Case Law Details
CA Prarthana Jalan
Hon’ble Chennai ITAT has in the case of SAE India v/s DIT(E) has held that if the objects and activities of the trust are genuine than registration cannot be cancelled merely because receipts are exceeding threshold limit as provided under second proviso to section 2(15) of the Act. It is open to the Assessing Officer to deny exemption under section 11 on the receipts of the assessee, if the Assessing Officer feels that activities of the assessee are for general public utility and it is indulging in trade or commerce etc.
Assessee was granted registration under section 12AA of the Act vide order No.DIT(E)No.2(202)/2003-04 dated 24.7.2003. As per the amendment to section 2(15) of the Act and since the receipts of the assessee exceeded over Rs. 10 lakhs i.e. threshold limit as provided in 2nd proviso to section 2(15) of the Act the exemption granted under section 12AA was withdrawn as the assessee is no more charitable organization and the assessee’s objects fall under general public utility and not education.
Whereas the objects of the assessee is to serve as a forum where Engineers, Scientists, Technologists and Innovators in mobility engineering field can exchange ideas and learn from each other experience and the objects and activities of the institution are educational in nature as it is conducting programme for school children to cultivate engineering background. assessee conducts Baja competition where undergraduate and post-graduate engineers can display their technical skill by prototype race cars. assessee also conduct professional relevant programme by way of organizing conferences etc. and therefore activities of the assessee certainly fall under the limb of education.
It was held that registration granted under section 12AA cannot be withdrawn simply because receipts of the assessee exceeds Rs. 10 lakhs i.e. threshold limit as per second proviso to section 2(15) of the Act.
The Hon’ble ITAT observed as under:-
“In this case since the assessee’s objects and activities are genuine registration cannot be cancelled merely because receipts are exceeding threshold limit as provided under second proviso to section 2(15) of the Act. It is open to the Assessing Officer to deny exemption under section 11 on the receipts of the assessee, if the Assessing Officer feels that activities of the assessee are for general public utility and it is indulging in trade or commerce etc. Therefore, we set aside the impugned order of the Director of Income Tax (Exemptions) and allow the grounds raised by the assessee.”
