2023 (8) TMI 216 - AT - Income Tax

Exemption u/s 11 - Assessment of trust - Plastic Waste Management Preservation of the environment as a Charitable Purpose or not? - Rejecting the Assessee s application in Form No. 10A filed electronically seeking registration u/s 12A - charitable activity u/s 2(15) - HELD THAT - The Punjab Pollution Control Board is a creature of Legislation in the form of the Plastic Waste Management Rules, 2016, particularly Rule 12 and Schedule II, containing the Guidelines with regard to the plastic waste management under the Extended Producer s Responsibility for Plastic Packaging and duties and functions of the State Pollution Control Boards. There is nothing wrong in the factum of all the powers having been vested with the Punjab Pollution Control Board. Rather, this is in furtherance of the requirement of the Plastic Waste Management Rules, 2016. The Bye-laws of the Assessee society are entirely in keeping with its Memorandum of Association which, in turn, is well within the four corners of the Plastic Waste Management Rules, 2016. The aims and objects of the Assessee society are not restrictive in nature. Rather, as per requirement of the Plastic Waste Management Rules, they are centered towards the implementation of the preservation of the environment purpose of plastic waste management under the aegis of the Punjab Pollution Control Board. It is out of sheer ignorance of the law that the ld. CIT(E) has held that the Assessee society, as per its bye-laws, is meant to be run as a one man show and not as a public charity. Apropos the finding of the ld. CIT(E) that none of the activities of the Assessee society is covered by any limb of charitable purpose , as envisaged by section 2(15) of the I.T. Act, we find that not only one, but all the objectives of the Assessee society are directly covered by the limb of preservation of the environment as a Charitable Purpose under the provisions of section 2(15) of the I.T. Act. Expenditure of multi-layered plastic collection and disposal charges for members are the only major expenses incurred by the Assessee society. Considering its sole object of plastic waste management, obviously, there cannot be any other major expenditure attributable to the objects of the Assessee society. The factum of this major expenditure does not take away from the prevailing fact that the objects of the Assessee society are charitable objects and its activities are with regard to the Members of the society only, strictly as per the requirements of the scheme of plastic waste management under the Plastic Waste Management Rules, 2016, as amended from time to time. CIT (E) is again wrong in observing the objects of the Assessee society to be merely ostensible charitable objects. All the objects of the Assessee society, taken either individually, or collectively, are directed towards the Assessee s charitable object of preservation of the environment. CIT(E) has also erred in holding that the activity of the Assessee society does not enure for the public at large. It cannot be over stressed that the object of plastic waste management under the Plastic Waste Management Rules, 2016 is nothing other than an activity substantially and wholly enuring for one and all, so that the basic purpose of preservation of the environment is fulfilled so far as regards the pollution caused by plastic. National Green Tribunal as well as the Hon'ble Supreme Court, besides the High Courts of the country are repeatedly laying down law favouring plastic waste management as a measure for the preservation of the environment, enuring for the public at large. ORDER The objects of the Assessee society are charitable and the activities of the Assessee society are genuine, as provided u/s 12AA - finding that the order under appeal rejecting the Assessee s application filed in Form No. 10A for registration, is erroneous and not sustainable in the eye of law, we hereby set aside and reverse the said order passed by the CIT(E), Chandigarh - Decided in favour of assessee.

Summary

Issues Involved:

1. Delay in filing the appeal.
2. Rejection of application for registration under section 12AA.
3. Observations regarding the nature of the society's activities.
4. Consideration of the objects and activities of the society.
5. Legal precedents and statutory provisions.

Summary:

1. Delay in Filing the Appeal:
The assessee explained that the 50-day delay in filing the appeal was due to a grave family tragedy and other personal difficulties faced by the Chairman. The tribunal condoned the delay, finding it unintentional and bona fide, in the interest of substantial justice.

2. Rejection of Application for Registration under Section 12AA:
The CIT(E) rejected the application, citing that the society appeared to be a one-man show controlled by the Punjab Pollution Control Board (PPCB) and not a public charity. The CIT(E) also observed that the society's activities did not qualify as charitable under section 2(15) of the Income Tax Act, 1961.

3. Observations Regarding the Nature of the Society's Activities:
The CIT(E) noted that the society's activities were restrictive and primarily benefited a specific group of companies rather than the public at large. The CIT(E) also pointed out that the financial statements did not show major expenditures attributable to the stated charitable objects, leading to the conclusion that the society was not pursuing genuine charitable activities.

4. Consideration of the Objects and Activities of the Society:
The tribunal examined the aims and objects of the society, which included setting up mechanisms for plastic waste management, conducting research, and interacting with stakeholders. The tribunal found these activities aligned with the charitable purpose of environmental preservation as defined under section 2(15) of the Income Tax Act. The tribunal also reviewed the detailed reports on the society's activities and found them genuine and in furtherance of its stated objectives.

5. Legal Precedents and Statutory Provisions:
The tribunal referred to various legal precedents, including the cases of 'CIT Vs. ILLM Foundation Academy' and 'CIT Vs. Shri Shirdi Sai Darbar Charitable Trust,' which emphasized that the objects of the trust should be charitable and the activities genuine for granting registration under section 12AA. The tribunal also highlighted the statutory provisions under the Environment (Protection) Act, 1986, and the Plastic Waste Management Rules, 2016, supporting the society's activities.

Conclusion:
The tribunal concluded that the CIT(E)'s rejection of the application was erroneous and not sustainable. The tribunal directed the CIT(E) to grant registration to the society, recognizing its objects as charitable and its activities as genuine. The appeal was allowed, and the order pronounced on 14.07.2023.