| The Tax Publishers2020 TaxPub(DT) 5481 (Guj-HC) : (2020) 428 ITR 0152 : (2021) 277 TAXMAN 0376 INCOME TAX ACT, 1961
Section 12AA(3)
Assessee was a State Government entity-local authority-constituted under Gujarat Maritime Board Act, 1981 and Gujarat Maritime Board had been carrying out its activities as empowered as per said Act and, therefore, activities of assessee could not be held as not genuine and assessee had used 85 per cent of the funds collected and there was nothing on record that assessee had violated any conditions laid down under section 12AA(3). Fee collected was incidental to its main object being charitable in nature and same was applied in furtherance of main objects. Thus, in the absence of any violation of section 12A(3), registration granted under section 12AA could not be cancelled.
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Charitable trust - Cancellation of registration under section 12AA - AO alleged collection of fee as being commercial in nature - No profit motive
Assessee was engaged in the activities of administering, controlling and managing minor ports in the State of Gujarat. It was registered under section 12AA. CIT cancelled the registration of assessee as a charitable institution on the ground that levying various fees or charges from the users of ports under various heads was more of commercial nature resulting in commercial income. Held: Assessee was a State Government entity-local authority-constituted under Gujarat Maritime Board Act, 1981 and Gujarat Maritime Board had been carrying out its activities as empowered as per said Act and, therefore, activities of assessee could not be held as not genuine. There was no material on record where funds had been utilized for profit motive or for non-charitable purpose. Assessee had used 85 per cent of the funds collected and there was nothing on record that assessee had violated any conditions laid down under section 12AA(3). Fee collected was incidental to its main object being charitable in nature and same was applied in furtherance of main objects. Thus, in the absence of any violation of section 12A(3), registration granted under section 12AA could not be cancelled.
Relied:GS1 India v. DGIT (Exemption) (2014) 360 ITR 138 (Del) : 2013 TaxPub(DT) 2791 (Del-HC), India Trade Promotion Organization v. DGIT (Exemptions) (2015) 371 ITR 333 (Del) : 2015 TaxPub(DT) 623 (Del-HC), PHD Chamber of Commerce and Industry v. DIT (Exemptions) (2013) 357 ITR 296 (Del-HC) : 2013 TaxPub(DT) 453 (Del-HC), Bureau of Indian Standards v. DGIT (Exemptions) (2012) 27 Taxmann.com 127 (Del), (2013) 358 ITR 78 (Del-HC) : 2013 TaxPub(DT) 323 (Del-HC), DIT (Exemptions) v. Shree Nashik Panchvati Panjrapole (2017) 397 ITR 501 (Bom) : (2017) 81 Taxmann.com 375 (Bom) : 2017 TaxPub(DT) 1508 (Bom-HC), DIT (Exemptions) v. Lala Lajpatrai Memorial Trust (2016) 383 ITR 345 (Bom) ; (2016) 69 Taxmann.com 158 (Bom) : 2016 TaxPub(DT) 1896 (Bom-HC) and CIT v. Gujarat Industrial Development Corporation (2017) 83 Taxmann.com 366 (Guj) : 2017 TaxPub(DT) 1934 (Guj-HC).
REFERRED :
FAVOUR : In assessee's favour.
A.Y. :
IN THE GUJARAT HIGH COURT
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