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TMI Blog2021 (3) TMI 520X X X X Extracts X X X X X X X X Extracts X X X X ..... e first proviso to section 2(15) of the Act, hence, the Ld.CIT had issued the notice proposing to cancel the registration already granted to the assessee Trust, vide show cause letter No.CIT-1/VSP/12AA/VPT/12-13 dated 09.08.2012, observing that the assessee Trust is carrying on it's activities on commercial principles and generating huge income from operations with the turnover exceeding the threshold limit of Rs. 10 lakhs as envisaged in proviso to Sec.2(15) of the Act. In response to the show cause notice issued by the Ld.CIT, the assessee filed it's reply stating that the activities of the assessee are genuine and it is carrying on the activities in accordance with the objects of the Trust, therefore submitted that there is no case for cancellation of the registration already granted to it u/s 12A of the Act. The assessee further submitted that the issue with regard to taxation of income that was not exempt in case of trusts was addressed in section 13(8) of the Act which was inserted by Finance Act, 2012 with retrospective effect from 01.04.2009 and as per which nothing contained in section 11 or section 12 shall operate so as to exclude any income from the total income of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is established that either by the conduct of the Institution or by way of legal requirement, the activities are not charitable, in my view Sec.12-AA(3) can be invoked on the ground that the activities of the Trust are not genuinely charitable. 8.7. Therefore, even if activities are carried out in accordance with trust deed but the activities are no longer charitable in nature, it will be hit by genuineness clause. Hence, in my view the word 'genuineness' is used only to look into the character of the institution as to whether it is charitable or not. Hence, once it is established that the institution is not for charitable purpose as per the definition of the word "charitable purpose', the activity can be termed as not genuine for the Purpose of Sec.12AA of the Act. 8.8. The last contention of the assessee is that it has taken note of the amendment to Section 2(15) of the Act (by Finance Act, 2008) which has been brought out to give restrictive meaning to "any other object of general public utility" as appearing in the above section. Accordingly, it filed Returns of Income for the Asst. Year 2009-10 onwards admitting its income under the head "Business Income" Therefore, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nted, the Ld.CIT(A) is not permitted to cancel the registration unless it is found that the activities of the assessee are not genuine or not being carried out in accordance with the objects of the Trust or the institution. In the instant case, the Ld.AR argued that the activities of the assessee are genuine and carried out in accordance with the objects of the Trust, therefore, cancellation of registration which was already granted is bad in law, hence requested to set aside the order of the Ld.CIT and restore the registration. It is further submitted by the Ld.AR that merely on account of amendment to section 2(15) of the Act, there is no requirement of cancellation of registration. The provisions of section 13(8) of the Act clearly restrict the application of provisions of section 11 and 12 in respect of any previous year to which the amended provisions are applicable. The assessee further submitted that the assessee's activities are genuine and carried out in accordance with the objects as regulated by provisions of Major Port Trust, Act, 1963 and the accounts are being audited by C&AG. The Ld.AR relied on the decision of Hon'ble High Court of Kerala in CIT Vs. Cochin Port Trus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be the outcome of alteration in the very nature of the activities of the trust or institution required cancellation of registration already granted to the Trust or institution. Hence, section 13 of the Act has been amended vide Finance Act, 2012 by inserting a new sub-section (8) therein to provide that such organization would not get benefit of tax exemption in the particular year in which its receipts from commercial activities exceed the threshold whether or not the registration granted is cancelled. This amendment has taken effect retrospectively from 1st April, 2009 and accordingly applies in relation to the assessment year 2009-10 onwards. 4. In view of 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 deemed to the institution in that year and cancellation of registration would not be m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statute has protected the interest of the revenue. Notwithstanding the fact that the assessee is conferred registration under the provisions of Section 12A of the Act, unless the assessee falls within the provisions of Section 2(15) of the Act, excluding the first proviso, the assessee would not be entitled to the benefit of exemption from the tax. If the case of the assessee falls in the first proviso to Section 2(15) of the Act, the benefit of registration which flow from Section 12A of the Act is not available. Anyhow, that is a matter to be considered by the Assessing Authority. But on that ground, the registration cannot be cancelled, which is precisely the Tribunal has held by allowing the appeal in the present impugned order." 5.2. This Tribunal also had occasion to consider the issue in the case of Visakhapatnam Metropolitan Region Development Authority in I.T.A. No. 295/Viz/2012 dated 20.03.2020 and held that the once the registration is granted, it is not permissible to the Ld.CIT to cancel the registration u/s 12AA(3) of the Act at any stage unless it is found that the assessee is not carrying on the activity as per the objects or the activities of the assessee are not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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