TMI Blog2013 (9) TMI 341X X X X Extracts X X X X X X X X Extracts X X X X ..... said to be charitable purpose. Once the activity of the assessee does not fall within the ambit of definition of 'charitable purpose', the learned CIT rightly refused to register the society for the purpose of Section 12A - Decided against assessee. - ITA No.1045/Del/2012 - - - Dated:- 6-9-2013 - Shri G. D. Agrawal And Shri A. D. Jain,JJ. For the Appellant : Shri Raj Kumar and Shri Sumit Goel, CAs. For the Respondent : Shri M. B. Reddy, CIT-DR. ORDER Per G. D. Agrawal, VP :- This appeal by the assessee is directed against the order of learned Commissioner of Income-tax, Meerut dated 16th December, 2011 passed under Section 12AA of the Income-tax Act, 1961. 2. The assessee has raised the following grounds of appeal:- "1. That ld.CIT, Meerut has not justified in treating the charitable work to construct shushk (dry) shauchalya (latrines) in the villages for proper sanitation with the help of state development agencies as work for public utility. However the claim of the assessee was comes under the provision of environment for which provision of section 2(15) is not applicable. Therefore Ld.CIT is in error in rejecting the application of the assessee. 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 444/- including purchases of Rs.2,44,92,009/-, Labour payment of Rs.1,07,09,600/- and other establishment and administrative expenses. Therefore, the activities of the society are of the civil construction work in nature and income earning is the main purpose regardless the profit earned during the year. Society has also claimed itself as a registered society dedicated to the task of Public Welfare Services and technical experts in construction/conversion of dry latrines into hand flush with twin leach pits for on site disposal of human excreta, for which it has entered into agreement with DUDA for conversion of uthao and bahau latrines into water pour flush latrines. But this is not sufficient to establish the work done by the society as charitable in nature because the expenses as shown by the society in its P L a/c for the March ending 2011 are purely for the purpose of completion of work contract as awarded to the society by the state development agency and the funding for that purpose has been made by the state agency. Therefore, the main theme behind the work completed by the society during the year under consideration has been to carry out the business task and fulfillme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be directed to allow registration under Section 12AA to the assessee society. 7. Learned DR, on the other hand, relied upon the order of learned CIT and stated that from the income and expenditure account of the assessee for the two years, it is evident that the assessee only executed the contract of construction of dry latrines (shushk shauchalya) awarded by DUDA i.e., District Urban Development Authority. Thus, the activity of the assessee is purely in the nature of a business activity being performed by any contractor. From the profit loss account of the assessee, it is evident that no other activity is carried out by the assessee. Therefore, learned CIT rightly refused the registration to the assessee society. The same should be sustained. In support of this contention, he relied upon the decision of Indian Chamber of Commerce Vs. Commissioner of Income-tax, West Bengal II - [1975] 101 ITR 796. 8. We have carefully considered the submissions made by both the sides before us and perused the material placed before us. Section 12AA of the Income-tax Act, 1961, which is the procedure for registration of a trust or a society, reads as under:- "[Procedure for registration. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t proviso "the advancement of any other object of general public utility" shall not be a charitable purpose if it involves carrying on an activity in the nature of trade, commerce or business for consideration. As per the constitution of the assessee's society, it has as many as 20 objects. Object No.18 thereof is construction and maintenance of shushk shauchalya (dry latrines). As per the assessee's own statement, assessee has not carried out any other activity which is specified at item No.1 to 17 and 19 to 20 of the object clause. Only one activity carried out by the assessee is the construction of dry latrines. As per assessee's claim, this object falls within the ambit of "any other object of general public utility". Therefore, it was necessary for the CIT to examine whether the proviso to Section 2(15) is applicable because if proviso is applicable, then "any other object of general public utility" cannot be treated to be charitable purpose. In this regard, he examined the assessee's income and expenditure account of the immediately preceding two years and it was noticed by him that the only receipt was by way of the contract amount received from DUDA and the expenditure incu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivity in the nature of trade, commerce or business. Thus, the facts and the issue involved in the case of the assessee are altogether different than the facts and issue involved before Hon'ble Karnataka High Court in the case of Sanjeevamma Hanumanthe Gowda Charitable Trust (supra). Therefore, the same would not be applicable in the case of the assessee. As per assessee's own stand, which is evident from its written submission, the assessee executed the contract awarded by DUDA for construction of shushk shauchalya. Thus, clearly, the assessee's case falls within the ambit of carrying on an activity for consideration. The assessee has not constructed the shushk shauchalya as a part of a social service but it only executed the contract awarded by DUDA. If the contention of the assessee is accepted, then every contractor who is constructing the roads, bridges or airports, power generation plants etc. can claim that they are doing the charitable work. From the income and expenditure account of the assessee for the immediately preceding two years, it is evident that the only activity carried out was for the execution of the contract awarded by DUDA. In view of the above, in our opinion ..... X X X X Extracts X X X X X X X X Extracts X X X X
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