The Seagull Foundation for arts, Kolkata v. DIT(Exemptions), Kolkata, Kolkata

ITA 451/KOL/2012 | 2009-2010
Pronouncement Date: 12-11-2014 | Result: Allowed

Appeal Details

RSA Number 45123514 RSA 2012
Assessee PAN AAATI3222D
Bench Kolkata
Appeal Number ITA 451/KOL/2012
Duration Of Justice 2 year(s) 7 month(s) 19 day(s)
Appellant The Seagull Foundation for arts, Kolkata
Respondent DIT(Exemptions), Kolkata, Kolkata
Appeal Type Income Tax Appeal
Pronouncement Date 12-11-2014
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted C
Tribunal Order Date 12-11-2014
Assessment Year 2009-2010
Appeal Filed On 23-03-2012
Judgment Text
C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOLKATA ( ) BEFORE /AND ) [BEFORE SHRI MAHAVIR SINGH JM & SHRI SHAMIM YAHYA AM ] / I.T.A NO. 451 /KOL/20 1 2 / ASSESSMENT YEAR : 200 9 - 1 0 THE SEAGULL FOUNDATION FOR THE ARTS VS. DIRECTOR OF INCOME - TAX (EXEMPTION) KOL. (PAN: AAATI3222D) ( /APPELLANT ) ( / RESPONDENT ) DATE OF HEARING: 30 . 10 .201 4 DATE OF PRONOUNCEMENT: 12 . 11 .201 4 FOR THE A PPELLANT : SHRI J. P. KHAITAN SR. COUNSEL & SHRI ARVIND AGARWAL ADVOCATE FOR THE RE SPONDENT : SHRI VARINDER MEHTA CIT DR / ORDER PER SHRI MAHAVIR SINGH JM : THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER OF DIT(E) KOLKATA IN NO . DIT(E)/KOL/12AA(3)/2011 - 12/3075 DATED 16 .0 1 .201 2 . 2. THE ONLY ISSUE IN THIS APPEAL OF ASSESSEE IS AGAINST THE ORDER OF DIT(E) KOLKATA IN CANCELLING THE REGISTRATION GRANTED U/S. 12A OF THE INCOME - TAX ACT 1961 (HEREINAFTER REFERRED TO AS THE ACT ) FOR THE REASON THAT THE ASSESSEE TRUST WAS HIT BY THE AMENDED PROVISIONS OF SECTION 2(15) OF THE ACT BECAUSE THE OBJECTS WERE NOT CHARITABLE OR ITS ACTIVITIES WERE IN THE NATURE OF COMMERCE OR TRADE OR BUSINESS. FOR THIS ASSESSEE HAS RAISED FOLLOWING TWO GROUNDS: 1. THAT THE ORDER DATED 16 TH JANUARY 2012 UNDER SECTION 12AA(3) OF THE INCOME TAX ACT 1961 CANCELLING THE APPELLANT S REGISTRATION UNDER SECTION 12A GRANTED ON 13 TH SEPTEMBER 1988 WAS PASSED BY THE DIRECTOR OF INCOME TAX (EXEMPTION) KOLKATA WITHOUT AND/OR IN EXCESS OF JURISDICTION AND IS WHOLLY ILLEGAL AND INVALID. 2. THAT THE PURPORTED FINDINGS OF THE DIRECTOR OF INCOME TAX (EXEMPTIONS) THAT THE APPELLANT WAS HIT BY THE AMENDED PROVISIONS OF SECTION 2(15) OR THAT ITS OBJECTS WERE NOT CHARITABLE OR THAT ITS ACTIVITIES WERE IN THE NATURE OF COMMERCE OR BUSINESS OR WERE NOT GENUINE ARE ARBITRARY ERRONEOUS UNREASONABLE AND PERVERSE. 3. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE TRUST IS A REGISTERED TRUST U/S. 12A OF THE ACT VIDE NO DIT(E)/T - 22/88 - 89 DATED 13.09.1988 ISSUED VIDE F NO ASSMNT/1955/CT/8E/54/87 - 88. THE COPY OF REGISTRATION CERTIFICATE IS ENCLOSED IN ASSESSEE S PAPER BOOK AT PAGE 1 3. THIS TRUST WAS CREATED VIDE TRUST DEED DATED 2 ND MAY 1987 AND REGISTERED ON 2 ND MAY 1987 WITH THE SUB - REGISTRAR OF ASSURANCES KOLKATA. C OMPLETE AIMS AND OBJECTS IN THE NATURE OF CHARITABLE 2 ITA NO. 451/K/2012 SEAGULL FOUNDATION FOR THE ARTS AY 2009 - 10 PURPOSE ARE ENSHRINED IN CLAUSE (2) OF THE TRUST DEED . THE COPY OF TRUST DEED IS ENCLOSED IN ASSESSEE S PAPER BOOK FROM PAGES 1 TO 12. AT T HE FIRST INSTANCE THE DIT(E) KOLKATA VIDE N O. DIT(E)/REGN/12AA/09 - 10/2022 DATED 16.07.2009 A SHOW CAUSE NOTICE WAS ISSUED THAT IN VIEW OF SECTION 2(15) OF THE ACT AS AMEN DED BY FINANCE ACT 2008 THE TRUST WAS FALLING WITHIN THE PURVIEW OF THE NEWLY INSERTED PROVISO TO SECTION 2(15) OF THE ACT AND HENCE AS TO WH Y REGISTRATION GRANTED U/S. 12A OF THE ACT BE NOT CANCELLED. THE RELEVANT PORTION OF THE SHOW CAUSE NOTICE (WHI CH IS ENCLOSED AT ASSESSEE S PAPER BOOK AT PAGE 50) RE ADS AS UNDER : IT IS EVIDENT FROM THE INFORMATION AVAILABLE AT THIS END THAT THE NATURE OF ACTIVITIES CARRIED ON BY YOUR INSTITUTION COME WITHIN THE PURVIEW OF THE PROVISO INSERTED IN CLAUSE 15 OF SEC. 2 OF THE I. T. ACT 1961 EFFECTIVE FROM 1.4.2009. THEREFORE I AM DIRECTED TO ASK YOU TO SHOW CAUSE AS TO WHY REGISTRATION GRANTED U/S. 12AA OF THE I. T. ACT TO YOUR INSTITUTION SHALL NOT BE CANCELLED IN ACCORDANCE WITH CLAUSE 3 OF SEC. 12AA OF THE A CT. THE ASSESSEE REPLIED THE SHOW CAUSE NOTICE VIDE LETTER DATED 19.08.2009 AND ALSO FURTHER LETTER DATED 28.07.2009. SUBSEQUENT TO THAT THE DIT(E) KOLKATA ISSUED RENEWAL DEDUCTION CERTIFICATE U/S. 80G(5)(VI) OF THE ACT (RENEWAL) VIDE NO. DIT(E)/2961/ 8E/54/87 - 88 DATED 04.03.2011. NOTHING HAPPENED IN BETWEEN. SUBSEQUENTLY ALMOST AFTER 2 AND YEARS ITO(E) HQR DIT(E) KOLKATA AGAIN ISSUED SHOW CAUSE NOTICE FOR CANCELLATION OF REGISTRATION GRANTED U/S. 12A OF THE ACT VIDE NO. DIT(E)/12AA/CANCELLATION/ 2011 - 12/2739 DATED 02.12.2011/08.12.2011 PROPOSING CANCELLATION OF REGISTRATION. THE RELEVANT PARA OF THE SHOW CAUSE NOTICE READS AS UNDER: I AM DIRECTED TO STATE THAT IT WAS OBSERVED THAT YOU ARE ENGAGED IN COMMERCIAL ACTIVITIES AS YOU ARE HIRING HALLS FOR EXHIBITIONS AND SALE OF THE PICTURES COLLECTED FROM ARTISTS. THESE ACTIVITIES IN WHICH YOU ARE ENGAGED IN IS IN THE NATURE OF TRADE COMMERCE OR BUSINESS WITHIN THE MEANING OF 1 ST PROVISO TO SEC. 2(15) OF THE I. T. ACT. AS SUCH THE OBJECTS OF YOU S OCIETY DO NOT QUALIFY AS BEING FOR CHARITABLE PURPOSE WITH EFFECT FROM 01.04.2009 IN VIEW OF THE AMENDMENT TO SEC. 2(15) BY THE FINANCE ACT 2008 . IN VIEW OF THE ABOVE DISCREPANCIES AND VIOLATION OF LAW NOTED ABOVE THE DIRECTOR OF INCOME TAX (EXEMPTION) KOLKATA PROPOSE TO CANCEL THE REGISTRATION U/S. 12AA GRANTED TO YOU. THE ASSESSEE REPLIED TH IS SHOW CAUSE NOTICE VIDE LETTER DATED 27.12.2011 AND DIT(E) AFTER GOING THROUGH THE FACTS OF THE CASE CANCELLED THE REGISTRATION GRANTED U/S. 12A OF THE ACT VIDE HIS ORDER DATED 22.03.2012 BY INVOKING THE PROVISO TO SECTION 2(15) OF THE ACT BY OBSERVING AS UNDER: I HAVE EXAMINED THE FACTS OF THE CASE AND ALSO CONSIDERED THE ASSESSEE S SUBMISSION. THE POWER TO CANCEL THE REGISTRATION OF A TRUST OR I NSTITUTION IS GRANTED TO THE COMMISSIONER OF I NCOME TAX U/S. 12AA(3) OF THE I NCOME TAX ACT. THE PROVISION OF SUB - SECTION 3 REQUIRES THE SATISFACTION OF THE COMMISSIONER THAT THE ACTIVITIES OF SUCH TRUST OR INSTITUTION ARE NOT GENUINE OR ARE NOT BEING CARRI ED OUT IN ACCORDANCE WITH OBJECTS OF THE TRUST. I N THE PRESENT CASE THE O BJECT OF THE TRUST DO NOT ADMITTEDLY FA LL WITHIN THE CATEGORIES OF RELIEF OF THE POOR EDUCATION MEDICAL RELIEF OR ANY OTHER LIMB OF CHARITABLE ACTIVITY EXCLUDED BY THE 3 ITA NO. 451/K/2012 SEAGULL FOUNDATION FOR THE ARTS AY 2009 - 10 A M ENDED PR OVISION OF SECTION 2(15) OF I . T. ACT. THUS THE ACTIVITIES OF THE TRUST OBVIOUSLY AIM AT THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY . THE PROVISO TO SECTION 2(15) INTRODUCED W.E.F. 01/04/2009 STATES THAT THE ADVANCEMENT OF ANY OTHER O BJECT OF GENERAL PUBLIC UTIL I TY SHALL NOT BE A CHARITABLE PURPOSE I F IT I NVOLVES THE CARRYING ON OF ANY ACTIVITY IN THE NATURE OF TRADE COMMERCE OR BUSINESS OR ANY ACT I VITY OF RENDERING ANY SERVICE IN RELAT I ON TO ANY TRADE COMMERCE OR BUSINESS FOR A C ESS OR FEE OR ANY OTHER CONSIDERAT I ON IRRESPECTIVE OF THE NATURE OF USE OR APPL I CATION OR RETENTION OF THE I NCOME FROM SUCH ACTIV I TY . ON A PERUSAL OF THE I NCOME & EXPENDITURE ACCOUNT IT I S SEEN THAT THE ASSESSEE HAD REALISED RS. 16.27 LAKHS FROM MISCELLANEOUS SOURCES WHICH B A RRING BANK INTEREST OF RS.3.96 LAKHS INVOLVED CONDUCT OF ART EXHIBITIONS SALE OF PAINTINGS ETC. AS WELL AS RENTAL INCOME. THEREFORE IT IS ESTABLISHED THAT THE ACTIVITIES OF THE ASSESSEE ARE IN THE NATURE OF COMMERCE OR BUS INESS. SINCE THE AGGREGATE VALUE OF THE RECEIPTS FROM SUCH ACTIVITIES WAS IN EXCESS OF RS. L0 LAKHS THE ASSESSEE IS SQUARELY HIT BY THE AMENDED PROVISION OF SECTION 2(15 ) . HENCE IN THE ASSESS E E S C ASE THE ADVANCEMENT OF THE OBJECT OF GENERAL PUBLIC UTILI TY SHA LL NOT BE A CHARITABLE PURPOSE. SINCE THE OBJECT OF THE TRUST CANNO T BE REGARDE D ANY LONGER AS BEING FOR CHARITABLE PURPOSE I HOLD THE ACTIVITIES OF THE TRUST AS NOT BEING GENUINE. THEREFORE IN EXERCISE OF POWERS CONFERRED ON ME U/S. 12AA(3) OF I. T. ACT I HEREBY CANCEL THE REGISTRATION OF THE ASSESSEE GRANTED U/S. 12AA VIDE ORDER NO. ASSMNT./1955/8E/54/87 - 88/CT DATED 13.09.1988. AGGRIEVED ASSESSEE IS IN APPEAL BEFORE TRIBUNAL. 4. SHRI J. P. KHAITAN LD. SR. COUNSEL OF THE ASSESSEE TOOK US TO THE TRUST DEED AND DREW OUR ATTENTION TO AIMS AND OBJECTS OF CHARITABLE ACTIVITIES CARRIED OUT BY THE ASSESSEE. LD. COUNSEL STATED THAT IN LAST 3 7 YEARS THE ASSESSEE TRUST UNDER THE NAME OF THE SEAGULL FOUNDATION FOR THE ARTS HAS BEEN ACTIVELY SUPPORTIN G AND NURTURING THE ARTS IN INDIA SPECIALLY FINE ARTS THEATRE AND CINEMA OUT OF DEEP CONVICTION AND COMMITMENT TO THE BELIEF OF EVERYBODY THAT ARTS IS RESPONSIBILITY OF EVERY ONE. LD. COUNSEL FOR ASSESSEE STATED THAT OVER THESE YEARS CONTEMPORARY INDIAN ART BECAME POPULAR AND THEREFORE SALEABLE . THE A SSESSEE HA S BEEN SHOWCASING WHAT WERE ONCE UNSUNG ARTISTS AND PHOTOGRAPHERS AND DOCUMENTARY FILMMAKERS AND MUSICIANS AND DANCERS. HE STATED THAT OUT OF ABOVE ARTISTS SOME HAVE STARTED DONATING SOME OF THEIR PROCEEDS TO THE FOUNDATION BECAUSE THEY FEEL THAT THERE IS NEED TO CONTRIBUTE TO AN ORGANIZATION LIKE THIS THAT WORKED AND CONTINUES TO WORK CLOSELY WITH THE ISSUES OF EDUCATION AND VALUE SYSTEMS. LD. COUNSEL FOR THE ASSESSEE SHRI J. P. KHAITAN ADVOCATE STATED THAT THE VERY AIM AND OBJECT OF THE ASSESSEE TRUST I S CHARITABLE IN NATURE AND AN INSTITUTION THAT WORKS CLOSELY WITH THE STUDENTS IN THEIR SCHOOLS AND COLLEGES. ACCORDING TO HIM THE FINANCE IS MAINLY AVAILABLE FROM DONATIONS RECEIVED FROM THE FOUNDATION AND PORTION OF AVAILABLE FUNDS WAS RAISED THROUGH EX HIBITIONS OF PAINTING AND OTHER ART RELATED ACTIVITIES. LD. COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TO THE FINDINGS OF DIT(E) WHEREIN DIT(E) HAS CANCELLED THE REGISTRATION GRANTED U/S. 12A OF THE ACT TO THE ASSESSEE TRUST FOR THE REASON THAT THE ASSES SEE IS INVOLVED IN CONDUCTING OF ART EXHIBITION SALE OF PAINTINGS ETC. ACCORDING TO DIT(E) THIS ACT OF THE ASSESSEE TRUST ESTABLISHES THAT THE 4 ITA NO. 451/K/2012 SEAGULL FOUNDATION FOR THE ARTS AY 2009 - 10 ACTIVITIES OF THE ASSESSEE ARE IN THE NATURE OF COMMERCE OR BUSINESS AND THE AGGREGATE VALUE OF SUCH RECEIPT FR OM ACTIVITIES WAS IN EXCESS OF RS. 10 LACS AND HENCE ASSESSEE IS HIT BY THE AMENDED PROVISO OF SECTION 2(15) OF THE ACT. LD. COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TO THE SCHEDULE FORMING PART OF RECEIPTS AND PAYMENTS AND INCOME AND EXPENDITURE ACCO UNT FILED BY THE ASSESSEE IN ITS PAPER BOOK AT PAGE 44 WHEREIN OUT OF THE TOTAL INCOME A SUM OF RS.7 78 714/ - IS ON ACCOUNT OF ART AND PAINING EXHIBITION (NET). LD. COUNSEL FOR THE ASSESSEE STATED THAT THE DIT(E) HAS NO WHERE ESTABLISHED THAT THE AIMS AN D OBJECTS OF THE ASSESSEE TRUST ARE HIT BY THE NEWLY INSERTED PROVISO TO SECTION 2(15) OF THE ACT AS INSERTED BY THE FINANCE ACT 2008 W.E.F. 01.04.2009. ACCORDING TO LD. COUNSEL ONCE THE AIMS AND OBJECTS OF THE ASSESSEE TRUST ARE NOT UNDER DISPUTE THE REGISTRATION U/S. 12A CANNOT BE CANCELLED. L D. COUNSEL FOR THE ASSESSEE FURTHER ARGUED THAT THE DIT(E) HAS NOT DOUBTED ABOUT THE GENUINENESS OF THE TRUST. HE STATED THAT THIS TRUST IS BEING ASSESSED TO TAX SINCE ITS INCEPTION I.E. FROM AY 1988 - 89. ACCORDI NG TO LD. COUNSEL THE CANCELLATION OF REGISTRATION BY DIT(E) IS WITHOUT ANY BASIS AND AGAINST THE PROVISIONS OF LAW. HENCE HE REQUESTED THE BENCH TO QUASH THE ORDER OF DIT(E) AND RESTORE THE REGISTRATION GRANTED TO THE ASSESSEE TRUST U/S. 12A OF THE ACT . 5. ON THE OTHER HAND LD. CIT DR SHRI VARINDER MEHTA DREW OUR ATTENTION TO PAGE 46 OF ASSESSEE S PAPER BOOK WHEREIN THE SUMMARY OF ACCOUNT OF ART AND PAINTING EXHIBITION IS GIVEN. ACCORDING TO HIM THE ASSESSEE HAS EARNED INCOME FROM ART AND PAINTI NG EXHIBITION AT RS.2 71 66 698/ - AND INCURRED EXPENDITURE TO THE TUNE OF RS.2 63 87 984/ - AND EARNED NET INCOME OF RS.7 78 714/ - FROM THIS ACTIVITY. LD. COUNSEL FOR THE ASSESSEE STATED THAT THE MAJOR ECONOMIC ACTIVITY OF THE ASSESSEE IS THAT OF SALE FROM ART AND PAINTING IN EXHIBITION AND THIS TANTAMOUNT TO ASSESSEE INVOLVES IN CARRYING OF AN ACTIVITY IN THE NATURE OF TRADE COMMERCE BUSINESS OR ANY ACTIVITIES OF RENDERING ANY SERVICES IN RELATION TO ANY TRADE COMMERCE OR BUSINESS FOR FEE OR ANY OTHE R CONSIDERATION . SHRI METHA ARGUED THAT IRRESPECTIVE OF THE NATURE OF USE OR APPLICATION OR RETENTION OF THE INCOME FROM SUCH ACTIVITY AS MENTIONED IN PROVISO TO SECTION 2(15) OF THE ACT AS INSERTED BY FINANCE ACT 2008 W.E.F. 01.04.2009 THE ASSESSEE S MA JOR SALES AT RS.2 71 66 698/ - PERTAINS TO SALE OF ART AND PAINTING IN EXHIBITIONS WHICH IS NOTHING BUT IN THE NATURE OF TRADE COMMERCE OR BUSINESS OR THE ACTIVITY OF RENDERING ANY SERVICE IN RELATION TO ANY TRADE COMMERCE OR BUSINESS. ACCORDING TO HIM THE ASSESSEE S CASE SQUARELY FALLS UNDER THE PROVISO TO SECTION 2(15) OF THE ACT AND DIT(E) HAS RIGHTLY CANCELLED THE SAME. ACCORDINGLY HE SUPPORTED THE ORDER OF DIT(E). 5 ITA NO. 451/K/2012 SEAGULL FOUNDATION FOR THE ARTS AY 2009 - 10 6 . WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. FIRST OF ALL WE HAVE GONE THROUGH AIMS AND OBJECTS OF TRUST WHETHER THE SAME ARE IN NATURE OF PUBLIC CHARITABLE AS MENTIONED IN CLAUSE 2 OF THE TRUST DEED WHICH READS AS UNDER: 2. THE TRUSTEES ARE HOLDING AND SHALL HOLD AND APPLY THE TRUST ESTATE FOR AND UPON THE PUBLIC CHARITABLE AND/OR OBJECTS SPECIFIED HEREUNDER: 1. TO IDENTIFY AND PRESENT TO THE PUBLIC SIGNIFICANT EXAMPLES ARTISTIC WORK OF A HIGH ORDER LITERARY VISUAL PERFORMATIVE. 2. TO PROMOTE SUPPORT AND SPONSOR MOVEMENTS CAMPAIGNS I MPORTANT TRENDS IN DIFFERENT FIELDS OF THE ARTS AND PARTICULARLY IN DIFFERENT REGIONS IN INDIA THROUGH FESTIVALS EXHIBITIONS SUPPORTIVE PUBLICATIONS ETC. 3. TO PARTICIPATE IN FESTIVALS FAIRS SEMINARS EXHIBITIONS ETC. PROJECTING THE ARTS IN INDIA AND O UTSIDE THE COUNTRY. 4. TO COLLECT AND HOLD AND EXHIBIT AND DISTRIBUTE WORKS OF ART IN INDIA AND ABROAD. 5. TO PROMOTE SUPPORT AND SPONSOR THE PUBLICATION OF BOOKS AUDIO AND VIDEO CASSETTES ALBUMS PERIODICALS CARDS PRINTS AND REPRODUCTIONS POSTERS ETC. R EPRESENTATIVE OF THE BEST ARTISTIC EXPRESSIONS IN INDIA AND ANYWHERE IN THE WORLD. 6. TO PROMOTE AND MARKET PUBLICATIONS IN THE ARTS AS SPECIFIED ABOVE. 7. TO OFFER FELLOWSHIPS AND SUPPORTIVE GRANTS TO DESERVING INDIVIDUALS ARTISTS OR ORGANIZATIONS AND HELP THEM TO RAISE FUNDS FOR THIS WORK. 8. TO SET UP IN CALCUTTA PERMANENT HOUSE OF CULTURE AS ACCOMPOSITE CENTRE FOR EXHIBITIONS PERFORMANCES SALES OF BOOKS AND WORKS AND OBJECTS OF ART ETC. FROM THE ABOVE AIMS AND OBJECTS WE FIND THAT THE ASSESSEE IS MAINL Y CARRYING OUT THE FOLLOWING ACTIVITIES: A) WORKING ACTIVELY WITH SCHOOLS TO STRENGTHEN VALUES OF MUTUAL CO - EXISTENCE AND RESPECT FOR ALL COMMUNITIES. B) WORKSHOPS USING FILM/DRAMA TECHNIQUES/PHOTOGRAPHY WITH UNDER PRIVILEGED STREET CHILDREN TO BRING ABOUT SOC IAL CHANGE. C) D O THIS THROUGH THE ARTS BY ORGANIZING AND IMPLEMENTING A SERIES OF EVENTS AND WORKSHOPS FILM SCREENINGS FOLLOWED BY GROUP DISCUSSIONS DRAMATIC PERFORMANCES CREATIVE WRITING AND MORE. THE IDEA IS TO BROADEN AND EXTEND THE SCOPE OF THE CU RRENT CAREER ORIENTED EDUCATION SYSTEM THROUGH THE ARTS. D) THE CORE IDEA BEHIND ALL THAT IS THAT A CHANGE IN OUR VALUE SYSTEMS HAS TO START WITH THE YOUNG AND THAT IT HAS TO BE AN ONGOING LIFE LONG INITIATIVE. E) PUT UP WORKSHOPS AND EVENTS AND EXHIBITIONS OF YOUNG UNKNOWN PAINTERS AND PHOTOGRAPHERS AND PERFORMERS IN A PARTICULAR POINT IN THEIR LIVES WHEN THEY NEED SUPPORT AND NURTURING. 7. FROM THE VARIOUS OBJECTS OF THE FOUNDATION NOW WE HAVE TO EXAMINE THE PROVISIONS OF SECTION 12AA(1) AND 12AA(3) OF THE ACT AS WELL AS THE FIRST PROVISO TO SECTION 2(15) OF THE ACT . THE REGISTRATION GRANTED ORIGINALLY TO THE FOUNDATION IN 1988 CLEARLY POINTED OUT THE SATISFACTION OF THE DIT(E) THAT THE ASSESSEE WAS PUBLIC CHARITABLE TRUST UNDER SECTION 12AA OF THE ACT . REFERRING TO SECTION 12AA(3) OF THE ACT WE ARE OF THE VIEW THAT CANCELLATION OF 6 ITA NO. 451/K/2012 SEAGULL FOUNDATION FOR THE ARTS AY 2009 - 10 REGISTRATION GRANTED IS POSSIBLE ONLY UNDER THE STATED CIRCUMSTANCES VIZ. ON THE DIT(E) RECORDING HIS SATISFACTION THAT THE ACTIVITIES OF THE TRUST ARE NOT GENUINE OR AR E NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST OR INSTITUTION ; THUS UNLESS AND UNTIL THE SHOW - CAUSE NOTICE ISSUED CONTAINED THE GROUNDS AND MATERIALS AS PRESCRIBED UNDER SECTION 12AA(3) OF THE ACT THE QUESTION OF CANCELLATION OF RE GISTRATION PER SE DOES NOT ARISE. WE FIND THAT THE A SSESSEE FOUNDATION WAS GRANTED REGISTRATION UNDER SECTI ON 12AA OF THE ACT ONLY ON THE DIT(E) SATISFYING HIMSELF ON THE OBJECTS OF THE TRUST AND THE GENUINENESS OF THE ACTIVITIES. THE NATURE OF ACTIVITY C ARRIED ON BY ASSESSEE CONTINUES TO BE THE SAME WITHOUT ANY CHANGE TILL THIS DATE AND IF ANY OF THE ACTIVITIES CARRIED ON BY THE ASSESSEE RESULTED IN AN INCOME NOT INCIDENTAL AND NOT CONNECTED WITH THE MAIN ACTIVITY OR MAIN OBJECT OF THE TRUST IT WOULD BE A MATTER FOR ASSESSMENT. THUS WHAT HAS TO BE A SUBJECT MATTER FOR ASSESSMENT THE SAME CANNOT BE CONSIDERED AS A GROUND FOR CANCELLING THE REGISTRATION UNDER SECTION 1 2AA(3)OF THE ACT. WE HAVE GONE THROUGH CIRCULAR NO. 11 OF 2008 ISSUED BY CBDT DATED 1 9 .12.2008 [2009] 308 ITR (ST.) 5 TO EXPLAIN THE INSERTION OF A PROVISO TO SECTION 2(15) OF THE ACT LEARNED SENIOR COUNSEL EXPLAINED THAT AS IS EVIDENT FROM THE READING OF THE CIRCULAR THE QUESTION OF REJECTION OF REGISTRATION UNDER SECTION 12AA(3) WOUL D ARISE ONLY IN THOSE CASES WHERE AN ENTITY USES THIS STATUS OF CHARITABLE INSTITUTION WITH A CHARITABLE OBJECT OF GENERAL PUBLIC UTILITY AS A MASK OR A DEVICE TO HIDE THE TRUE PURPOSE AND THAT OBJECT IS NOTHING OTHER THAN TRADE COMMERCE OR BUSINESS OR THE RENDERING OF ANY SERVICE IN RELATION TO TRADE COMMERCE OR BUSINESS ; AS FAR AS THE PRESENT CASE IS CONCERNED THE REVENUE HAS NOT SUBSTANTIATED WITH ANY MATERIAL TO SHOW THE ABSENCE OF THE GENUINENESS ; ALL THAT THE REVENUE ALLEGES IS THAT BY COND UCT ING SALE OF PAINTING OR EXHIBITION OF PAINTINGS IT HAS EXHIBITED A SENSE OF BUSINESS OR COMMERCIAL CHARACTER. THIS ACCORDING TO THE ASSESSEE IS NOT A GOOD GROUND FOR CANCELLING THE REGISTRATION UNDER SECTION 12AA OF THE ACT. ACCORDINGLY G OING BY TH E TENOR OF THE LANGUAGE IN SECTION 12AA(3) AND SECTION 12AA(1) OF THE ACT THE CANCELLATION OF THE REGISTRATION UNDER SECTION 12AA OF THE ACT IS WITHOUT ANY SUBSTANCE. 8. BEFORE US LD. SENIOR COUNSEL RELIED ON THE DECISION OF HON BLE MADRAS HIGH COURT IN THE CASE OF TAMIL NADU CRICKET ASSOCIATION V DIT(E)(2014) 360ITR6 33(MAD) WHEREIN RATIO LAY DOWN BY HON BLE HIGH COURT IS EXACTLY APPLICABLE TO THE FACTS OF THE CASE IN HAND BEFORE US. HON BLE HIGH COURT HAS CONSIDERED THE FACTS A ND HELD AS UNDER: HEARD LEARNED SENIOR COUNSEL APPEARING FOR THE ASSESSEE AND LEARNED STANDING COUNSEL APPEARING FOR THE REVENUE AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE HAD ALREADY EXTRACTED IN THE PRECEDING PARAGRAPH THE OBJECTS OF THE ASSOCIATION. GOING BY THE OBJECTS WE FIND THAT THE TRUST FALLS UNDER THE HEAD OF 'ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY' AND HENCE FALLS WITHIN THE MEANING OF CHARITABLE PURP OSE UNDER 7 ITA NO. 451/K/2012 SEAGULL FOUNDATION FOR THE ARTS AY 2009 - 10 SECTION 2(15) OF THE ACT. SECTION 2(15) OF THE ACT DEFINES 'CHARITABLE PURPOSE' AS IT ORIGINALLY STOOD AT THE TIME OF GRANT OF REGISTRATION AS UNDER : ' 'CHARITABLE PURPOSE' INCLUDES RELIEF OF THE POOR EDUCATION MEDICAL RELIEF AND THE ADVANC EMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY.' SECTION 2(15) WAS AMENDED UNDER THE FINANCE ACT 2008 WITH EFFECT FROM APRIL 1 2009 BY SUBSTITUTING THE FOLLOWING PROVISION WHICH READS AS UNDER: '2. DEFINITIONS. - . . . (15) 'CHARITABLE PURPOSE' INCLUDES RELIEF OF THE POOR EDUCATION MEDICAL RELIEF PRESERVATION OF ENVIRONMENT (INCLUDING WATERSHEDS FORESTS AND WILDLIFE) AND PRESERVATION OF MONUMENTS OR PLACES OR OBJECTS OF ARTISTIC OR HISTORIC INTEREST AND THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY : PROVIDED THAT THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY SHALL NOT BE A CHARITABLE PURPOSE IF IT INVOLVES THE CARRYING ON OF ANY ACTIVITY IN THE NATURE OF TRADE COMMERCE OR BUSINESS OR ANY ACTIVITY OF R ENDERING ANY SERVICE IN RELATION TO ANY TRADE COMMERCE OR BUSINESS FOR A CESS OR FEE OR ANY OTHER CONSIDERATION IRRESPECTIVE OF THE NATURE OF USE OR APPLICATION OR RETENTION OF THE INCOME FROM SUCH ACTIVITY ;' SECTION 2(15) AS IT STOOD PRIOR TO 1 983 DEFINED 'CHARITABLE PURPOSE' TO INCLUDE RELIEF OF THE POOR EDUCATION MEDICAL RELIEF AND THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY NOT INVOLVING THE CARRYING ON OF ANY ACTIVITY FOR PROFIT. THE PHRASE 'NOT INVOLVING THE CARRYIN G ON OF ANY ACTIVITY FOR PROFIT' WAS OMITTED FROM THE SECTION BY THE FINANCE ACT 1983 WITH EFFECT FROM APRIL 1 1984 CONSEQUENT ON THE AMENDMENT TO SECTION 11 WHEREUNDER PROFITS AND GAINS OF BUSINESS IN THE CASE OF CHARITABLE OR RELIGIOUS TRUST AND INS TITUTIONS WOULD NOT BE E NTITLED TO EXEMPTION UNDER THAT SECTION EXCEPT IN CASES WHERE THE BUSINESS FULFILLED THE CONDITIONS UNDER SECTION 11(4). THE SECTION WAS ONCE AGAIN AMENDED BY SUBSTITUTION IN THE YEAR 2008 UNDER THE FINANCE ACT 2008 WITH EFFECT F ROM APRIL 1 2009 STREAMLINING THE DEFINITION OF 'CHARITABLE PURPOSE' CONSIDERING THE FACT THAT TAKING ADVANTAGE OF THE PHRASE 'ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY' A NUMBER OF ENTITIES OPERATING ON COMMERCIAL LINES CLAIMED EXEM PTION ON THEIR INCOME EITHER UNDER SECTION 10(23C) OR UNDER SECTION 11 OF THE ACT. THUS TO LIMIT THE SCOPE OF THIS EXPRESSION THE SECTION WAS AMENDED IN THE YEAR 2008 THAT THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY SHALL NOT BE A CHA RITABLE PURPOSE IF THE OBJECT INVOLVED THE CARRYING ON OF ANY ACTIVITY IN THE NATURE OF TRADE COMMERCE OR BUSINESS OR ANY ACTIVITY OF RENDERING ANY SERVICE IN RELATION TO ANY TRADE COMMERCE OR BUSINESS FOR A CESS OR FEE OR ANY OTHER CONSIDERATION IRRESPECTIVE OF THE NATURE OF USE OR APPLICATION OR RETENTION OF THE INCOME FROM SUCH ACTIVITY. THOUGH THE SECTION AS IT STOOD PRIOR TO THE SUBSTITUTION IN 2008 CONTAINED NO PROVISION AS IN THE PROVISO UNDER THE 2008 AMENDMENT YET THE SUPREME COURT HELD THAT IF THE PRIMARY OR DOMINANT PURPOSE OF A TRUST OR INSTITUTION IS CHARITABLE ANOTHER OBJECT WHICH BY ITSELF MAY NOT BE CHARITABLE BUT WHICH IS MERELY ANCILLARY OR INCIDENTAL TO THE PRIMARY OR DOMINANT PURPOSE WOULD NOT PREVENT THE TRUST OR INST ITUTION FROM BEING A VALID CHARITY VIDE CIT V. ANDHRA CHAMBER OF COMMERCE [1965] 55 ITR 722 (SC) (REFERRED TO IN THE DECISION REPORTED IN ADDL. CIT V. SURAT ART SILK CLOTH MANUFACTURERS ASSOCIATION [1980] 121 ITR 1 (SC)). THUS IF THE DOMINANT OBJECT O R THE PRIMARY OBJECT WAS CHARITABLE THE SUBSIDIARY OBJECT FOR THE PURPOSE OF SECURING THE FULFILMENT OF THE DOMINANT OBJECT WOULD NOT MILITATE AGAINST ITS CHARITABLE CHARACTER AND THE PURPOSE WOULD NOT BE ANY THE LESS CHARITABLE. THE AMENDMENT IN THE Y EAR 2008 MADE A DRASTIC AMENDMENT TO DENY THE STATUS OF A CHARITABLE PURPOSE TO AN INSTITUTION WITH THE OBJECT OF GENERAL PUBLIC UTILITY HAVING ANY ACTIVITY IN THE NATURE OF TRADE COMMERCE OR BUSINESS OR ANY ACTIVITY OF RENDERING ANY SERVICE IN RELATION TO ANY TRADE COMMERCE OR BUSINESS FOR A CESS OR FEE OR ANY OTHER CONSIDERATION. 8 ITA NO. 451/K/2012 SEAGULL FOUNDATION FOR THE ARTS AY 2009 - 10 THE PROVISO TO SECTION 2(15) OF THE INCOME - TAX ACT STATES THAT IF THE OBJECTS INVOLVE THE CARRYING ON ANY ACTIVITY IN THE NATURE OF TRADE COMMERCE OR BUSINESS FOR A CESS OR FEE OR ANY OTHER CONSIDERATION IRRESPECTIVE OF THE NATURE OF USE OR APPLICATION OR RETENTION OF THE INCOME FROM SUCH ACTIVITY THE STATUS OF THE INSTITUTION WILL NOT BE ONE FOR 'CHARITABLE PURPOSE'. THE CENTRAL BOARD OF DIRECT TAXES IN PARAGRAPH 3. 2 POINTED OUT TO THE SCOPE OF THE CIRCULAR AS UNDER (SEE [2009] 308 ITR (ST.) 5 7 ) : 'IN SUCH A CASE THE OBJECT OF 'GENERAL PUBLIC UTILITY' WILL BE ONLY A MASK OR A DEVICE TO HIDE THE TRUE PURPOSE WHICH IS TRADE COMMERCE OR BUSINESS OR THE RENDERING OF ANY SERVICE IN RELATION TO TRADE COMMERCE OR BUSINESS. EACH CASE WOULD THEREFORE BE DECIDED ON ITS OWN FACTS AND NO GENERALIZATION IS POSSIBLE. THE ASSESSEES WHO CLAIM THAT THEIR OBJECT IS 'CHARITABLE PURPOSE' WITHIN THE MEANING OF SECTION 2(15) WO ULD BE WELL ADVISED TO ESCHEW ANY ACTIVITY WHICH IS IN THE NATURE OF TRADE COMMERCE OR BUSINESS OR THE RENDERING OF ANY SERVICE IN RELATION TO ANY TRADE COMMERCE OR BUSINESS.' THUS THE ANXIETY OF PARLIAMENT IN INTRODUCING THE PROVISO TO SECTION 2(15) OF THE ACT IS ONLY TO CHECK THOSE INSTITUTIONS WHICH ATTEMPT TO GAIN EXEMPTION UNDER THE CLOAK OF A TRUST. SECTION 11 OF THE ACT STATES THAT INCOME FROM PROPERTY HELD FOR RELIGIOUS OR CHARITABLE PURPOSES SHALL NOT BE INCLUDED IN THE TOTAL INCOME OF THE PREVIOUS YEAR. SECTION 12 DEALS WITH INCOME OF TRUSTS OR INSTITUTIONS FROM CONTRIBUTIONS. SECTION 12A DEALS WITH MAKING APPLICATION FOR REGISTRATION OF THE TRUST/ASSOCIATION SO THAT THE SAID INSTITUTION WILL HAVE THE BENEFIT OF EXEMPTION UNDER SECTION 11 AND SECTION 12 OF THE ACT. SECTION 12AA OF THE ACT PRESCRIBES PROCEDURE FOR REGISTRATION. AS PER THIS ON RECEIPT OF THE APPLICATION FOR REGISTRATION THE COMMISSIONER IS TO CALL FOR SUCH DOCUMENTS OR INFORMATION FROM THE TRUST OR INSTITUTION IN ORDER TO SATISFY HIMSELF ABOUT THE GENUINENESS OF ACTIVITIES OF THE TRUST OR INSTITUTION. THE SECTION FURTHER EMPOWERS THE COMMISSIONER TO MAKE SUCH ENQUIRY AS HE DEEMS NECESSARY IN THIS REGARD. ONCE THE COMMISSIONER IS SATISFIED HIMSELF ABOUT THE OBJECTS OF THE TRUST OR INSTITUTION AND THE GENUINENESS OF THE ACTIVITIES OF THE TRUST HE HAS TO PASS AN ORDER IN WRITING REGISTERING THE TRUST OR INSTITUTION ; IF HE IS NOT SO SATISFIED HE HAS TO PASS AN ORDER IN WRITING REFUSING TO REGISTER THE TRUST OR INSTITUTIO N. SECTION 12AA(3) OF THE ACT INSERTED WITH EFFECT FROM OCTOBER 1 2004 UNDER THE FINANCE (NO. 2) ACT 2004 AND THE AMENDMENT INSERTED BY THE FINANCE ACT 2010 WITH EFFECT FROM JUNE 1 2010 THEREIN EMPOWERING THE COMMISSIONER TO CANCEL THE REGISTRA TION GRANTED UNDER THE STATED CIRCUMSTANCES READS AS UNDER : PROVISION INSERTED UNDER THE FINANCE ACT 2004: '12AA. (3) WHERE A TRUST OR AN INSTITUTION HAS BEEN GRANTED REGISTRATION UNDER CLAUSE (B) OF SUB - SECTION (1) AND SUBSEQUENTLY THE COMMISSIONER I S SATISFIED THAT THE ACTIVITIES OF SUCH TRUST OR INSTITUTION ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST OR INSTITUTION AS THE CASE MAY BE HE SHALL PASS AN ORDER IN WRITING CANCELLING THE REGISTRATION OF SUCH TRUST OR INSTITUTION: PROVIDED THAT NO ORDER UNDER THIS SUB - SECTION SHALL BE PASSED UNLESS SUCH TRUST OR INSTITUTION HAS BEEN GIVEN A REASONABLE OPPORTUNITY OF BEING HEARD.' 9 ITA NO. 451/K/2012 SEAGULL FOUNDATION FOR THE ARTS AY 2009 - 10 AFTER THE AMENDMENT IN THE YEAR 2010 SECTION 12AA(3) OF THE INCOME TAX ACT REA DS AS FOLLOWS : '12AA. (3) WHERE A TRUST OR AN INSTITUTION HAS BEEN GRANTED REGISTRATION UNDER CLAUSE (B) OF SUB - SECTION (1) OR HAS OBTAINED REGISTRATION AT ANY TIME UNDER SECTION 12A AS IT STOOD BEFORE ITS AMENDMENT BY THE FINANCE (NO. 2) ACT 1996 (33 OF 1996) AND SUBSEQUENTLY THE COMMISSIONER IS SATISFIED THAT THE ACTIVITIES OF SUCH TRUST OR INSTITUTION ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST OR INSTITUTION AS THE CASE MAY BE HE SHALL PASS AN ORDER IN WRITING CANCELLING THE REGISTRATION OF SUCH TRUST OR INSTITUTION : PROVIDED THAT NO ORDER UNDER THIS SUB - SECTION SHALL BE PASSED UNLESS SUCH TRUST OR INSTITUTION HAS BEEN GIVEN A REASONABLE OPPORTUNITY OF BEING HEARD.' THUS IN CONTRAST TO SECTION 1 2AA(1)(B) OF THE INCOME - TAX ACT 1961 WHERE THE GRANT OF REGISTRATION REQUIRES SATISFACTION ABOUT THE OBJECTS OF THE TRUST AS WELL AS THE GENUINENESS OF THE ACTIVITIES FOR THE CANCELLATION OF THE REGISTRATION UNDER SECTION 12AA(3) ALL THAT IT IS INSI STED UPON IS THE SATISFACTION AS TO WHETHER THE ACTIVITIES OF THE TRUST OR INSTITUTION ARE GENUINE OR NOT AND WHETHER THE ACTIVITIES ARE BEING CARRIED ON IN ACCORDANCE WITH THE OBJECTS OF THE TRUST. THUS EVEN IF THE TRUST IS A GENUINE ONE I.E. THE OBJ ECTS ARE GENUINE IF THE ACTIVITIES ARE NOT GENUINE AND THE SAME NOT BEING CARRIED ON IN ACCORDANCE WITH THE OBJECTS OF THE TRUST THIS WILL OFFER A GOOD GROUND FOR CANCELLATION. THUS IN EVERY CASE GRANT OF REGISTRATION AS WELL AS CANCELLATION OF REGI STRATION RESTS ON THE SATISFACTION OF THE COMMISSIONER ON FINDINGS GIVEN ON THE PARAMETERS GIVEN IN SECTION 12AA(1) AND SECTION 12AA(3) OF THE ACT AS THE CASE MAY BE. REGISTRATION OF THE TRUST UNDER THE ACT CONFERS CERTAIN BENEFITS FROM TAXATION UNDER THE PROVISIONS OF THE ACT. THE CONDITIONS UNDER WHICH THE INCOME OF THE TRUST WOULD BE EXEMPTED UNDER THE PROVISIONS OF THE ACT ARE CLEARLY LAID DOWN UNDER SECTION 11 AS WELL AS IN SECTION 12 OF THE ACT. SECTION 11 OF THE ACT SPECIFICALLY POINTS OUT THE CIRCUMSTANCES UNDER WHICH INCOME OF THE TRUST IS NOT TO BE INCLUDED IN THE TOTAL INCOME OF THE PREVIOUS YEAR OF THE PERSON. SO TOO SECTION 12 OF THE ACT ON THE INCOME DERIVED FROM PROPERTY HELD FOR CHARITABLE OR RELIGIOUS PURPOSES. THUS WHEN THE ASSE SSEE IS IN RECEIPT OF INCOME FROM ACTIVITIES WHICH FITS IN WITH SECTIONS 11 AND 12 OF THE ACT AS WELL AS FROM SOURCES WHICH DO NOT FALL STRICTLY WITH THE OBJECTS OF THE TRUST WOULD NOT GO FOR CANCELLATION OF REGISTRATION UNDER SECTION 12AA OF THE ACT ON THE SOLE GROUND THAT THE ASSESSEE IS IN RECEIPT OF INCOME WHICH DOES NOT QUALIFY FOR EXEMPTION STRAIGHTAWAY BY ITSELF. ALL THAT ULTIMATELY WOULD ARISE IN SUCH CASES IS THE QUESTION OF CONSIDERING WHETHER SECTION 11 OF THE ACT WOULD AT ALL APPLY TO E XEMPT THESE INCOME FROM LIABILITY. THESE ARE MATTERS OF ASSESSMENT AND HAS NOTHING TO DO WITH THE GENUINENESS OF THE ACTIVITY OR THE ACTIVITIES NOT IN CONFORMITY WITH THE OBJECTS OF THE TRUST. AS RIGHTLY POINTED OUT BY LEARNED SENIOR COUNSEL APPEARING FO R THE ASSESSEE AS IS EVIDENT FROM THE READING OF CIRCULAR NO. 11 OF 2008 DATED DECEMBER 19 2008 THE OBJECT OF THE INSERTION OF FIRST PROVISO TO SECTION 2(15) OF THE ACT WAS ONLY TO CURTAIL INSTITUTION WHICH UNDER THE GARB OF 'GENERAL PUBLIC UTILITY ' CARRY ON BUSINESS OR COMMERCIAL ACTIVITY ONLY TO ESCAPE THE LIABILITY UNDER THE ACT THEREBY GAIN UNMERITED EXEMPTION UNDER SECTION 11 OF THE ACT. IN THE DECISION REPORTED IN SINHAGAD TECHNICAL EDUCATION SOCIETY V. CIT [2012] 343 ITR 23 (BOM) THE BOM BAY HIGH COURT HELD AS FOLLOWS (PAGE 26) : 'AS A RESULT OF THE AMENDMENT WHICH HAS BEEN BROUGHT ABOUT BY THE FINANCE ACT OF 2010 SUB - SECTION (3) OF SECTION 12AA HAS BEEN AMENDED SPECIFICALLY TO EMPOWER THE COMMISSIONER TO CANCEL A REGISTRATION OBTAINED UNDER SECTION 10 ITA NO. 451/K/2012 SEAGULL FOUNDATION FOR THE ARTS AY 2009 - 10 12A AS IT STOOD PRIOR TO IT S AMENDMENT BY THE FINANCE (NO. 2) ACT 1996. SUB - SECTION (3) WAS INSERTED INTO THE PROVISIONS OF SECTION 12AA BY THE FINANCE (NO. 2) ACT 2004 WITH EFFECT FROM OCTOBER 1 2004. AS IT ORIGINALLY STOOD UNDER SUBSECTION (3) A POWER TO CANCEL REGISTRATIO N WAS CONFERRED UPON THE COMMISSIONER WHERE A TRUST OR AN INSTITUTION HAD BEEN GRANTED REGISTRATION UNDER CLAUSE (B) OF SUB - SECTION (1) OF SECTION 12AA. THE COMMISSIONER AFTER SATISFYING HIMSELF THAT THE OBJECTS OF THE TRUST OR AN INSTITUTION ARE NOT GEN UINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST OR INSTITUTION AS THE CASE MAY BE WAS VESTED WITH THE POWER TO PASS AN ORDER IN WRITING CANCELLING THE REGISTRATION OF SUCH TRUST OR INSTITUTION. BY THE FINANCE ACT OF 2010 SUB - SECTION (3) WAS AMENDED SO AS TO EMPOWER THE COMMISSIONER TO CANCEL THE REGISTRATION OF A TRUST OR AN INSTITUTION WHICH HAS OBTAINED REGISTRATION AT ANY TIME UNDER SECTION 12A (AS IT STOOD BEFORE ITS AMENDMENT BY THE FINANCE (NO. 2) ACT 1996). AS A RESULT OF THE AMENDMENT A REGULATORY FRAMEWORK IS NOW SOUGHT TO BE PUT IN PLACE SO AS TO COVER ALSO A TRUST OR AN INSTITUTION WHICH HAS OBTAINED REGISTRATION UNDER SECTION 12A AS IT STOOD PRIOR TO ITS AMENDMENT IN 1996. . . POWER UNDER SECTION 12AA( 3) CAN BE EXERCISED BY THE COMMISSIONER IN RESPECT OF A TRUST REGISTERED PRIOR TO JUNE 1 2010. THE MERE FACT THAT A PART OF THE REQUISITES FOR THE ACTION UNDER SECTION 12AA(3) IS DRAWN FROM A TIME PRIOR TO ITS PASSING NAMELY REGISTRATION AS A CHARITABLE TRUST UNDER SECTION 12A PRIOR TO 2010 WOULD NOT MAKE THE AMENDMENT RETROSPECTIVE IN OPERATION. THE AMENDMENT DOES NOT TAKE AWAY ANY VESTED RIGHT NOR DOES IT CREATE NEW OBLIGATIONS IN RESPECT OF PAST ACTIONS.' AS ALREADY POINTED OUT EARLIER THE QUESTION AS TO WHETHER THE PARTICULAR INCOME OF A TRUST IS ELIGIBLE FOR EXEMPTION UNDER SECTION 12 OF THE ACT IS A MATTER OF ASSESSMENT AND THIS COURT HAD POINTED OUT IN THE DECISION REPORTED IN THE CASE OF CIT V. SARVODAYA ILAKKIYA PANNAI [2012] 343 ITR 300 ( MAD) AS UNDER (PAGE 302) : 'IN ORDER TO AVAIL OF THE BENEFIT OF EXEMPTION UNDER SECTION 11 OF THE INCOME - TAX ACT 1961 A TRUST CAN MAKE AN APPLICATION TO THE COMMISSIONER FOR REGISTRATION UNDER SECTION 12A OF THE INCOME - TAX ACT 1961. ON RECEIPT OF T HE SAID APPLICATION FOR REGISTRATION OF A TRUST OR INSTITUTION THE COMMISSIONER SHOULD SATISFY HIMSELF ABOUT THE GENUINENESS OF THE ACTIVITIES OF THE TRUST OR INSTITUTION. IN ORDER TO SATISFY HIMSELF THE COMMISSIONER MAY ALSO MAKE SUCH ENQUIRY AS HE MAY DEEM NECESSARY IN THAT BEHALF. IN THE EVENT THE COMMISSIONER SATISFIES HIMSELF THAT THE TRUST IS ENTITLED TO REGISTRATION KEEPING IN MIND THE OBJECTS SHALL GRANT REGISTRATION IN WRITING IN TERMS OF SECTION 12AA(1)(B)(I) OF THE INCOME - TAX ACT 1961. IN THE EVENT THE COMMISSIONER IS NOT SATISFIED HE SHALL REFUSE SUCH REGISTRATION IN TERMS OF SECTION 12AA(1)(B)(II) OF THE INCOME - TAX ACT 1961. ONCE SUCH A SATISFACTION IS ARRIVED AT BY THE COMMISSIONER TO GRANT SUCH REGISTRATION CANNOT BE CANCELLED BY FOL LOWING THE VERY SAME PROVISION OF SECTION 12AA(B)(I) OF THE INCOME - TAX ACT 1961 TO GO INTO THE GENUINENESS OF THE ACTIVITIES OF THE TRUST. HOWEVER THE COMMISSIONER IS EMPOWERED TO REVOKE THE CERTIFICATE IN TERMS OF SECTION 12AA(3) OF THE INCOME - TAX AC T 1961. AS PER THE SAID PROVISION IN THE EVENT THE COMMISSIONER IS SATISFIED SUBSEQUENTLY I.E. AFTER REGISTRATION THAT THE ACTIVITIES OF SUCH TRUST OR INSTITUTION ARE NOT GENUINE OR NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST OR THE INSTITUTION AS THE CASE MAY BE HE SHALL PASS AN ORDER IN WRITING CANCELLING THE REGISTRATION OF SUCH TRUST OR INSTITUTION.' AFTER THE GRANT OF REGISTRATION IF THE COMMISSIONER IS SATISFIED SUBSEQUENTLY THAT THE ACTIVITIES OF THE INSTITUTION ARE NOT GENUINE OR THEY ARE NOT CARRIED ON IN ACCORDANCE WITH 11 ITA NO. 451/K/2012 SEAGULL FOUNDATION FOR THE ARTS AY 2009 - 10 THE TRUST/INSTITUTION HE COULD PASS AN ORDER IN WRITING CANCELLING THE REGISTRATION OF SUCH TRUST OR INSTITUTION. REFERRING TO SECTION 11 AND SECTION 12A OF THE ACT THIS COURT POINTED OUT THAT THE ACT OF GRANTING REGISTRATION UNDER SECTION 12AA(1) ITSELF IS A RESULT OF A SATISFACTION RECORDED BY THE COMMISSIONER AS REGARDS THE GENUINENESS OF THE OBJECTS OF THE TRUST AS WELL AS THE ACTIVITIES OF THE TRUST AND ONCE A SATISFACTION IS ARRIVED AT BY THE COMMISSIONER THE CANCELLATION COULD ONLY BE IN TERMS OF SECTION 12AA(3) OF THE INCOME - TAX ACT 1961. THIS COURT POINTED OUT THAT THE CANCELLATION MADE IN THE CASE OF THE ASSESSEE THEREIN WAS NOT ON THE GROUND THAT THE ACTIVITIES WERE NOT GENUIN E BUT THE ACTIVITIES OF THE TRUST IN PUBLICATION AND SALE AND SPREAD OF SARVODAYA LITERATURE AND GANDHIAN IDEOLOGIES WAS NOT THE OBJECTS OF THE TRUST. THIS COURT POINTED OUT THAT THE CANCELLATION WAS MADE NOT ON THE GROUND THAT THE ACTIVITIES OF THE TR UST WERE NOT GENUINE BUT THE ACTIVITIES OF THE TRUST WERE NOT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST ; WHEN THE TRUST WAS REGISTERED WITH DEFINITE OBJECTS CARRYING ON SUCH ACTIVITIES WOULD BE IN TERMS OF THE OBJECTS FOR WHICH REGISTRATION WAS GRAN TED. REFERRING TO SECTION 12AA OF THE INCOME - TAX ACT 1961 THIS COURT HAS HELD AS UNDER (PAGE 304 OF 343 ITR) : 'UNDER SECTION 12AA THE COMMISSIONER IS EMPOWERED TO GRANT OR REFUSE THE REGISTRATION AND AFTER GRANTING REGISTRATION WOULD BE EMPOWERED TO CANCEL AND THAT TOO ONLY ON TWO CONDITIONS LAID DOWN UNDER SECTION 12AA(3) OF THE INCOME - TAX ACT 1961. WHETHER THE INCOME DERIVED FROM SUCH TRANSACTION WOULD BE ASSESSED FOR TAX AND ALSO WHETHER THE TRUST WOULD BE ENTITLED TO EXEMPTION UNDER SECTION 11 ARE ENTIRELY THE MATTERS LEFT TO THE ASSESSING OFFICER TO DECIDE AS TO WHETHER IT SHOULD BE ASSESSED OR EXEMPTED.' IN THE LIGHT OF THE LAW DECLARED BY THIS COURT IN THE ABOVESAID DECISION WE DO NOT FIND THAT THE SCOPE OF SECTION 12AA(3) OF THE ACT IS OF ANY DOUBT FOR A FRESH LOOK. IT IS RELEVANT HEREIN TO POINT OUT THAT IN TWO OTHER ASSESSEE'S CASE THE INCOME - TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A RENDERED IN THE CASE OF GUJARAT CRICKET ASSOCIATION V. DIT (EXEMPTION) IN I.T.A. NO. 93(AHD)/201 1 DATED JANUARY 31 2012 - SINCE REPORTED IN [2012] 19 ITR (TRIB) 520 (AHD) AND THAT OF THE NAGPUR BENCH RENDERED IN THE CASE OF VIDARBHA CRICKET ASSOCIATION V. CIT IN I. T. A. NO. 3/NAG/10 DATED MAY 30 2011 CONSIDERED THE SAID DECISION REPORTED IN T HE CASE OF CIT V. SARVODAYA ILAKKIYA PANNAI [2012] 343 ITR 300 (MAD) RENDERED UNDER SECTION 12AA(3) OF THE ACT. ON APPEAL BEFORE THE RESPECTIVE HIGH COURTS THE DECISION OF THE INCOME - TAX APPELLATE TRIBUNAL WAS CONFIRMED. LEAVING THAT ASIDE THERE BEING NO DISPUTE RAISED BY THE REVENUE AS TO THE GENUINENESS OF THE TRUST OR AS TO THE ACTIVITIES OF THE TRUST NOT BEING IN ACCORDANCE WITH THE OBJECTS OF THE TRUST THE QUESTION OF CANCELLATION UNDER SECTION 12AA OF THE ACT DOES NOT ARISE. WE FURTHER HOLD TH AT AT THE TIME OF GRANT OF REGISTRATION ON MARCH 28 2003 THE SAME WAS MADE TAKING INTO CONSIDERATION THE OBJECTS OF THE INSTITUTION FITTING IN WITH THE DEFINITION OF 'CHARITABLE PURPOSE' DEFINED UNDER SECTION 2(15) OF THE ACT AND THE SUBSTITUTION OF T HE SECTION ITSELF CAME ONLY 2008 WITH EFFECT FROM APRIL 1 2009. AS RIGHTLY POINTED OUT BY THE LEARNED SENIOR COUNSEL APPEARING FOR THE ASSESSEE THE CIRCULAR CLEARLY BRINGS OUT THE OBJECT OF THE AMENDMENT AND THE AMENDED PROVISION HAS NO RELEVANCE TO TH E CASE. THE POWER REGARDING CANCELLATION HENCE HAS TO BE SEEN WITH REFERENCE TO THE REGISTRATION AND THE OBJECT SATISFYING THE DEFINITION ON 'CHARITABLE PURPOSE' AS IT STOOD AT THE TIME OF REGISTRATION AND NOT BY THE SUBSEQUENT AMENDMENT TO SECTION 2( 15) OF THE INCOME - TAX ACT. LEARNED STANDING COUNSEL APPEARING FOR THE REVENUE PLACED HEAVY RELIANCE ON THE PROVISO TO SECTION 12AA(3) OF THE ACT AND SUBMITTED THAT WHEN THE ASSESSEE HAS INCOME RECEIVED FROM CONDUCT OF THE MATCHES WHICH ARE COMMERCIAL I N NATURE AS HAD BEEN FOUND BY THE 12 ITA NO. 451/K/2012 SEAGULL FOUNDATION FOR THE ARTS AY 2009 - 10 INCOME - TAX APPELLATE TRIBUNAL THE OBJECTS OF THE TRUST CEASED TO BE CHARITABLE. HE SUBMITTED THAT GOING BY THE DEFINITION OF SECTION 2(15) OF THE ACT RIGHTLY THE COMMISSIONER ASSUMED JURISDICTION UNDER SECTION 12AA(3) OF THE ACT TO CANCEL THE REGISTRATION. HE FURTHER POINTED OUT THAT FOR THE FINDING TO BE RECORDED THAT THE ACTIVITIES OF THE TRUST ARE NOT GENUINE ONE MUST NECESSARILY LOOK INTO THE OBJECTS OF THE ASSOCIATION; IF THE OBJECTS OF THE ASSOCIATION REVEAL COM MERCIAL NATURE IN THE CONDUCT OF MATCHES THE ASSOCIATION CANNOT BE ONE FOR CHARITABLE PURPOSE AS DEFINED UNDER SECTION 2(15) OF THE ACT. THUS THERE COULD BE NO INHIBITION FOR THE COMMISSIONER TO ASSUME JURISDICTION TO ISSUE SHOW - CAUSE NOTICE CALLING UPON THE ASSESSEE TO STATE WHETHER THE ASSOCIATION IS GENUINE OR NOT. HE FURTHER SUBMITTED THAT ON LOOKING AT THE ACTIVITIES OF THE ASSOCIATION THE COMMISSIONER HAD RIGHTLY COME TO THE CONCLUSION THAT THE ASSESSEE'S REGISTRATION WAS LIABLE TO BE WITHDRAWN. WE DO NOT ACCEPT THE SUBMISSION OF LEARNED STANDING COUNSEL APPEARING FOR THE REVENUE. AS RIGHTLY OBSERVED BY LEARNED SENIOR COUNSEL APPEARING FOR THE ASSESSEE THE REVENUE GRANTED REGISTRATION UNDER SECTION 12AA OF THE ACT SATISFYING ITSELF AS TO THE OB JECTS OF THE ASSOCIATION BEFITTING THE STATUS AS CHARITABLE PURPOSE AS DEFINED UNDER SECTION 2(15) AS IT STOOD IN 2003 AND AFTER GRANTING THE REGISTRATION IF THE REGISTRATION IS TO BE CANCELLED IT MUST BE ONLY ON THE GROUNDS STATED UNDER SECTION 12AA( 3) OF THE ACT WITH REFERENCE TO THE OBJECTS ACCEPTED AND REGISTERED UNDER SECTION 12AA AS PER THE LAW THEN STOOD UNDER THE DEFINITION OF SECTION 2(15) OF THE INCOME - TAX ACT. EVEN THEREIN COURTS HAVE DEFINED AS TO WHEN AN INSTITUTION COULD BE HELD AS O NE FOR ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY. THUS IF A PARTICULAR ACTIVITY OF THE INSTITUTION APPEARED TO BE COMMERCIAL IN CHARACTER AND IT IS NOT DOMINANT THEN IT IS FOR THE ASSESSING OFFICER TO CONSIDER THE EFFECT OF SECTION 11 O F THE ACT IN THE MATTER OF GRANTING EXEMPTION ON PARTICULAR HEAD OF RECEIPT. THE MERE FACT THAT THE SAID INCOME DOES NOT FIT IN WITH SECTION 11 OF THE ACT WOULD NOT BY ITSELF HEREIN LEAD TO THE CONCLUSION THAT THE REGISTRATION GRANTED UNDER SECTION 12AA IS BAD AND HENCE TO BE CANCELLED. IT MAY BE OF RELEVANCE TO NOTE THE LANGUAGE USED IN THE DEFINITION 'CHARITABLE PURPOSE' IN SECTION 2(15) OF THE ACT WHICH STATES THAT CHARITABLE PURPOSE INCLUDES RELIEF OF THE POOR EDUCATION MEDICAL RELIEF AND ADV ANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY. THE ASSESSEE'S CASE FALLS WITHIN THE PHRASE OF THE DEFINITION 'GENERAL PUBLIC UTILITY'. IN THE DECISION REPORTED IN THE CASE OF HIRALAL BHAGWATI V. CIT [2000] 246 ITR 188 (GUJ) THE GUJARAT HIGH CO URT CONSIDERED THE SAID PHRASE IN THE CONTEXT OF SECTION 12AA REGISTRATION AND HELD THAT REGISTRATION OF THE CHARITABLE TRUST UNDER SECTION 12AA OF THE ACT IS NOT AN IDLE OR EMPTY FORMALITY ; THE COMMISSIONER OF INCOME - TAX HAS TO EXAMINE THE OBJECTS OF T HE TRUST AS WELL AS AN EMPIRICAL STUDY OF THE PAST ACTIVITIES OF THE APPLICANT ; THE COMMISSIONER OF INCOME - TAX HAS TO EXAMINE THAT IT IS REALLY A CHARITABLE TRUST OR INSTITUTION ELIGIBLE FOR REGISTRATION ; THE OBJECT BENEFICIAL TO A SECTION OF THE PUBL IC IS AN OBJECT OF 'GENERAL PUBLIC UTILITY'. THE GUJARAT HIGH COURT HELD THAT TO SERVE AS A CHARITABLE PURPOSE IT IS NOT NECESSARY THAT THE OBJECT MUST BE TO SERVE THE WHOLE OF MANKIND OR ALL PERSONS LIVING IN A COUNTRY OR PROVINCE ; IT IS REQUIRED TO BE NOTED THAT IF A SECTION OF THE PUBLIC ALONE ARE GIVEN THE BENEFIT IT CANNOT BE SAID THAT IT IS NOT A TRUST FOR CHARITABLE PURPOSE IN THE INTEREST OF THE PUBLIC ; IT IS NOT NECESSARY THAT THE PUBLIC AT LARGE MUST GET THE BENEFIT ; THE CRITERIA HERE IS THE OBJECTS OF GENERAL PUBLIC UTILITY. THUS THE GUJARAT HIGH COURT HELD THAT IN ORDER TO BE CHARITABLE THE PURPOSE MUST BE DIRECTED TO THE BENEFIT OF THE COMMUNITY OR A SECTION OF THE COMMUNITY ; THE EXPRESSION 'OBJECT OF GENERAL PUBLIC UTILITY' HOW EVER IS NOT RESTRICTED TO THE OBJECTS BENEFICIAL TO THE WHOLE OF MANKIND ; AN OBJECT BENEFICIAL TO A SECTION OF THE PUBLIC IS AN OBJECT OF GENERAL PUBLIC UTILITY ; THE SECTION OF THE COMMUNITY SOUGHT TO BE BENEFITED MUST UNDOUBTEDLY BE SUFFICIENTLY DE FINED AND IDENTIFIABLE BY SOME COMMON QUALITY OF A PUBLIC OR IMPERSONAL NATURE. THE ABOVESAID DECISION HIRALAL BHAGWATI V. CIT [2000] 246 ITR 188 (GUJ) CAME UP ON APRIL 18 2000. EVIDENTLY THE REVENUE HAS NOT GONE ON APPEAL AS AGAINST THIS JUDGMENT. 13 ITA NO. 451/K/2012 SEAGULL FOUNDATION FOR THE ARTS AY 2009 - 10 I N THE DECISION REPORTED IN THE CASE OF ASST. CIT V. SURAT CITY GYMKHANA [2008] 300 ITR 214 (SC) REFERENCE WAS MADE ABOUT THIS DECISION AND THE APEX COURT POINTED OUT THAT THE REVENUE DID NOT CHALLENGE THIS CASE AND IT ATTAINED FINALITY. IT IS NO DOUBT TRU E THAT THE DECISION REPORTED IN ASST. CIT V. SURAT CITY GYMKHANA [2008] 300 ITR 214 (SC) WAS IN THE CONTEXT OF SECTION 10(23) OF THE INCOME - TAX ACT 1961 NEVERTHELESS THE FACT REMAINS THAT THE UNDERSTANDING OF THE SCOPE OF THE EXPRESSION 'GENERAL PUBL IC UTILITY' WOULD NEVERTHELESS IS OF RELEVANCE HEREIN. ADMITTEDLY WHEN THE ASSESSEE WAS GRANTED REGISTRATION THE REVENUE RECORDED ITS SATISFACTION THAT THE OBJECTS ARE OF CHARITABLE PURPOSE. THUS ONLY POSSIBLE ENQUIRY UNDER SECTION 12AA OF THE ACT FOR CANCELLATION IS TO FIND OUT WHETHER THE ACTIVITIES OF THE TRUST ARE GENUINE OR IN ACCORDANCE WITH THE OBJECTS OF THE TRUST. IF ANY OF THE INCOME ARISING ON THE ACTIVITIES ARE NOT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST THE ASSESSEE'S INCOME AT BEST MAY NOT GET THE EXEMPTION UNDER SECTION 11 OF THE ACT. BUT THIS BY ITSELF DOES NOT RESULT IN STRAIGHT REJECTION OF THE REGISTRATION AS 'TRUST' UNDER SECTION 12AA OF THE ACT. CONSEQUENTLY WE REJECT THE PRAYER OF THE REVENUE THAT SECTION 12AA(1) OF THE IN COME - TAX ACT 1961 MUST BE READ ALONG WITH SECTION 12AA(3) OF THE INCOME - TAX ACT 1961 BEFORE CONSIDERING THE CANCELLATION. AS FAR AS THE UNREPORTED DECISION OF THIS COURT IN GOWRI ASHRAM V. DIRECTOR OF INCOME - TAX (EXEMPTIONS) IN T. C. (A.) NO. 91 OF 2013 DATED APRIL 29 2013 - SINCE REPORTED IN [2013] 356 ITR 328 (MAD) IS CONCERNED ON WHICH HEAVY RELIANCE WAS PLACED BY THE REVENUE THE SAID DECISION RELATES TO THE REJECTION OF THE REGISTRATION AT THE THRESHOLD OF THE APPLICATION FILED FOR REGIST RATION. SO TOO THE DECISION OF THE UTTARAKHAND HIGH COURT REPORTED IN THE CASE OF CIT V. NATIONAL INSTITUTE OF AERONAUTICAL ENGINEERING EDUCATIONAL SOCIETY [2009] 315 ITR 428 (UTTARAKHAND) WHEREIN REJECTION WAS MADE ON THE THRESHOLD OF APPLICATION FOR R EGISTRATION MADE BY THE ASSESSEE. THE DECISIONS RELIED ON IS THUS DISTINGUISHABLE AND HAS NO RELEVANCE TO THE FACTS OF THE PRESENT CASE. AS FAR AS UNREPORTED DECISION OF THIS COURT IN GOWRI ASHRAM V. DIRECTOR OF INCOME - TAX (EXEMPTIONS) IN T. C. (A.) NO. 91 OF 2013 DATED APRIL 29 2013 - SINCE REPORTED IN [2013] 356 ITR 328 (MAD) IS CONCERNED WHILE REJECTING THE APPEAL FILED BY THE ASSESSEE ON THE REJECTION OF THE APPLICATION FOR REGISTRATION THIS COURT OBSERVED THAT IT WAS OPEN FOR THE ASSESSEE - SOCIET Y TO RENEW ITS APPLICATION AS AND WHEN IT EXPANDED THE OBJECTS OF THE SOCIETY AND WERE APPROVED BY THE COMPETENT COURT. THE REJECTION ORDER PASSED BY THE REVENUE WAS ON THE GROUND THAT THE OBJECTS OF THE TRUST WERE NOT CHARITABLE IN CHARACTER. THIS DECISI ON ALSO HAS NO RELEVANCE TO THE CASE ON HAND. 9. IN THE PRESENT CASE BEFORE US WE FIND THAT THE REVENUE DOES NOT QUESTION THE OBJECT OF THE ASSOCIATION AS NOT GENUINE OR ARE IN ACCORDANCE WITH THE OBJECTS. REVENUE STATES THAT THE NATURE OF RECEIPT COULD NO T BE CALLED FOR THE PURPOSE OF CHARITY BUT FALLING UNDER THE DEFINITION OF SECTION 2(15) OF THE ACT AS AMENDED W.E.F. 01.04.2009 AND THE OBJECT INVOLVES THE CARRYING ON OF ANY ACTIVITY IN THE NATURE OF TRADE COMMERCE OR BUSINESS FOR A CESS OR FEE OR ANY OTHER CONSIDERATION IRRESPECTIVE OF NATURE OF USE FOR APPLICATION OR RETENTION OF THE INCOME FROM SUCH ACTIVITY AND HENCE THE STATUS OF THE INSTITUTION WILL NOT BE ONE FOR CHARITABLE PURPOSES. ACCORDING TO DIT(E) SINCE THE AGGREGATE VALUE OF THE RE CEIPTS FROM SUCH ACTIVITY WAS IN EXCESS OF RS.10 LACS THE ASSESSEE IS HIT BY THE AMENDED PROVISIONS OF SECTION 2(15) OF THE ACT. WE DO NOT THINK THAT BY THE VOLUME OF RECEIPT ONE CAN DRAW SUCH INFERENCE THAT THE ACTIVITY IS COMMERCIAL. THE DIT(E) S VIEW THAT THE FOUNDATION IS COMMERCIAL ENTITY AND HENCE OFFENDED 14 ITA NO. 451/K/2012 SEAGULL FOUNDATION FOR THE ARTS AY 2009 - 10 THE PROVISIONS OF SECTION 2(15) OF THE ACT DOES NOT APPEAR TO BE CORRECT AND THE SAME IS BASED ON HIS OWN IMPRESSION ON ACCOUNT OF SALE OF PAINTINGS AND EXHIBITION OF PAINTINGS. THESE CONSIDERA TIONS ARE NOT GERMANE IN CONSIDERING THE QUESTION AS TO WHETHER THE ACTIVITIES ARE GENUINE OR CARRIED ON IN ACCORDANCE WITH THE OBJECTS OF THE ASSOCIATION. AS FAR AS THE OBSERVATIONS OF THE DIT(E) THAT THE CONDITIONS OF THE PROVISIONS OF SECTION 2(15) OF THE ACT IS TO BE SATISFIED IT IS NOT DENIED BY REVENUE THAT AT THE TIME OF GRANTING REGISTRATION THE DIT(E) HAS SATISFIED HIMSELF ABOUT THE OBJECTS OF THE FOUNDATION AND GENUINENESS OF ACTIVITIES AS FALLING WITHIN THE MEANING OF CHARITABLE PURPOSE AS ITS STOOD IN 2008 I.E. AT THE TIME OF REGISTRATION OF THE FOUNDATION. EVEN NOW REVENUE DOES NOT DENY AS A MATTER OF FACT THAT THE OBJECTS REMAIN AS IT WAS IN 2008 AND THERE IS NO CHANGE IN THE CONTENTS OF THE FOUNDATION TO CALL THE ASSESSEE S OBJECTS AS NOT GENUINE. EVEN THERE IS NO MATERIAL TO INDICATE THAT THE GRANT OF REGISTRATION WAS NOT BASED ON MATERIALS INDICATING OBJECTS OF GENERAL PUBLIC UTILITY. IN SUCH CIRCUMSTANCES AND RESPECTFULLY FOLLOWING THE PRECEDENT OF HON BLE MADRAS HIGH COURT IN THE CASE OF TAMIL N ADU CRICKET ASSOCIATION SUPRA WE ALLOW THIS ISSUE OF ASSESSEE S APPEAL. 10. IN THE RESULT APPEAL OF ASSESSEE IS ALLOWED. 11 . ORDER IS PRONOUNCED IN THE OPEN COURT ON 12/11/14 SD/ - SD/ - ( SHAMIM YAHYA ) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 12 TH NOVEMBER 201 4 JD.(SR.P.S.) - COPY OF THE ORDER FORWARDED TO: 1 . / A PPELLANT THE SEAGULL FOUNDATION FOR THE ARTS 31A S. P. MUKHERJEE ROAD KOLKATA - 700 025. 2 / RESPONDENT D IT (E) KOLKATA . 3 . ( )/ THE AD IT( E ) KOLKATA 4. 5. / CIT KOLKATA / DR KOLKATA BENCHES KOLKATA / TRUE COPY / BY ORDER /ASSTT. REGISTRAR .