DIRECTOR OF INCOME TAX, EXEMPTION Vs. KODAVA SAMAJA

JUDGEMENT

(1.) THE above appeal is filed by the revenue challenging the order dated 8.2.2013 passed by the Tribunal setting aside the order of the Director of Income -tax (Exemption) dated 15.12.2011 in cancelling the registration of the assessee as a Charitable Trust under Section 12A of the Income -tax Act, 1961 (for short hereinafter referred to as 'the Act'). The respondent -assessee - M/s. Kodava Samaja was granted registration under Section 12A of the Act on 27.6.1980 by an order passed by the Commissioner of Income -tax. Subsequently, a notice came to be issued on 22.11.2011 as to why registration under Section 12A of the Act should not be revoked by invoking the provisions of Section 12AA(3) of the Act by the authorities. In response to the said notice, the assessee filed its written submission on 2.12.2011 and contested the matter. The authorities took note of the fact that the accounts for the year ended 31.3.2009 shows receipts by way of rentals and other income to an extent of Rs. 75,92,080/ - and excess of income over expenditure of Rs. 63,61,403/ - for the assessment year 2008 -09 and Rs. 82,54,493/ - for the assessment year 2009 -10. An extract of the Income and Expenditure account for the financial year is reproduced as under:

(2.) THE Director of Income -tax (Exemption) considering the entire material on record, by his order dated 15.12.2011, exercising his powers under the provisions of Section 12A of the Act has cancelled the registration observing that on examination of records shows that the Samaja has earned profit of Rs. 63,61,403/ - and 82,54,493/ - for the assessment years 2008 -09 and 2009 -10 respectively. Under various heads, the Samaja has earned huge profits and after taking note of the change in definition of Section 2(15) of the Act which came into effect from 1.4.2009, it was held that the activity carried on by the assessee is in the nature of trade, commerce or business or any activity of rendering any services in relation to trade, commerce or business and therefore, the consideration received irrespective of the nature of use or application, or retention, of the income, from such activity would take the case out of Section 2(15) of the Act and after referring to the various judgments, the Director of Income -tax (Exemption) has cancelled the registration. Aggrieved by the said order, the assessee filed an appeal - ITA No. 200/2012 before the Tribunal.

(3.) THE substantial questions of law which arise for our consideration are as follows: