U.P Beej Vikas Nigam, Lucknow V. Commissioner of Income Tax-1, Lucknow

ITA 91/LKW/2012

• Counselvise Citation: 9123714 RSA 2012
• Duration Of Justice: 2 year(s) 1 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-04-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 04-02-2014
• Assessment Year: misc
• Appeal Filed On: 02-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S C AGARWALA
• Keywords: Charitable institution; Retrospective amendment; Cancellation of registration
• Section: 12A; 12AA; 12

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.91/LKW/2012 ASSESSMENT YEAR: N.A. UP BEEJ VIKAS NIGAM, C - 973/974 - B, MAHANAGAR, LUCKNOW. PAN:AAACU5869L VS. C.I.T. - 1, LUCKNOW. (APPELLANT) (RESPONDENT) APPELLANT BY SHRI S. C. AGARWALA , ADVOCATE RESPONDENT BY SHRI MANOJ KUMAR GUPTA, CIT, D.R. DATE OF HEARING 04/02/2014 DATE OF PRONOUNCEMENT 1 1 /04/2014 O R D E R PER A. K. GARODIA, A.M. THIS IS ASSESSEES APPEAL DIRECTED AGAINST THE ORDER PASSED BY CIT - I, LUCKNOW DATED 10/01/2012 U/S 12AA(3) OF THE I.T. ACT. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. THAT THE ORDER PASSED U/S 12AA(3) OF THE INCOME TAX ACT 1961 IS ERRONEOUS AND INVALID. 2. THAT THE LEARNED CIT WAS WRONG AND NOT HAVING JURISDICTION IN INVOKING PROVISOS TO SECTION 2(15) OF THE INCOME TAX ACT TO CANCEL THE REGISTRATION CERTIFICATE ISSUED U/S 12 AA OF THE ACT. 3. THAT IN THE ABSENCE OF ANY FI NDING BY THE LEARNED CIT THAT (A) THE ACTIVITIES OF THE ASSESSEE COMPANY ARE NOT GENUINE OR (B) ARE NOT BEING CARRIED IN ACCORDANCE WITH THE OBJECTS LAID DOWN IN THE MEMORANDUM OF ASSOCIATION OF THE APPELLANT THEREBY RENDERING THE IMPUGNED ORDER OUTSIDE TH E SCOPE OF SECTION 12AA(3) OF THE INCOME TAX ACT. 2 4. THAT THE LEARNED CIT WAS WRONG IN COMING TO THE CONCLUSION THAT THE ACTIVITIES OF THE COMPANY ARE INVOLVED IN CARRYING OUT THE ACTIVITIES IN THE NATURE OF TRADE, COMMERCE OR BUSINESS. 5. THAT THE ACTIV ITIES OF THE APPELLANT COMPANY ARE CHARITABLE IN NATURE AND THE LEARNED CIT IS WRONG IN COMING TO A CONTRARY VIEW. 6. THAT IN ANY CASE THE ACTIVITIES OF THE APPELLANT COMPANY ARE NON - COMMERCIAL IN CHARACTER AND THE LEARNED CIT WAS WRONG AND ACTED ARBITRAR ILY WITHOUT APPRECIATING THE FACTS IN HOLDING THAT SUCH ACTIVITIES ARE IN THE NATURE OF TRADE COMMERCE OR BUSINESS. 7. THAT THE LEARNED CIT ERRED IN HOLDING ' ADMITTEDLY THE ACTIVITIES OF THE APPELLANT ARE FOR ADVANCEMENT OF OBJECTS OF GENERAL PUBLIC UTILI TY' IGNORING THE FACT THAT SUCH ACTIVITIES OF THE APPELLANT PROVIDING RELIEF TO SMALL AND MEDIUM FARMERS IS COVERED UNDER RELIEF TO THE POOR AS PER CIRCULAR NUMBER 11/2008 DATED 19 - 12 - 2008 ISSUED BY CBDT. 8. THAT THE LEARNED CIT WAS UNJUSTIFIED IN COMING TO THE CONCLUSION WITH THE AVERMENT THAT DEVELOPING, PRODUCING, PURCHASING AND PROCESSING LARGE VARIETY OF CERTIFIED SEEDS AND SELLING FOR A PRICE BY THE APPELLANT IS AN ORGANIZED ACTIVITY ON THE REGULAR BASIS WHICH IS A WRONG APPRECIATION OF FACTS AND CON TRARY TO FACTS ON RECORD. 9. THAT THE SUBMISSIONS MADE DURING THE COURSE OF PROCEEDINGS U/S 12AA(3) BEFORE THE LEARNED CIT WERE NOT GIVEN DUE CONSIDERATION. 10. THAT THE IMPUGNED ORDER IS BAD IN LAW AND AGAINST FACTS. 11. THAT THE APPELLANT CRAVES THE PERMISSION OF THE TRIBUNAL FOR ADDITION, MODIFICATION OF GROUNDS OF APPEAL AT THE TIME OF HEARING. 3. THE ASSESSEE HAS ALSO RAISED ADDITIONAL GROUND OF APPEAL, WHICH IS AS UNDER: 3 THAT THE IMPUGNED ORDER IS WITHOUT JURISDICTION AND VOID AB - INITIO IN AS MUCH AS THE LEARNED CIT HAD NO POWER TO CANCEL THE REGISTRATION U/S 12AA(3) OF THE I.T. ACT GRANTED TO THE ASSESSEE COMPANY U/S 12A OF THE ACT. 4. IT WAS SUBMITTED BY LEARNED A.R. OF THE ASSESSEE THAT THE REGISTRATION U/S 12AA WAS GRANTED BY CIT ON 09/0 1/2006 WITH EFFECT FROM 25/03/2003 AND THE COPY OF THE ORDER PASSED BY LEARNED CIT IS AVAILABLE ON PAGE NO. 38 OF THE PAPER BOOK. HE ALSO SUBMITTED THAT AS PER THE JUDGMENT OF HON'BLE ALLAHABAD HIGH COURT RENDERED IN THE CASE OF COMMISSIONER OF INCOME - TAX VS MANAV VIKAS AVAM SEWA SANSTHAN [2011] 336 ITR 240 (ALL) , TH E EFFECT OF INSERTION OF SUB SECTION (3) IN SECTION 12AA WITH EFFECT FROM 01/10/2004 PROVIDING FOR CANCELLATION OF REGISTRATION IS NOT RETROSPECTIVE AND, THEREFORE, THE TRUST GRANTED REGISTRATION U/S 12A PRIOR TO AMENDMENT IS NOT CANCELABLE BY THE ORDER PAS SED IN MARCH, 2009 BY THE CIT. HE DRAWN OUR ATTENTION TO PARA 10 OF THE JUDGMENT OF HON'BLE ALLAHABAD HIGH COURT. REGARDING THE MERIT OF THIS ORDER PASSED BY LEARNED CIT U/S 12AA(3), HE SUBMITTED THAT AS PER THE PROVISIONS OF SECTION 13(8), IF THE PROVIS O TO SECTION 2(15) BECOMES APPLICABLE TO AN ASSESSEE IN ANY PREVIOUS YEAR, THEN THE PROVISION CONTAINED IN SECTION 11 & 12 ARE NOT APPLICABLE AND THEREFORE, ON THE BASIS OF APPLICABILITY OF THE PROVISION OF THE FIRST PROVISO TO SECTION 2(15), CANCELLATION OF REGISTRATION IS NOT JUSTIFIED. 5. AS AGAINST THIS, LEARNED D.R. OF THE REVENUE SUPPORTED THE ORDER PASSED BY LEARNED CIT U/S 12AA(3) OF THE ACT. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT AS PER THE IMPUGNED ORDER PASSED BY LEARNED CIT U/S 12AA(3) OF THE ACT, THIS IS THE ONLY OBJECTION THAT THE ASSESSEE IS HIT BY THE PROVISO TO SECTION 2(15) TAKING IT OUT OF THE AMBIT OF CHARITABLE ACTIVITY. HE HAS REFERRED TO PROVISO 1 READ WITH PROVISO 2 TO SECTION 2(15). FOR THE READY REFERENCE, WE REPRODUCE THE PROVISION S CONTAINED IN THESE TWO PROVIS OS OF SECTION 2(15) OF THE ACT, WHICH ARE AS UNDER: 4 (15) CHARITABLE PURPOSE INCLUDES RELIEF OF THE POOR, EDUCATION, MEDICAL RELIEF, [PRESERVATION OF ENVIRONMENT (INCLUDING WATERSHEDS, FORESTS AND WILD LIFE) AND PRESERVATION OF MONUMENTS 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 CHAR ITABLE PURPOSE, 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 RELATION TO ANY TRADE, COMMERCE OR BUSINESS, FOR A CESS OR FEE OR ANY 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 APPLY IF THE AGGREGATE VALUE OF THE RECEIPTS FROM THE ACTIVITIES REFERRED TO THEREIN IS 85TWENTY - FIVE LAKH RUPEES OR L ESS IN THE PREVIOUS YEAR ; 7. FROM THE ABOVE PROVISIONS CONTAINED IN THESE TWO PROVISOS, WE FIND THAT AS PER THE SECOND PROVISO, THE FIRST PROVISO IS NOT APPLICABLE IF THE AGGREGATE VALUE OF THE RECEIPTS FROM THE ACTIVITIES REFERRED TO THEREIN IS RS.25 L AC S OR LESS IN THE PREVIOUS YEAR. EARLIER THIS LIMIT WAS RS.10 LAC S . THE SECOND PROVISO HAS BEEN INSERTED BY THE FINANCE ACT, 20 1 0 WITH RETROSPECTIVE EFFECT FROM 01/04/2009. THE IMPUGNED ORDER U/S 12AA(3) WAS PASSED BY LEARNED CIT ON 10/01/2012 AND HENC E, THE SECOND PROVISO IS APPLICABLE AT THE TIME OF PASSING OF THIS ORDER. IN OUR CONSIDERED OPINION, BECAUSE OF SECOND PROVISO TO SECTION 2(15) IN THE CASE OF AN ASSESSEE, THE FIRST PROVISO TO SECTION 2(15) MAY BE APPLICABLE IN ONE OR MORE YEAR BUT TO THE SAME ASSESSEE, THE FIRST PROVISO MAY NOT BE APPLICABLE IN SOME OTHER YEAR. HENCE, THE APPLICABILITY OF FIRST PROVISO TO SECTION 2(15) IS NOT CERTAIN IN THE CASE OF THE ASSESSEE IN EACH OF THE YEARS. AS PER THE PROVISION OF SECTION 13(8) OF THE ACT, NO E XEMPTION IS ALLOWABLE TO AN ASSESSEE IF THE FIRST PROVISO TO SECTION 2(15) IS APPLICABLE IN A PARTICULAR PREVIOUS YEAR. IN OUR CONSIDERED OPINION, TO TAKE CARE OF THIS SITUATION THAT EXEMPTION IS NOT ALLOWED TO AN ASSESSEE TO WHOM FIRST PROVISO TO SECTION 2(15) IS APPLICABLE IN A PARTICULAR YEAR, THE PROVISION S OF SECTION 13(8) ARE SUFFICIENT AS PER WHICH THE ASSESSEE IN THAT YEAR CANNOT GET 5 EXEMPTION U/S 11 OR 12 OF THE ACT. HENCE, IN OUR CONSIDERED OPINION, FOR THE REASON THAT FIRST PROVISO TO SECTION 2 (15) IS APPLICABLE TO AN ASSESSEE IN A PARTICULAR YEAR, THERE IS NO NEED OR JUSTIFICATION TO CANCEL THE REGISTRATION BY INVOKING THE PROVISIONS OF SECTION 12AA(3) OF THE ACT BECAUSE IF THE REGISTRATION ITSELF IS CANCELLED U/S 12AA(3) THEN IN A SUBSEQUENT Y EAR WHEN THE FIRST PROVISO TO SECTION 2(15) IS NOT APPLICABLE TO THE SAME ASSESSEE FOR THE REASON THAT ITS RECEIPT IS BELOW THE SPECIFIED LIMIT THEN THE ASSESSEE WILL BE REQUIRED TO OBTAIN FRESH REGISTRATION. MOREOVER, AS PER THE PROVISIONS OF SUB SECTION (3) OF SECTION 12AA OF THE ACT, THE REGISTRATION SHOULD BE CANCELLED IF IT IS FOUND BY THE CIT THAT THE ACTIVITIES OF THE TRUST / INSTITUTION ARE NOT GENUINE OR NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST /INSTITUTION AS THE CASE MAY BE. IN THE PRESENT CASE, THIS IS NOT THE OBJECTION OF CIT THAT THE ACTIVITIES OF THE ASSESSEE A RE NOT GENUINE OR THE SAME ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST. FOR THIS REASON ALSO, THE ORDER PASSED BY LE ARNED CIT U/S 12AA(3) IS NOT SUSTAINABLE. WE, THEREFORE, CANCEL THE SAME. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 1 1 /04/2014 . *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR