U/S.12AA(3) OF IT ACT. GROUNDS RAISED BY THE ASSE SSEE ARE HEREBY ALLOWED. 5. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. SD/- SD/- ( .. !' ) ( ) #$ ( B.P. JAIN ) ( MUKUL KR. SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL ME MBER AHMEDABAD; DATED 20 / 01 /2012 40..', .'../ T.C. NAIR, SR. PS #3 . +5 6#5' #3 . +5 6#5' #3 . +5 6#5' #3 . +5 6#5'/ COPY OF THE ORDER FORWARDED TO : 1. (* / THE APPELLANT 2. +,(* / THE RESPONDENT. 3. 7 / CONCERNED CIT-GANDHINAGAR 4. 7() / THE CIT(A) 5. 5:; +' , , / DR, ITAT, AHMEDABAD 6. ;< =/ / GUARD FILE. #3' #3' #3' #3' / BY ORDER, ,5 + //TRUE COPY// > >> >/ // / ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD 1. DATE OF DICTATION..10.1.12 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 11.1.12 OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S 19.1.12 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S20.1.12 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 20.1.12 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 9. DATE OF DESPATCH OF THE ORDER