Charitable trust registration cannot be cancelled merely for one year's excess commercial receipts; genuineness and objects remain decisive.

Registration of a charitable trust under Section 12AA(3) could not be cancelled merely because receipts from commercial activities exceeded the proviso to Section 2(15) for one year. The distinction between registration and exemption was material: denial of exemption for a particular assessment year under Section 13(8) did not by itself justify cancellation. Cancellation was permissible only where the trust was not genuine or its activities were not carried out in accordance with its objects. A single year of excess commercial receipts, without more, did not establish non-genuineness, so cancellation was unjustified and the Revenue's challenge failed.

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Issues: Whether registration of a trust under Section 12AA(3) of the Income-tax Act, 1961 could be cancelled merely because its receipts from commercial activities exceeded the limit in the proviso to Section 2(15) of the Act, and whether such excess by itself established that the trust was not genuine.

Analysis: The distinction between registration and exemption was material. The mere denial of exemption for a particular assessment year under Section 13(8) did not automatically justify cancellation of registration. Cancellation under Section 12AA(3) could be sustained only if the trust was not genuine or its activities were not carried out in accordance with its objects. A single year's excess commercial receipts, without more, did not establish lack of genuineness. The authorities were required to examine the statutory conditions for cancellation and could not cancel registration solely because the proviso to Section 2(15) applied in one year.

Conclusion: Cancellation of registration was not justified on the facts, and the appeal of the Revenue failed.

Ratio Decidendi: Registration of a charitable trust cannot be cancelled under Section 12AA(3) merely because its receipts in a particular year exceed the monetary threshold in the proviso to Section 2(15); cancellation requires satisfaction of the statutory grounds of non-genuineness or activities not being carried out in accordance with the objects of the trust.

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