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TMI Blog2014 (5) TMI 733X X X X Extracts X X X X X X X X Extracts X X X X ..... e relevant year during which its income has crossed the limit of Rs.10.00 lacs - merely because the income of the assessee has crossed prescribed limit of Rs. 10 lakhs, that itself cannot be ground for cancellation of its registration invoking section 12AA(3) of the Act - for the previous year, during which the gross receipt income crosses limit of Rs.10.00 lacs, the trust will not get exemption or benefit of its being charitable in nature despite its carrying out charitable activities but, it will get benefit if it is registered as charitable institution and income from business activities, as mentioned in first proviso to section 2(15), does not cross limit of Rs.10.00 lacs – thus, the order of the DIT(E) is set aside and the registrati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n support of his contention. On the other hand, the learned DR has submitted that the registration of the assessee has rightly been cancelled by the DIT(E). 4. We have heard the learned counsel for the assessee and the learned Departmental Representative. It may be observed that identical issue came for adjudication before the Co-ordinate Bench of the Tribunal in the case of Ghatkopar Jolly Gymkhana v. DIT (E)[2013] 40 taxmann.com 207 (Mum.-Trib), ITA No.882/Mum/2012 decided on 23.10.2013, (present Judicial Member being party to that order) and while dealing with the issue, the bench observed as under: 5. We have considered the submissions of the ld. Representative of the parties. It may be observed that the first proviso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he trusts which were already registered, in the light of the newly added proviso w.e.f. 01.04.2009 to section 2(15) of the Income Tax Act, observed as under: 5.2 We may observe that the tax exemption or benefits are granted to a trust or institution because its activities fall within the definition of charitable purposes as defined u/s. 2(15) of the Act. Under section 12AA(3) the registration of such trust/institution can be cancelled if its activities have become non genuine or it is not carrying out activities as per objects of the institution. Once the activities of a registered charitable institution cease to be charitable or do not fall within the purview of definition of 'charitable purpose' as per the relevant p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emption/ benefits which is affected that too for the relevant year during which the gross receipts of the institutions cross the limit of Rs.10.00 lacs. The insertion of second proviso has not made the definition restrictive or rigorous rather with the insertion of second proviso to section 2(15) of the Act, the rigour or restrictive nature of the definition has been diluted and has been made wide enough to include related business activities of the trust/institution, as described the first proviso to section 2(15) of the Act, also within the scope of definition of charitable purposes. The limit of receipt upto Rs.10.00 lacs during the 'previous year' as mentioned in the second proviso, has made the section further liberal mandating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 50 . The Hon'ble Madras High Court in para 34 of the above said judgment, observed as under: 34. Thus, when the assessee 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 straight away 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 exempt these income from liability. These are matters of assessment and has nothing to do with the genuinene ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, 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. The Hon'ble Madras High Court further in 'para 56' of the judgment observed that for invoking Section 12AA read with Section 2(15) of the Act, Revenue has to show that the activities are not fitting with the objects of the Association and that the dominant activities are in the nature of trade, commerce and business. Merely by the volume of receipt one cannot draw the inference that the activity is commercial. 8. It is not the case of the revenue before us that the dominant activities of the assessee are no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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