SAE INDIA Vs. DIRECTOR OF INCOME TAX (EXEMPTIONS)
LAWS(IT)-2014-10-21
INCOME TAX APPELLATE TRIBUNAL
Decided on October 17,2014

Sae India Appellant
VERSUS
DIRECTOR OF INCOME TAX (EXEMPTIONS) Respondents

JUDGEMENT

Challa Nagendra Prasad, Member (J) - (1.) THIS appeal is filed by the assessee against the order of the Director of Income Tax (Exemptions) dated 26.12.2011 passed under section 12AA(3) of the Act cancelling registration granted to the assessee with effect from 1.4.2009 i.e. introduction of proviso to section 2(15) of the Act stating that organization has not remained charitable.
(2.) COUNSEL for the assessee submits that assessee was granted registration under section 12AA of the Act vide order No. DIT(E) No. 2(202)/2003 -04 dated 24.7.2003. Counsel submits that society was formed with following main objects: - i) To serve as a forum where Engineers, Scientists, Technologists and Innovators in mobility engineering field can exchange ideas and learn from each other experience; ii) To hold, organize technical meetings, workshop, seminars educational programs and specialty conferences to report on the frontline development before they impact the industry; iii) To organize tours, social events and exhibition of latest events related to mobility engineering field; & iv) To encourage the creation, maintenance and adherence of code of conduct for the profession of mobility engineering, etc. Counsel for the assessee submits that in view of the amendment to section 2(15) of the Act and since the receipts of the assessee exceeded over Rs. 10 lakhs i.e. threshold limit as provided in 2nd proviso to section 2(15) of the Act the exemption granted under section 12AA was withdrawn as the assessee is no more charitable organization and the assessee's objects fall under general public utility and not education. Counsel submits that objects of the assessee is to serve as a forum where Engineers, Scientists, Technologists and Innovators in mobility engineering field can exchange ideas and learn from each other experience and the objects and activities of the institution are educational in nature as it is conducting programme for school children to cultivate engineering background. Counsel submits that assessee conducts Baja competition where undergraduate and post -graduate engineers can display their technical skill by prototype race cars. Counsel further submits that assessee also conduct professional relevant programme by way of organizing conferences etc. and therefore activities of the assessee certainly fall under the limb of education. Counsel for the assessee further submits that even assuming for a moment without conceding that its objects do not fall under education, registration granted under section 12AA cannot be withdrawn simply because receipts of the assessee exceeds Rs. 10 lakhs i.e. threshold limit as per second proviso to section 2(15) of the Act. Counsel submits that simply because receipts of the assessee are exceeded Rs. 10 lakhs i.e. threshold limit as provided under second proviso, the assessee institution cannot be held as not genuine and it is not charitable organization. He submits that Assessing Officer can deny section 11 if he finds that activities of the assessee are coming within the purview of trade, commerce or business or any activity of rendering any service in relation to any trade, commerce or business but certainly the registration granted under section 12AA of the Act cannot be withdrawn. Counsel for the assessee further referring to the memorandum explained in Finance Bill, 2012 submits that the intention of legislature is not to withdraw registration granted under section 12AA of the Act in each and every case when there is excess of receipts by the assessee prescribed under second proviso to section 2(15) of the Act. Therefore, counsel submits that even if the activities of the assessee trust fall under general public utility, since its objects are genuine and activities are genuine, registration granted under section 12AA cannot be withdrawn. Counsel places reliance on the decision of Hon'ble Madras High Court in the case of Tamil Nadu Cricket Association in Tax Case Appeal No. 450 of 2013 dated 21.10.2013. Departmental Representative supports the order of Director of Income Tax (Exemptions) in withdrawing registration granted under section 12AA(3) of the Act.
(3.) HEARD both sides. Perused orders of lower authorities and the case law relied on. The assessee was granted registration under section 12AA of the Act vide order no. DIT(E) No. 2(202)/2003 -04 dated 24.7.2003. The assessee contends that objects and activities of the assessee are educational in nature as it is conducting programme for school children to cultivate engineering backgrounds. It is conducting Baja competition where undergraduate and postgraduate engineers can display their technical skill by prototype race cars. They are conducting conferences on various issues of automobile sector while participants are managers and engineers of automobile industry. These activities in our view cannot be considered as 'education'. The activities of the assessee carried on certainly not fall under 'education'. The activities of the institution will fall under the category of object of general public utility. The main reason for withdrawing registration granted under section 12AA(3) seems to be that the assessee is receiving huge amounts as it is conducting various conferences, baja programmes in promoting objects of the assessee. Director of Income Tax (Exemptions) cancelled registration under section 12AA(3) of the Act stating that objects and the activities of the assessee are falling under general public utility and not education and assessee's commercial receipts exceeding Rs. 10 lakhs i.e. threshold limit as per second proviso to section 2(15) of the Act and therefore assessee loses its character with charitable institution as per first and second proviso of section 2(15) of the Act. This conclusion of the Director of Income Tax (Exemptions) appears to be not correct, when the objects of the assessee trust are genuine and assessee is carrying on the activities in accordance with the objects. In this case, activities of the trust cannot be held to be not genuine and it is not the case of the Director of Income Tax (Exemptions) that assessee is not carrying on the activities in accordance with its objects. The only reason for refusing registration was that assessee's receipts are exceeding threshold limit as specified under second proviso to section 2(15) of the Act.;


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