2023 (10) TMI 214 - SCH - Income Tax

Exemption u/s 11 - Entitlement to registration u/s 12A - whether some of the activities of the assessee are found to be commercial in nature and its gross receipts from such activities exceed year on year the limit set out in the proviso to Section 2(15) ? - petitioner s grievance is that the respondent s application for registration u/s 12AA as an institution carrying on charitable objects falling within the definition of Section 2 (15) in furtherance of the protection of the environment was allowed as a result of the impugned order - HC 2017 (7) TMI 364 - ANDHRA PRADESH HIGH COURT held Tribunal committed 2 mistakes, as that of overlooking the first 6 activities covered by Section 2(15) and focusing on the 7th activity which has a correlation to the first proviso and that of looking at the gross receipts even before the grant of registration. HELD THAT - In the present case the Court is of the opinion that the concerned Commissioner overlooked the circumstance that the category within which the assessee claimed registration as a charitable trust is considered to be per se a charitable object and does not fall within the description of the residuary clause of a general public utility concern. The impugned order corrected the error. The Court is of the opinion that there is no infirmity in the impugned order. The special leave petition is accordingly dismissed.

Summary

Issues involved:
The issue in this case revolves around the respondent's application for registration under Section 12AA of the Income Tax Act as an institution carrying on charitable objects related to the protection of the environment. The petitioner challenges the impugned order allowing the respondent's application.

Details of the Judgment:

Issue 1: Object of the Assessee
The impugned order listed the objects of the assessee, including training government functionaries, promoting efficient operational plans, enhancing understanding of water and land resources, functioning as an apex body on water and land management matters, providing consultancy services, and conducting research on water and land management.

Issue 2: Interpretation of Section 12AA
The respondent relied on a three-judge bench judgment that clarified the interpretation of Section 12AA regarding the registration of trusts. The court emphasized the distinction between assessing proposed activities for registration and actual activities for cancellation of registration. The court found that the concerned Commissioner in this case overlooked the charitable nature of the assessee's category, which is considered "per se" charitable and not a general public utility concern.

Conclusion:
The court held that there was no infirmity in the impugned order, dismissing the special leave petition and disposing of all pending applications.

This summary highlights the key issues addressed in the judgment, including the object of the assessee and the interpretation of Section 12AA of the Income Tax Act. The court's decision provides clarity on the registration process for charitable trusts and emphasizes the importance of aligning proposed activities with the charitable objects of the trust.