In a recent ruling, the Kolkata bench of Income Tax Apppellate Tribunal observed that, Engaging the activities of develoing the public utilities shall also come under the purview of “Charitable purpose”.
The Assessee-applicant Asansol Durgapur Development Authority is constituted under section 11 of the West Bengal Town and Country (Planning &Development) Act, 1979 and engaged in the activities of developing the public utilities. The assessee-trust upto including Assessment Year 2003-04 was claiming the exemption u/s. 10(20A) of the Act. However, the Section was omitted by Finance Act 2002 with effect from 01.04.2003. Thereafter assessee submitted the registration application under setion 12A of the Act on 19.03.2009. During the course registration proceedings, Ld. CIT observed that the activities of assessee are in the nature of trade, commerce or business or in relation to rendering of any services to any trade, commerce or business. Therefore, the assessee is not eligible for registration u/s 12A of the Act in terms of amended provision of Sec. 2(15) of the Act. Besides above, the CIT observed that with effect from 01.06.2007 the power for condoning the delay has been withdrawn. Consequently, the ld. CIT can grant the exemption only from the financial year in which the application is made. In the instant case the application was submitted by assessee for registration under section 12A of the Act on dated 19.03.2009. In view of above the Ld. CIT rejected the application filed by assessee under section 12A of the Income Tax Act.
The assessee filed an appeal before the Trbunal alleging that the Ld. CIT(A) erred in rejected the registration application u/s 12AA of the Act on account of delay in filing the registration application and holding that the activities of the assessee are non charitable.
The Tribunal found that assessee-trust in the instant case, is the West Bengal Statutory Body. It was claiming exemption from its income tax u/s 10(20A) of the Act till the AY 2003-04. However, the same has been omitted by the Finance Act, 2002 with effect from 01.04.2003. Consequently as a result of omission the assessee-trust was not entitled to claim the exemption of its earned income under the provision of Income Tax Act.
The Tribunal bench comprising of Judicial member S.S.Viswanethra Ravi and Accountant Member Waseem Ahmed observed that, from a bare reading of the aforesaid proviso this is amply clear that exemption Sections 11 & 12 will be available from the first day of assessment year immediately following the financial year in which the application is made. Now in the instant case, since the application has been made on 19.03.2009 then the assessee-trust cannot claim the exemption for the earlier years but certainly entitle to claim the exemption benefit prospectively from the financial year in which the application has been made. On the basis of this, the Tribunal arrived at a conclusion that that L’d CIT is not supposed to done the delay for registration application but should grant the registration on prospective basis. Therefore, the action of L’d CIT for rejecting the registration application on the ground that it is filed late is not correct. It is because, L’d CIT has power to grant registration prospectively.
Regarding the issue of activities of the assessee-trust, i.e, about the nature of trade, commerce or business, the Tribunal relied upon catena of decisions of various benches ITAT have decided in favour of assessee.
Read the full text of the order below.
