- (1.)THE petitioner is assailing the issuance of show-cause notice as to why registration be not cancelled under the provisions of Section 12a read with Section 12aa of the Income-tax Act, 1961. The petitioner was granted registration as charitable institution. The petitioner is an undertaking of the State of Madhya Pradesh According to the petitioner, it is undertaking charitable activities in the very nature which are defined in Section 2 (15) of the Income-tax Act, 1961.
(2.)THE petitioner submits that this question was adjudicated by the Income-tax Department whether the petitioner can avail of such an exemption ; considering the nature of the activities while passing the assessment order for the year 1994-95, an order was passed by the Income-tax Appellate Tribunal, Indore Bench, Indore (annexure P/5), in which the view was taken that till registration stands, the authorities are bound by it and cannot take a different view as to the nature of the activities. On the facts also an examination appears to have been made of the expression "any other object of general public utility" and it was found that it is difficult to hold that the object of the assessee/institution was not for general public utility. The petitioner submits that once this finding was recorded by the Income-tax Appellate Tribunal, it was not open to issue a show-cause notice annexure P/4 which was issued on January 23, 2002, by the Government of India, Ministry of Finance (Department of Revenue), office of the Commissioner of Income-tax, Bhopal, it is quoted below :
"sub : Show-cause notice for cancellation/withdrawal of registration under Section 12a read with Section 12aa of the Income-tax Act, 1961 --regarding. You had applied for registration under Section 12a of the Income-tax Act, 1961, vide your application dated March 27, 1985. This application was entered at serial No. Regn. /bpl/3 of 1985-86 in the register of applications under Section 12a (a ). The certificate of registration was forwarded to you vide this office endorsement F. No. Regn/bpl/3 of 1985-86 of dated January 29, 1986. 2. From the material on record it emerges that you are engaged in the following activities : - (i) publication and sale of weekly magazine Rozgar and Nirman ; (ii) production documentary films, TV reports, etc. , for the State Government Departments and public sector undertakings ; (iii) acting as advertising agency for the State Government Departments and public sector undertakings for publication of their advertisements in the newspapers.
The State Government Departments and public sector undertakings pay commission to you besides reimbursing the actual expenditure incurred by you for providing the above services as per bills raised by you.
(3.)THE above activities are clearly in the nature of commercial activities intended to earn profit and, therefore, you were/are not entitled for registration under Section 12a of the Income-tax Act, 1961. Your claim before the authorities below that you are like a State Government Department is also not correct because you are registered as a society under the Madhya Pradesh Societies Registration Act, 1973, and, therefore, you are an independent entity covered within the definition of 'person' in terms of the provisions of Section 2 (31} of the Income-tax Act, 1961. In the circumstances, I propose to cancel the registration under Section 12a of the Income-tax Act, 1961, granted to you on January 29, 1986.