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2017 (10) TMI 1243 - AT - Income TaxEntitlement for benefit of section 11(1)(a) - main object of assessee - proof of charitable activities - Held that - Main object of the assessee was for providing clean environment to the society, maintenance of garden, plantation, horticulture etc. These objects and activities of the assessee were in the nature of charitable purpose, and as such accepted by the Revenue in the past. Exemption under section 11(1)(a) of the Act has been granted to the assessee in the past, and there is no change in the facts and circumstances. Registration granted under section 12A has not been cancelled. The activity of the assessee does not fall in the expression advancement of any other object of general public utility . It is specifically fall within the ambit of preservation of environment . The ld.CIT(A) has considered both these aspects and accepted explanation of the assessee that it is meant for preservation of environment as well as its objects are of charitable nature. - Decided in favour of assessee.
Issues Involved:
1. Whether the assessee is entitled to the benefit of section 11(1)(a) of the Income Tax Act, 1961 for the assessment years 2010-11 and 2011-12. Detailed Analysis: 1. Entitlement to Benefit Under Section 11(1)(a): The primary issue revolves around whether the assessee, a society registered under the Society Registration Act, 1860, is entitled to the benefit of section 11(1)(a) of the Income Tax Act, 1961. The assessee has been granted registration under section 12(A)(a) of the Income Tax Act effective from 1.6.1984 and has consistently received benefits under section 11 in the past. Facts of the Case: The assessee filed its returns for the assessment years 2010-11 and 2011-12 declaring NIL income. The Assessing Officer (AO) denied the benefit under section 11(1)(a) citing an amendment in section 2(15) of the Income Tax Act, which redefined "charitable purpose." The AO argued that the assessee's activities were in the nature of business, thus disqualifying it from exemption under section 11(1)(a). CIT(A)'s Findings: The CIT(A) highlighted that the assessee's main objectives include the preservation of the environment through various activities such as providing clean environment services, testing water and air, tree plantation, and conducting environmental research. These activities align with the definition of "charitable purpose" under section 2(15). Legal Precedents: The CIT(A) referenced the Gujarat High Court's decision in the case of Ahmedabad Management System (47 Taxman.com 162), which clarified that the proviso to section 2(15) applies to entities advancing any other object of general public utility but not to those engaged in activities like relief to the poor, education, or preservation of the environment. The court noted that the assessee's activities fall under the preservation of the environment, thus exempting it from the proviso's restrictions. Consistency of Exemption: The CIT(A) emphasized that the assessee had been granted exemption under section 11(1)(a) in previous years without any change in its activities. The AO failed to demonstrate that the assessee's activities were no longer charitable. The registration under section 12A remained valid, and the activities were consistent with the charitable purpose of preserving the environment. Conclusion: The Tribunal upheld the CIT(A)'s decision, confirming that the assessee's activities are charitable in nature as defined under section 2(15) and thus entitled to exemption under section 11(1)(a). The AO's assessment was overturned, and the appeals of the Revenue were dismissed. Order: The appeals of the Revenue were dismissed, and the decision was pronounced in the Court on 25th October 2017 at Ahmedabad.
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