The Madras High Court held that the assessee is entitled to registration under Section 12A even when activity is covered under “object of general public utility”.
The assessee, Tuticorin Port Trust filed an application for registration under Section 12AA of the Income Tax Act, 1961 on claiming it as a Charitable Institution on the ground that the object and service rendered by the assessee are in the nature of general public utility.
The Commissioner of Income Tax rejected the application on the ground that the assessee is not involved in any charitable activity to qualify for registration under Section 12AA of the Income Tax.
The assessee preferred an appeal before the Income Tax Appellate Tribunal and the Tribunal held that all the requisite conditions are satisfied and directed the Commissioner to grant registration under Section 12AA to the assessee following the decision of the Gujarat High Court and allowed the assessee’s appeal. Aggrieved over the order passed by the Tribunal, the Department has filed the appeal.
The issue raised in this case was whether the ITAT was right in law in directing the Commissioner of Income Tax to grant registration under Section 12AA of the Act even though disregard to the provisions of Section 12A(a) proviso (ii) of the Income Tax Act, according to which registration cannot be granted from a date earlier than first of the financial year in which application was made.
The main contention of the appellant-Department is that the assessee Trust has not established that they are involved in charitable activities.
Further, the contention of the appellant that the claim of the assessee that registration under Section 12AA may be granted with effect from 01.04.2000, is not sustainable in view of the provisions of Section 12Aa proviso 2 of the Income Tax Act and that the registration cannot be granted from a date earlier than the first day of the financial year in which the application was made.
The division bench of Justice M.Duraiswamy and T.V.Tamilselvi held that even if the assessee is engaged in the category of activity of “object of general public utility”, they are entitled for registration under Section 12A.
Therefore, the court held that the assessee can claim registration under Section 12A by categorising the activity of the assessee as “object of general public utility”.
“In these circumstances, we do not find any error or irregularity in the order passed by the Income Tax Appellate Tribunal. We find no ground much less any substantial question of law to interfere with the order passed by the Income Tax Appellate Tribunal,” the court while dismissing the appeal said.
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