2012 (9) TMI 369 - AT - Income Tax

Charitable purpose u/s 2(15) - Cancellation of Registration u/s 12AA(1)(b)(iii) - the object pertaining to the maintenance of the park has been struck down by the Charity Commissioner - Held that - On going through the remaining object of the trust, read with the provisions of sections 2(15), 12A, 12AA it is found that there has been compliance to section 12A as required under the provisions, so far as provisions of section 2(15) are concerned 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. No doubt, the specific clauses have been struck out by the Charity Commissioner, under the Trust Act, but still the object would fall in the ambit of clause (8) mentioning about the benefit of the locality residents and the environment - assessee trust must be granted the registration u/s 12AA - in favour of assessee.

Summary

Issues:
Cancellation of Registration u/s 12AA(1)(b)(iii) - Trust Deed Compliance - Interpretation of Objects - Compliance with Section 12A - Compliance with Section 2(15) - Public Good vs. Profit Motive - Benefit of Locality Residents and Environment - Judicial Precedents' Application - Registration Grant.

Cancellation of Registration u/s 12AA(1)(b)(iii):
The appeal was filed against the cancellation of registration u/s 12AA(1)(b)(iii) due to the Charity Commissioner striking down certain objects of the trust. The issue revolved around whether the rejection of the registration application was justified.

Trust Deed Compliance - Interpretation of Objects:
The Charity Commissioner had struck down specific objects of the trust related to maintaining the park. The Tribunal examined whether the remaining objects, especially clause (8) focusing on the benefit of locality residents and the environment, aligned with the charitable purpose under the Income Tax Act.

Compliance with Section 12A and Section 2(15):
The Tribunal analyzed compliance with Section 12A requirements and the definition of charitable purpose under Section 2(15). They considered the amendment emphasizing the preservation of the environment and how the trust's activities, like maintaining a park in a city environment, could fall under this definition.

Public Good vs. Profit Motive - Benefit of Locality Residents and Environment:
The Tribunal deliberated on whether the trust's activities were genuinely for public good without any profit motive. They focused on the benefit to the locality residents and the environment, essential for qualifying as a charitable purpose under the Income Tax Act.

Judicial Precedents' Application - Registration Grant:
The Tribunal referred to various judicial precedents, including the decisions of different High Courts, to support their interpretation. They emphasized the importance of complying with registration requirements and ensuring that the trust's activities were genuine and charitable in nature. Ultimately, the Tribunal directed the registration to be granted to the appellant assessee trust based on clause (8) of the trust deed.

This detailed analysis of the judgment showcases the thorough examination of the issues involved, the legal interpretations applied, and the final decision rendered by the Tribunal in favor of the appellant assessee trust.