2015 (1) TMI 1417 - AT - Income Tax

Tribunal grants tax exemption to Assessee for environmental charity activities.

Deputy Director of Income-tax (Exemption), Ahmedabad Versus Naroda Enviro Projects Ltd.,

Deputy Director of Income-tax (Exemption), Ahmedabad Versus Naroda Enviro Projects Ltd., - TMI Issues:1. Whether the activities of the Assessee should be treated as charitable, leading to the deletion of a specific addition.2. Whether the Assessee qualifies for the benefits under Section 11 & 12 of the Income Tax Act.Analysis:Issue 1:The Appellate Tribunal ITAT Ahmedabad heard an appeal filed by the Revenue against the order of the Commissioner of Income Tax (Appeals). The Revenue contested the direction to treat the Assessee's activities as charitable, resulting in the deletion of an addition of Rs. 2,53,21,438. The Assessee, a company engaged in pollution control treatment, was accused by the Assessing Officer of not conducting charitable activities as per Section 2(15) of the Income-tax Act. The Assessing Officer argued that the Assessee was operating for profit under the guise of charity. The Assessing Officer concluded that the Assessee did not qualify for exemptions under Section 11 & 12 of the Income-tax Act due to its profit-making nature. The First Appellate Authority granted relief to the Assessee, leading to the appeal.Issue 2:Upon reviewing the submissions and evidence, the Tribunal found that the Assessee's primary objective was environmental protection and pollution abatement, aligning with the requirements of Section 2(15) of the Income-tax Act. The Tribunal noted that the Assessee's activities were in compliance with the directions of the High Court and various regulatory bodies. The Assessee's incorporation under Section 25 of the Companies Act and the relevant certifications supported its charitable nature. The Tribunal emphasized that the Assessee's surplus generation was not for private profit but for environmental preservation. The Tribunal upheld the First Appellate Authority's decision, stating that the Assessee's activities qualified as charitable under Section 2(15), making it eligible for benefits under Section 11 & 12 of the Income-tax Act. Consequently, the Tribunal dismissed the Revenue's appeal, affirming the deletion of the addition of Rs. 2,53,21,438.In conclusion, the Tribunal's judgment favored the Assessee, recognizing its charitable activities in pollution control and environmental preservation, thereby upholding the benefits under relevant sections of the Income-tax Act.