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Per D. Manmohan, V.P. This appeal by the assessee Trust is directed against the order passed by the Director of Income Tax (Exemption) wherein the DIT (Exemption) observed that the assessee Trust/Institution, having carried on the business of sports material, flour mill, miscellaneous edibles and giving hall on hire for marriage, etc. and its gross receipts having exceeded `10,00,000/-, by virtue of first and second proviso to section 2(15) of the Act it looses its charitable character and by virtue of this change in the status it can no longer be considered as a Trust constituted for charitable purposes. The learned DIT (Exemption) further observed that consequently the Trust becomes non-genuine for the purpose section 11 of the I.T. Act and by invoking the provisions of section 12AA(3) of the Act he is entitled to cancel/withdraw the registration originally granted.

2. The case of the assessee, on the other hand, was that there is no change in the status of the Trust. As per the original constitution of the Trust the same activities were carried on from 1953 onwards and it continued to carry on the same activities even till date. It was also submitted that the objectives of the assessee Trust are to start Library and Newspaper M/s. Vanita Samaj readings for study, Lectures, organising competitions and similar other activities. To attain the objectives of the Trust it requires finances and the receipts from the activities carried on by the assessee are hardly sufficient to cover the expenditure towards medical relief, education, relief to poor, etc. which are of general public utility and the charges for various activities are nominal and hence it cannot be considered as non-charitable activity and, at any rate, it cannot be said that the Trust is non-genuine. It was also submitted that section 12AA(3) was wrongly invoked by the AO since proviso 1 and 2 to Section 2(15) have been incorporated in the Statue w.e.f. 01.04.2009 with the sole purpose that as and when the aggregate value of receipts exceed the stipulated limit prescribed in the second proviso the activities carried on by the assessee for earning income should be treated as falling out side section 2(15) irrespective of the nature of use or application, or retention, of the income from such activity which implies that though the Trust will not loose its character as charitable Trust but only in the years where the receipts exceed the stipulated limited it looses the benefit of exemption. The learned DIT was, however, of the opinion that by virtue of the new proviso introduced w.e.f. 01.04.2009 the activities of the Trust cannot be considered as charitable in nature and hence the Trust itself become non-genuine. Accordingly the registration allowed to it in earlier years under section 12AA was cancelled/withdrawn from 2009-10 and the assessee Trust was held to be non-charitable Trust/Institution.

3. Aggrieved, assessee contented before the Tribunal that the DIT (Exemption) should have fulfilled the requirements of section 12AA(3) before cancelling the registration granted to the appellant earlier under section 12A of the I.T. Act and he has not considered the provisions of section 11(1)(b) of the I.T. Act properly.

4. At the time of hearing the learned counsel for the assessee submitted that there is no change in the objects of the Trust or the activities of the Trust since inception and the Trust was already granted registration. By virtue of the first proviso introduced to section 2(15) of the Act w.e.f. 01.04.2009, carrying on any activity in the nature of trade, etc. was deemed to be not an activity for charitable purpose but upon introduction of the first M/s. Vanita Samaj proviso the Legislature, in its wisdom, noticed that it affects the genuineness of small Trusts who have to survive on such income so as to apply the receipts for its charitable activities and immediately thereafter, by Finance (No.2) Act with retrospective effect from 01.04.2009, introduced the second proviso whereby it was clarified that first proviso shall not be applied if the aggregate value of the receipts from the activities referred to therein is `10,00,000/- or less in the previous year and this monitory limit was increased in the subsequent years. Strong reliance was placed upon the decision of the ITAT "G" Bench, Mumbai in the case of Ghatkopar Gymkhana vs. DIT(E) 40 taxmann.com 207 wherein the Bench, considering identical circumstances, observed that on a conjoint reading of first proviso as well as the second proviso to section 2(15) alongwith section 12AA(3) of the Act, the only conclusion that could be reached is that the assessee, whose gross receipts cross the stipulated limit, would be denied exemption in the year in which the gross receipts exceed the stipulated limit but the Trust as such cannot be considered as non-charitable/non-genuine in nature so as to cancel the registration under section 12AA(3) of the Act. In para 5.4 of the aforementioned order the Bench observed that registration under section 12A of the Act can be cancelled only upon finding that the activities of the Trust are non-genuine or the same were not carried out in accordance with the objects of the Trust. In other words, so long as the assessee Trust is carrying out its activities in accordance with its objects, Revenue cannot invoke provisions of section 12AA(3) of the Act which was introduced by Finance (No. 2) Act, 2009 with retrospective effect from 01.04.2009. As could be noticed from the above provisions, where a Trust or an Institution has been granted registration earlier, it is for the Commissioner to record satisfaction that the activities of such Trust or Institution are not genuine or are not being carried out in accordance with the objects of the Trust or Institution, as otherwise he is not empowered to invoke sub-section (3) of section 12AA of the Act. Having regard to the circumstances of the case the Bench observed that denial of exemption can be limited to the years where the gross receipts exceed the stipulated monitory limit but the registration as such cannot be cancelled unless the Trust is held to be non-genuine; it is for the Commissioner to show that M/s. Vanita Samaj there is change in the activities of the Trust. The learned counsel adverted our attention to the order passed by the DIT (Exemption) to highlight that there is no change in the activities of the Trust from its inception and it is only by virtue of application of first proviso, having regard to the fact that in this year the gross receipts exceeded the limit provided under the second proviso, the learned DIT (Exemption) proceeded to assume that the assessee Trust becomes non-genuine for the purpose of section 11 of the I.T. Act without giving any finding, whatsoever, that there is change in the objects of the Trust. He, therefore, strongly relied upon the order passed by the ITAT Mumbai Bench to contend that the general order passed by the DIT (Exemption) to cancel the Registration is not in accordance with law.

8. On a conspectus of the matter we, therefore, hold that denial/ cancellation of registration in the instant case is not in accordance with law. To clarify further the gross receipts having exceeded the stipulated monitory limit provided in the second proviso to section 2(15) of the Act, the assessee is not entitled to claim exemption in this year but that fact alone cannot make the Trust non-genuine for the purpose of invoking section 12AA(3) of the Act. We, therefore, set aside the order passed by the DIT (Exemption) and allow the appeal filed by the assessee. Needless to observe that the AO is duty bound to independently verify as to whether the assessee fulfilled the other conditions such as application of income, etc. so as to claim exemption under section 12(15).