M/S. PANOLI INDUSTRIAL INFRASTRUCTURE PROJECT LTD.,,BHARUCH vs. THE INCOME TAX OFFICER, WARD-2,, BHARUCH

Ground No.1 relates to disallowance of claim of exemption of Rs.25,19,268/- u/s.11 was made on account of the fact that the assessee was not registered u/s.12 of the Income Tax Act.

Brief facts of the case are that the disallowance of claim of exemption of Rs.25,19,268/- u/s.11 was made on account of the fact that the assessee was not registered u/s.12A of the Act. The Assessing Officer has discussed the issue in para 4 of the Assessment Order read as under : “4. During the course of assessment proceedings, on verification of the books of accounts and other details of the assessee, it is noticed that assessee company has claimed exemption of Rs.25,19,268/- u/s.11 of the I.T.Act, 1961 in its return of income for the year under consideration, however, Authorized Representative of the assessee could not furnish the copy of certificate required as per provisions of section 12A of the I.T. Act for getting the above mentioned exemption. Therefore, Authorized Representative of the assessee was requested to show cause vide order sheet note dated 25/02/2014 as to why abovementioned exemption of Rs.25,19,268/- claimed by the assessee should not be disallowed and added to the total income of the assessee. In response, he stated that assessee had filed application before Ld. Commissioner of Income Tax-III, Baroda for granting certificate u/s.12A of the I.T.Act, however, assessee’s application was rejected by the Ld. Commissioner of Income Tax-III, Baroda. Thereafter, assessee has filed appeal before Hon'ble ITAT, Ahmedabad against the order of Ld. Commissioner of Income Tax-III, Baroda for rejection of assessee’s application for granting certificate u/s 12A of the I.T.Act which is pending for disposal. Reply submitted by the assessee has been duly considered however, it is not found tenable as per law. Therefore, abovementioned amount of

Per contra, the ld.Departmental Representative supported the order of ld.CIT(A). 7. We have heard the rival submissions, we find that the assessee Trust do not have registration u/s.12A of the Act. The Tribunal vide its order dated 23.05.2016 in para 11 has held as under : “11. On application of the above decision to the facts of the case of assessee, we find that the objects of the assessee company speaks about to build, construct, operate and maintain water supply scheme, drainage scheme, storm water drainage scheme, gas Utility Services, Power Utility, Road Network, Rainwater harvesting, artificial recharging and other utilities of Panoli GIDC Industrial Estate for the benefit of member industries. We further observe that during the course of hearing when a question was posed to the ld. AR regarding “as to who will bear the cost of accomplishing all these objects”, then ld.AR replied that assessee company shall charge the cost of services to the member industries only. This indicates that the objects for which the assessee company is seeking registration u/s 12A, they generally come in the area of work of local authorities or the Government Department which has established the industrial estate but for the better and improved quality of services that too within the control of member industries the concept of formation of such non-profit making company gets its organisation. We further observe that the working of assessee company is for the member industries of GIDC Industrial Estate and the public at large is not coming in the picture nor is there any indication in the objects which says that any specific activity for the objects to general public utility will be carried out rather the contention of assessee is indicating about remote and dim effect on the general public will be there with the attainment of main objects but we do not find it so. Therefore, respectfully following the decision of Hon’ High Court in the case of Ahmedabad Mill Owners’ Association (supra)and looking to the facts and objects of the case before us, we are of the view that main objects of the case before us, we are of the view that main objects of the assessee company are not covered under the provisions of section 2(15) of the Act and are not charitable in nature as they are confined to a special class of member industries of GIDC Industrial Estate, Panoli. Accordingly, we find no reason to interfere with the order of ld.CIT and dismiss the appeal of assessee.”

In the light of above, findings of Tribunal, we find that the objects of Trust are not covered by provision of section 2(15) and therefore, are not charitable in nature. Therefore, the lower authorities are justified in rejecting the claim of exemption u/s.11 of the Act. Therefore, respectfully following the order of Tribunal in the case of assessee Trust, this appeal of assessee is accordingly dismissed.

In the result, appeal of the Assessee is dismissed.

The order pronounced in the open Court on 22-10-2018.