Section 12AB(4) of the Income Tax Act

Violation of the conditions under Section 13 of the Income Tax Act does not automatically lead to the conclusion that the activities of a trust are not in accordance with its objects. The revenue must demonstrate that the dominant activities are in the nature of trade, commerce, or business, not merely based on the volume of receipts.

While the strict rule of res judicata does not apply to income tax proceedings, the revenue cannot adopt a contradictory stance in subsequent years if the facts and circumstances remain identical. Decisions made in earlier years should be respected, and the position of the tax authorities should not be arbitrarily changed.

Cancellation of registration granted under section 12A/12AA/12AB cannot operate retrospectively, as amendments to these sections are prospective unless explicitly stated otherwise by Parliament.

At the stage of registration under Section 12AA, the extent and nature of activities are not required to be examined; this is to be examined during assessment proceedings.