TaxTMI 
TaxTMI 
2012 (3) TMI 671
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....sessee company was incorporated with following objects:- "i) To promote, create, construct, erect, maintain assist and develop all kinds of infrastructural facilities anywhere in India without any profit motive. ii) To initiate all necessary steps to protect the environment from effluent of industrial and domestic sewerages, air, water, chemicals, betterment of industry and public health other wastes ecology safety needs and using the treated water for industrial, irrigation and domestic purposes. iii) To assist the leather industry, small scale, tiny and cottage industry in all the technical financial research and development administration. Warehousing facilities, information technology, marketing, training, rec....
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....ity is to serve a particular trade, i.e. leather industry. Therefore the activity is of General public utility and not protection of environment. 3. The turnover from the activity and the additional infrastructure created far exceeds the threshold limit of even Rs. 25 lakhs. As the proviso to section 2(15) is hit, it is no longer a charitable purpose." 4. Principle of mutuality does not hold good as discussed in the order above. In view of the above, the registration requested for cannot be granted and the application for registration u/s.12AA is hereby rejected." 4. The learned counsel appearing on behalf of the assessee submitted that the assessee company was set up as a special purpose vehicle for implementing and up....
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....Director of Income Tax (Exemptions) has erred in coming to the conclusion that the assessee is not entitled for registration under the provisions of section 12AA of the Act. 5. On the other hand, learned DR appearing on behalf of the department submitted that application for registration under section 12AA has been rightly rejected by the Director of Income Tax (Exemptions) and strongly supported the order dated 30.11.2011 passed by Director of Income Tax (Exemptions) . 6. We have heard the parties and have gone through the impugned order. Board's circular no.11 of 2008 dated 19.12.2008 clarifies exemption under section 11 in case of assessee claiming both to be charitable institution as well as mutual organization. The relevant ....
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.... 3.1. There are industry and trade associations who claim exemption from tax u/s 11 on the ground that their objects are for charitable purpose as these are covered under 'any other object of general public utility'. Under the principle of mutuality, if trading takes place between persons who are associated together and contribute to a common fund for the financing of some venture or object and in this respect have no dealings or relations with any outside body, then any surplus returned to the persons forming such association is not chargeable to tax. In such cases, there must be complete identity between the contributors and the participants. Therefore, where industry or trade associations claim both to be charitable institution....
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....isions of section 25 of the Companies Act, 1956. Section 25 of the Companies Act lays down the power to dispense with the word "Limited" or the word "Private Limited" in the name of charitable or other company. The fact that the assessee is a company registered under section 25 of the Companies Act has not been disputed by the revenue. Therefore, it leaves no doubt that the assessee company has been formed as a limited company for promoting charity or any useful object (in the case of the assessee maintain and develop infrastructure facilities for leather industry and implementation of common treatment plants to protect the environment from industrial pollution) and it intends to apply its profits, if any or other income in promoting its ob....
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....related and allied activities. The assessee created CETPs to protect environment from the ill effects of pollution created by leather industry. The assessee is rendering its services inter-alia for the protection of environment and control of pollution which otherwise is very harmful to the human being, plants and wild life. The observation of the Director of Income Tax (Exemptions) that the dominant activity of the assesse is to serve a particular trade is not correct as the common effluent treatment plants are set up for the protection of environment as a whole and not for a particular industry or a particular section of the society. His further observation that the turnover from the activities and additional infrastructure created far ex....