Registration of institution u/s 12AA cannot be cancelled if its receipts from trade, commerce, etc., exceeds Rs.10Lakhs/Rs.25 Lakhs limit u/s 2(15)

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INCOME TAX APPELLATE TRIBUNAL , JAIPUR

ITA NO. 100/JP/2012 Asstt. Year : 2009-10 & STAY APPLICATION No. 5/JP/2012 (In ITA NO. 100/JP/2012) Asstt. Year : 2009-10

Rajasthan Housing Board vs The CIT

Date of pronouncement : 04.05.2012

After going through the provisions of section 12AA(3) and section 2(15), we found that before the CIT(A) to withdraw the registration granted u/s 12AA has been provided in sub clause (3) of section 12AA of the Act. The provision of section 2(15) are totally different. Now by the amended provisions of section 2(15) it has been provided that if any year the gross receipts of an institution exceeds Rs. 10 lakhs, (now Rs. 25 lakhs w.e.f. 1.4.2012), then in that case, exemption u/s 11 may not be allowed to the Institution as the activities of the institution will be treated as not charitable if the receipts exceeds the limit. The exemption u/s 11 is to be examined on yearly basis, therefore, the exemption u/s 11 have no effect for granting registration u/s 12AA of the Act.

In the case of Gujarat Cricket Association, Ahmedabad vs DIT(E) (supra), the Tribunal by passing a detailed order has held that the registration cancelled by DIT(E) on the basis of amended provisions of section 2(15) of the Act was not justified as amended provisions does not fall within the permissible limit of section 12AA(3) of the Act and accordingly the order of DIT(E) was considered bad in law and the appeal of the Institution was allowed.

If in any year, the gross receipts of the Institution exceeds Rs. 10 lakhs or Rs. 25 lakhs, as the case may be, then in that year, the Assessing Officer is empowered to examine the allowability of exemption u/s 11 but the same has no effect on granting the registration u/s 12AA of the Act.