Case Law Details
Visakhapatnam Port Trust Vs CIT (ITAT Visakhapatnam)
In the instant case, the registration was already granted by the Ld.CIT vide order dated 20.03.2008 w.e.f. 01.04.2002. There is no dispute with regard to genuineness of the activities and there is no finding of the Ld.CIT with regard to not carrying on the activities as per the objects of the trust. Therefore, as per Circular No.21 of 2016- Income TAX dated 27.05.2016, there is no case for cancellation of registration. Though the Circular was issued on 27.05.2016, the same is clarificatory circular which has retrospective effect. In the circular, itself, it is mentioned that it has retrospective effect. By Finance Act, 2012, by inserting new sub section 8 in section 13, it has provided sufficient care not to get benefit of exemption in such year in which its receipts or commercial activities exceeds the threshold limit. Though the assessee continued to have the registration, the AO is not barred in examining the benefits of exemption claimed by the assessee u/s 11 and 12 as provided to u/s 13(8) or section 2(15) of the Act. Thus, the cancellation of registration is not mandatory as envisaged in Circular No.21 of 2016- Income TAX dated 27.05.2016. The decision of Hon’ble Karnataka High Court and the decision of this Tribunal in the case of VMRDA and the decision of Kandla Port Trust which was discussed supra support our view. Therefore, taking into consideration all the above facts, case laws, judicial precedents and the circular of CBDT, we hold that cancellation of registration u/s 12AA(3) by the Ld,CIT is bad in law, hence, we set aside the order of the Ld.CIT and restore the registration already granted to the assessee.
FULL TEXT OF THE ITAT JUDGEMENT
This appeal is filed by the assessee against the order of the Commissioner of Income Tax [CIT]-1,Visakhapatnam in F.No.CIT- 1/VSP/12AA/VPT/12-13 dated 11.09.2012.
2. The assessee is a Port Trust, granted registration u/s 12A of the Income Tax Act, 1961 (in short ‘Act’) w.e.f. 01.04.2002 i.e. from the Assessment Year (A.Y.) 2003-04 onwards, pursuant to the order of the ITAT, Visakhapatnam wherein the ITAT viewed that the assessee is entitled to registration u/s 12A of the Act, as the assessee was pursuing the objects of general public utility which are considered to be charitable in nature. Subsequently, after the amendment made in sub- section 15 of section 2, by Finance Act, 2008, the charitable activity was redefined in the first proviso to section 2(15) of the Act, hence, the Ld.CIT had issued the notice proposing to cancel the registration already granted to the assessee Trust, vide show cause letter No.CIT-1/VSP/12AA/VPT/12-13 dated 09.08.2012, observing that the assessee Trust is carrying on it’s activities on commercial principles and generating huge income from operations with the turnover exceeding the threshold limit of Rs.10 lakhs as envisaged in proviso to Sec.2(15) of the Act. In response to the show cause notice issued by the Ld.CIT, the assessee filed it’s reply stating that the activities of the assessee are genuine and it is carrying on the activities in accordance with the objects of the Trust, therefore submitted that there is no case for cancellation of the registration already granted to it u/s 12A of the Act. The assessee further submitted that the issue with regard to taxation of income that was not exempt in case of trusts was addressed in section 13(8) of the Act which was inserted by Finance Act, 2012 with retrospective effect from 01.04.2009 and as per which 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. Thus, submitted that section 11 and 12 of the Act do not apply for any of the previous year, if, proviso to section 2(15) are applicable in such year. Therefore, submitted that the Act itself has taken care not to extend the benefits of registration in any of the year in which the income of the institution registered u/s 12A exceeds the amounts mentioned in section 2(15) of the Act.
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