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

ITA 366/ASR/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94995 (ITAT-AMRITSAR)
• Duration Of Justice: 2 year(s) 11 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 09-06-2015
• Assessment Year: misc
• Appeal Filed On: 11-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: TARSEM LAL
• Assessee Lawyers: Y K SUD
• Keywords: Charitable institution; Earning of tax free income; Retrospective amendment; Benefit of exemption; Cancellation of registration
• Section: 12; 10; 11; 12A; 12AA

Judgement Text

I.T.A. NO. 366 /ASR/201 2 PAGE 1 OF 8 IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR [CORAM: PRAMOD KUMAR AM AND A.D. JAIN JM] I.T.A. NO. 366 /ASR/201 2 IMPROVEMENT TRUST BATHINDA, . APPELLANT DR. MELA RAM ROAD, BATHINDA (PUNJAB) [PAN: AA ATE 1563 E ] VS. COMM ISSIONER OF INCOME TAX , ....... RESPONDENT BATHINDA. APPEARANCES BY: Y.K. SUD FOR THE APPELLANT TARSEM LAL FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING: 10.06.2015 DATE OF PRONOUNCING THE ORDER: 31.08.2015 O R D E R PER PRAMOD KUMAR: BY WAY OF THIS APPEAL, THE ASSESSEE APPELLANT HAS CALL E D INTO QUESTION CORRECTNESS OF LD. CIT S O RDER DATED 20.07.2012 WITHDRAWING REGISTRATION GRANTED TO T HE AS S ESS E E UNDER SECTION 12AA(3) OF THE INCOME TAX ACT, 1961 (THE ACT HERE INAFTER), ON THE FOLLOWING GROUNDS : - 1. THAT THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX CANCELLING REGISTRATION U/S 12AA(3) OF THE INCOME T A X ACT IS WRONG, ILLEGAL AND AGAINST FACTS . 2. THAT IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED COMMISSIONER OF INCOME TAX HAS ERRED IN LAW AND ON FACTS WHILE CANCELLING THE REGISTRATION ALREADY GRANTED W. E.F. 12.06.2003. I.T.A. NO. 366 /ASR/201 2 PAGE 2 OF 8 3. THAT THE LEARNED COMMISSIONER OF INCOME TAX HAS NOT APPRECIATE D THE FACTS OF THE CASE, EXPLANATION OFFERED, AMENDE D PROVISIONS OF SECTION 2(15) W .E.F. 01.04.2009 AND PROCEEDED TO CANCEL THE REGISTRATION ARBITRARILY. 4. THAT THE LEARNED CIT HAS ERRED IN HOLDING THAT ACTIVITIES OF THE TRUST ARE IN THE NATURE OF TRADE, COMMERCE AND BUSINESS. 5. THAT THE FACTS MENTIONED FOR THE CANCELLATION HAVE ALREADY BEEN CONSIDERED BY IT A T IN APPEAL NO.413(ASR) 2009 AND HENCE CANCELLATION OF REGISTRATION IS WRONG. 6. THAT THE ORDER OF GRANTING REGISTRATION HAS MERGED WITH THE ORDER OF ITAT AND AS SUCH ORDER FOR CANCELLING REGISTRATI ON IS WRONG, ILLEGAL AND WITHOUT JURISDICTION. ACCORDINGLY IT IS PRAYED THAT THE ORDER OF THE LEARNED COMMISSIONER OF INCOME T A X CANCELLING THE REGISTRATION BE QUASHED AND REGISTRATION ALREADY GRANTED SHOULD BE DIRECTED TO BE RESTORED. 2. BEFORE TAKING UP THE MATTER ON MERITS, IT IS APPROPRIATE TO POINT OUT THAT ORIGINALLY THIS APPEAL WAS DISPOSED OF BY THE TRIBUNAL VIDE ORDER DATED 18.12.2012 BUT WHEN THE MATTER WAS CARRIED IN APPEAL BEFORE THEIR LORDSHIPS OF HONBLE P U NJAB & HARYANA HIGH COURT, THEIR LORDSHIPS WERE PLEASED TO RESTORE THE ORDER TO THE FILE OF T RIBUNAL BY OBSERV ING , INTER ALIA, A S FOLLOWS : - 5. LEARNED COUNSEL FOR THE APPELLANT SUBMITTED THAT IN VIEW OF THE PROVISIONS OF 1922 ACT, THE MATTER IS REQUIRED TO BE REMANDED TO THE TRIBUNAL T O ADJUDICATE WHETHER THE ACTIVITIES OF THE APPELLANT TRUST WERE COVERED WITHIN THE MEANING OF CHARITABLE IN NATURE OR NOT EVEN AFTER THE INSERTION OF THE PROVISO TO SECTION 2(15) OF THE ACT W.E.F. 1.4.2009 I.E. IN RESPECT OF ASSESSMENT YEARS 2009 - 10 ONWARD S. NO SERIOUS OBJECTION WAS RAISED BY THE LEARNED COUNSEL FOR THE REVENUE TO THE AFORESAID SUBMISSION. 6. ACCORDINGLY , THE IMPUGNED ORDERS PASSED BY THE TRIBUNAL IN BOTH THE APPEALS ARE SET ASIDE AND THE MATTER IS REMANDED TO THE TRIBUNAL TO DECIDE THE SAME AFRESH KEEPING IN VIEW THE PROVISO TO SECTION 2(15) OF THE ACT INSERTED W.E.F. APRIL 1, 2009 WITH REFERENCE TO THE PROVISIONS OF THE 1922 ACT AFTER AFFORDING AN OPPORTUNITY OF HEARING TO THE PARTIES IN ACCORDANCE WITH LAW. NEEDLESS TO S A Y, ANYTHING OBSERVED HEREINBEFORE SHALL NOT BE TAKEN TO BE EXPRESSION OF OPINION ON THE MERITS OF THE CONTROVERSY. SINCERE EFFORTS SHALL BE MADE TO DECIDE THE MATTER EXPEDITIOUSLY. A S A RESULT, ALL THE APPEALS S T AND DISPOSED OF. 3. THAT IS HOW THE MATTER HAS COME BEFORE THE TRIBUNAL ONCE AGAIN. I.T.A. NO. 366 /ASR/201 2 PAGE 3 OF 8 4. COMING BACK TO THE RELEVANT MATERIAL FACTS A S NECESSARY FOR THE ADJUDICATION , THE SAME ARE AS UNDER. THE ASSESSEE BEFORE US IS A BODY SE T UP UNDER THE PUNJAB TOWNS IMPROVEMENT ACT, 1922. THE ASSESSEE WAS REGISTER E D A S A CHARITABLE INSTITUTION UNDER SECTION 12AA OF THE ACT W.E.F. 12.06.2003 ON 30.06.2012 . THE LD . CIT REQUIRED THE ASSESSEE TO SHOW CAUSE AS TO WHY THE REGISTRATION GRANTED BY THE ASSESSEE NOT BE WITHDRAWN. IN RESPONSE TO THE SHOW CAUSE NOTICE, THE ASSESSE E APPEARED FROM TIME TO TIME AND SUBMITTED THAT THE FACTS AND CIRCUMSTANCES OF THE CASE DO NOT WARRANT OR JUSTIFY SUCH A CANCELLATION OF REGISTRATION. HOWEVER, UNIMPRES SE D BY THE ARGUMENTS OF THE ASSESSEE AND HAVING NOTED THAT THE OPERATIONS OF THE ASSESS EE ARE BEING CARRIED ON COMMERCIAL LINE GENERATING HUGE PROFIT, LD . CIT WITHDREW THE REGISTRATION GRANTED TO THE ASSESSEE ON THE GROUND THAT I A M SATISFIED THAT THE ACTIVITIES OF THE APPLICANT INSTITUTION S ARE NOT CHARITABLE IN NATURE WITHIN THE MEANING O F PROVISO TO SECTION 2(15) OF THE I NCOME TAX ACT, 1961. THE ASSESSEE IS AGGRIEVED AND IS IN APPEA L BEFORE US. 5. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE APPLICABLE LEG AL POSITION. 6. LD . REPRESENTATIVES FAIRLY AGREE THAT WHATEVER WE DECIDE D IN THE CASE OF KAP URTHALA IMPROVEMENT TRUST VS. CIT IN ITA NO.732/ASR/2013 A.Y. 2009 - 10 WHICH WAS H EARD ON 03.06.2015 WILL APPLY MUTA TIS MUTANDIS IN THIS CASE AS WELL. LD. DEPARTME NTAL REPRESENTATIVE, HOWEVER , VEHEMENTLY RELIED UPON THE STAND OF THE LD . CIT AND CONTENDED THAT SINCE THE ASSESSEE IS CARRYING ON THE ACTIVITIES WHICH ARE IN THE NATURE OF TRADE, COMMERCE AND BUSINESS , THE ASSESSE E IS NOT ENTITLED TO REGISTRATION IN VIEW OF SPECIFIC PROVISIONS OF SECTION 2(15) OF THE ACT. 7 . WE FIND THAT IN THE C A SE OF KAP URTHALA IMPROVEMENT TRUST VS. CIT (SUPRA) VIDE OUR ORDER D A TED 11.06.2015, THIS ISSUE H A S BEEN SETTLED IN FAVOUR OF THE ASSESSEE BY, INTER ALIA, OBSERVING AS FOLLOWS : - 9. WE FIND THAT, AS LEARNED COUNSEL RIGHTLY POINTS OUT, THE SCOPE OF POWERS OF THE COMMISSIONER UNDER SECTION 12AA(3) FOR CANCELLATION OF REGISTRATION ALREADY GRANTED IS VERY LIMITED IN SCOPE INASMUCH AS IT CAN ONLY BE INVOKED ONLY WHEN (I) THAT THE A CTIVITIES OF THE TRUST ARE NOT GENUINE, AND (II) THAT THE ACTIVITIES OF THE I.T.A. NO. 366 /ASR/201 2 PAGE 4 OF 8 TRUST OR THE INSTITUTION ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST OR THE INSTITUTION. SECTION 12AA(3) SPECIFICALLY PROVIDES THAT WHEN THE CIT IS SATI SFIED THAT THE ACTIVITIES OF SUCH TRUST OR INSTITUTION ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST OR INSTITUTION, AS THE CASE MAY BE, HE SHALL PASS AN ORDER IN WRITING CANCELLING THE REGISTRATION OF SUCH TRUST OR INSTITUTION. IT IS NOT EVEN THE CASE OF THE CIT THAT THE ACTIVITIES OF THE ASSESSEE TRUST ARE NOT GENUINE OR THAT THE ACTIVITIES OF THE ASSESSEE ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE ASSESSEE TRUST. THE CASE OF THE CIT RES TS ON THE FIRST PROVISO TO SECTION 2 (15) COMING INTO PLAY ON THE FACTS OF THIS CASE BUT THEN SUCH A FACTOR CANNOT WARRANT OR JUSTIFY THE POWERS UNDER SECTION 12AA(3) BEING INVOKED. WE, THEREFORE, UPHOLD THE GRIEVANCE OF THE ASSESSEE THAT THE ACTION OF THE LEARNED C OMMISSIONER , IN WITHDRAWING THE REGISTRATION UNDER SECTION 12AA(3), WAS WELL BEYOND THE LIMITED SCOPE OF THE POWERS CONFERRED ON HIM BY THE STATUTE. THE ASSESSEE, THEREFORE, MUST SUCCEED IN THE APPEAL FOR THIS SHORT REASON ALONE. 10. THERE IS, H OWEVER, A MUCH MORE FUNDAMENTAL A REASON FOR THE ASSESSEE SUCCEEDING IN THIS APPEAL. IN OUR CONSIDERED VIEW, THE CONSIDERATION WITH RESPECT TO THE FIRST PROVISO TO SECTION 2(15) COMING INTO THE PLAY AND, FOR THAT REASON, THE OBJECTS OF AN ASSESSEE TRUST OR INSTITUTION BEING HELD TO BE NOT COVERED BY THE DEFINITION OF CHARITABLE PURPOSES, HAS NO ROLE TO PLAY IN THE MATTERS RELATING TO REGISTRATION OF A TRUST OR INSTITUTION UNDER SECTION 12A OR 12AA - WHETHER IN RESPECT OF GRANT OF A REGISTRATION OR IN RESP ECT 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 MATTER. 11. LET US BEGIN BY TAKING A LOOK AT SECTION 2(15) WHICH DEFINES CHARITABLE ACTIVITIES AND FIRST AND SECOND PROVISOS THERETO. THESE STATUTORY PROVISIONS ARE AS FOLLOWS: (15) 'CHARITABLE PURPOSE' INCLUDES RELIEF OF THE POOR, EDUCATION, MEDICAL RELIEF, PRESERVATION OF ENVIRONMENT (INCLUDING WATERSHEDS, FORESTS AND WILDLIFE) AND PRESERVATION OF MO NUMENTS OR PLACES OR OBJECTS OF ARTISTIC OR HISTORIC INTEREST,] AND THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY: PROVIDED THAT THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY SHALL NOT BE A CHARITABLE PURPOSE, IF IT INVOLVE S 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 OR FEE OR ANY OTHER CONSIDERATION, IRRESPECTIVE OF THE NATURE OF USE OR APPL ICATION, OR 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 ACTIVITIES REFERRED TO THEREIN IS TWENTY - FIVE LAKH RUPEES OR LESS IN THE PREVIOUS YEAR; (EMPH ASIS BY UNDERLINING SUPPLIED BY US) 12. WHAT IS CLEAR FROM THE RIDERS IN THE ABOVE DEFINITION OF CHARITABLE PURPOSES IS THAT RIDER SET OUT THEREIN, UNDER FIRST PROVISO TO SECTION 2(15), CAN ONLY COME I NTO I.T.A. NO. 366 /ASR/201 2 PAGE 5 OF 8 PLAY ON YEAR TO YEAR BASIS AND NOT IN ABSOLUTE TERMS. THE SAME ACTIVITY 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 THE ASSESSEE TRUST OR INSTITUTION MAY REMAIN UNAFFECTED BY THE SA ME DISABLING PROVISION FOR 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 CLAUSE CAN COME INTO PLAY. THE SAFEGUARD AGAINST THE OBJECTS OF T HE TRUST BEING VITIATED INSOFAR A S 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 1 ST APRIL 2009. SECTION 13(8) PROVIDES AS FOLLOWS : - SECTION 13 - SECTION 11 NOT TO APPLY IN CERTAIN CASES. . (8) NOTHING CONTAINED IN SECTION 11 OR SECTION 12 SHALL OPERATE SO AS TO EXCLUDE ANY INCOME FROM THE TOTAL INCOME OF THE PREVIOUS 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 MEMORANDUM T O THE FINANCE BILL 2012 ( HTTP://INDIABUDGET.NIC.IN/BUDGET2012 - 2013/UB2012 - 13/MEM/MEM1.PDF ) EXPLAINED THE REASONS AND BACKDROP OF THIS LEGISLATIVE AMENDMENT AS FOLLOWS: ASSESS MENT OF CHARITABLE ORGANIZATION IN CASE COMMERCIAL RECEIPTS EXCEED THE SPECIFIED THRESHOLD SECTIONS 11 AND 12 OF THE ACT EXEMPT INCOME OF ANY CHARITABLE TRUST OR INSTITUTION, IF SUCH INCOME IS APPLIED FOR CHARITABLE PURPOSES IN INDIA AND SUCH INSTITUTION IS REGISTERED UNDER SECTION 12AA OF THE ACT. ... SECTION 2(15) OF THE ACT PROVIDES DEFINITION OF CHARITABLE PURPOSE. IT INCLUDES ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY AS CHARITABLE PURPOSE PROVIDED THAT IT DOES NOT INVOLVE CARRYIN G ON OF ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS. 2ND PROVISO TO SAID SECTION PROVIDES THAT IN CASE WHERE THE ACTIVITY OF ANY TRUST OR INSTITUTION IS OF THE NATURE OF ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY, AND IT INVOL VES CARRYING ON OF ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS; BUT THE AGGREGATE VALUE OF RECEIPTS FROM THE COMMERCIAL ACTIVITIES DOES NOT EXCEED RS. 25,00,000 IN THE PREVIOUS YEAR, THEN THE PURPOSE OF SUCH INSTITUTION SHALL BE CONSIDERED A S CHARITABLE, AND ACCORDINGLY, THE BENEFITS OF EXEMPTION SHALL BE AVAILABLE TO IT. THUS, A CHARITABLE TRUST OR INSTITUTION PURSUING ADVANCEMENT OF OBJECT OF GENERAL PUBLIC UTILITY MAY BE A CHARITABLE TRUST IN ONE YEAR AND NOT A CHARITABLE TRUST IN ANOTHER YEAR DEPENDING ON THE AGGREGATE VALUE OF RECEIPTS FROM COMMERCIAL ACTIVITIES . I.T.A. NO. 366 /ASR/201 2 PAGE 6 OF 8 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 FIRST PROVISO OF SUB - SECTION 2 (15) BECOME APPLICABLE FOR THAT PARTICULAR PREVIOUS 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 RESCI NDING OF NOTIFICATION ISSUED IN RESPECT OF TRUST OR INSTITUTION. THEREFORE, THERE IS NEED TO ENSURE THAT IF THE PURPOSE OF A TRUST OR INSTITUTION DOES NOT REMAIN CHARITABLE DUE TO APPLICATION OF FIRST PROVISO ON ACCOUNT OF COMMERCIAL RECEIPT THRESHOLD PRO VIDED IN SECOND PROVISO IN A PREVIOUS YEAR. THEN, SUCH TRUST OR INSTITUTION WOULD NOT BE ENTITLED TO GET BENEFIT OF EXEMPTION IN RESPECT OF ITS INCOME FOR THAT PREVIOUS YEAR FOR WHICH SUCH PROVISO IS APPLICABLE. SUCH DENIAL OF EXEMPTION SHALL BE MANDATORY BY OPERATION OF LAW AND WOULD NOT BE DEPENDENT ON ANY WITHDRAWAL OF APPROVAL OR CANCELLATION OF REGISTRATION OR A NOTIFICATION BEING RESCINDED. IT IS, THEREFORE, PROPOSED TO AMEND . SECTION 13.. OF THE ACT TO ENSURE THAT SUCH ORGANIZATION 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, WITHDRAWN OR RESCINDED . THIS AMENDMENT WILL TAKE EFFECT R ETROSPECTIVELY FROM 1ST APRIL, 2009 AND WILL, ACCORDINGLY, APPLY IN RELATION TO THE ASSESSMENT YEAR 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 CHARITABLE INSTITUTION WILL HAVE NO BEAR ING ON THIS DENIAL OF REGISTRATION. AS A COROLLARY 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 12A A. 15. IT IS ALSO IMPORTANT TO BEAR IN MIND THE FACT THAT IN TERMS OF THE SECOND PROVISO TO SECTION 2(15), WHICH WAS INTRODUCED BY THE FINANCE ACT 2010 WITH RETROSPECTIVE EFFECT FROM 1 ST APRIL 2009, THE LEGAL PRESCRIPTION SET OUT IN FIRST PROVISO TO SECTI ON 2(15) CANNOT COME INTO PLAY IF THE AGGREGATE VALUE OF THE RECEIPTS FROM THE ACTIVITIES REFERRED TO THEREIN IS TWENTY - FIVE LAKH RUPEES OR LESS IN THE PREVIOUS YEAR . CLEARLY, THEREFORE, IN ORDER THAT THE BENEFITS UNDER SECTION 11 ARE DECLINED TO THE AS SESSEE ON THE GROUND THAT IT IS ENGAGED IN SUCH ACTIVITIES AS MAY BE HIT BY THE FIRST PROVISO TO SECTION 2(15), NOT ONLY THE ASSESSEE MUST BE ENGAGED IN CARRYING OUT SUCH ACTIVITIES AS MAY HIT THE FIRST PROVISO 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 SATISFIED WITH RESPECT TO EACH I.T.A. NO. 366 /ASR/201 2 PAGE 7 OF 8 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 NOT SOMETHING WHICH MUST BE DONE FOR EACH ASSESSMENT YEAR SEPARATELY. THAT IS PRECISELY 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 GRANT, DECLINE OR WITHDRAWAL OF REGISTRATION BUT IN DECLINING THE BENEFITS OF EXEMPTION UNDER SECTION 11 ON THAT COUNT, ON YEAR TO YEAR BASIS, NOTWITHSTANDING THE STATUS OF REGISTRA TION. 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 RECOGNIZED IN SECTION 13(8), ON THE AVAILABILITY OF EXEMPTION UNDER SECTION 11. TO THE EXTENT INCOME OF THE ASSESSEE A RISES FROM THE ACTIVITIES HIT BY THE FIRST PROVISO TO SECTION 2(15) IN ANY ASSESSMENT YEAR, THE ASSESSEE WILL BE DISENTITLED FOR EXEMPTION UNDER SECTION 11 TO THAT EXTENT. IT IS ALSO IMPORTANT TO BEAR IN MIND THE FACT THAT THE DISENTITLEMENT FOR EXEMPTION UNDER SECTION 11, A S A RESULT OF THE ACTIVITIES OF AN ASSESSEE BEING HELD TO BE NOT FOR CHARITABLE PURPOSES UNDER SECTION 2(15) READ WITH PROVI S O THERETO, IS IN RESPECT OF ENTIRE INCOME OF THE ASSESSEE TRUST OR INSTITUTION BUT ONLY FOR THE ASSESSMENT YEAR IN RESPECT OF WHICH THE FIRST PROVISO 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 PROVISO TO SECTION 2(15) BUT THE ASSESSEES RECEI PTS FROM SUCH ACTIVITIES DONOT EXCEED SPECIFIED THRESHOLD IN A PARTICULAR ASSESSMENT YEAR, THE ASSESSEE WILL BE SUBJECTED TO UNDUE HARDSHIP IN THE SENSE THAT WHILE THE ASSESSEE WILL BE DISENTITLED 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 SOME OF THE OBJECTS MAY BE HIT BY THE FIRST PROVISO TO SECTION 2(15) AN D THE ASSESSEES RECEIPTS FROM SUCH ACTIVITIES DO EXCEED SPECIFIED THRESHOLD, NO PREJUDICE WILL BE CAUSED TO THE LEGITIMATE INTERESTS OF THE REVENUE BECAUSE, NOTWITHSTANDING THE STATUS OF REGISTRATION AND BY THE VIRTUE OF SECTION 13(8), THE ASSESSEE WILL N OT BE ELIGIBLE FOR 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. 18. THE CONSIDERATIONS ABOUT THE POSSIBILITIES OF THE FIRST PROVISO TO SECTION 2(15) COMING INTO PLAY AFFECTING THE GRANT, DECLINE OR WITHDRAWAL OF REGISTRATION UNDER SECTION 12AA WILL THUS LEAD TO WHOLLY AVOIDABLE UNDUE HARDSHIPS TO THE ASSESSEE, WILL BE UNWORKABLE IN PRACTICE AND B E CONTRARY TO THE SCHEME OF THE ACT. 19. IN VIEW OF THE ABOVE DISCUSSIONS, IN OUR CONSIDERED VIEW, THE CONSIDERATIONS ABOUT THE POSSIBILITIES OF FIRST PROVISO TO SECTION 2(15) INTO PLAY ARE WHOLLY EXTRANEOUS IN THE PRESENT CONTEXT. AS THE WITHDRAWAL OF REGISTRATION IS SOLELY BASED ON THESE CONSIDERATIONS, THE VERY FOUNDATION OF THE LEARNED COMMISSIONERS ACTION IS UNSUSTAINABLE IN LAW AND CONSISTS OF REASONS 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. I.T.A. NO. 366 /ASR/201 2 PAGE 8 OF 8 20. HAVING DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE ON THESE ISSUES, WE SEE NO NEED TO ADDRESS OURSELVES, AT THIS STAGE, TO THE Q UESTION WHETHER THE FIRST PROVISO TO SECTION 2(15) COULD INDEED APPLY ON THE FACTS AND IN THE CIRCUMSTANCES OF THIS CASE. THAT ASPECT OF THE MATTER IS WHOLLY ACADEMIC AS ON NOW. 8 . WE SEE NO REASON TO TAKE ANY OTHER VIEW OF THE M AT TER THAN THE VIEW SO T AKEN IN KAP URTHALA IMPROVEMENT TRUST VS. CIT (SUPRA). RESPECTFULLY FOLLOWING THE SAME , WE UPHOLD THE GRIEVANCE OF THE ASSESS EE A ND QUASH THE IMPUGNED ORDER, CANCELLING REGISTRATION GRANTED TO THE ASSESSEE. THE REGISTRATION THUS STANDS RESTORED . 9 . I N THE RESULT, THE APPEAL IS ALLOWED. PRONOUNCE D TODAY 31 ST DAY OF AUGUST, 2015. SD/XX SD/XX A D JAIN PRAMOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) DATED THE 31 ST DAY OF AUGUST, 2015 PBN/* COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRIT SAR