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2023 (12) TMI 214 - AT - Income TaxApproval u/s 80G - denial of claim as assessee is established for spending Corporate Social Responsibility ( CSR ) funds of Huhtamaki India Ltd. and the material produced by the assessee is again sold in the market which is a commercial activity and thus it doesn t come under the purview of charitable activities - HELD THAT - The assessee was settled as an irrevocable trust, vide Trust Deed dated 09/10/2019, with the main object to work in the area of preservation of environment. The assessee is registered under the Bombay Public Trusts Act, 1950. Further, the assessee has also received a Registration Certificate for recycling plastic waste issued by the Maharashtra Pollution Control Board under the Environment (Protection) Act, 1986 read with the Plastic Waste Management Rules, 2016. From the perusal of the financial statements of the assessee for the financial years 2020-21, 2021-22, and 2022-23, we find that the assessee earned income only from donations, sale of scraps, and sale of finished goods and no such service was rendered to any entity. In any case, it is to be noted that such a service even if it is rendered by the assessee, the same will only be for the preservation of environment and thus is a charitable activity. It is evident from the record that no other objection was raised by the learned CIT(E) while denying the approval u/s 80G of the Act to the assessee. Further, no doubt has been raised by the Revenue regarding the genuineness of the activity conducted by the assessee. Accordingly, we are of the considered view that the assessee satisfies all the conditions for the grant of approval under section 80G - the impugned order dated 30/03/2023 denying the grant of approval u/s 80G of the Act is set aside and the grounds raised by the assessee are allowed.
Issues Involved:
1. Rejection of application for approval under section 80G(5) of the Income Tax Act, 1961. 2. Determination of whether the appellant trust's activities qualify as 'charitable purpose' under section 80G(5). 3. Denial of effective opportunity of hearing to the appellant trust. Summary of Judgment: 1. Rejection of Application for Approval under Section 80G(5): The assessee challenged the impugned order dated 30/03/2023, passed by the learned Commissioner of Income Tax (Exemption), Mumbai, which rejected the assessee's application for approval under section 80G of the Income Tax Act, 1961. The application was filed in Form 10AB, and the rejection was based on the grounds that the assessee is engaged in commercial activity and not in charitable purposes as required under section 80G(5). 2. Determination of Charitable Purpose: The main object of the assessee, as per the Trust Deed dated 09/10/2019, is the preservation of the environment through recycling post-consumer plastic waste. The learned CIT(E) rejected the application on the basis that the activities of the assessee, such as selling recycled plastic granules, are commercial. However, the Tribunal found that the preservation of the environment is included in the definition of "charitable purpose" under section 2(15) of the Act. The Tribunal noted that the assessee is registered under section 12AA of the Act and satisfies all conditions laid down in section 80G(5), including not benefiting any particular religious community or caste and maintaining regular accounts. 3. Denial of Effective Opportunity of Hearing: The assessee claimed that it was not provided an effective opportunity of hearing before the rejection of its application. The Tribunal observed that the learned CIT(E) did not raise any doubts regarding the genuineness of the activities conducted by the assessee and found that the assessee was performing an important role in recycling plastic waste, which is essential for environmental protection. Conclusion: The Tribunal concluded that the assessee's activities fall under the category of preservation of the environment, which is a charitable purpose. The revenue generated from these activities is used solely for plastic waste management. Therefore, the Tribunal set aside the impugned order dated 30/03/2023 and allowed the appeal, granting the approval under section 80G of the Act. Order Pronounced: The appeal by the assessee is allowed, and the order was pronounced in the open Court on 29/11/2023.
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