SAE INDIA Vs. DIRECTOR OF INCOME TAX (EXEMPTIONS)

JUDGEMENT

(1.) THIS appeal is filed by the assessee against the order of the Director of Income Tax (Exemptions) dated 26.12.2011 passed under section 12AA(3) of the Act cancelling registration granted to the assessee with effect from 1.4.2009 i.e. introduction of proviso to section 2(15) of the Act stating that organization has not remained charitable.

(2.) COUNSEL for the assessee submits that assessee was granted registration under section 12AA of the Act vide order No. DIT(E) No. 2(202)/2003 -04 dated 24.7.2003. Counsel submits that society was formed with following main objects: -

(3.) HEARD both sides. Perused orders of lower authorities and the case law relied on. The assessee was granted registration under section 12AA of the Act vide order no. DIT(E) No. 2(202)/2003 -04 dated 24.7.2003. The assessee contends that objects and activities of the assessee are educational in nature as it is conducting programme for school children to cultivate engineering backgrounds. It is conducting Baja competition where undergraduate and postgraduate engineers can display their technical skill by prototype race cars. They are conducting conferences on various issues of automobile sector while participants are managers and engineers of automobile industry. These activities in our view cannot be considered as 'education'. The activities of the assessee carried on certainly not fall under 'education'. The activities of the institution will fall under the category of object of general public utility. The main reason for withdrawing registration granted under section 12AA(3) seems to be that the assessee is receiving huge amounts as it is conducting various conferences, baja programmes in promoting objects of the assessee. Director of Income Tax (Exemptions) cancelled registration under section 12AA(3) of the Act stating that objects and the activities of the assessee are falling under general public utility and not education and assessee's commercial receipts exceeding Rs. 10 lakhs i.e. threshold limit as per second proviso to section 2(15) of the Act and therefore assessee loses its character with charitable institution as per first and second proviso of section 2(15) of the Act. This conclusion of the Director of Income Tax (Exemptions) appears to be not correct, when the objects of the assessee trust are genuine and assessee is carrying on the activities in accordance with the objects. In this case, activities of the trust cannot be held to be not genuine and it is not the case of the Director of Income Tax (Exemptions) that assessee is not carrying on the activities in accordance with its objects. The only reason for refusing registration was that assessee's receipts are exceeding threshold limit as specified under second proviso to section 2(15) of the Act.