Case Law Details
Tamil Nadu Maritime Board Vs ITO (ITAT Chennai)
The appeal was filed by Tamil Nadu Maritime Board against the order of the Commissioner of Income Tax (Exemptions), Chennai dated 29.09.2025, rejecting its application for registration under Section 12AB of the Income Tax Act, 1961.
The assessee is an agency of the Government of Tamil Nadu established under the Tamil Nadu Maritime Act, 1995, responsible for regulation and maintenance of minor ports. It had earlier obtained provisional registration under Section 12AB and claimed exemption under Section 11 for assessment years 2023–24 and 2024–25. Subsequently, it applied for final registration on 27.03.2025.
During the proceedings, the assessee submitted that it performs sovereign functions such as managing ports, framing rules, providing infrastructure, facilitating navigation, and collecting fees for services. However, the CIT(E) rejected the application, holding that the activities did not fall within the scope of “charitable purpose” under Section 2(15) and that the application was not maintainable under Section 12A(1)(ac)(iii). The rejection was based on the view that the assessee’s activities were not charitable and were akin to business operations.
Before the Tribunal, the assessee argued that it is an instrumentality of the State carrying out activities for the benefit of the general public, particularly in regulating and maintaining minor ports, which contributes to public safety and infrastructure. It was further contended that the CIT(E) had accepted the objects as charitable but denied registration merely because fees were charged in the course of activities. The assessee also submitted that no specific adverse findings were recorded regarding the nature of its activities.
The Tribunal observed that the assessee operates as an agent of the State in carrying out regulatory and maintenance functions of minor ports, which are intended for public benefit. It noted that the CIT(E) rejected the application without recording detailed findings on why the activities do not qualify as charitable. Further, the Tribunal found that the CIT(E) had not considered the principles laid down by the Supreme Court in the case of Ahmedabad Urban Development Authority, where statutory bodies engaged in activities for general public utility can be treated as charitable institutions even if they carry out certain commercial activities.
In light of these observations, the Tribunal held that the matter required reconsideration. It directed the CIT(E) to re-examine the application for registration under Section 12AB, taking into account the nature of the assessee’s activities and the relevant Supreme Court decision. The Tribunal also directed that the assessee be given a reasonable opportunity of being heard.
Accordingly, the appeal was allowed for statistical purposes, and the matter was remitted back to the CIT(E) for fresh adjudication in accordance with law.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
This appeal by the assessee is against the order of the Commissioner of Income Tax (Exemptions), Chennai (in short “CIT(E)”) dated 29.09.2025.
2. The assessee is an agency and instrumentality of the Government of Tamil Nadu and created by the Tamil Nadu Maritime Act, 1995. The assessee being an agency executing the sovereign powers and duties of the State Govt. in respect of regulation and maintenance of minor ports the assessee was classified as charitable institution and thus made an application for registration u/s. 12AB of the Income Tax Act, 1961 (in short “the Act”). The assessee had obtained provisional registration us/. 12AB of the Act through order dated 12.05.2023 and was claiming exemption u/s. 11 of the Act for AY 2023-24 and 2024-25. The assessee made application for final registration on 27.03.2025. The CIT(A) called for details with regard to the activities and the objectives of the assessee which was responded by the assessee. The assessee submitted before the CIT(E) that it is an arm of the State established to manage, control and administer minor ports in the state of Tamil Nadu and is empowered to frame port rules, provide infrastructure, facilitate navigation and collect duties and fees towards providing the facility. The CIT(E) after perusing the submissions of the assessee held that:
“4.7. Board’s Activities:
As detailed above, if the activities of the Board considered carefully, the same may not fit into ambit of section 2(15) of the Income Tax Act 1961 and ultimately cannot be considered as charitable activities.
Accordingly, the application seeking registration u/s 12AB through Form 10AB filed on 27.03.2025 u/s 12A(1)(ac) (iii) cannot be entertained and thus the application deserves rejection.
4.8. Moreover, as explained in para 2 of this order, as per the provisions of section 12AB (1)(b) clause (ii) (B) of the I.T. Act, 1961, if the application is made under sub- clause (ii) or sub-clause (iii) or sub-clause (v) of section 12A(1)(ac) and the Principal Commissioner or Commissioner has not satisfied, he can reject the application as well as cancel the registration of the trust/institution.
Considering all the above facts, the application filed under the section 12A(1)(ac)(iii) in Form 10AB is not maintainable and as such deserves for rejection.”
3. We have heard the parties, and perused the material available on record. The Ld. Authorized Representative (AR) of the assessee submitted that the assessee is established and constituted by the State Act with the solitary and principle purpose of regulating or regulating and developing any activity for the benefit of general public. The Ld. AR further submitted that the CIT(E) has considered the purpose in the objects of the assessee as charitable but has denied the registration u/s. 12AB of the Act for the reason that the assessee charges fees and charges in the course of activities towards achieving the purpose. The Ld. AR also submitted that the CIT(E) has not given any finding with regard to why the assessee is not entitled for registration u/s. 12AB of the Act but has simply rejected stating that the activities may not fit into the ambit of section 2(15) of the Act. From the perusal of the objects of the trust, we notice that the assessee is mainly acting as an agent of the State with regard to maintenance and regulation of minor ports which according to the assessee is ultimately for the benefit of public since it protects the coastal safety. We further notice that the CIT(E) has rejected the application by stating that the assessee is operating on commercial line akin to business without recording any adverse finding regarding the overall nature and activities of the assessee. We also notice that the CIT(E) has not considered the decision of the Hon’ble Supreme Court in the case of ACIT(E) vs. Ahmadabad Urban Development Authority [2022] 143 taxmann.com 278 (SC) wherein the Hon’ble Apex Court has laid down various principles with regard to the trust being engaged in commercial activities where the Trust is established with the objective of general public utility. It is relevant to consider the following observation of the Hon’ble Supreme Court in the above case whereby the assessee would fall within the category of charitable institutions engaged in general public utility:
“Statutory Corporations, Boards, Authorities, Commissions, etc. (by whatsoever names called) in housing development, town planning, industrial development sectors are involved in advancement of objects of general public utility, therefore are entitled to be considered as charities in GPU categories”
4. In view of the above discussions, we of the considered view that the application for registration made by the assessee has to be re-examined by the CIT(E) taking into account the unique nature of the assessee’s activities and in the light of decision of the Hon’ble Supreme Court in the case of Ahmadabad Urban Development Authority (supra). We therefore remit the appeal back to the CIT(E) for fresh consideration in the light of our above findings and decide in accordance with law. Needless to say that the assessee be given a reasonable opportunity of being heard. It is ordered accordingly.
5. In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced on 08th day of April, 2026 at Chennai
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