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Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR
Before: DR. M. L. MEENA & SH. ANIKESH BANERJEE
Per Dr. M. L. Meena, A.M.:
Both these appeals are filed by the appellant assessee against the order dated 31.07.2018 in ITA No. 501/Asr/2019 and ITA No. 86/Asr/2020 respectively, passed by the Commissioner of Income Tax (Exemptions), Chandigarh u/s 12AA of the Act, refusing to grant registration u/s 12AA of the Act.
ITA Nos. 501 & 86/Asr/2019&2020 2 Bahadur Ke Textiles & Knitwear Association v. CIT 2. The Common grounds of these appeals reads as under: -
“1. That the ld. CIT-Exemptions Chandigarh, has erred in law and facts of the case, while denying the registration to applicant u/s 12AA of the Income Tax Act, 1961, without appreciating the fact that such company is engaged in activities, which are within the meaning of “Charitable purposes”, as defined u/s 2(15) of the Act. 2. That the appellant craves the right to add, amend or delete any grounds of appeal before it is finally disposed off.”
Considering the similar grounds of appeal on identical facts and circumstances of the matter in the case of the same assessee, regarding the refusal of registration u/s 12AA both these appeals were heard together and, are being disposed off by this common order for sake of brevity.
The Ld. Counsel brought to the notice of the Bench that the appellant is a Company incorporated u/s 25 of the Companies Act, 1956 and has been in operation since 29.06.2011. The appellant company is engaged in the activity of promoting, establishing, running and managing “Common Effluent Treatment Plants” and Research Laboratories, Research Institutions for treatment of Water and Effluent of Industries, to promote processing industries to develop and achieve the treatment of water and effluent as per norms and standards laid down by Punjab Pollution Control Department, to install, establish, maintain control and manage electricity generation by installing requisite machinery as per norms and standards laid down by Punjab State Electricity Board and Central Electricity Regulatory Authority and to provide uninterrupted power and steam through pipelines to Dyeing Units.
ITA Nos. 501 & 86/Asr/2019&2020 3 Bahadur Ke Textiles & Knitwear Association v. CIT 5. It was further argued that the assessee company had filed two applications in Form 10A seeking registration of company u/s 12AA of the Income Tax Act, 1961 ( in short ‘the Act’) was filed by the Appellant before Commissioner of Income Tax (Exemptions), Chandigarh, (hereinafter referred to as the ‘CIT(E)’, the details of the same are tabulated hereunder:
Bearing ITA No. 86/Asr/2020 1st Application u/s 12AA Date of filing 02.01.2018 Order u/s 12AA rejecting the application 31.07.2018 Date of filing of Appeal before Hon’ble Bench 13.02.2020 Delay in filing of appeal 501 days
Bearing ITA No. 501/Asr/2019 2nd Application u/s 12AA Date of filing 30.11.2018 Order u/s 12AA rejecting the application 28.05.2019 Date of filing of Appeal before Hon’ble Bench 27.07.2019
The Ld. AR submitted that the initial order of rejection, dated 31.07.2018, bearing ITA No. 86/Asr/2020 and the 2nd appeal, bearing ITA No. 501/Asr/2019, since the facts are same and hence, the Ld. Counsel requested that appeal bearing ITA No.86/Asr/2020 be taken up first and, whatever, would be decision of the Hon’ble Bench in that case, the same would be applicable in 2nd appeal in ITA No.501/Asr/2019.
ITA Nos. 501 & 86/Asr/2019&2020 4 Bahadur Ke Textiles & Knitwear Association v. CIT 7. It was pointed to the Ld. Counsel, that the appeal bearing ITA No. 86/Asr/2020 is late by 501 days and for that the Ld. Counsel alongwith appeal filed in ITA 86/Asr/2020, filed a condonation application, which is being reproduced as under:-
“Condonation Application “Condonation Application in the instant case, is necessitated under the circumstances as explained hereunder:- Assessee filed application originally, on 02.01.2018, in form 10A, seeking registration 12AA of Income Tax Act, and 1961 (referred to as “the Act”, hereinafter. Such application was rejected by CIT-E, vide his order, dated 231.07.2018, hearing No.CIT(E)/Chd/12AA/2018-19/3634-3636, citing the reasons mentioned in the order (Copy of order is on record). After going through such rejection order of CIT(E), the counsel of the assessee framed the opinion that perhaps CIT(E), could not appreciate the facts of the case properly, in light of the fact that, there were certain inconsistencies in the rejection order w.r.t. factual findings. So, instead of filing appeal before ITAT, counsel advised the assessee to file fresh application (on Form 10A), seeking registration under section 12A of the Act, before new incumbent commissioner. This would help the assessee to explain his correct and detailed facts to new incumbent commission. Fresh application advised to be filed with the expectation that commissioner might appreciate the case of the assessee with elaborated explanation w.r.t. facts and law. Accordingly, the assessee e-filed fresh application, on 30.11.2018, seeking registration u/s 12AA of the Act. A detailed submission was made with CIT(E), w.r.t. facts as well as law applicable thereon. But, CIT(E), rejected their fresh application, so filed on 30.11.2018 by citing the following reason, vide order no. ITBA/EXMP/S/EXM1/2019- 20/1016137539(1) DATED 28.05.2019: “The above facts and approval certificates from various government agencies/ministries submitted by the applicant does not succor in changing the opinion taken by CIT(E) in earlier rejection order dated under these circumstances natural or legal recourse available with the applicant was to file an appeal before the Hon’ble ITAT. There is no such provision in Income Tax Act to file a fresh application when the case is rejected on merit. The only remedy available to the applicant/assessee was to file an appeal before the
ITA Nos. 501 & 86/Asr/2019&2020 5 Bahadur Ke Textiles & Knitwear Association v. CIT Hon’ble ITAT. Even in present the infractions that had gone behind the rationale for the earlier rejection remains. 9. In the instant case, given the above, I have no opinion but to proceed on merits and deny the registration to the application u/s 12AA of the Income Tax Act 1961. There is no ground to deviate from the conclusion of the earlier rejection that the applicant company cannot be termed to full under the definition of “charitable purposes” as defined u/s 2(`15) of the Act.”. So, CIT(E) rejected the application by citing his inability to deviate from earlier decision and did not discuss the merits of the case. Aggrieved, the assessee filed appeal before ITAT, vide appeal no. 501/Asr/2019. Hearing in this case was fixed for first time on 05.02.2020. During the hearing, on appeal, Hon’ble Members of the Bench observed that since this appeal was not decided on merits by CIT(E), but he relied upon the earlier order of CIT(E), therefore, the Counsel should opt for filing appeal w.r.t. earlier passed order dtd. 31.07.2018 (first order), duly seeking condonation of delay for the same. An application for clubbing for both the appeals i.e.Appeal No.501/Asr/2019 and new Appeal should be filed. Then, it would be expedient for the Tribunal to decide both the appeals on merits. Accordingly, this fresh appeal is being filed, assailing the order of CIT(E) dtd. 31.07.2018 (first order). Therefore, it is humbly prayed before your honour to condone the delay of 497 days, in peculiar facts and circumstances of the case, in interest of natural justice.” 8. The Ld. Counsel argued that the appellant was fully dependent upon his erstwhile representative for filing the appeal. However, since, the Authorized Representative guided the assessee in filing the fresh application after rejection of first application instead of filing the appeal, the appellant was under bonafide belief as per legal advice of the earlier counsel. He argued that the assessee cannot be penalized, when there is a reasonable case for delay in filing the appeal and for that, the appellant has relied upon the decision of Jurisdictional, Punjab & Haryana High Court in the case of Sh. Manoj Ahuja, reported in 150 ITR 696, copy placed at pages 223 to 227 of Paper Book-II, wherein, it has been held that litigant should not suffer on account of mistake of counsel.
ITA Nos. 501 & 86/Asr/2019&2020 6 Bahadur Ke Textiles & Knitwear Association v. CIT 9. The Ld. Counsel also relied upon the decision of Coordinate Bench in case of M/s Gurfateh Films and Sippy Grewal Productions P Ltd. vs Pr. CIT (Central), Ludhiana in ITA No. 92/Asr/2020 dated 23.12.2021 where the Bench has condoned the delay of 665 days wherein the Appellant has proved its bonafide, when the erstwhile AR has delayed despite all the documents were provided to the AR by the Appellant. (Copy of the order is placed at Page No. 228 to 235 of PB–II) as filed by the assessee.
The Ld. Counsel further relied upon the decision of M/s Bhagwati Colonizers P.Ltd. Vs. ITO in ITA No.169/Asr/2015 vide order, dated 22.10.2019 decided in favour of assessee, where the delay of 571 days on the basis of reasonable cause was condoned and copy of the judgment has been placed at pages 236 to 240 of PB-II as filed by the assessee.
Lastly, the appellant relied upon the judgment of Puneet Fashion Pvt. Ltd. of Chandigarh Bench in ITA No. 1065 to 1067/Chd/2017, wherein, by relying upon the decision of Bombay High Court in the case of Vishin Meghani 86 taxmann.com 98, the delay of 2984 days was condoned by relying upon the decision of Hon’ble Apex Court in the case of “Concord of India Insurance Co. Ltd. Vs. Smt. Nirmala Devi & Ors.” (Copy of the order is placed at page No. 241 to 255 of Paper Book-II) as filed by the assessee.
The Ld. DR argued that the delay should not be condoned, since the appellant should have filed the appeal after rejection of order u/s 12AA by the Ld. CIT(E) on 31.07.2018 and no ground has been made for condonation of delay.
ITA Nos. 501 & 86/Asr/2019&2020 7 Bahadur Ke Textiles & Knitwear Association v. CIT 13. We have considered the submissions and arguments of the appellant assessee on the application for condonation of delay and the arguments of Ld. DR as advanced during the course of hearing. We have gone through the orders of CIT(E), dated 31.07.2018 and 28.05.2019 and the facts as borne out from the record of assessee in both the appeals, are that after first rejection of application, the assessee again filed an application on 30.11.2018. From the perusal of the orders of CIT(E) rejecting the applications of assessee vide order, dated 31.7.2018 and 28.05.2019 on similar facts and circumstances, it is borne out that the CIT(E) has relied upon the earlier order, dated 31.7.2018 for rejecting the subsequent application filed by the assessee on 30.11.2018 and as such, the condonation of delay deserves to be accepted. The reliance placed by the assessee on the judgment of Jurisdictional High Court in the case of Sh. Manoj Ahuja reported in 150 ITR 696, wherein it has clearly been held as under:
“That it is axiomatic that the Court is the guardian of the minors. It is the duty of every Court and Tribunal to protect and safeguard the interests of minors of course within the four walls of law. If a guardian, who" also happens to be an advocate, makes a mistake in understanding and applying the law of the land, the interests of the minors cannot be allowed to suffer on that score. It is now well recognised that no litigant should ordinarily suffer for a mistake fully his counsel. Application for condonation of delay allowed with costs.-Bharat Rubber and Allied Industries vs. State of Punjab & Ors. (1980) 46 STC367 (P&H) (FB) and Piare Lal Khushbakhat Rai vs. State of Punjab (1971) 27 STC398 (P&H) applied; Smt. Nirmal Khosla vs. Union of India & Ors. AIR 1976 P&H 22 relied or; IAC vs. Kedar Nath Jhunjhunwalla (1982) 133 ITR 746 (Pat): TAX 61 (3) -151: TC3R.874 dissented from” 14. In the case of ‘Gurfateh Films and Sippy Grewal Productions Pvt. Ltd. (Supra) on the identical facts condoned delay of 665 days by relying upon
ITA Nos. 501 & 86/Asr/2019&2020 8 Bahadur Ke Textiles & Knitwear Association v. CIT the judgement of Hon’ble Apex Court. The Hon’ble Bench in para 12 of the order has discussed the decision of the Hon’ble “Supreme court” in the case of Esha Bhattacharjee vs. Managing Committee of Raghunathpur Nafar Academy & Others (Civil Appeal Nos. 8183- 8184 of 2013), in which, some of the decisions rendered by Hon’ble Apex Court on the principle to be followed, white adjudicating the issue of condonation of delay have been discussed as under:-
“(a) In Collector, Land Acquisition, Anantnag and another v. Mst. Katiji and others (supra), a two-Judge Bench observed that the legislature has conferred power to condone delay by enacting Section 5of the Indian Limitation Act of 1963 in order to enable the courts to do substantial justice to parties by disposing of matters on merits. The expression “sufficient cause" employed by the legislature is adequately elastic to enable the courts to apply the law in a meaningful manner which sub serves the ends of justice, for that is the lifepurpose for the existence of the institution of courts. The learned Judges emphasized on adoption of a liberal approach while dealing with the applications for condonation of delay as ordinarily a litigant does not stand to benefit by lodging an appellate and refusal to condone delay can result in a meritorious matter being thrown out at the very threshold and the cause of justice being defeated. It was stressed that there should not be a pedantic approach but the doctrine that is to be kept in mind is that the matter has to be dealt with in a rational common-sense pragmatic manner and cause of substantial justice deserves to be preferred over the technical considerations. It was also ruled that there is no presumption that delay is occasioned deliberately or on account of culpable negligence and that the courts are not supposed to legalize in justice on technical grounds as it is the duty of the court to remove in justice. In the said case the Division Bench observed that the State which represents the collective cause of the community does not deserve a litigant-non grata status, and the courts are required to be informed with the spirit and philosophy of the provision in the course of interpretation of the expression “sufficient cause”. In this context, we may refer with profit to the authority in Oriental Aroma Chemical Industries Limited v. Gujarat Industrial Development Corporation and another (2010) (5SGC 459), where a two-Judge Bench of this Court has observed that the law of limitation is founded on public policy. The
ITA Nos. 501 & 86/Asr/2019&2020 9 Bahadur Ke Textiles & Knitwear Association v. CIT legislature does not prescribed limitation with the object of destroying the rights of the parties but to ensure that they do not resort to dilatory tactics and seek remedy without delay. The idea is that every legal remedy must be kept alive for a period fixed by the legislature. To put it differently, the law of limitation prescribes a period within which legal remedy can be availed for redress of the legal injury. At the same time, the courts are bestowed with the power to condone the delay, if sufficient cause is shown for not availing the remedy within the stipulated time. Thereafter, the learned Judges proceeded to state that this Court has justifiably advocated adoption of liberal approach in condoning the delay of short duration and a strict approach where the delay is in ordinate. In Improvement Trust, Ludhiana v. Ujagar Singh and others (2010) (6SCC786),it has been held that while considering an application for condonation of delay no strait jacket formula is prescribed to come to the conclusion if sufficient and good grounds have been made out or not. It has been further stated therein that each case has to be weighed from its facts and the circumstances in which the party act sand behaves. ” The principles that emanate from the above said decisions are that, in the matter of condonation of delay in filing appeals beyond the limitation period, the courts are empowered to condone the delay, provided the litigant is able to demonstrate that there was ‘‘sufficient cause” in preferring appeal beyond the limitation period. The Courts have also held that the expression “sufficient cause” should receive liberal construction so as to advance substantial justice. Hence the question of condonation of delay is a factual matter and the result would depend upon the facts of the case and the cause shown by the assessee for the delay. It has also been opined that generally delays in preferring appeals are required to be condoned in the interest of justice, where no gross negligence or deliberate inaction or lack of bona fides is imputable to the party seeking condonation of the delay.” 15. Accordingly, considering the facts of the case in view of judgment of “Apex Court”, we are of the considered opinion that the assessee had reasonable and sufficient cause for delay in filing the appeal in time. Thus, we hereby condone the delay and admit the appeals on merits.
At the time of hearing, the Ld. Counsel invited our attention to para 2 of the order of CIT(E), dated 31.07.2018, wherein the Ld. CIT(E) had
ITA Nos. 501 & 86/Asr/2019&2020 10 Bahadur Ke Textiles & Knitwear Association v. CIT discussed aims and objects of the company. The Ld. AR argued that admittedly, the CIT(E) has not doubted the aims and objectives while rejecting the application. The AR further argued, that a detailed query letter was letter issued by the Ld. CIT(E) as reproduced in para 5 and, in para 6, of the order of CIT (E), and after considering the written reply of the assessee dated 24.05.2018, he has recorded a finding of fact that no fault was found in the said reply furnished by the assessee (APB, Pg. 154 to 157).
It was further argued that the Ld. CIT(E) directed the Assessing Officer to make further enquiries as to whether the Dyeing Industries and Others were developing pollutants and harassing pollution in the area and in compliance, the Ld. Assessing Officer reported that the assessee is a company formed by 25 Dyeing Units and in the area known as “Bahadur Ke Road”, Ludhiana,; that there are about 300 manufacturing units in addition to some dyeing units located therein and that there is cluster of 23 dyeing units in Bahadur Ke Road Dyeing Complex, which are engaged in the job work of dyeing cloth manufactured by 300 units located in Bahadur K. Road Complex and also effecting the inhabitants, effected area damaged to the soil and underground water and, though, admitted that some necessary measure are required to ameliorate environment degradation caused by their activities but then the CIT(E) has held that there is nothing charitable in this endeavour and they are bound in law to take necessary measure to reduce the pollution and finally, rejected the application that the said activity cannot fall under the definition of charitable purpose as defined in section 2(15) of the Act and hence rejected the application.
ITA Nos. 501 & 86/Asr/2019&2020 11 Bahadur Ke Textiles & Knitwear Association v. CIT 18. It was vehemently argued by the Ld. Counsel of the assessee that, the activities undertaken by the Company, "preservation of environment" as mentioned u/s 2(15) of the Act. Provision of section 2(15) reads as under:
"Charitable purpose" includes relief of the poor, education, yoga, medical relief, preservation of environment (including watersheds, forests and wildlife) and preservation of monuments or places or objects of artistic or historic interest, and the advancement of any other object of general public utility: Provided that the advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on of any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity, unless— (i) such activity is undertaken in the course of actual carrying out of such advancement of any other object of general public utility; and (ii) the aggregate receipts from such activity or activities during the previous year, do not exceed twenty per cent of the total receipts, of the trust or institution undertaking such activity or activities, of that previous year;”
The Ld. AR brought to the attention of the Bench that, the assessee is engaged in the activity of providing “Special Purpose Vehicle” to shoulder the working of CETP and overcoming the problem of effluent from the industries in Ludhiana, which at present a major concern for the city. It was further argued that the smooth working of these “effluent plants” is ensured by the Appellant Company in collaboration with the financial support provided by the State & Central Government. The City Ludhiana is facing a major problem of health hazardous effluents from the industries, being the industrial effluent water/waste left in the natural water channels/rivers, which in turn result in contaminated water for the residents.
ITA Nos. 501 & 86/Asr/2019&2020 12 Bahadur Ke Textiles & Knitwear Association v. CIT 20. The Ld. Counsel further argued that the appellant had been granted various departmental approvals like approval from “Ministry of Environment, Forest & Climate Change Department”, approval from the “Municipal Corporation of Ludhiana”, Approval from ‘National Highway Authorities of India’, from ‘Planning Department Punjab’, approval from ‘PPCB’ regarding the lying of ‘Sewerage Line’, which proves the aims & objects and genuineness of the activities of the company. It was, further, argued that, certain grants have been received from Central & State Governments, which is an undisputed fact and substantial grant of Rs. 5,62,50,000/- had been received from ‘Punjab Infrastructure Development Board’ and also the grant from the ‘Ministry of Environment’ of Rs. 4,50,00,000/- for setting-up of these effluent plants and the said project had also the support from the Punjab Pollution Control Board and all such documentary evidences had been submitted to the CIT (Exemption), copies of which have been placed in the paper book. Further, it was also brought to the notice of the CIT(E), the correspondence with the various government authorities about the availability of treated water at the said common ‘Effluent Treatment Plants’ which could be used for various purposes and also drawn our attention to the balance sheet for the subsequent years, which proves the setting-up the common ‘Effluent Treatment Plants’ and, thus, the activities of the company cannot be doubted.
The Ld. Counsel also argued that, the Worthy CIT (Exemption) had wrongly held that the assessee is not covered u/s 2(15) of the Act, since there had been amendment to Section 2(15) and the “Preservation of the Environment” had been inserted by Finance Act No. 2, 2009 w.e.f.
ITA Nos. 501 & 86/Asr/2019&2020 13 Bahadur Ke Textiles & Knitwear Association v. CIT 01.04.2009 and, as such, the finding of the Ld. CIT (Exemption) that, it is not covered u/s 2(15) is not a correct finding. The Ld. Counsel also relied upon the judgment of the Gujarat High Court in the case of Naroda Enviro Projects Ltd. reported in (2020) 120 taxmann.com 126 (Guj.) for the said preposition, that if the dominant object was for ‘Preservation of Environment’, the object of the assessee was ‘charitable in nature’ and the registration u/s 11 & 12 was granted to the assessee and, further, brought to our attention that, under similar circumstances, the CIT, Ludhiana-1, has granted registration u/s 12AA to “Punjab Dyers Association” under File NO. CIT-1/Ldh/Tech/12A/322012-2013/2483 order dated 31.08.2012, (APB, Pg.167 to 169).
The Ld. AR argued that there was no defects pointed out in the application of the assessee by the CIT(E) and he has not doubted the two conditions required to be satisfied for the grant of registration u/s 12AA i.e. aim & object and genuineness of the activities. In the peculiar fact, the application for grant of registration u/s 12AA cannot be rejected. Reliance was placed by the assessee on the following judgments:
a) CIT(Exemption)vs. Shri Shirdi Sai Darbar Charitable Trust (Dharmshala), Barnala [2017] 81 taxmann.com 49 (Punjab and Haryana) (Copy of the order is placed at Page No. 256 to 259 of Paper Book –II) b) CIT vs. Surya Educational & Charitable Trust [2011] 15 taxmann.com 123 (Punjab and Haryana) c) CIT vs. Baba Kartar Singh Dukki Educational Trust [2014] 42 taxmann.com 17 (Punjab & Haryana) (Copy of the order is placed at Page No. 260 to 261 of Paper Book –II) d) CIT vs. B.K.K Memorial Trust [2013] 29 taxmann.com 286 (Punjab and Haryana) e) Saint Kabir Educational Trust vs CIT 41 DTR 27 Asr. Trib.
ITA Nos. 501 & 86/Asr/2019&2020 14 Bahadur Ke Textiles & Knitwear Association v. CIT f) CIT vs. IILM Foundation Academy as reported in 389 ITR 148 order dated 16.09.2016 “There was nothing on record which showed that the assessee did not meet any of the prescribed conditions for the grant of registration and the eligible exemption under section 11 and consequently under section 80G. There was also nothing on record which showed that the company indulged in any non- charitable activities. The Commissioner’s declining the registration by reading the ancillary objects as its main objects as also on the basis of future of the assessee was only presumptuous. The appellate Tribunal rightly held that the registration and status granted under section 25 of the 1956 Act was a recognition of the fact that the Assessee was essentially established for the purpose of education.” g) CIT vs Baba Deep Singh Educational Society in ITA No. 881 of 2010 (P&H HC) h) Vikas Lok Sewa Smiti vs. CIT (2014) 147 ITD 294 Agra-Trib. i) DIT(Ex.) vs Delhi Public School Society (2018) 92 taxmann.com 132 DEL-HC j) CIT(Ex.) vs Kids-R-Kids International Education & Social Welfare Trust (2017) 399 ITR 572 P&H High Court k) DIT(Ex.) vs. The North Indian Association 148 DTR 76 Bom. HC (2017) Thus, it was contended by the Ld. Counsel that the assessee company be granted registration u/s 12AA. 23. Per contra, the Ld. DR stands by the impugned orders.
We have heard the rival contentions, perused the material on record and gone through the order of the CIT (Exemption) dated 31.07.2018, where he has denied the registration to the assessee by holding that there is nothing charitable in the case of the assessee and, we have also carefully considered the arguments of the Ld. Counsel and various documents filed in the paper book and the judgments relied upon by the assessee during the course of hearing. Admittedly, the CIT (Exemption) had not doubted the aims & objects of the assessee and that the preservation of the environment is covered by Section 2(15) w.e.f.
ITA Nos. 501 & 86/Asr/2019&2020 15 Bahadur Ke Textiles & Knitwear Association v. CIT 01.04.2009. In our view, Since, the Ld. CIT (Exemption) have neither doubted the aims & objects nor activities of the assessee and, once these two twin conditions have been satisfied, and hence, CIT (Exemption) was not justified in refusing to grant the registration to the appellant company.
The CIT (Exemption) during the course of processing the application u/s 12AA also made enquiries through the Assessing Officer about the activities of the assessee and nothing adverse have been pointed out by the Assessing Officer in his report to the CIT (Exemption), which have been discussed in para 6 of the order of the CIT (Exemption). The activities of the assessee are matching to the objects of the company, in as much as, the assessee has got the recognition from the various government authorities, like “Ministry of Environment”, “Punjab Pollution Board”, “Municipal Corporation of Ludhiana”, “National Highway Authority of India”, “Planning Development Punjab” and even the centre & state government have released the grants for setting-up the common ‘Effluent Treatment Plants’ and the plant has started working in the next years and substantial investment have been made by the company as well and, thus, the object of formation of this company for carrying out charitable activities in the field of environment stands achieved as per section 2(15) of the Income Tax Act, 1961.
We have also gone through the order of the Gujarat High Court in the case of Naroda Enviro Projects Ltd. reported in (2020) 120 taxmann.com 126 (Guj.) dated 21.09.2020, in which under similar facts & circumstances, the registration which was refused by the CIT (Exemption) was granted, wherein it has been held as under:
ITA Nos. 501 & 86/Asr/2019&2020 16 Bahadur Ke Textiles & Knitwear Association v. CIT “Section 2(15), read with section 11, of the Income-tax Act, 1961 - Charitable purpose (Objects of general public utility/Preservation of environment) - Assessment year 2014-15 - Assessee-trust was engaged in management of liquid and solid industrial waste generated by polluting industries in common Effluent Treatment Plant - It was also engaged in other ancillary activities for purpose of curbing menace of pollution - Assessing Officer observed that assessee earned profit from activity of management of liquid and solid wastes and concluded that assessee was engaged in activities which were not in nature of charity but were in nature of business as per section 2(15), read with section 13(8) and, accordingly, he denied exemption as provided under sections 11 and 12 - Whether since dominant object was not only preservation of environment but one of general public utility, object of assessee was charitable in nature, and, thus, assessee was entitled to seek exemption under section 11 - Held, yes [Para 7] [In favour of assessee]” 27. We have noted the fact that even the CIT-1, Ludhiana vide File No. CIT-1Ldh/Tech/12A/32/2012-13/2483 order dated 31.08.2012 in the case of “M/s. Punjab Dyers Association” C/o Balaji Processors, Opp. Central Jail, Kaka Road, Tajpur Road, Ludhiana has granted the registration u/s 12AA vide order dated 31.08.2012 under similar facts & circumstances and hence, we have no hesitation in holding that, the CIT (Exemption) has erred in not granting registration u/s 12AA to the assessee, and while holding so, we rely upon the judgment of Hon’ble Jurisdictional High Court of Punjab & Haryana in the case of Shri Shirdi Sai Darbar Charitable Trust (Dharmshala) (Supra) wherein it was held that-
“Section 12AA of the Income-tax Act, 1961 - Charitable or religious trust - Registration of (Conditions precedent) - Whether while granting registration under section 12AA two conditions to be fulfilled are that objects of assessee are charitable in nature and, thus, activities are genuine - Held, yes - No adverse remarks were recorded by Commissioner (Exemptions) with regard to objects contained in memorandum of assessee-trust to come to conclusion that its activities were not genuine - Whether where assessee- trust had not filed its return in earlier years, it could not be said that activities of assessee were not genuine; hence, denying of registration on
ITA Nos. 501 & 86/Asr/2019&2020 17 Bahadur Ke Textiles & Knitwear Association v. CIT grounds of non-filing of return was unjustified - Held, yes [Para 4][In favour of assessee]” 28. Similarly, the Hon’ble Jurisdictional High Court of Punjab & Haryana in the case of Baba Kartar Singh Dukki Educational Trust (Supra) held as under:
“Section 12A, read with section 12AA, of the Income-tax Act, 1961 - Charitable or religious trust - Registration of [Disqualification] - Whether object of section 12AA is only to examine genuineness of object of trust - Held, yes - Income as well as resource of assessee trust were taken into consideration while examining genuineness of object - Whether no suspicion as to these facts could be sole criteria for rejecting an application under section 12A - Held, yes - Whether merely because a trustee was a life long member of a trust, same could not itself raise an inference that trust was not charitable - Held, yes - Whether therefore, Tribunal was justified in directing registration of assessee as charitable trust - Held, yes [Para 4] [In favour of assessee]” 29. In view of the above said factual matrix and the judgements on parity of facts, we hereby set-aside the order passed by the CIT (E) dated 31.07.2018 and restore the matter to the file of CIT (Exemption) with a direction to grant the registration u/s 12AA of the Act.
In the ITA No. 86/Asr/2020, on similar facts & circumstances of not grating the registration u/s 12AA in the case of the same assessee, as discussed above, the assessee instead of filing the appeal against the first order dated 31.07.2018, as advised by his counsel, filed an another application on same facts &circumstances on 30.11.2018 to CIT (Exemption) and the CIT (Exemption) by relying upon the earlier order of its rejection dated 31.07.2018 rejected the application. Since we have allowed the appeal of the assessee in ITA No. 501/Asr/2019 and directed the CIT
ITA Nos. 501 & 86/Asr/2019&2020 18 Bahadur Ke Textiles & Knitwear Association v. CIT (Exemption) to grant the registration and, therefore, the appeal in ITA No. 86/Asr/2020 will become infructuous and that we order accordingly.
In the backdrop of the aforesaid discussion, both the appeals of the assessee are disposed off in the terms indicated as above.
Order pronounced in the open court on 11.08.2022.
Sd/- Sd/- (Anikesh Banerjee) (Dr. M. L. Meena) Judicial Member Accountant Member *GP/Sr.PS* Copy of the order forwarded to: (1) The Appellant: (2) The Respondent: (3) The CIT(Appeals) (4) The CIT concerned (5) The Sr. DR, I.T.A.T.