Srushti Conservation Foundation Vs CIT (ITAT Pune)
The Pune ITAT held that activities relating to “preservation of environment” are per se charitable activities and cannot be denied exemption merely because the organisation earns surplus or works through project-based agreements. The Tribunal directed grant of registration u/s 12A to a Section 8 conservation company whose application was rejected by the CIT(E) on the allegation that it functioned like a “service provider or contractor.”
The CIT(E) had denied registration by observing that the assessee was acting as an “implementing agency”, earning substantial margins and accumulating reserves, thereby indicating a profit-oriented commercial model rather than charitable activity.
Rejecting this approach, the Tribunal noted that the assessee was engaged in research-based conservation of biodiversity, ecosystem restoration, climate adaptation, agro-biodiversity and environmental education, all of which squarely fall within the category of “preservation of environment” under Section 2(15).
The ITAT emphasised that the first proviso to Section 2(15) dealing with trade, commerce or business activities applies only to cases falling under “advancement of any other object of general public utility”, and not to entities engaged in preservation of environment.
The Tribunal also found fault with the CIT(E)’s approach because the assessee had already been granted earlier registration u/s 12A, and there was no change in facts or activities warranting denial of renewal.
Relying on the Ahmedabad ITAT ruling in Gujarat Environment Service Society, the Tribunal reiterated that activities like environment protection, plantation, biodiversity conservation and ecological restoration are inherently charitable and cannot be equated with commercial business merely because receipts or surpluses arise in the course of carrying out such objects.
Accordingly, the ITAT set aside the order of the CIT(E) and directed grant of registration u/s 12A to the assessee trust
FULL TEXT OF THE ORDER OF ITAT PUNE
