AI Drafter 
TaxTMI 
TaxTMI 
2017 (3) TMI 37
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....d the following substantial question of law for our consideration : " Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in holding that the Registration u/s 12A of the Income Tax Act,1961, once granted could not be reviewed or withdrawn in the absence of stipulation to the effect in Section 12AA(3) of the Act? 3. The respondent assessee is a Trust registered under Section 12 of the Act since 27th November, 1995. The Director of Income Tax (Exemption) by an order dated 8th December, 2011 cancelled the registration of the Trust under Section 12 of the Act in exercise of powers under Section 12AA(3) of the Act. The basis of the cancellation was the introduction of provisos to Section 2....
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....e of the Trust not being a genuine Trust. 5. The basis of the impugned order prima facie appears to be contrary to the decision of this Court in Sinhagad Technical Education Society Vs. Commissioner of Income Tax 343 ITR 23. In the above case, this Court negatived the Constitutional challenge to the amendment made in Section 12AA(3) of the Act w.e.f. 1st June, 2010 by Finance Act, 2010. Thus, refusing to quash and / or stay the notice issued after 1st June, 2010 for cancelling a registration of a Trust, registered prior to 2010. However, admitting this appeal may be an academic exercise, as even if the registration of a Trust registered prior to 2010, can be cancelled / revoked post 2010, yet the jurisdiction to issue a notice under Sect....
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....rom club at Rs. 22,83,551/and from premises contractors and services at Rs. 48,48,023/, makes it amply clear that the assessee is doing regular activities which are in the nature of business in a systematic manner and also by exploiting its assets commercially and as such I am of the considered view that after discussing the issue as discussed above, the assessee trust is directly hit by the proviso to Section 2(15) which has been introduced from A.Y. 2009-10. Once a charitable Trust / Institution hit by aforesaid proviso, then there is deeming provision that such entity shall not be for a charitable purpose. Hence, once the assessee Trust / Institution looses its charitable character then obviously there is change in the status of such ass....
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....income for the previous year relevant to the subject assessment year will not be available. Thus, income is brought to tax to secure the Revenue's interest but it does not necessarily result in automatic cancellation of Registration. Therefore, the mere fact that in one particular year, the respondent assessee may have income receipts in excess of Rs. 10 lakhs or such other limit as provided in the proviso to Section 2(15) of the Act, that by itself would not warrant cancellation of the registration under Section 12AA(3) of the Act. A similar issue had arisen before us in Director of Income Tax (Exemption) Vs. Khar Gymkhana, 382 ITR 62 where we had rejected the Revenue's appeal. In the above decision, we relied upon the CBDT Circula....
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.... (4) In view of the aforesaid position, it is clarified that it shall not be mandatory to cancel the registration already granted under section 12AA of a charitable institution merely on the ground that the cut off specified in the provision to section 2(15) of the Act is exercised in a particular year without there being any change in the nature of activities of the institution. If in any particular year, the specified cut off is exceeded, the tax exemption would be denied to the institution in that year and cancellation of registration would not be mandatory unless such cancellation becomes necessary on the ground(s) prescribed under the Act. (5) With the introduction of Chapter XIIEB in the Act vide Finance Act, 2016, prescribing special....
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.... under Section 12AA(3) of the Act in view of amendment to Section 2(15) of the Act, had not accepted an identical submission on behalf of the Revenue. In appeal, the High Court while upholding the view of the Tribunal that registration cannot be cancelled, observed as under : " The fact that the receipts from commercial activities are more compared to the overall receipts of the charitable activities can neither lead to the conclusion that the activities of the trust or Institution are not genuine nor can it be said that the activities of the Trust or Institution are not being carried in accordance with objects of the Trust or Institution and, therefore, the two conditions stipulated under the provisions of subsection (3) of Sectio....