TMI Blog2012 (3) TMI 671X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, recruitment and placement. iv) To assist the members and other in the leather industry to mod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity and not protection of environment. 3. The turnover from the activity and the additional infrastructure created far exceeds the threshold limit of even ₹ 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 upgradation of three Common Effluent Treatment Plants for the purpose to protect the environment. He submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egistration 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 extract of the circular is reproduced hereinbelow:- Section 2(15) of the Income Tax Act defines charitable purpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 institutions as well as mutual organizations and their activities are restricted to contributions from and participation of only their members, these would not fall under t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 objects. Further it prohibits the payment of any dividend to its members as per the provisions of section 25. Thus, the activities of the assessee are charitable in natur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ices 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 exceeds the threshold limit of ₹ 25 lakhs is also not tenable. A perusal of the chart on page 3 of the impugned order shows that operating income, profit/loss are of the othe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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