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2007 (1) TMI 238 - AT - Income TaxDenial for Registration u/s 12A - the activities of the Major Port Trusts come into purview of the term 'charitable purpose' as defined u/s 2(15)? - eligible for the exemption u/s 10(20)? - statutory autonomous body created under the Major Port Trusts Act, 1963 - delay in filing the application for registration u/s 12A - HELD THAT - There is no doubt that the assessee, prior to insertion IT Explanation in section 10(20) with effect from 1-4-2003, was treated as a local body and accordingly, its income was exempt. In view of the statutory charge, the Legislature withdrew blanket exemption enjoyed by the local authorities like the assessee. Thus, we are of the opinion that the assessee cannot enjoy the status of the local authority. However, as per the advice by the Finance Ministry the assessee is entitled to apply for the registration under section 12A of the Act to claim the charitable institution but strictly on merits. Needless to mention that Andhra Pradesh State Road Corporation, established under the Road Corporation Act, 1950, has already been treated as a charitable institution u/s 2(15). There are several other statutory organizations established by law which enjoy the status of charitable institution. We, therefore, do not find any force in the objection that Major Ports cannot be treated as charitable institutions, because these are created under a statute . Likewise, registration cannot be denied to the assessee on account of amendment under section 10(20) of the Act with effect from 1-4-2003. There is nothing in the amendment to show that the assessees are precluded due to any reason from making an alternative claim under section 11 of the Act. The legislative intention appears to be to put restrictions on these bodies as are contained in sections 11 to 13 of the Act, relating to utilization of income of these bodies by way of investments, for public good. Sections 11 to 13 impose several restrictions and do not allow blanket exemption like section 10(20), where the assessee has only to establish that it is a local authority. No other conditions have to be followed after claiming exemption under the above sub-section. In the present scenario of globalization of trade and industry, the transport of goods from one country to another, which is mostly by sea, has become essential. Therefore, development and maintenance of Ports are of 'general public utility' it is also not in dispute that the assessee-institution is genuinely engaged in the activities of development and maintenance of Mormugao Port. Therefore, the assessee duly fulfils both the conditions u/s 12AA which are necessary for the registration of the institution u/s 12A. The predominant objectives of MPT being charitable in nature, we are unable to agree with the view taken by the CIT, Panaji that the assessee is not eligible to be registered as an institution within the meaning of section 12A of the Act. Since all the requisite conditions are satisfied, we direct the CIT to register the Mormugao Port Trust as an institution u/s 12A from the first day of financial year in which the application was made i.e., from 1-4-2005. Delay in filing the application for registration u/s 12A - HELD THAT - Following the case of Ananda Marga Pracharaka Sangha v. CIT 1995 (2) TMI 7 - CALCUTTA HIGH COURT , it appears that the assessee is entitled for registration from the date of its creation but in the instant case, the assessee is not required to get registration since 1-4-1964 to 31-3-2002 as it was already enjoying the status of local authority and was exempted from the clutches of the Income-tax Act and it is not in dispute before us. we have already observed that the assessee is entitled for registration with effect from 1-4-2005 i.e., from first day of the financial year when the application was made for registration without any delay. For the intermediatory period of three years (1-4-2002 to 31-3-2005) the application was filed belated and the same was rejected by the CIT, as we were told. Thus, we are of the view that the issue pertaining to the registration for the three years needs fresh adjudication. Therefore, in the interest of justice, we set aside the order of the CIT and restore the issue to his file for considering the belated registration application and registration for the intermediatory period of three years strictly on merits de novo but by providing reasonable opportunity to the assessee. In the result, the appeal filed by the assessee is partly allowed as stated above and announced in the open court.
Issues Involved:
1. Rejection of the application for registration under section 12A as a Charitable Institution. 2. Non-condonation of delay in making the application under section 12A for registration. Issue-Wise Detailed Analysis: 1. Rejection of the Application for Registration under Section 12A as a Charitable Institution: The appellant, an autonomous body constituted under the Major Port Trusts Act, 1963, sought registration under section 12A of the Income-tax Act, 1961, to be recognized as a Charitable Institution. The CIT rejected this application on the grounds that the Major Port Trusts Act, 1963, did not create a valid trust, and the Mormugao Port Trust (MPT) continued to be a local authority, not eligible for exemption under sections 11 to 13 of the Income-tax Act. The CIT argued that local authorities could only claim exemption under section 10(20), and the purpose of the application was to evade taxes. The Tribunal noted that the appellant was previously exempt under section 10(20) until the Finance Act, 2002, amended the section, limiting the exemption to specified local authorities. Consequently, the appellant applied for registration under section 12A to avail exemption under section 11. The Tribunal emphasized that the CIT should only examine whether the institution's objects are charitable and not delve into the application of income at the registration stage. Citing the Gujarat Maritime Board (GMB) case, the Tribunal observed that maintaining and developing ports is an object of general public utility, thus falling within the definition of "charitable purpose" under section 2(15). The Tribunal highlighted that the MPT, like the GMB, is engaged in activities of general public utility and fulfills the conditions for registration under section 12AA. The Tribunal directed the CIT to register the MPT as an institution under section 12A from the first day of the financial year in which the application was made, i.e., from 1-4-2005. 2. Non-Condonation of Delay in Making the Application under Section 12A for Registration: The appellant also challenged the CIT's refusal to condone the delay in filing the application for registration. The Tribunal acknowledged that the appellant was exempt under section 10(20) until the amendment in 2002, and there was no need to apply for registration as a charitable institution before 1-4-2002. The Tribunal noted that the appellant sought exemption through the Ministry of Shipping, which was not granted, leading to the delayed application. The Tribunal referred to the Calcutta High Court's decision in Ananda Marga Pracharaka Sangha v. CIT, which held that condonation of delay would relate back the effect of registration to the date of creation of the trust. The Tribunal observed that the appellant was controlled by the Government of India, and the delay in filing the application was justified due to the slow movement of government departments. The Tribunal set aside the CIT's order and restored the issue of registration for the intermediary period (1-4-2002 to 31-3-2005) to the CIT for fresh adjudication, providing a reasonable opportunity to the appellant. Conclusion: The appeal was partly allowed, directing the CIT to register the Mormugao Port Trust as a charitable institution under section 12A from 1-4-2005 and to reconsider the registration for the intermediary period of three years on merits.
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