TaxTMI 
TaxTMI 
2015 (5) TMI 919
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....x (Exemptions) referred to object clause No. 2, under the main objects to be perused by the company as mentioned in Part-A, reading as follows : "To promote environmentally and socially responsible business practices by assessing and mitigating the environmental and social impacts for sustainable economic growth, to address. . ." 2.1. The Director of Income-tax (Exemptions) further observed that the applicant intends to engage business practices for the purpose of economic growth, which does not come under the purview of "charitable in nature" as defined under section 2(15) of the Act. The Director of Income-tax (Exemptions) in this connection held as follows : "2.1 Under the circumstances and when all the objects of the applicant-company are not charitable, in my view, it will not be eligible for registration under section 12AA of the Act. Further, in the said object clause which is descriptive in nature, there is also reference to promoting environmental sensitivity of the employees of the company throug....
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....sp; 4. Further, it is noticed that the above company also intends to engage in litigation in different courts of law against different authorities for different purposes. The object clause No.11, in this regard under the incidental objects in Part-B is reproduced as under : 'To create and promote enlightened public opinion on various issues affecting the citizens of India and if necessary to take up, litigations in competent court of law and take any other lawful measures to safeguard rights and interest of all citizen. . .' 4.1 From the aforementioned object, it may be noticed that the applicant-company also intends to file litigation against different authorities including Government authorities while taking up different issues concerning the citizens of the society. In the fact of such an object, which is not at all charitable, it may be noticed that the entire objects of the applicant-company are not charitable and hence under that circumstances, it will not be eligible for registration under se....
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....ct. Reliance in this regard is placed on the decision of the hon'ble Supreme Court in Yogiraj Charity Trust v. CIT [1976] 103 ITR 777 (SC) wherein their lordships made the following observations (page 781) : 'The question is whether exemption can be granted where some objects are charitable and some non-charitable. Where there are several objects of a trust, some of which are charitable and some non- charitable, and the trustees in their discretion are to apply the income to any of the objects, the whole trust fails and no part of the income is exempt from tax. Where the objects are distributive, each and every one of the objects must be charitable in order that the trust might be upheld as a valid charity. If no definite part of the property or its income is allocated to charitable purposes and it would be open to the trustees to apply the whole income to any of the non-charitable objects, no exemption can be claimed. (See East India Industries (Madras) P. Ltd. v. CIT [1967] 65 ITR 611 (SC) and Mohammad- Ibrahim Riza Malak v. CIT [1930] AIR 1930 PC 226).' &nbs....
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....f the company shall be wound-up, the assets available for distribution amongst the members shall (subject to any rights attached to any new class of shares hereafter created) be applied in repayment of the capital paid up on the ordinary shares and any balance shall be distributed amongst the holders thereof in proportion to the number of ordinary shares held by them respectively.' 6.2 From the above, it may be noticed, in case of winding up of the applicant-company, the balance assets of the company, i.e., the property of the company, after repayment of the paid up capital on the ordinary shares, shall be paid to the holders of the same in proportion to the number of ordinary shares held by them. This provision, as may be noticed, rather contradicts the earlier winding up clause referred to in article X of the memorandum of association. In the face of such ambiguity, the applicant-company in this case, in my view, cannot be granted registration under section 12AA of the Act." 2.2. Hence the registration sought under section 12AA of the Act was refused and the application in Form 10A rejected....
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....b) 688 (Kol) is reproduced hereunder (page 749) : ". . . The concept behind section 28(iii) is to cut at the mutuality principle being relied on in support of a claim for exemption, when the assessee was actually deriving income or making profits as a result of rendering specific services for its members in a commercial way. The reason for the introduction of section 28(iii) of the Act, is to ignore the principle of mutuality and reach the surplus arising to the mutual association and this is clear from the fact that these provisions are confirmed to services performed by the association 'for its members'. Such income would either be charged as business income or under the residual head, depending upon the question whether the activities of the association with the non-members amount to a business or otherwise. Section 28(iii) constitutes certain income of the association to be business income without affecting the scope of the exemption under section 11. Section 2(15) which incorporates the definition of 'charitable purposes' simply shows that several mutual associatio....