Tax exemption under section 11(1)(a) for environmental preservation activities reinstated after finding activities charitable and noncommercial

Denial of tax exemption under section 11(1)(a) was contested on the ground that the society's activities-environmental cleanup and facility improvement for community benefit-constitute charitable purpose rather than commercial operations under the definition of charitable purpose. The tribunal, relying on the assessee's own earlier decision, concluded the activities qualify as preservation of environment and form part of charitable objects, deleted the assessing officer's addition treating them as chargeable, and allowed the appeal, restoring exemption eligibility.

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Issues: Whether the assessee is entitled to exemption under section 11(1)(a) of the Income-tax Act, 1961 for A.Y. 2013-14 by treating its activities of preservation of environment as charitable and consequently whether the addition of Rs. 44,07,704 made by the Assessing Officer should be deleted.

Analysis: The Tribunal examined the assessee's objects and activities relating to provision of a clean environment, maintenance of gardens, plantation and related activities and compared them with previous years where exemption under section 11(1)(a) was granted. The Tribunal noted that registration under section 12A was not cancelled and there was no change in facts or circumstances. The Tribunal further relied on a coordinate-bench decision in the assessee's own case for an adjacent assessment year which held that the activities fall within preservation of environment and qualify as charitable purpose. On this basis the Tribunal found the issue to be covered in favour of the assessee and saw no reason to uphold the addition made by the Assessing Officer.

Conclusion: The addition of Rs. 44,07,704 is deleted and the assessee is held entitled to exemption under section 11(1)(a); decision is in favour of the assessee.

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