(2013) 90 DTR 197 (Chennai) Madras Motor Sports Club vs. DIT (Exemptions) A.Y.: 2009-10 Dated: 21-12-2012

Facts:

The assessee, a motor sports club, registered as a society, was also having registration under erstwhile section 12A(a). The objectives of the assessee, inter alia, were to promote sports of motor car and motorcycle and conduct motor races competitions, etc. As per DIT (Exemptions), though the objects and activities were covered under the category of “advancement of general public utility” coming within the ambit of section 2(15), assessee’s receipts were in the nature of business receipts and were more than Rs. 10 lakh (this limit is now raised to Rs. 25 lakh w.e.f. 01-04-2012). Therefore, the objects and activities of the assessee could no more be considered as charitable in nature as per the first and second provisos to section 2(15). In this view of the matter, he cancelled registration granted to the assessee u/s. 12A(a).

Held:

A harmonious reading of both the provisos to section 2(15) will only mean that in the years in which the receipts of nature mentioned in first proviso exceeded Rs. 10 lakh, the assessee will not be eligible for exemption u/ss 11 and 12. It will not mean that an otherwise charitable object of general public utility will become a non-charitable one merely because its aggregate receipts of the nature mentioned in the first proviso to section 2(15) exceeded Rs. 10 lakh. Therefore, registration granted to the assessee u/s. 12A(a) cannot be cancelled only on that ground. If in the very next year, assessee’s receipts are less than Rs. 10 lakhs, then it will have to be granted the exemption available u/ss. 11 and 12, if other conditions are satisfied. In other words, nature of objects of the assessee cannot fluctuate in tandem with the quantum of receipts mentioned in the first proviso.