Case Law Details
IN THE ITAT MUMBAI BENCH ‘B’
New Saibaba Nagar Welfare Association
v/s.
Director of Income-tax (Exemption), Mumbai
IT APPEAL NO. 6011 (MUM.) OF 2011
[ASSESSMENT YEAR 2011-12]
JULY 31, 2012
ORDER
Vivek Varma, Judicial Member
The instant appeal has been filed by the assessee trust against the cancellation of Registration u/s 12AA(1)(b)(iii), read with section 12A of the Act.
2. The facts of the case are, that the assessee trust was registered under the Bombay Public Trust Act, 1950 vide registration No. F-39290 dated 18-02-2010 and under the Societies Registration Act, 1860 vide registration No. MAHA.STATE, Mumbai/1231/2009/GBBSD dated 20-06-2009.
3. While considering the registration, the Charity Commissioner struck down/deleted objects 1, 2 and 3, which were covered in broad sense by objections no. 6 & 8. He, therefore, granted registration to the assessee trust on objects covered by clauses 4 to 11.
4. Clauses 6 & 8 aims and objects read as, “(6): To further Health and Safety measure in coordination with civil and Police Authorities; (8): To implement schemes formulated by Local or Municipal, State and Central Government Authorities for the benefit of the locality, residents and the environment”.
5. The Authorised Representative appearing on behalf of the assessee trust submitted that the action of the trust was maintaining garden in the locality, where all the people were welcome and was being maintained through contributions received from neighboring societies. The A.R. also submitted that the objects of the trust squarely falls within the amendment brought in, in the Income Tax Act, section 2(15) wherein the words, “preservation of environment…” had been added, which brings in the objects within the amendment. The A.R. also submitted that the basic purpose of the trust was to maintain good and fresh environment. The AR placed reliance on the case of CIT v. Breach Candy Swimming Bath Trust [1955] 27 ITR 279 (Bom), wherein, it was held, “Under the Act ‘charitable purposes’ is defined, and the definition is an inclusive definition, as ‘relief to the poor, education, medical relief and the advancement of any other object of general public utility’ and the view taken has been that the expression ‘any other object of general public utility’ is of the widest connotation.” He also relied on the decision of Medical Accident Prevention Society v. CIT [2005] 278 ITR 165/144 Taxman 324 (Ker.), wherein it was held, “So far as the law which is applicable while considering the application under s. 12A, what is required to be established is that the trust or institution is a charitable one having charitable purpose. Charitable propose is also defined in s. 2(15). As per the said definition, the charitable purpose includes relief to the poor, education, medical relief and advancement of any object of general public utility. The CIT has taken a view against the petitioner in view of the provision of cl. 5 r/w cls. 4 and 8. In other words, the impact of the other clauses in the preamble and in the rules has not been given due weightage. In these circumstances, the matter requires a detailed consideration by the CIT with reference to the settled principles and with respect to the entirety of the trust for the said purpose. The impugned order is set aside and the CIT is directed to pass a fresh order in accordance with law after affording an opportunity of being heard to the petitioner.”
The A.R. also relied upon the decision in CIT v. Lucknow Educational & Social Welfare Society [2012] 340 ITR 86/21 taxmann.com 88 (All), wherein Hon’ble Allahabad High Court held, “The registration u/s 12A of the Income Tax Act was not granted by the C.I.T. by treating the activities of the Society as for commercial purposes and to gain personal profit. However, Tribunal took into considerations the requirements of registration under s. 12AA and found that the said requirements were fulfilled by the society and accordingly issued direction. Held: Tests for Registration which have to be applied are – (1) whether the activities of the society are genuine, and (2) whether the purpose of the society is charitable. Tribunal having come to the conclusion that the assessee had satisfied the registration under s. 12AA, no interference is called for with its order directing CIT to grant registration”.
The AR, therefore, pleaded that since the assessee trust was only doing service to the general public at large and there was no profit motive or commercial motive, the registration should not be cancelled.
6. The DR on the other hand submitted that the clause which talks “to beautify and maintain the garden, park, recreation centre….” has been struck down as the “aims and objects” of the trust by the Charity Commissioner and also the reply to the show cause notice is very general and that even the amendment referred to by the assessee does not talk about the maintenance of park etc. and the purpose of the trust does not fit into the scheme of section 2(15). He, therefore, pleaded that there was no infirmity in the order of the DIT, in not allowing the registration.
7. We have heard both the sides and the issue before us is whether the rejection of application for registration of the trust is correct. It is also no doubt true that clause mentioning “to beautify and maintain the garden, park, recreation centre and other human welfare………“ has been struck down by the Charity Commissioner, but the issue before us is whether the objects of the trust, for the purposes of Income Tax Act, are falling within the norms prescribed under the Income Tax Act. We have to examine the issue from two view points, i.e.;
(a) Whether the objects as per the trust deed are for public good and that there is no profit/commercial motive in the formation of the trust.
(b) Whether provisions of section 12A have been strictly adhered to by the assessee trust.
If both these view points have been satisfied by the assessee, the allowance of registration can be considered.
8. On examination of the trust deed, we find that the object pertaining to the maintenance of the park has been struck down by the Charity Commissioner and since the specific clause has been struck, it has to be presumed that it was never in existence, however clause (8), though general in nature does talk about the benefit of the locality residents and the environment. We have to take into consideration the benefit of locality residents and environment, which has also been brought into the definition of charitable purpose vide the amendment in section 2(15).
9. We find that Hon’ble Allahabad High Court in the case of Fifth Generation Education Society v. CIT [1991] 54 Taxman 237 the requirements at the stage of registration have to be complied with, along with looking into with the object of the trust.
10. In the case of Lucknow Educational & Social Welfare Society (supra) the Hon’ble Allahabad High Court the tests have been prescribed which are (1) Whether the activities are genuine and (2) whether the purpose is charitable, if both the conditions are satisfied, registration was to be granted.
11. We may observe that the decision of Hon’ble Kerala High Court was on the restoration for examination of registration afresh. The Hon’ble jurisdictional High Court in the case of Breach Candy Swimming Bath Trust’s, case (supra) the main thrust was “any other object of general public utility”.
12. The second point of view to be examined at this stage is whether the conditions u/s 12A have been complied with or not.
13. On going through the remaining object of the trust, read with the provisions of sections 2(15), 12A, 12AA of the Income Tax Act, and the case laws cited by the AR, we find that there has been compliance to section 12A as required under the provisions, so far as provisions of section 2(15) are concerned, we find that the amendment talks about preservation of environment. In the place like Mumbai, where we are encountered only with tall buildings and sky scrapers, a park is maintained and developed which not only gives fresh air but invites the people at large to come, enjoy and spend time in the company of fresh grass, flowers, and gives a breath of fresh air, would certainly fall within the words, “preservation of environment”, because if the assessee trust had not come forward to maintain it, it may have been used by other nefarious and unhealthy elements, which would otherwise, make the environment unhealthy.
14. No doubt, the specific clauses have been struck out by the Charity Commissioner, under the Trust Act, but we still feel that the object would fall in the ambit of clause (8). We also hold that the Bombay High Court in the case of Breach Candy Swimming Bath Trust (supra) and the case of Hon’ble High Court as mentioned in earlier paras, support our view.
15. We, therefore, hold that the appellant assessee trust must be granted the registration u/s 12AA and in this light we set aside the order of the Director of Income Tax (Exemption), Mumbai and direct him to allow the registration, based on clause (8).
16. In the result, the appeal filed by the assessee trust is allowed.
