CIT Vs. SARVODAYA ILAKKIYA PANNAI

JUDGEMENT

(1.) This Tax Case Appeal is at the instance of the Commissioner of Income Tax, Madurai, questioning the order dated 30.06.2011 passed by the Income Tax Appellate Tribunal in I.T.A.No.594/MDS/2011, by raising the following substantial questions of law.

(2.) The respondent Sarvodaya Ilakkiya Pannai is a Society and was granted registration by the Commissioner of Income Tax, Madurai vide his order dated 06.11.1989 under section 12A(a) of the Income Tax Act. The object for which the Trust was registered was to effect publication and sale of Sarvodaya Literature as also the Gandhian and Sarvodaya ideoloigies.

(3.) When the returns filed for the assessment years 2008-2009 to 2010-2011 were scrutinised, it was found that the Society was engaged in purchase and sale of books. On the ground that the above activities of the trust cannot be considered to be charitable activities, a show cause notice was issued by the Commissioner of Income Tax under section 12AA(3) of the Act, before an order of rejection was made. Thereafter, the Commissioner of Income Tax revoked the registration on the ground that the Society did not deserve exemption under section 11(1)(a) of the Act and accordingly, the registration granted under section 12A(a) was cancelled. On a challenge to the said order, the Appellate Tribunal has found that the order of the Commissioner was not justified as the power to cancel could be only traced out to section 12AA(3) and in the absence of any activity carried on by the trust contrary to the objects, the registration cannot be revoked. With that finding, the Tribunal has allowed the appeal filed by the Society. Challenging the said order, the present appeal has been filed.