Registration cancellation under charitable law requires factual non-genuineness or deviation from objects, not exemption denial alone.

Withdrawal of registration under section 12AA(3) requires a factual finding that the trust's activities are not genuine or are not carried out in accordance with its objects. The amended definition of charitable purpose under section 2(15) and its provisos may affect exemption eligibility, but they do not by themselves justify cancellation of registration. The later insertion of section 13(8) reinforces the distinction between continuation of registration and denial of exemption in a particular year. Where interest and rental receipts are asserted to be incidental to statutory objects, the factual nexus must be established on the record; if it is unclear, the matter requires fresh factual determination.

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Issues: (i) Whether registration granted under section 12A/12AA could be withdrawn under section 12AA(3) solely because the amended definition of charitable purpose under section 2(15) and its provisos affected exemption eligibility; (ii) whether the assessee's interest and rental receipts were shown, on the material placed, to arise in the course of and in furtherance of its objects so as to satisfy or negate the conditions in section 12AA(3).

Issue (i): Whether registration granted under section 12A/12AA could be withdrawn under section 12AA(3) solely because the amended definition of charitable purpose under section 2(15) and its provisos affected exemption eligibility.

Analysis: Section 12AA(3) permits withdrawal only if the activities of the trust or institution are not genuine or are not carried out in accordance with its objects. The later insertion of section 13(8) shows that the legislative scheme distinguishes between continuation of registration and denial of exemption in a particular assessment year. The first proviso to section 2(15) may affect eligibility for exemption, but it does not by itself establish that the registered entity's activities have become non-genuine or contrary to its objects.

Conclusion: Registration could not be withdrawn merely because the first proviso to section 2(15) became applicable; a separate factual basis under section 12AA(3) was required.

Issue (ii): Whether the assessee's interest and rental receipts were shown, on the material placed, to arise in the course of and in furtherance of its objects so as to satisfy or negate the conditions in section 12AA(3).

Analysis: The receipts were asserted to be incidental to the statutory functions, but the record did not establish the necessary factual link between those receipts and the principal objects and functions of the authority. The source, nature, and correlation of the financing and leasing activities with the core statutory mandate were left unclear. In the absence of sufficient particulars, no positive finding could be recorded either that the activities were in accordance with the objects or that they were not. The burden to establish the factual position lay on the assessee, and the factual inquiry was not completed.

Conclusion: The applicability of section 12AA(3) remained factually indeterminate, warranting restoration of the matter to the authority for fresh decision on facts.

Final Conclusion: The appeal succeeded to the extent that the cancellation issue was not finally adjudicated on merits and was sent back for fresh consideration limited to the factual requirements of section 12AA(3).

Ratio Decidendi: Withdrawal of registration under section 12AA(3) requires a factual finding that the activities are not genuine or are not carried out in accordance with the objects, and denial of exemption under section 2(15) alone does not automatically justify cancellation of registration.

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