Section 12AA registration cannot be cancelled solely because commercial receipts cross the section 2(15) threshold.

Registration under section 12AA cannot be cancelled merely because a trust or institution's receipts from activities covered by the proviso to section 2(15) exceed the prescribed monetary threshold in a particular year. The statutory scheme treats excess commercial receipts as a ground for denial of exemption for that year, not as proof that the activities are nongenuine or that the objects have changed. Cancellation is justified only if the activities are not genuine or are not carried out in accordance with the stated objects. The CBDT circular relied on in the text reflects this distinction, making cancellation unsustainable on threshold exceedance alone.

---

---

Issues: Whether registration granted under section 12AA could be cancelled merely because the assessee's receipts from activities covered by the proviso to section 2(15) exceeded the prescribed limit for the relevant assessment year.

Analysis: The statutory scheme distinguishes between denial of exemption in a particular year and cancellation of registration. Registration under section 12AA can be withdrawn only where the activities are not genuine or are not carried out in accordance with the objects of the trust or institution. Mere excess of commercial receipts beyond the monetary threshold in the proviso to section 2(15) does not, by itself, establish that the activities have become nongenuine or that the objects have changed. The CBDT circular relied upon by the Court clarified that cancellation is not mandatory merely because the threshold is exceeded in one year, and that the proper consequence is denial of exemption for that year under section 11, subject to section 13(8).

Conclusion: Registration under section 12AA could not be cancelled solely on the ground that the assessee's receipts crossed the limit in the proviso to section 2(15); the cancellation was unsustainable and the assessee succeeded.

Ratio Decidendi: Exceeding the monetary threshold in the proviso to section 2(15) affects eligibility for exemption in the relevant year, but does not justify cancellation of registration under section 12AA unless there is a change in the nature of activities or a lack of genuineness.

---