2021 (2) TMI 235 - HC - Income Tax

Exemption u/s 11 - application for registration under Section 12AA rejected - assessee is not involved in any charitable activity to qualify for registration under Section 12AA - HELD THAT - Even if the assessee is engaged in the category of activity of object of general public utility , they are entitled for registration under Section 12A. Therefore, we are of the considered view that the assessee can claim registration under Section 12A by categorising the activity of the assessee as object of general public utility . In these circumstances, we do not find any error or irregularity in the order passed by the Income Tax Appellate Tribunal. We find no ground much less any substantial question of law to interfere with the order passed by the Income Tax Appellate Tribunal. The appeal is liable to be dismissed.

Summary

Issues:
1. Appeal against rejection of registration under Section 12AA of the Income Tax Act, 1961.
2. Validity of the Tribunal's direction to grant registration under Section 12AA from a specific date.

Analysis:
1. The appellant challenged the rejection of registration under Section 12AA by the Commissioner of Income Tax, claiming the assessee was not involved in charitable activities. The Income Tax Appellate Tribunal (ITAT) directed the Commissioner to grant registration, citing fulfillment of requisite conditions. The appellant contended that registration cannot be granted earlier than the financial year of the application. The respondent argued that the ITAT's decision, following the Gujarat High Court's judgment, was correct. The Gujarat High Court held that the development and maintenance of Ports constitute general public utility. The Supreme Court interpreted the term "general public utility" broadly, stating that objects benefiting the public qualify as charitable purposes. The Supreme Court further clarified that activities promoting public welfare fall under charitable purposes. The High Court held that the assessee's activities aligned with "object of general public utility," justifying registration under Section 12AA.

2. The substantial questions of law raised included the validity of the ITAT's direction to grant registration from a specific date, contrary to the provision that registration cannot precede the application's financial year. The High Court, after reviewing relevant judgments, concluded that activities falling under "object of general public utility" entitle the assessee to registration under Section 12A. The Court found no error in the ITAT's decision and dismissed the appeal, emphasizing that the assessee met the conditions for registration under Section 12AA. The absence of contradictory judgments presented by the Department's counsel further solidified the Court's decision to uphold the ITAT's direction for registration.

In conclusion, the High Court upheld the ITAT's decision to grant registration to the assessee under Section 12AA, emphasizing the alignment of the assessee's activities with the concept of "general public utility." The Court's analysis of relevant legal precedents, including judgments by the Gujarat High Court and the Supreme Court, supported the decision to dismiss the appeal and confirmed the entitlement of the assessee to registration under Section 12A.