Goa Industrial Development Corporation Vs CIT (Bombay High Court)
Summary: The Bombay High Court allowed the appeal filed by Goa Industrial Development Corporation (GIDC), a statutory corporation established under the Goa, Daman and Diu Industrial Development Corporation Act, 1965, holding that registration under Section 12AA could not be cancelled merely because its activities were alleged to fall within the proviso to Section 2(15) of the Income-tax Act, 1961.
GIDC had been granted registration under Section 12A on 16.12.1983, which continued until the Commissioner of Income Tax (CIT) issued a show cause notice dated 12.12.2011 proposing cancellation under Section 12AA(3), principally on the basis of the proviso to Section 2(15) introduced with effect from 01.04.2009. The CIT withdrew the registration by order dated 27.12.2011, and the Income Tax Appellate Tribunal confirmed the action.
The High Court examined Section 12AA(3), which permits cancellation where the activities of the trust or institution are not genuine or are not being carried out in accordance with its objects. The Court found no categorical finding that GIDC’s activities were not genuine or were not being carried out in accordance with its statutory objects.
The Court noted that the Revenue did not contend that GIDC’s activities were contrary to its objects and held that merely attracting the proviso to Section 2(15) would not itself render the activities non-genuine for purposes of Section 12AA(3). Relying on Khar Gymkhana, Maharashtra Housing & Area Development Authority, Karnataka Industrial Area Development Board and Tamil Nadu Cricket Association, the Court held that the statutory conditions for cancellation must independently exist.
