Charitable registration cannot be cancelled merely because welfare scheme receipts are treated as commercial or exceed section 2(15) limits.

Existing registration under section 12AA could not be cancelled merely because receipts were treated as commercial or because the proviso to section 2(15) was invoked. The assessee's amended charitable objects were already on record, and the later withdrawal of the section 12A(1)(ab) application could not be used to undo an existing registration. The Tribunal also noted that the 2017 amendment to section 12A(1)(ab) operated from assessment year 2018-19, so the earlier position did not require such intimation. As the receipts arose from implementation of welfare schemes, routing payments through agreements, work orders, or TDS deductions did not convert the activity into trade, commerce, or business, and the registration was directed to continue.

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Issues: Whether the existing registration under section 12AA could be cancelled or rejected merely because the receipts were treated as commercial and the proviso to section 2(15) was invoked, despite the assessee's activities being carried out in furtherance of government welfare schemes.

Analysis: The registration had been granted earlier and the assessee's objects, as amended in 2013, were already on record. The later application filed under section 12A(1)(ab) was withdrawn, and the Tribunal held that the Commissioner could not treat that withdrawal as a basis to cancel the already existing registration. The Tribunal also noted that the Finance Act, 2017 introduced the amendment in section 12A(1)(ab) with effect from assessment year 2018-19, and therefore the position prevailing when the objects were amended did not require such intimation. On merits, the receipts were found to arise from implementation of welfare schemes, and the mere fact that payments were routed through agreements, work orders, or TDS deductions did not by itself convert the activities into trade, commerce, or business. The Tribunal further relied on the CBDT clarification that registration should not be cancelled merely because the threshold under the proviso to section 2(15) is exceeded in a particular year without a change in the nature of activities.

Conclusion: The cancellation/rejection of registration was unsustainable, and the assessee's registration was directed to continue.

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