2016 (9) TMI 1555 - AT - Income Tax

Exemption u/s 11 - declining registration under section 12AA - registration was declined was that the assessee institution was not for the benefit of public at large but for the mutual benefit of the association members - HELD THAT -This is a case in which the applicant institution was set up to set up an effluent plant and take care of industrial pollution. The objectives of the applicant trust clearly and unambiguously show that main objectives of the trust being set up is to take anti pollution measures for minimise the harmful impact of pollutants and to abide by guidelines of Gujarat Pollution Control Authority and Central Pollution Control Authority. The main objectives numbers 1 to 11 are specific objects in this regard. Pollution Control is certainly an object of public concern and utility. Under these circumstances the pedantic approach of the learned CIT was clearly incorrect and it cannot meet any judicial approval. As for the coordinate bench decision relied upon by the assessee it was a materially different situation inasmuch there was nothing to show that a public cause was served by the applicant in that case. Revenue does not therefore get any advantage from the same. In the light of these discussions as also bearing in mind the entirety of the case we uphold the grievance of the assessee. The CIT accordingly is directed to grant the registration under section 12AA. - Appeal allowed.

Summary

Issues:
1. Challenge to the order declining registration under section 12AA of the Income Tax Act, 1961.
2. Condonation of delay in filing the appeal.
3. Eligibility of the institution for registration under section 12AA.
4. Interpretation of the objectives of the trust in relation to public benefit.
5. Comparison with a previous decision on a similar matter.
6. Decision on granting registration under section 12AA.

Analysis:
1. The appellant challenged the order dated 30th June 2014 passed by the Commissioner of Income Tax, Gandhinagar, which declined registration under section 12AA of the Income Tax Act, 1961.

2. The appeal was time-barred by 29 days, but the appellant sought condonation of delay citing an inadvertent mistake by their tax consultant. The Tribunal, after perusing the petition and hearing both sides, concluded that the delay was due to sufficient cause and decided to condone the delay to consider the appeal on merits.

3. The Commissioner had declined registration under section 12AA stating that the institution was not for the benefit of the public but for the mutual benefit of association members. The Tribunal disagreed with this assessment, noting that the trust's objectives focused on setting up an effluent plant to tackle industrial pollution, which serves a public concern. The Tribunal found the Commissioner's approach incorrect and directed the grant of registration under section 12AA.

4. The Tribunal emphasized that pollution control, as one of the trust's main objectives, is of public concern and utility. The specific objectives related to anti-pollution measures and compliance with pollution control guidelines demonstrated the trust's public benefit focus, contrary to the Commissioner's view.

5. The Tribunal distinguished a previous decision cited by the Commissioner, highlighting that the circumstances in that case were materially different, and there was no evidence of serving a public cause. Therefore, the Tribunal found no advantage for the Revenue in relying on the previous decision.

6. Ultimately, the Tribunal upheld the appellant's grievance, directing the Commissioner to grant registration under section 12AA. The appeal was allowed, and the decision was pronounced on 1st September 2016.