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2017 (3) TMI 37 - HC - Income TaxCancelling the registration of the Trust - Exercise of jurisdiction under Section 12AA(3) by the Director of Income Tax (Exemption) - Held that:- Income is brought to tax to secure the Revenue's interest but it does not necessarily result in automatic cancellation of Registration. Therefore, the mere fact that in one particular year, the respondent assessee may have income receipts in excess of ₹ 10 lakhs or such other limit as provided in the proviso to Section 2(15) of the Act, that by itself would not warrant cancellation of the registration under Section 12AA(3) of the Act. A similar issue had arisen before us in Director of Income Tax (Exemption) Vs. Khar Gymkhana, [2016 (6) TMI 489 - BOMBAY HIGH COURT ] where rejected the Revenue's appeal as relied upon the CBDT Circular No.21 of 2016 dated 27th May, 2016 to conclude that the amendment to the definition of 'charitable purpose” by addition of the proviso w.e.f. 12th April, 2009 would not ipso facto give jurisdiction to the Commissioner of Income Tax to cancel the registration. The Circular No.21 of 2016 in terms directed the Authorities not to cancel the registration of the Charitable Institution only because the proviso to Section 2(15) of the Act comes into play as the receipts are in excess of the specified limits therein. It also refers to Section 13(8) of the Act to support the view of the non cancellation. However, the issue of the trust not being genuine cannot be concluded by merely giving a finding in one year that income earned from activities of trade, business or commerce are in excess of the limit specified in the proviso to Section 2(15) of the Act. This is so held by us in Khar Gymkhana (supra). However, if this happens on continuous / regular basis, it could justify further probe / inquiry before concluding that the trust is not genuine. - Decided against revenue
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