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of <h1>Charitable Institutions' Registration u/s 12AA Not Automatically Canceled for Temporary Excess Commercial Income.</h1> The circular clarifies that the cancellation of registration under section 12AA of the Income-tax Act, 1961 for charitable institutions is not mandatory if the income from commercial activities temporarily exceeds the specified cut-off. The exemption is denied for that year, but the registration remains unless other grounds for cancellation exist. The Finance Act, 2015 changed the cut-off to 20% of total receipts. The Finance Act, 2012 amendment ensures that excess receipts do not necessitate registration cancellation. Authorities are advised to carefully assess before initiating cancellation to avoid undue tax liabilities on accreted income under section 115TD.
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