Ita/73/2013 Of Improvement Trust v. Commissioner Of Income Tax

ITA No.73 of 2013 (O&M) IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH ITA No.73 of 2013(0&M)Date of decision: (06.08.201 Improvement [rust through Shri APS Virk s/o Late Shri Kartar SinghVirk, Chairman, Dr. Mela Ram Road, Bathinda, Punjab. Vs, wooeeee ADPEllant Commissioner of Income Tax, Aayakar Bhawan, Amritsar ...Respondent CORAM: HON'BLE MR. JUSTICK AJAY KUMAR MITTALHON'BLE MR. JUSTICE FATEH DEEP SINGH Present: Mr. K.L.Goyal, Sr. Advocate with Mr. Rajiv Sharma, Advocate for the appellant.Mr. Denesh Goyal, Advocate for the revenue Ajay Kumar Mittal,J, 1. This order shall dispose of ITA Nos.73 of 2013 and 22 of 2014as according to the learned counsel for the parties, the 1ssue involved inboth these appeals is similar. However, the facts are being extracted fromITA No.73 of 2013. 2. ITA No.73 of 2013 has been preferred by the appellantImprovement Trust under Section 260A of the Income Tax Act, 1961 (inshort, "the Act") against the order dated 18.12.2012, Annexure A.4 passedby Income Tax Appellate Tribunal, Amritsar (in short, “the Tribunal’) in ITANo.366(ASR)/2012, claiming following substantial question of law:- "Whether on the facts and 1n the circumstances of the case andin view of legal provisions the ITAT was justified inconfirming the order of CIT. Bathinda in cancelling theregistration of appellant trust under section 12AA of theIncome Tax Act, 1961 on the ground of its carrying outactivities in accordance with a statute and thereby holding it tobe carrying out activities of trade, commerce or business witha profit motive?" 3. A few facts relevant for the decision of the controversyinvolved as narrated in ITA No.73 of 2013 may be noticed. The appellanttrust was constituted under the Punjab Town Improvement Trust Act, 1922(in short, "the 1922 Act"). Income of the appellant trust was exempt undersection 10(20A) of the Act upto assessment year 2002-03. However, the saidsection was omitted by Finance Act, 2002 w.e.f 2003. By way of notificationdated 4.4.2002, the State Government dissolved appellant trust and renewedthe same w.e.f 12.6.2003. The appellant applied for registration as charitabletrust under section 12AA of the Act on 15.5.2005 seeking registration w.e.f12.6.2003 as the trust was created again by the State Government witheffect from the said date. However the application was rejected byCommissioner of Income Tax, Bathinda due to delay in filing application,The appellant filed appeal before the Tribunal which was dismissed videorder dated 19.9.2008. In the meantime, assessments for the assessmentyears 2005-06 to 2008-09 were completed creating demands of differentamounts which were recovered by attachment. In furtherance of notices, therevenue passed orders dated 25.3.2009 under section 226(3) of the Actattaching the bank Accounts of the appellant. Thereafter, the Banks releasedpayment to the revenue as per copies of letters by the banks to the revenue ITA No.73 of 2013 (O&M) ITA No.73 of 2013 (O&M) and to the appellant. The appellant filed application udner section 254(2) ofthe Act which was decided in favour of the appellant vide order dated4.3.2010, Annexure A.1. Thereafter, registration under section 12AA of theAct was granted to the appellant w.e.f 13.6.2003 by the Commissioner ofIncome Tax vide order dated 13.8.2010 as per directions of the Tribunal.However, the registration was subject to review under section 12AA(3) ofthe Income Tax Act, 1961 in view of the amendment to the definition of‘charitable purpose’ under section 2(15) w.e.f 1.4.2009. On 20.6.2012, theCIT issued show cause notice to the appellant as to why the registrationgranted be not cancelled under section 12AA(3) of the Act. The appellantexplained that it was a trust constituted under the 1922 Act and was carryingon activities in accordance with law. The appellant also placed on record theaudited accounts, reports etc. However, the CIT rejected the registrationgranted to the appellant holding that since the proviso to section 2(15) hadbeen inserted w.e.f 1.4.2009 so the appellant trust could not draw benefit ofregistration w.e.f 1.4.2009 1.e. from assessment year 2009-10. The appellantfiled appeal before the Tribunal which was also dismissed vide order dated18.12.2012, Annexure A.4. Hence the instant appeals by the appellant trust. 4. We have heard learned counsel for the parties and perused therecord| 5. Learned counsel for the appellant submitted that in view of theprovisions of 1922 Act, the matter 1s required to be remanded to theTribunal to adjudicate whether the activities of the appellant trust werecovered within the meaning of charitable in nature or not even after theinsertion of the proviso to Section 2(15) of the Act w.e.f 1.4.2009 1.e. in ITA No.73 of 2013 (O&M) respect of assessment years 2009-10 onwards. No serious objection wasraised by the learned counsel for the revenue to the aforesaid submission.6_Accordingly, the impugned orders passed by the Tribunal inboth the appeals are set aside and the matter 1s remanded to the Tribunal todecide the same afresh keeping in view the proviso to Section 2(15) of theAct inserted w.e.f April 1, 2009 with reference to the provisions of the 1922Act after affording an opportunity of hearing to the parties in accordancewith law. Needless to say, anything observed hereinbefore shall not be takento be expression of opinion on the merits of the controversy. Sincere effortsshall be made to decide the matter expeditiously. As a result, all the appealsstand disposed of. (Ajay Kumar Mittal)vudge August 06, 2014 .4 g (Fateh Deep Singh)Judge