TMI Blog2018 (3) TMI 64X X X X Extracts X X X X X X X X Extracts X X X X ..... n of registration of Trust. The appeal of the assessee is allowed, the ld. DIT(E) is directed to restore the registration certificate granted under section 12AA dated 08.09.2009. - Decided in favour of assessee. - ITA No.363/Mum/2012 - - - Dated:- 23-2-2018 - SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER For The Assessee : Shri Hari Raheja with Mani Jain (AR) For The Revenue : Ms. S. Padmaja (CIT-DR) Order Under Section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by assessee under section 253 of income tax act is directed against the order of Director of Income tax (Exemptions) Mumbai, dated 22 November 2011 for assessment year 2009-10. The assessee has raised following grounds of appeal: ( 1) On the facts and in the circumstances of the case and in law the learned Director of income tax (Exemption) erred in cancelling the restoration under section 12A of income tax Act with effect from assessment year 2009-10, holding that appellant is not engaged in activities which are covered within the meaning of charitable purpose appearing in section 2 (15) of the Income tax Act. 2. Brie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting its property commercially and in a systematic manner regularly. The ld. DIT(E) while referring Circular No.11 of 2008 dated 19.12.2008 observed that once Trust/Institution is engaged in the activity as envisages in the proviso to section 2(15), then it would not be entitled to claim that its object is for charitable purpose. The ld. DIT(E) concluded that assesseetrust is directly hit by proviso to section 2(15) introduced w.e.f. AY 2009- 10. The assessee-trust/Institution once looses its charitable character than there is change in the status of assessee and it is no longer can be held to be for charitable purpose and it became non-genuine for the purpose of section 11 and looses its charitable status and accordingly cancelled the registration under section 12AA w.e.f. AY 2009-10. Thus, aggrieved by the order of ld. DIT(E), the assessee has filed the present appeal before us. 3. We have heard the ld. AR of the assessee and ld. DR for the Revenue and perused the material available on record. The ld. AR of the assessee submits that the jurisdiction of DIT(E) for cancellation of registration already granted is very limited. The jurisdiction for cancelling registration under se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 602/M/2012 4638/M/2013 dated 18.04.2017. 4. We have considered the rival submission of the parties and have gone through the order of ld. DIT(E). The ld. DIT(E) cancelled/withdrawn the registration granted under section 12AA on the fact that the business receipt of the assessee during the year were exceeded than the prescribed limit under proviso to section 2(15). In our view, the basic dispute in the present appeal is whether in view of the amended section 2(15), restricting the definition of charitable purpose by excluding carrying any trade, commerce and business in receipt of an amount in excess of prescribed limit would itself entitle the ld. DIT(E) to cancel registration under section 12AA of the Act. The CBDT has issued the following Circular No. 21/2016 regarding cancellation/withdrawal of registration, which is extracted below: CIRCULAR NO.21/2016 [F.NO.197/17/2016-ITA-I], DATED 27-5-2016 Sections 11 and 12 of the Income-tax Act, 1961 ('Act') exempt income of charitable trusts or institutions, if such income is applied for charitable purpose and such institution is registered under section 12AA of the Act. 2. Section 2(15) of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the aforesaid position, it is 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 the proviso to section 2(15) of the Act is exceeded in a particular year without there being any change in the nature of activities of the institution. If in any particular year, the specified cut-off is exceeded, the tax exemption would be denied to the institution in that year and cancellation of registration would not be mandatory unless such cancellation becomes necessary on the ground(s) prescribed under the Act. 5. With the introduction of Chapter XII-EB in the Act vide Finance Act, 2016, prescribing special provisions relating to tax on accreted income of certain trusts and institutions, cancellation of registration granted u/s 12AA may lead to a charitable institution getting hit by sub-section (3) of section 115TD and becoming liable to tax on accreted income. The cancellation of registration without justifiable reasons may, therefore, cause additional hardship to an assessee institution due to attraction of tax-liability on accreted income. The field authorities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by CBDT came in rescue to the assessee-trust in the present case. The submission of ld. DR that activities of the Trust is not genuine because it is hit by proviso to section 2(15) of the Act, is in fact negatived by this Circular. The Circular clearly provides that mere receipt on account of business receipt in excess of limit in the proviso would not result in cancellation of registration granted under section 12AA, unless there is change in the nature of activities of the assessee. The ld. DIT(E) has not given any finding as to whether there is change in the nature of activities of the assessee during the relevant Assessment Year, except placing reliance on the proposal of ADIT(E). The ratio of decision relied by ld. DR in case of MIG Cricket Club vs. DIT(E) (supra) are not applicable on the fact of the present case. In MIG Cricket Club vs. DIT(E) (supra), on investigation it was concluded that the activities of assessee was not genuine and the matter was restored to the file of ld. DIT(E) for determination about genuinity of its activity. The other decision relied by Revenue in DIT(E) vs. North India Association (supra) is in favour of assessee wherein while dismissing the app ..... 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