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TMI Blog2017 (3) TMI 37X X X X Extracts X X X X X X X X Extracts X X X X ..... No.21 of 2016 in terms directed the Authorities not to cancel the registration of the Charitable Institution only because the proviso to Section 2(15) of the Act comes into play as the receipts are in excess of the specified limits therein. It also refers to Section 13(8) of the Act to support the view of the non cancellation. However, the issue of the trust not being genuine cannot be concluded by merely giving a finding in one year that income earned from activities of trade, business or commerce are in excess of the limit specified in the proviso to Section 2(15) of the Act. This is so held by us in Khar Gymkhana (supra). However, if this happens on continuous / regular basis, it could justify further probe / inquiry before concluding that the trust is not genuine. - Decided against revenue - Income Tax Appeal No. 1429 of 2014 - - - Dated:- 14-2-2017 - M. S. Sanklecha And A. K. Menon, JJ. Mr. Ashok Kotangle a/w Ms. Padma Divakar, Mr. Arun Nagarjun for the appellant None for the respondent ORDER P. C. 1. This Appeal under Section 260A of the Income Tax Act, 1961 (the Act) challenges an order dated 21st February, 2014 passed by the Income Tax Appellate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne Trust. 5. The basis of the impugned order prima facie appears to be contrary to the decision of this Court in Sinhagad Technical Education Society Vs. Commissioner of Income Tax 343 ITR 23. In the above case, this Court negatived the Constitutional challenge to the amendment made in Section 12AA(3) of the Act w.e.f. 1st June, 2010 by Finance Act, 2010. Thus, refusing to quash and / or stay the notice issued after 1st June, 2010 for cancelling a registration of a Trust, registered prior to 2010. However, admitting this appeal may be an academic exercise, as even if the registration of a Trust registered prior to 2010, can be cancelled / revoked post 2010, yet the jurisdiction to issue a notice under Section 12AA(3) of the Act would only arise if one of the two conditions for its exercise is satisfied i.e. either the Trust should not be genuine or the activities of the Trust are not carried out in accordance with its objects. In fact, we have so held in Commissioner of Income Tax Vs. Institute Management Committee of Industrial Training Institute Kolhapur (ITA No.1334 of 2014) decided on 17th January, 2017. In this case, it appeared to us that neither of the two conditions were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ingly held as non charitable Trust / Institution. Thus, holding the respondent assessee Trust is not genuine in view of the fact that during the subject assessment year, the income earned on account of the trade, commerce or business etc. was in excess of the limits of ₹ 10 lakhs, provided in the second proviso to Section 2(15) of the Act. In the above view, the Director of Income Tax (Exemption) holds that the Trust ceases to be a genuine Trust. 8. We must not lose sight of the fact that there is a difference between Registration and Exemption. This understanding of ours is fortified by virtue of Section 13(8) of the Act. In fact, Section 13(8) of the Act was introduced into the Act w.e.f. 1st April, 2009 by the Finance Act, 2012. It provides that where the receipts are hit by the proviso to Section 2(15) of the Act, the benefit of exemption to its income for the previous year relevant to the subject assessment year will not be available. Thus, income is brought to tax to secure the Revenue's interest but it does not necessarily result in automatic cancellation of Registration. Therefore, the mere fact that in one particular year, the respondent assessee may have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the institution in that year and cancellation of registration would not be mandatory unless such cancellation becomes necessary on the ground(s) prescribed under the Act. (5) With the introduction of Chapter XIIEB in the Act vide Finance Act, 2016, prescribing special provisions relating to tax on accreted income of certain trusts and institutions, cancellation of registration granted under section 12AA may lead to a charitable institution getting hit by subsection (3) of section 115TD and becoming liable to tax on accreted income. The cancellation of registration without justifiable reasons may, therefore, cause additional hardship on an assessee institution due to attraction of tax liability on accreted income. The field authorities are, therefore, advised not to cancel the registration of a charitable institution granted under section 12AA just because the proviso to section 2(15) comes into play. The process for cancellation of registration is to be initiated strictly in accordance with section 12AA(3) and 12AA(4) after carefully examining the applicability of these provisions. (emphasis supplied). 9. However, the issue of the trust not being genuine cannot be conclu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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