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2016 (10) TMI 537 - ITAT HYDERABADRegistration u/s section 12AA denied - non charitable activities - CIT (E) has invoked the proviso to section 2(15) of the I.T. Act only on the ground that the assessee is collecting sums under the heads of corporate fees, in-stadia advertisement, sale of corporate boxes etc - Held that:- To be eligible for exemption u/s 11 of the Act, the assessee has to be carrying on charitable activities and has to prove that it has applied its income for charitable purposes and there is no limitation that the assessee shall not make any profit out of its activities. U/s 11, the thrust is on application of income. The definition of charitable activity has not undergone a change except for raising the limit of turnover by which the income from commercial activities would become taxable. In the case of Tamil Nadu Cricket Association [2013 (12) TMI 833 - MADRAS HIGH COURT] has considered the CBDT circular 1 of 2011 and also the Hon'ble Supreme Court’s decision in the case of CIT vs. Andhra Chamber Of Commerce, reported in (1964 (10) TMI 19 - SUPREME Court ) to hold that if the primary or dominant purpose of the Trust or Institution is charitable, another object which by itself may not be charitable, but which is merely ancillary or incidental to the primary or dominant purpose would not prevent the Trust or Institution from being a valid charity. DIT has no jurisdiction to cancel registration of a charitable institution on the ground that it is carrying on commercial activities which are in breach of the amended definition of “charitable purpose” in section 2(15) and that registration can be cancelled only if the activities of the trust are not genuine or are not being carried out in accordance with its objects and further that this is clarified by Circular No.21 of 2016. Thus, it can be seen that the registration withdrawn u/s 12AA(3) of the Act is not sustainable in the case of the assessee before us. Thus, it can be seen that the alleged commercial activities carried on by the assessee were also carried on by the Tamil Nadu Cricket Association and the above judgment is clearly applicable to the facts of the case before us. Therefore, on this ground, registration could not have been invoked u/s 12AA(3) of the Act. As regards the other grounds i.e. holding of a cricket match for women in violation of the object No.(xxviii), we find that the main object of the assessee is to promote the game of cricket and particularly for men only as there is a separate cricketing body for women. The reason given by the assessee for holding women’s cricket match is that it was held at the instance of the BCCI particularly since the women cricket association was not functioning. We find that this activity cannot be said to be exactly in contravention of the objects of the assessee society. Even if it is to be considered to be in violation of the object, it is a solitary deviation and the AO might consider disallowing the income derived by the assessee from conducting of such a match while computing the exempt income u/s 11 of the I.T. Act. Further, as regards the expenditure which is not supported by bills and vouchers also, we are of the opinion that it can only lead to disallowance and not for withdrawal of registration u/s 12AA(3) of the Act. In view of the above, we set aside the order of the DIT (E) and assessee’s appeal is accordingly allowed. Since we have already set aside withdrawal of the registration u/s 12AA(3) of the Act, we see no reason to adjudicate the other ground of appeal i.e. the date from which the registration shall be withdrawn or cancelled. - Decided in favour of assessee.
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