August 2016
Charitable purpose- Cancellation of registration- Section 2(15) and 12AA(3) of I. T. Act, 1961- A. Y. 2009-10- Disqualification for exemption where receipts from commercial activities exceed Rs. 25 lakhs- No change in nature of activities- Assessee entitled to continued registration-
By K. B. Bhujle Advocate
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DIT(Exem) vs. Khar Gymkhana; 385 ITR 162 (Bom):
The assessee is a charitable trust covered by the last limb in the definition u/s. 2(15) of the Income-tax Act, 1961 “general public utility”. In the A. Y. 2009-10, the assessee was not eligible for the exemption in view of the fact that receipts from commercial activities exceeded Rs. 25 lakh. There was no change in the nature of activities. DIT(Exemption) cancelled the registration on this ground. The Tribunal restored the registration.
On appeal by the Revenue, the Bombay High Court upheld the decision of the Tribunal and held as under:
“i) CBDT circular No. 21 of 2016 dated 27/05/2016 clarified that it shall not be mandatory to cancel the registration already granted u/s. 12AA to a charitable institution merely on the ground that the cut off specified in proviso to section 2(15) is exceeded in a particular year without there being any change in the nature of activities of the institution.
ii) The Tribunal was right in law in holding that the assessee was entitled to continued registration u/s. 12A of the Act and in setting aside the cancellation of its registration on the ground that its receipts from commercial activities exceeded Rs. 25 lakh in the year.”
