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TMI Blog2018 (3) TMI 64X X X X Extracts X X X X X X X X Extracts X X X X ..... t Act 1963 and as per object of the Port Trust. The activities carried out by assessee trust is of 'General Public Utility' within the meaning of charitable purpose as defined under section 2(15) of the Income-tax Act. The assessee was granted a registration under section 12 AA with effect from 1 April 2002. The registration was withdrawn /cancelled by DIT (Exemption) on 29th of August 2007. However, on appeal before Tribunal the same was restored by the order vide dated 16th March 2009 order in ITA 6352/M/2007. Accordingly, fresh registration certificate under section 12AAwas issued on 8th September 2009. The learned DIT (Exemptions) on the proposal received from ADIT (Exemptions) Mumbai, for cancelling the registration on the ground that the assessee has carried activities in the nature of trade, commerce or business etc and gross receipts therefrom are in excess of Rs. 10 lakh. Thus the provision of section 2(15) of the Income-tax Act is attracted for assessment year 2009-10. Accordingly, a notice dated 14 October 2011 was issued to the assessee, to show cause as to why the registration granted under section 12AA should not be withdrawn by invoking the provision of section 12AA( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e not being carried out in accordance with the object of the Trust. Section 12AA(3) specifically mandate that when twin condition are violated, the DIT(E) can cancel the registration. There is no change in the object and the activities of the assessee-trust. The ld. AR further submits that in view of the Circular No.12 of 2016 dated 27.05.2016 issued by Central Board of Direct Taxes (CBDT) clearly mandate that temporarily excess receipts beyond the specified cut off in one year many not necessarily outcome of alteration in nature of activities of the Trust or Institution for cancelling the registration already granted. The ld. AR further submits that sub-section (8) of section 13 amended by Finance Act 2012 specifically provide that the Trust/Organization would not get tax benefit of exemption in a particular year in which its receipt from commercial activities exceeds the threshold limit. In support of its submission, the ld. AR of the assessee relied upon the CBDT Circular No. 21/2016 dated 27.05.2016, decision of jurisdictional High Court in DIT(E) vs. M/s. Khar Gymkhana ITA No. 2349 of 2013 dated 06.06.2016, Madras High Court in Tamil Nadu Cricket Association vs. DIT(E) [2013] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f any activity in the nature of trade, commerce or business etc. for financial consideration. The 2nd proviso to said section, introduced w.e.f. 1-4-2009 vide Finance Act 2010, provides that in case where the activities of any trust or institution is of the nature of advancement of any other object of general public utility and it involves carrying on of any activity in the nature of trade, commerce or business; but the aggregate value of receipts from such commercial activities does not exceed Rs. 25,00,000/- in the previous year, the purpose of such trust/institution shall be deemed as "charitable" despite it deriving consideration from such activities. However, if the aggregate value of these receipts exceeds the specified cut-off, the activity would no longer be considered as charitable and the income of the trust/institution would not be eligible for tax exemption in that year. Thus an entity, pursuing advancement of object of general public utility, could be treated as a charitable institution in one year and not a charitable institution in the other year depending on the aggregate value of receipts from commercial activities. The position remains similar when the first and s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f registration is to be initiated strictly in accordance with section 12AA(3) and 12AA(4) after carefully examining the applicability of these provisions. 6. The above may be brought to the notice of all concerned. 5. The jurisdictional High Court in case of DIT(E) vs. Khar Gymkhana, while hearing a similar question of law held that mere receipts on account of business being in excess of limits specified in proviso to section 2(15) would not result in cancellation of Registration granted under section 12AA unless there is a change in nature of activities of institution. 6. The Hon'ble Madras High Court in case of Tamil Nadu Cricket Association vs. DIT(E) (supra) held that where Commissioner after satisfying himself about genuineness of objects of assessee, a cricket association, granted registration to it under section 12AA on 28-3-2003 and later on 19-7-2011 he having noticed that assessee was receiving income from holding of cricket matches cancelled registration, since objects remained as they were in year 2003, cancellation of registration was not justified. The co-ordinate bench of Mumbai Tribunal in Bhakti Kala Kshetra vs. DIT(E), Mumbai (supra) held that even if assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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