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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 ..... of "advancement of any other objects of general public utility" as per definition of charitable purpose given u/s. 2(15) of the Income tax Act. The DIT(E) noticed that the assessee was carrying out activities in the nature of trade, commerce or business etc., and gross receipts there from were in excess of Rs.10.00 lacs. So by taking resort to the newly added proviso w.e.f. 01.04.2009 to section 2(15) of the Income tax Act, he cancelled the registration of assessee. The assessee is thus in appeal before us. 3. Before us, the learned counsel for the assessee has submitted that registration once granted to the assessee being a charitable institution cannot be cancelled or taken away because of the newly inserted proviso to section 2(15) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .f. 01.04.2009 the rigour of the first proviso has been diluted and the first proviso has not been made applicable even if the trust carries on business activities and the gross receipts from such activities is Rs.10.00 lacs or less than Rs.10.00 lacs in the previous year. Hence, from 01.04.2009 the carrying out of the activities of trade, commerce or business even by charitable trust is not barred so as to exclude its activities from the definition of charitable purposes. However, a limitation has been imposed to the effect that the gross receipts from such activities should not increase Rs.10.00 lacs. The DIT(E) has cancelled the registration on the ground that the total receipts of the Assessee trust has exceeded Rs.10.00 lacs during the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e word "previous year" mentioned in the second proviso to section 2(15) is more relevant. It has not been mentioned that the first proviso, which as observed is a rigorous proviso, will not apply if the total receipts from the charitable activities exceeds the limit of Rs.10.00 lacs during "any year" rather, the word is "previous year" . That means the benefits will not be available to the Assessee for the assessment year in which the gross receipts of income exceeds the limit of Rs.10.00 lacs, however, that does not mean that such benefits will not be available to the institution for all other assessment years during which its receipts does not cross the limit of Rs.10.00 lacs. The word "previous year" mentioned in the second proviso makes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ortified from the judgment of the co-ordinate Bench decision of the Tribunal in the case of Rajasthan Housing Board vs. CIT (2012) 21 taxmann.com 77(Jp). 5.4 Thus, the action of the CIT(A) relying upon the newly inserted proviso from 01.04.2009 in cancelling the registration of the trust, in our view, is not correct or justified. The only effect will be that the Assessee will not be entitled for exemption or tax benefits which otherwise would have been available to it being registered as charitable institution, for the relevant year during which its income has crossed the limit of Rs.10.00 lacs. Subject to our above observations cancellation of registration granted to Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y only to escape the liability under the Act thereby gain unmerited exemption under Section 11 of the Act." 7. The Hon'ble Madras High Court further in 'para 45' of the above judgment observed that 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 of 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. Hon'ble Madras High Court further in 'para 48' of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. If any of the income arising on the activities is not in accordance with the objects of the trust, the assessees income, at best, may not get the exemption under Section 11 of the Act. Further 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. However, it will get such 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. 9. Subject to our above observations, the impugned order of the DI.T(exemptions) is hereby set aside and the registration to the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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