TaxTMI 
TaxTMI 
2017 (3) TMI 103
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....e participants in markets for products, goods or commodities, currency, bonds, fixed income, intangibles, indices." 2. That a proposal was received by the DIT(Exemption), Mumbai, from the office of the ADIT(E)-II(2), Mumbai, therein recommending cancellation of registration granted to the assessee under Sec. 12AA, for the reason that it was carrying on activities in the nature of trade, commerce or business etc., and the gross receipts from the same were in excess of the stipulated limit of Rs. 10 lac as stood contemplated under the first proviso of Sec. 2(15). The DIT(Exemption) referring to the 'Income & Expenditure A/c' of the assessee therein observed that the latter had during the year earned income by way of running courses and franchisee fees of Rs. 18,56,401/-. The DIT(Exemption) being of the view that as the activities carried on by the assessee were in the nature of trade, commerce, business etc., therefore the assessee would be hit by the first proviso to Sec. 2(15), and as per the mandate of law it would be deemed that the assessee trust was not existing for a charitable purpose. The DIT(Exemption) in the backdrop of his aforesaid observations thus concluded that once....
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....hort 'D.R') heavily relied on the order of the DIT(Exemption) and submitted that as the assessee after being hit by the first proviso of Sec. 2(15) was thus no more existing for charitable purpose, therefore the DIT(Exemption) vide his order passed under Sec. 12AA(3) had rightly cancelled the registration that was granted to the assessee trust u/s Sec. 12AA(1)(b)(i). 5. We have heard the Ld. Representatives of both the parties, perused the order of the DIT(Exemption), and the material placed on our record. We find that the DIT(Exemption) referring to the 'Income & Expenditure A/c' of the assessee had therein observed that the latter had earned income by way of running courses and franchisee fees of Rs. 18,56,401/-during the year. The DIT(Exemption) being of the view that as the earning of income by the assessee from running of courses and franchisee fees was in the nature of a systematic generation of income from activities which were in the nature of trade, commerce or business, therefore the assessee was hit by the first proviso of Sec. 2(15), and as a fall out of the same it was to be deemed that the assessee was not existing for a charitable purpose and had become non-genuine,....
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....f the trust or institution, as the case may be, he shall pass an order in writing cancelling the registration of such trust or institution: Provided that no order under this sub-section shall be passed unless such trust or institution has been given a reasonable opportunity of being heard." 7. We are of the considered view that in the absence of anything being provided in Sec. 12AA(3) that the registration granted under Sec.12A/12AA would stand cancelled/withdrawn where the assessee is hit by the first proviso of Sec. 2(15), we are thus unable to persuade ourselves to subscribe to the findings of the DIT(Exemption) who had concluded to the contrary and had cancelled the registration of the assessee on the said count. We are not oblivious of the settled position of law that while interpreting the scope and gamut of a statutory provision, no violence can be done to its plain literal interpretation in the garb of giving effect to the underlying legislative intent. Thus in case if we subscribe to the observations of the DIT(Exemption), who we can safely conclude had transposed and read into Sec. 12AA(3) the narrowed definition of 'Charitable purpose' as stands contemplated in Sec. ....
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..... 10.00 lacs as provided under the second proviso to section 2(15) of the Act. In our view the word "previous year" mentioned in the second proviso to section 2(15) is more relevant. It has not been mentioned that the first proviso, which as observed is a rigorous proviso, will not apply if the total receipts from the charitable activities exceeds the limit of Rs. 10.00 lacs during "any year" rather, the word is "previous year". That means the benefits will not be available to the Assessee for the assessment year in which the gross receipts of income exceeds the limit of Rs. 10.00 lacs, however, that does not mean that such benefits will not be available to the institution for all other assessment years during which its receipts does not cross the limit of Rs. 10.00 lacs. The word "previous year" mentioned in the second proviso makes it liberal to get an interpretation that it is not the registration of the institution as charitable institution which is affected, rather, it is the eligibility of the said institution to get tax exemption/ benefits which is affected that too for the relevant year during which the gross receipts of the institutions cross the limit of Rs. 10.00 lacs. T....