TMI Blog2014 (3) TMI 320X X X X Extracts X X X X X X X X Extracts X X X X ..... n all other years income from such activities should be considered for the benefits under section 2(15) if it is within the limit provided - thus, the denial/ cancellation of registration is not in accordance with law - the gross receipts having exceeded the stipulated monitory limit provided in the second proviso to section 2(15) of the Act, the assessee is not entitled to claim exemption in this year but that fact alone cannot make the Trust non-genuine for the purpose of invoking section 12AA(3) of the Act – thus, the order passed by the DIT (Exemption) set aside – Decided in favour of Assessee. - ITA No. 1034/Mum/2012 - - - Dated:- 26-2-2014 - Shri D. Manmohan And Shri N. K. Billaiya,JJ. For the Appellant : Shri Ashok J. Patil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies carried on by the assessee are hardly sufficient to cover the expenditure towards medical relief, education, relief to poor, etc. which are of general public utility and the charges for various activities are nominal and hence it cannot be considered as non-charitable activity and, at any rate, it cannot be said that the Trust is non-genuine. It was also submitted that section 12AA(3) was wrongly invoked by the AO since proviso 1 and 2 to Section 2(15) have been incorporated in the Statue w.e.f. 01.04.2009 with the sole purpose that as and when the aggregate value of receipts exceed the stipulated limit prescribed in the second proviso the activities carried on by the assessee for earning income should be treated as falling out side sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proviso the Legislature, in its wisdom, noticed that it affects the genuineness of small Trusts who have to survive on such income so as to apply the receipts for its charitable activities and immediately thereafter, by Finance (No.2) Act with retrospective effect from 01.04.2009, introduced the second proviso whereby it was clarified that first proviso shall not be applied if the aggregate value of the receipts from the activities referred to therein is Rs. 10,00,000/- or less in the previous year and this monitory limit was increased in the subsequent years. Strong reliance was placed upon the decision of the ITAT G Bench, Mumbai in the case of Ghatkopar Gymkhana vs. DIT(E) 40 taxmann.com 207 wherein the Bench, considering identical ci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bench observed that denial of exemption can be limited to the years where the gross receipts exceed the stipulated monitory limit but the registration as such cannot be cancelled unless the Trust is held to be non-genuine; it is for the Commissioner to show that there is change in the activities of the Trust. The learned counsel adverted our attention to the order passed by the DIT (Exemption) to highlight that there is no change in the activities of the Trust from its inception and it is only by virtue of application of first proviso, having regard to the fact that in this year the gross receipts exceeded the limit provided under the second proviso, the learned DIT (Exemption) proceeded to assume that the assessee Trust becomes non-genuin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was granted registration under section 12A vide its order dated 30.09.2009 which date falls after the introduction of first proviso as well as second proviso to section 2(15) of the Act. The law, as it exists as on that date, clearly specifies that any authority which is carrying on any activity in the nature of trade cannot be considered as engaged in a charitable activity. As soon as the Commissioner realised the mistake he invoked provisions of section 12AA(3) of the Act which, in the said circumstances, is not in accordance with law; whereas in the case of the assessee before us the registration originally granted was in accordance with law since the first proviso and second proviso to section 2(15) was not on Statute book at the poin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that by virtue of the first proviso to section 2(15) of the act the activity of the Trust should be treated as not genuine overlooking the fact that there is no change in the activity so as to invoke provisions of sub-section (3) of section 12AA of the Act. In our considered opinion, on a conjoint reading of the first proviso with second proviso to section 2(15) of the Act, a Trust can be denied exemption in the year where the gross receipts exceed the limit prescribed in the second proviso to section 2(15) and in all other years income from such activities should be considered for the benefits under section 2(15) if it is within the limit provided therein. If it was to be interpreted that once the income of the trust in one year crosses t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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