Govardhan Eco Village Trust Vs CIT(Exemption)/ITO (ITAT Mumbai)
ITAT Mumbai held that rejection of registration under section 12AB of the Income Tax Act treating receipts and income from sale of agro and Gaushala products as commercial without examining the receipts being incidental and ancillary is not justifiable. Accordingly, matter restored to file of CIT(E).
Facts- The present appeal has been preferred by the assessee. CIT(E) has erred in law and on facts in rejecting the Appellant’s application for renewal of registration under Section 12AB of the Income-tax Act, 1961, on the erroneous ground that the activities actually carried out by the Trust over the years are not in furtherance of a “charitable purpose” within the meaning of Section 2(15) of the Act and its proviso.
Conclusion- Merely because one of the objects in the trust deed refers to “advancement of any other object of general public utility”, it would not, by itself, conclude the matter unless the Ld.CIT(E) also examines the dominant and actual activities carried on by the assessee during the relevant period and determines under which limb of section 2(15) such activities properly fall. If, on facts, the activities are found to be in the nature of education, yoga, preservation of environment, or other specific charitable heads, the matter would stand on a footing distinct from a case falling purely under the residuary category of “advancement of any other object of general public utility”. The mere exceedance of the 20% threshold, by itself, could not have been treated as determinative unless the Ld.CIT(E) first came to a clear finding, on the basis of the objects and actual activities of the assessee, that the case falls under the residuary limb of “advancement of any other object of general public utility” as contemplated under section 2(15) of the Act. Likewise, the character of the receipts from agro/goshala products and rent could not have been concluded merely on nomenclature, without examining whether such receipts were intrinsically connected with and incidental to the attainment of the assessee’s stated charitable objects.
