Asansol Durgapur Development Authority, Durgapur V. CIT, Durgapur, Durgapur

ITA 756/KOL/2010

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4642 (ITAT-KOLKATA)
• Duration Of Justice: 6 year(s) 2 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 18-05-2016
• Assessment Year: misc
• Appeal Filed On: 16-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S SRIVASTAVA
• Assessee Lawyers: ABHIJIT BISWAS; DR SAMCER CHAKRABORTYSR
• Keywords: Charitable institution; Earning of tax free income; Benefit of exemption; Condonation of delay; Cancellation of registration
• Section: 12A; 12AA; 12; 11; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH C KOLKATA BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI S.S.VISWANETHRA RAVI, JUDICIAL MEMBER ITA NO. 756 / KOL / 201 0 ASANSOL DURGAPUR DEVELOPMENT AUTHORITY 1 ST ADMINISTRATIVE BUILDING, CITY CENTER, DURGAPUR, WEST BENGAL [ PAN NO.AAALA 0733G ] V/S . COMMISSIONER OF INCOME TAX, DURGAPUR, URMILA BHAWAN, CITY CENTER /APPELLANT .. / RESPONDENT /BY APPELLANT DR. SAMCER CHAKRABORTY,SR. ADVOCATE & SHRI ABHIJIT BISWAS, ADVOCATE /BY RESPONDENT SHRI S.SRIVASTAVA, CIT-DR /DATE OF HEARING 18-05-2016 /DATE OF PRONOUNCEMENT 24-06-2016 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER P ASSED U/S 12AA OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO A S THE ACT) DATED 31.12.2009 OF COMMISSIONER OF INCOME TAX, DURGAPUR DATED 10.09.2009. DR. SAMCERE CHAKRABORTY AND SHRI ABHIJIT BISWAS, LD . AUTHORIZED REPRESENTATIVES APPEARED ON BEHALF OF THE ASSESSEE AND SHRI S. SRIVASTAVA, LD. DEPARTMENTAL REPRESENTATIVE APPEARED ON BEHALF REVENUE. 2. AT THE OUTSET, LD. AR OF ASSESSEE-TRUST DREW OUR ATTENTION THAT THE APPEAL IS BARRED BY LIMITATION FOR 152 DAYS DUE TO WRONG ADVICE AND ILL HEALTH OF LD. ADVOCATE. WE OBSERVE THE DELAY IN THE FILING OF ITS APPEAL BY ASSESSEE- ITA NO.756/KOL/2010 ADDA VS. CIT DGA PA GE 2 TRUST WHICH THOUGH STANDS SUITABLY EXPLAINED AS PER ACCOMPANYING CONDONATION PETITION OF DELAY. THE LD. DR RAISED NO OBJECTION IF THE DELAY OF CONDONATION IS CONSIDERED. HENCE, WE CONDONE THE DE LAY AND PROCEED FOR HEARING THE APPEAL. 3. SOLITARY GROUND RAISED BY ASSESSEE IN THIS APPEA L IS THAT LD. CIT ERRED IN REJECTING THE REGISTRATION APPLICATION U/S 12AA OF THE ACT ON ACCOUNT OF DELAY IN FILING THE REGISTRATION APPLICATION AND HOLDING THA T THE ACTIVITIES OF THE ASSESSEE ARE NON CHARITABLE. 4. FACTS IN BRIEF ARE THAT ASSESSEE-APPLICANT IS A DEVELOPMENT AUTHORITY CONSTITUTED U/S. 11 OF THE WEST BENGAL TOWN AND COU NTRY (PLANNING & DEVELOPMENT) ACT, 1979 AND ENGAGED IN THE ACTIVITIE S OF DEVELOPING THE PUBLIC UTILITIES. THE ASSESSEE-TRUST UPTO INCLUDING ASSESS MENT YEAR 2003-04 WAS CLAIMING THE EXEMPTION U/S. 10(20A) OF THE ACT. HOW EVER, THE SECTION WAS OMITTED BY FINANCE ACT 2002 WITH EFFECT FROM 01.04. 2003. THEREAFTER ASSESSEE SUBMITTED THE REGISTRATION APPLICATION U/S 12A OF T HE ACT ON 19.03.2009. DURING THE COURSE REGISTRATION PROCEEDINGS, LD. CIT OBSERV ED THAT ASSESSEE HAS DECLARED FOLLOWING INCOME IN THE EARLIER YEARS:- ITEMS OF INCOME: YEAR ENDED 31-03-2008 YEAR ENDED 31-03-2007 YEAR ENDED 31.03.2006 ALL FIGURES ARE IN RUPEES CRORES RS. RS. RS. A) RELATING TO LAND 33.74 43.12 18.37 B) FROM WATER DISTRIBUTION 3.96 3.17 2.18 C) CONTRACTUAL INCOME FROM PUBLIC PRIVATE PARTNERSHIP 15.19 8.27 NIL D) GROUND RENT/LICENCE FEE ETC. AS RENTAL INCOME 0.81 0.94 2.63 E) INTEREST AND DIVIDEND 11.22 5.64 3.49 ON THE BASIS OF AFORESAID INCOME, THE LD. CIT OBSER VED THAT THE ACTIVITIES OF ASSESSEE ARE IN THE NATURE OF TRADE, COMMERCE OR BU SINESS OR IN RELATION TO RENDERING OF ANY SERVICES TO ANY TRADE, COMMERCE OR BUSINESS. THEREFORE, THE ITA NO.756/KOL/2010 ADDA VS. CIT DGA PA GE 3 ASSESSEE IS NOT ELIGIBLE FOR REGISTRATION U/S 12A O F THE ACT IN TERMS OF AMENDED PROVISION OF SEC. 2(15) OF THE ACT. BESIDES ABOVE, THE LD. CIT OBSERVED THAT WITH EFFECT FROM 01.06.2007 THE POWER FOR CONDONING THE DELAY HAS BEEN WITHDRAWN. CONSEQUENTLY, THE LD. CIT CAN GRANT THE EXEMPTION ONLY FROM THE FINANCIAL YEAR IN WHICH THE APPLICATION IS MADE. IN THE INSTANT CASE THE APPLICATION WAS SUBMITTED BY ASSESSEE FOR REGISTRAT ION U/S 12A OF THE ACT ON DATED 19.03.2009. IN VIEW OF ABOVE THE LD. CIT REJE CTED THE APPLICATION FILED BY ASSESSEE U/S 12A OF THE ACT. BEING AGGRIEVED BY THIS ORDER OF LD CIT(A) ASSESSE E PREFERRED AN APPEAL BEFORE US. 5. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. BEFORE US LD. AR ARGUED THAT THE ACTIVITY A ND SOURCE OF INCOME ASSUMED BY ASSESSEE-TRUST IS ERRONEOUS ON THE GROUN D THAT LAND DOES NOT BELONG TO THE ASSESSEE. THE LAND IS THE PROPERTY OF GOVT. OF WEST BENGAL. THE APPELLANT ACTS ONLY AS CUSTODIAN OF SAID LAID ON BE HALF OF STATE GOVERNMENT. SO THE APPELLANT CAN CLAIM IMMUNITY FROM UNION TAXA TION UNDER ARTICLE 289 OF THE CONSTITUTION OF INDIA AS THE INCOME RELATING TO LAND REALLY BELONGS TO STATE GOVERNMENT AND NOT TO APPELLANT-ASSESSEE. THE ASSES SEE IS ONLY THE CUSTODIAN OF FUND ON BEHALF OF STATE GOVERNMENT. TH E LD. AR FURTHER SUBMITTED THAT AFTER THE AMENDMENT MADE IN THE FINA NCE ACT 2007, IT IS NECESSARY FOR THE TRUST / INSTITUTION TO FILE REGIS TRATION APPLICATION U/S 12A OF THE ACT WITHIN ONE YEAR FROM THE DATE OF ITS CREATION O R ESTABLISHMENT, WHICHEVER IS LATER. IF IT IS FILED ON OR AFTER 01.06.2007 THE EX EMPTION SHALL BE AVAILABLE U/S. 11 AND 12 OF THE ACT ON PROSPECTIVE BASIS. THE LD. COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT THE EXPRESSION INCORPORATED U/S 2(15) OF THE ACT THAT THE OBJECT OF PUBLIC UTILITY IS NOT RESTRICTED TO THE O BJECTS BENEFICIAL TO THE WHOLE MANKIND AND OBJECT BENEFICIAL TO THE SECTION OF THE PUBLIC IS AN OBJECT OF GENERAL PUBLIC UTILITY. IT IS SUFFICIENT IF THE INT ENTION IS FOR THE BENEFIT OF THE ITA NO.756/KOL/2010 ADDA VS. CIT DGA PA GE 4 SECTION OF THE PUBLIC AS DISTINGUISHED FROM SPECIFI C INDIVIDUALS. FINALLY THE LD. AR REQUESTED THE BENCH THAT THE ISSUE MAY BE DECIDE D ON MERIT. ON THE OTHER HAND, LD DR SUBMITTED THAT THE APPLIC ATION FOR REGISTRATION IS FILED DELAYED. THE LD. DR FURTHER SUBMITTED THAT AS PER THE PROVISO TO SEC.2(15) OF THE ACT THE ACTIVITIES OF THE ASSESSEE-TRUST ARE IN THE NATURE OF COMMERCE AND TRADE AND THEREFORE THE ASSESSEE-TRUST IS NOT T O ENTITLE FOR REGISTRATION U/S. 12A OF THE ACT AND HE VEHEMENTLY RELIED ON THE ORDE R OF LD CIT. 6. FROM THE FACTS OF THE CASE, WE FIND THAT ASSESSE E-TRUST IN THE INSTANT CASE, IS THE WEST BENGAL STATUTORY BODY. IT WAS CLA IMING EXEMPTION FROM ITS INCOME TAX U/S 10(20A) OF THE ACT TILL THE AY 2003- 04. HOWEVER, THE SAME HAS BEEN OMITTED BY THE FINANCE ACT, 2002 WITH EFFECT F ROM 01.04.2003. CONSEQUENTLY AS A RESULT OF OMISSION THE ASSESSEE-T RUST WAS NOT ENTITLED TO CLAIM THE EXEMPTION OF ITS EARNED INCOME UNDER THE PROVISION OF IT ACT. NOW TO CLAIM THE EXEMPTION, ASSESSEE FILED REGISTRATION AP PLICATION ON 19.03.2009 U/S 12A OF THE ACT AND SAME WAS REJECTED BY LD CIT ON ACCOUNT OF TWO REASONS:- (A) THE APPLICATION WAS FILED LATE AND CONDONATION OF DELAY IS BEYOND THE POWER OF LD CIT., (B) ACTIVITIES OF ASSESSEE-TRUST ARE IN THE NATURE OF COMMERCE AND TRADE; NOW, THE QUESTION BEFORE US ARISES SO AS TO WHETHER LD CIT IS RIGHT IN REJECTING THE REGISTRATION APPLICATION IN THE AFORE SAID FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. THERE IS NO DOUBT THAT THE POW ER OF LD CIT HAS BEEN WITHDRAWN FOR CONDONING THE DELAY OF REGISTRATION A PPLICATION. THE LAW OF INCOME TAX ACT CLEARLY STATES THAT IN TERMS OF SEC. 12A(2) WHERE THE APPLICATION MADE FOR REGISTRATION U/S. 12A OF THE A CT ON OR AFTER THE FIRST DAY OF JUNE, 2007, THE EXEMPTION OF INCOME WOULD BE AVAILA BLE TO THE ASSESSEE FROM THE ASSESSMENT YEAR IMMEDIATELY FOLLOWING THE FINAN CIAL YEAR IN WHICH SUCH APPLICATION IS MADE. AT THIS JUNCTURE, WE FIND PERT INENT TO REPRODUCE THE PROVISION OF THE ACT. ITA NO.756/KOL/2010 ADDA VS. CIT DGA PA GE 5 12A [CONDITIONS FOR APPLICABILITY OF SECTIONS 11 A ND 12] [(1)] . .. [(2)] WHERE AN APPLICATION HAS BEEN MADE ON OR AFTE R THE FIRST DAY OF JUNE, 2007, THE PROVISIONS OF SECTIONS 11 AND 12 SH ALL APPLY IN RELATION TO THE INCOME OF SUCH TRUST OR INSTITUTION FORM THE ASSESSMENT YEAR, IMMEDIATELY FOLLOWING THE FINANCIAL YEAR IN SUCH AP PLICATION IS MADE:] FROM A BARE READING OF THE AFORESAID PROVISO THIS I S AMPLY CLEAR THAT EXEMPTION SECTIONS 11 & 12 WILL BE AVAILABLE FROM T HE FIRST DAY OF ASSESSMENT YEAR IMMEDIATELY FOLLOWING THE FINANCIAL YEAR IN WH ICH THE APPLICATION IS MADE. NOW IN THE INSTANT CASE, SINCE THE APPLICATION HAS BEEN MADE ON 19.03.2009 THEN THE ASSESSEE-TRUST CANNOT CLAIM THE EXEMPTION FOR THE EARLIER YEARS BUT CERTAINLY ENTITLE TO CLAIM THE EXEMPTION BENEFIT PR OSPECTIVELY FROM THE FINANCIAL YEAR IN WHICH THE APPLICATION HAS BEEN MADE. IN THI S CONNECTION, WE ARE OF THE CONSIDERED VIEW THAT LD CIT IS NOT SUPPOSED TO DON E THE DELAY FOR REGISTRATION APPLICATION BUT SHOULD GRANT THE REGISTRATION ON PR OSPECTIVE BASIS. IN OUR CONSIDERED VIEW, THE ACTION OF LD CIT FOR REJECTIN G THE REGISTRATION APPLICATION ON THE GROUND THAT IT IS FILED LATE IS NOT CORRECT. IT IS BECAUSE, LD CIT HAS POWER TO GRANT REGISTRATION PROSPECTIVELY. NOW COMI NG TO THE ISSUE THAT THE ACTIVITIES OF THE ASSESSEE-TRUST ARE IN THE NATURE OF TRADE, COMMERCE OR BUSINESS, WE FIND THAT VARIOUS BENCHES ITAT HAVE DE CIDED THIS ISSUE IN FAVOUR OF ASSESSEE. REFERENCE IN THIS CONNECTION IS MADE T O CHANDIGARH BENCH IN THE CASE OF PUNJAB CRICKET ASOCIATION V. CIT (2016) 65 TAXMANN.COM 239 (CHANDIGARH TRIB) 157 ITD 227 (CHAN) WHEREIN THE H EAD NOTE:- T: COMMISSIONER IS EMPOWERED TO CANCEL REGISTRATI ON GRANTED TO A SOCIETY UNDER SECTION 12A FROM ASSESSMENT YEAR 2011 -12 ONWARDS, HE CANNOT ASSUME SUCH POWER FOR EARLIER ASSESSMENT YEA RS; IT: CONSIDERATION OF FIRST PROVISO TO SECTION 2(15) HAS NO ROLE TO PLAY IN MATTERS RELATING TO REGISTRATION OF A TRUST OR INST ITUTION UNDER SECTION 12A IN RESPECT OF GRANTING OR DECLINING OR CANCELLING R EGISTRATION. FURTHER REFERENCE IN AMRITSAR BENCH IN THE CASE OF KAPURTHALA IMPROVEMENT TRUST V. CIT (20115) 60 TAXMANN.COM 301 (AMRITSAR TRIB.) WHEREI N THE TRIBUNAL HELD IN PARA 8 TO 14, THE EXTRACT CONTENT REPRODUCED BELOW:- ITA NO.756/KOL/2010 ADDA VS. CIT DGA PA GE 6 8. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED TH E MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE APPLICABLE LEGAL POSITION. 9. WE FIND THAT, AS LEARNED COUNSEL RIGHTLY POINTS OUT, THE SCOPE OF POWERS OF THE COMMISSIONER UNDER SECTION 12AA(3) FO R CANCELLATION OF REGISTRATION ALREADY GRANTED IS VERY LIMITED IN SCO PE IN AS MUCH AS IT CAN ONLY BE INVOKED ONLY WHEN (I) THAT THE ACTIVITIES O F THE TRUST ARE NOT GENUINE, AND (II) THAT THE ACTIVITIES OF THE TRUST OR THE INSTITUTION ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS O F THE TRUST OR THE INSTITUTION. SECTION 12AA(3) SPECIFICALLY PROVIDES THAT WHEN THE CIT 'IS SATISFIED THAT THE ACTIVITIES OF SUCH TRUST OR INST ITUTION ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE O BJECTS OF THE TRUST OR INSTITUTION, AS THE CASE MAY BE, HE SHALL PASS AN O RDER IN WRITING CANCELLING THE REGISTRATION OF SUCH TRUST OR INSTIT UTION'. 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 BEI NG CARRIED OUT IN ACCORDANCE WITH THE OBJECTS' OF THE ASSESSEE TRUST. THE CASE OF THE CIT RESTS 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 LE ARNED COMMISSIONER, IN WITHDRAWING THE REGISTRATION UNDER SECTION 12AA( 3), WAS WELL BEYOND THE LIMITED SCOPE OF THE POWERS CONFERRED ON HIM B Y THE STATUTE. THE ASSESSEE, THEREFORE, MUST SUCCEED IN THE APPEAL FOR THIS SHORT REASON ALONE. 10. THERE IS, HOWEVER, A MUCH MORE FUNDAMENTAL REAS ON FOR THE ASSESSEE SUCCEEDING IN THIS APPEAL. IN OUR CONSIDER ED VIEW, THE CONSIDERATIONS 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 DE FINITION 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 REGISTRATION OR IN RESPE CT OF CANCELLATION, EVEN IF OTHERWISE PERMISSIBLE, OF A REGISTRATION. A CLO SER 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 PO OR, EDUCATION, MEDICAL RELIEF, PRESERVATION OF ENVIRONMENT (INCLUD ING WATERSHEDS, FORESTS AND WILDLIFE) AND PRESERVATION OF MONUMENTS OR PLACES OR ITA NO.756/KOL/2010 ADDA VS. CIT DGA PA GE 7 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 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 OR FEE OR A NY OTHER CONSIDERATION, IRRESPECTIVE OF THE NATURE OF USE OR APPLICATION, OR RETENTION, OF THE INCOME FROM SUCH ACTIVITY: PROVIDED FURTHER THAT THE FIRST PROVISO SHALL NOT A PPLY IF THE AGGREGATE VALUE OF THE RECEIPTS FROM THE ACTIVITIES REFERRED TO THEREIN IS TWENTY-FIVE LAKH RUPEES OR LESS IN THE P REVIOUS YEAR: (EMPHASIS SUPPLIED) 12. WHAT IS CLEAR FROM THE RIDERS IN THE ABOVE DEFI NITION OF 'CHARTABLE PURPOSES' IS THAT RIDER SET OUT THEREIN, UNDER FIR ST PROVISO TO SECTION 2(15), CAN ONLY COME INTO PLAY ON YEAR TO YEAR BASI S AND NOT IN ABSOLUTE TERMS. THE SAME ACTIVITY CAN BE HIT BY THIS RIDER I N 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 I NSTITUTION 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 CLAUSE CAN COME INTO PLAY. THE SAFEGUARD AGAINST TH E OBJECTS OF THE TRUST BEING VITIATED 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~CED -I.E. WITH EFFECT FROM 1 ST APRIL 2009 SECTION 13(8) PROVIDES AS FOLLOWS: 'SECTION 13-SECTION 11 NOT TO APPLY IN CERTAIN CA SES. (8) NOTHING CONTAINED IN SECTION 11 OR SECTION 12 S HALL OPERATE SO AS TO EXCLUDE ANY INCOME FROM THE TOTAL INCOME OF T HE PREVIOUS YEAR OF THE PERSON IN RECEIPT THEREOF IF THE PROVIS IONS OF THE FIRST PROVISO TO CLAUSE (15) OF SECTION 2 BECOME APPLICAB LE IN THE CASE OF SUCH PERSON IN THE SAID PREVIOUS YEAR'. 13. WHILE INTRODUCING THIS AMENDMENT, EXPLANATORY M EMORANDUM TO THE FINANCE BILL 2012 FHTTP://INDIABUDGETNIC.IN/BUDGET2 012-2013/UB2012- 13/MEM/MEML.PDFI EXPLAINED THE REASONS AND BACKDROP OF THIS LEGISLATIVE AMENDMENT AS FOLLOWS: ASSESSMENT OF CHARITABLE ORGANIZATION IN CASE COMME RCIAL RECEIPTS EXCEED THE SPECIFIED THRESHOLD ITA NO.756/KOL/2010 ADDA VS. CIT DGA PA GE 8 SECTIONS 11 AND 12 OF THE ACT EXEMPT INCOME OF ANY CHARITABLE TRUST OR INSTITUTION, IF SUCH INCOME IS APPLIED FOR CHARITA BLE 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 U TILITY ' AS CHARITABLE PURPOSE PROVIDED THAT IT DOES NOT INVOLVE CARRYING ON OF ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS. 2ND PROVISO TO SAID SECTION PROVIDES THAT IN CASE W HERE THE ACTIVITY OF ANY TRUST OR INSTITUTION IS OF THE NATURE OF ADVANC EMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY, AND IT INVOLVES CARRYING ON OF ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS; BUT T HE 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 AS 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 Y EAR DEPENDING ON THE AGGREGATE VALUE OF RECEIPTS FROM COMMERCIAL ACTIVIT IES. THERE IS, THEREFORE, NEED TO EXPRESSLY PROVIDE IN L AW 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 APPLICABL E FOR THAT PARTICULAR PREVIOUS YEAR. HOWEVER, THIS TEMPORARY EXCESS IN ON E 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 AP PROVAL OR RESCINDING OF NOTIFICATION ISSUED IN RESPECT OF TRUST OR INSTITUT ION. THEREFORE, THERE IS NEED TO ENSURE THAT IF THE PURP OSE OF A TRUST OR INSTITUTION DOES NOT REMAIN CHARITABLE DUE TO APPLI CATION OF FIRST PROVISO ON ACCOUNT OF COMMERCIAL RECEIPT THRESHOLD PROVIDED 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 F OR THAT PREVIOUS YEAR FOR WHICH SUCH PROVISO IS APPLICABLE. SUCH DENIAL O F EXEMPTION SHALL BE MANDATORY BY OPERATION OF LAW AND WOULD NOT BE DEPE NDENT ON ANY WITHDRAWAL OF APPROVAL OR CANCELLATION OF REGISTRAT ION 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 IT'S RECEIPTS FROM COMMERCIAL ACT IVITIES EXCEED THE THRESHOLD WHETHER OR NOT THE REGISTRATION OR APPROV AL GRANTED NOTIFICATION ISSUED IS CANCELLED, WITHDRAWN OR RESC INDED. THIS AMENDMENT WILL TAKE EFFECT RETROSPECTIVELY FRO M 1 ST APRIL, 2009 AND WILL, ACCORDINGLY, APPLY IN RELATION TO THE ASSESSM ENT YEAR 2009-10 AND SUBSEQUENT ASSESSMENT YEARS. (EMPHASIS SUPPLIED) ITA NO.756/KOL/2010 ADDA VS. CIT DGA PA GE 9 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, T HE 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 BEARING ON THI S DENIAL OF REGISTRATION. AS A COROLLARY TO THIS LEGAL POSITION, THE FACT THA T 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 R EGISTRATION UNDER SECTION 12AA. RESPECTFULLY FOLLOWING THE ABOVE PRECEDENT OF CO-OR DINATE BENCHES OF ITAT (SUPRA) WE REVERSE THE ORDER OF THE LD. CIT AND DIR ECT TO GRANT REGISTRATION UNDER SECTION 12AA OF THE ACT. HENCE THE GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 7. IN THE RESULT, ASSESSEES APPEAL STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT 24/ 06/2016 SD/- SD/- (S.S.VISWANETHRA RAVI) (WASEEM AHMED) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) KOLKATA, *DKP !- 24 / 06 /201 6 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-ASANSOL DURGAPUR DEV. AUTHORITY, 1 ST ADMINISTRATIVE BUILDING CITY CENTER, DUR GAPUR, WEST BENGAL, PIN 713 216 2. /RESPONDENT-CIT, DURGAPUR, URMILA BHAWAN, A-2, NAND ALAL BITHI CITY CENTRE, DURGAPUR -713 2 16 3. ) *+ , , - / CONCERNED CIT KOLKATA 4. , , -- / CIT (A) KOLKATA 5. 012 33*+, , *+ , / DR, ITAT, KOLKATA 6. 267 89 / GUARD FILE. BY ORDER/ , , /TRUE COPY/ / , *+ ,