2007 (1) TMI 238 - AT - Income Tax

Tribunal Orders CIT to Register Charity Status from 2005; Reassess 2002-2005 with Fair Hearing Opportunity.

Mormugao Port Trust. Versus Commissioner Of Income-tax, Panaji.

Mormugao Port Trust. Versus Commissioner Of Income-tax, Panaji. - [2008] 301 ITR 380, ITD 109, 303, TTJ 112, 681, Issues Involved:1. Rejection of the application for registration under section 12A as a Charitable Institution.2. Non-condonation of delay in making the application under section 12A for registration.Issue-Wise Detailed Analysis:1. Rejection of the Application for Registration under Section 12A as a Charitable Institution:The appellant, an autonomous body constituted under the Major Port Trusts Act, 1963, sought registration under section 12A of the Income-tax Act, 1961, to be recognized as a Charitable Institution. The CIT rejected this application on the grounds that the Major Port Trusts Act, 1963, did not create a valid trust, and the Mormugao Port Trust (MPT) continued to be a local authority, not eligible for exemption under sections 11 to 13 of the Income-tax Act. The CIT argued that local authorities could only claim exemption under section 10(20), and the purpose of the application was to evade taxes.The Tribunal noted that the appellant was previously exempt under section 10(20) until the Finance Act, 2002, amended the section, limiting the exemption to specified local authorities. Consequently, the appellant applied for registration under section 12A to avail exemption under section 11. The Tribunal emphasized that the CIT should only examine whether the institution's objects are charitable and not delve into the application of income at the registration stage. Citing the Gujarat Maritime Board (GMB) case, the Tribunal observed that maintaining and developing ports is an object of general public utility, thus falling within the definition of 'charitable purpose' under section 2(15).The Tribunal highlighted that the MPT, like the GMB, is engaged in activities of general public utility and fulfills the conditions for registration under section 12AA. The Tribunal directed the CIT to register the MPT as an institution under section 12A from the first day of the financial year in which the application was made, i.e., from 1-4-2005.2. Non-Condonation of Delay in Making the Application under Section 12A for Registration:The appellant also challenged the CIT's refusal to condone the delay in filing the application for registration. The Tribunal acknowledged that the appellant was exempt under section 10(20) until the amendment in 2002, and there was no need to apply for registration as a charitable institution before 1-4-2002. The Tribunal noted that the appellant sought exemption through the Ministry of Shipping, which was not granted, leading to the delayed application.The Tribunal referred to the Calcutta High Court's decision in Ananda Marga Pracharaka Sangha v. CIT, which held that condonation of delay would relate back the effect of registration to the date of creation of the trust. The Tribunal observed that the appellant was controlled by the Government of India, and the delay in filing the application was justified due to the slow movement of government departments.The Tribunal set aside the CIT's order and restored the issue of registration for the intermediary period (1-4-2002 to 31-3-2005) to the CIT for fresh adjudication, providing a reasonable opportunity to the appellant.Conclusion:The appeal was partly allowed, directing the CIT to register the Mormugao Port Trust as a charitable institution under section 12A from 1-4-2005 and to reconsider the registration for the intermediary period of three years on merits.