TaxTMI 
TaxTMI 
2013 (2) TMI 70
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.....C.No.1212(154)/77. Objects of the assessee, inter alia, was to promote sports of motor car and motor cycle and conduct motor races, competitions, etc. During the scrutiny proceedings, for assessment year 2009-10, the A.O. of the assessee sent a proposal to the DIT(E) recommending cancellation of registration granted to assessee under Section 12A(a) of the Act. A show cause notice was issued for this, by the DIT(E). As per DIT(E), though the objects and activities were covered under the category of "advancement of general public utility" coming within the ambit of Section 2(15) of the Act, assessee had, during the previous year ended 31.3.2009, receipts of Rs. 1,52,79,521/-. As per ld. DIT(E), such receipts were in the nature of business re....
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....sidered charitable in nature. In this view of the matter, he cancelled registration granted to the assessee under Section 12A(a) of the Act. 3. Now before us, learned A.R. strongly assailing the order of DIT(E), submitted that assessee had been granted registration under Section 12A(a) from the year 1977 and also granted benefit under Section 80G of the Act. According to learned A.R., just because sponsorship fees were received on the races conducted by the assessee, it could not be held that assessee was doing something which was not of the nature mentioned under Section 2(15) of the Act. According to him, ld. DIT(E) had accepted that objects of the assessee came within the ambit of advancement of general public utility. He cancelled the ....
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.... sum of Rs. 10 lakhs. Therefore, it could not argue that any object of the general public utility was being carried on by it. Though the objects were in the nature of general public utility, earlier, by virtue of proviso to Section 2(15), introduced by Finance Act, 2008, it ceased to be so. Therefore, according to him, ld. DIT(E) was justified in cancelling the registration. 5. We have perused the orders and heard the rival submissions. There is no dispute that the assessee was granted registration under Section 12A(a) in the year 1977. Therefore, assessee was earlier considered to be charitable society eligible for claiming exemption under Sections 11 and 12 of the Act. Ld. DIT(E) has mentioned as under at para 3 and para 10(i) of his ord....
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.... Section 2(15) was further amended by Finance Act, 2010, with retrospective effect from 1.4.2009. Section 2(15) as it stands now reads as under:- "2(15) "charitable purpose" includes relief of the poor, education, medical relief, [preservation of environment (including watersheds, forests and wildlife) and preservation of monuments or places or objects of artistic or historic interest,] and the advancement of any other object of general public utility: Provided that the advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on of any activity in the nature of trade, commerce or business, or any activity of rendering any service in relat....
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....business but there was an upper limit specified. Thus, even if we presume that the sponsorship fees and entry fees received by the assessee were consideration received in relation to service rendered by virtue of trade, commerce or business, if the aggregate value of such receipts were less than Rs. 10 lakhs, it would still be considered as charitable purpose. A harmonious reading of both the provisos will only mean in the years in which the receipts of nature mentioned in first proviso exceeded Rs. 10 lakhs, assessee will not be eligible for exemption under Sections 11 and 12 of the Act. It will not mean that an otherwise charitable object of general public utility will become a non-charitable one only for a reason that the aggregate recei....