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2019 (4) TMI 769 - AT - Income TaxBenefit of sections 11 and 12 - Charitable activity or not? - disallowance of capital expenditure and addition made on account of disallowance of ECP contribution expenses by applying provisions of section 2(15) - HELD THAT:- The assessee trust is engaged in the activity of preservation of environment by treating and controlling pollution of environment i.e. land and water. As a part of its activities, trust is running a common effluent treatment plant for treatment of effluent and wastewater generated and discharged by the Industrial units situated in and around Nandesari Industrial Units, who are members of the assessee trust. This is in accordance with the requirement of Environment Protect Act and various notifications and guidelines issues by the Central, State Governments, and Pollution Control Boards. Assessee is charging fees from members for meeting operating costs. This factual position has not been disputed by the AO. According to the AO provision of section 2(15) is applicable to the assessee-trust, because the predominant object of the assessee is in the nature of trade, business or commercial activities and to make profit, and therefore, there is no exclusive usage of income or profit for the charitable purpose as defined in section 2(15) and therefore, the assessee is not entitled for benefit under section 11. CIT(A) has considered both the issues in detail and observed that the activities of the assessee trust clearly falls within the ambit of the clause of preservation of environment and the assessee is eligible for all the benefits under sections 11 and 12 and all the capital expenditure incurred by the assessee has to be considered as application of income. By holding so, CIT(A) has also treated ECP contribution as part of application of income, and accordingly disallowance to this extent also deleted. As decided in assessee's own case Asstt.Year 2010-11 the assessee and conclude that it was indeed not a fit case for invoking proviso to section 2(15) merely because the assessee was charging the fee for the services rendered to the industrial unit. - Decided against revenue.
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