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TMI Blog2018 (6) TMI 1656X X X X Extracts X X X X X X X X Extracts X X X X ..... HAVIR SINGH, JM: This appeal by the assessee is arising out of the order of Director of Income Tax (Exemptions), Mumbai [in short DIT (E)] vide order dated 01.03.2012 for AY 2009-10. 2. The only issue in this appeal of assessee is against the order of DIT(Exemptions) in cancelling the registration already grated under section 12AA(3) of the Act. For this assessee has raised the following five grounds: - 1. The learned DIT(E) erred in holding that he had jurisdiction to cancel the registration Under section. 12AA(3), as the aforesaid section applies only if, the activities of the Trust are not genuine or are not being carried out in accordance with the objects of the Trust and neither of these conditions applies because for the last over 35 years the Appellant has been held to be entitled to exemption from tax under section 11. 2. The DIT(E) erred in holding that the Appellant is hit by the proviso to Sec.2(15) and the Appellant will not be for a charitable purpose and the trust itself becomes non-genuine for the purpose of Sec.11 and therefore, the registration allowed to the appellant was cancelled /withdrawn as non-charitable trust. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on activity in the nature of trade, commerce and business etc. in term of the proviso to section 2(15) of the Act. The Proviso to section 2(15) of the Act, which came into effect from 01.04.2009, by an amendment by the Finance Act 2008 as the section has under gone change to the effect that advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying out of any activity in the nature of trade, commerce or business. The relevant provision of section 2(15) of the Act reads as under : - charitable purpose includes relief of the poor, education, yoga, 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 rendering any service in relation to any trade, commerce or business, for a cess or fee or any other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ust/ Institute looses its charitable character from A.Y. 2009-10 and onwards. Accordingly, the AR's above argument is also rejected. Therefore, in the circumstances and factual position as discussed above clearly reveals that the assessee club is engaged in commercial activities and the receipts thereof are far and excess of the limit as laid down in the proviso to section 2(15) and accordingly it is held that the assessee club hit by the proviso to section 2(15) of the Act which has come to effect from A.Y. 2009-10. Once a charitable Trust / Institution hit by aforesaid proviso, then there is deeming provision that such entity shall not be for a charitable purpose. Hence, once the assessee Trust / Institution looses its charitable character then obviously there is change in the status of such assessee and it is no longer can be hold to be for charitable purpose. Once it is held that the assessee is not for charitable purpose then the trust itself becomes non genuine for the purpose of Section II of the I.T.Act, as it looses its public charitable status and accordingly the provision of Section 12AA(3) of the Act gets attracted. As discussed in earlier paragrap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... favour of assessee by observing in Para 8 to 12 as under:- 8. The jurisdiction to cancel the Registration would only arise if there is any change in the nature of activities of the institution. The above Circular clearly directs the authorities not to cancel the Registration of the charitable institution just because the proviso to section 2(15) of the Act comes into play as receipts are in excess of ₹ 25 lakhs in a year. It also refers to Section 13(8) of the Act which provides that where the receipts on account of commercial activities is in excess of the limit of ₹ 25 lacs provided in second proviso to section 2(15) of the Act, then the Assessing Officer would deny the benefit of registration as a Trust for the subject Assessment Year while framing the Assessment. 9. In response, Mr. Malhotra, learned Counsel appearing for the Revenue in respect of the appeal, submits that the aforesaid Circular dated 27th May, 2016 is to be read as a whole and on so reading, it would be evident that Income Tax Department has jurisdiction to cancel the registration whenever receipts from commercial activities have exceeded ₹ 25 lakhs. Learned Counsel further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpugned order has held that cancellation of a Registration under Section 12AA(3) of the Act, can only take place in case where the activities of trust or institution are not genuine and/or not carried on in accordance with its objects. The aforesaid Circular No.21 of 2016 is in line of the finding of the Tribunal in the impugned order. The submission on behalf of the Revenue that the Trust is not genuine because it is hit by proviso to Section 2(15) of the Act, is in fact, negatived by Circular No. 21 of 2016. In fact, the above Circular No. 21 of 2016 clearly provides that mere receipts on account of business being in excess of the limits in the proviso would not result in cancellation of Registration granted under Section 12AA of the Act unless there is a change in nature of activities of the institution. Admittedly, there is no change in nature of activities of the institution during the subject Assessment Year. The further submission on behalf of the Revenue that looking at the quantum of receipts on account of commercial activities, it is un-likely/ improbable that in the subsequent Assessment Years, the receipts would fall below ₹ 25 lakhs and therefore, the Commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X
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