Charitable purpose : Section 2(15) and section 12AA of Income-tax Act, 1961 : Assessee-corporation established under Warehousing Corporation Act, 1962 : Application for registration u/s.12AA rejected on ground that assessee was earning income and was decl

[CIT v. Haryana Warehousing Corporation, 196 Taxman 260
(P&H)]

The assessee was a corporation established under the
provisions of the Warehousing Corporation Act, 1962. It was earlier claiming
exemption u/s.10(29), but after deletion of the said provision with effect from
1-4-2003, it applied for registration u/s.12AA. The said application was
rejected by the Commissioner mainly on the ground that the assessee was earning
income and was declaring dividends. The profits were ploughed back for expanding
its activities to earn larger incomes. Thus, the activities were on commercial
principles for profit motive which could not be held to be charitable in nature.
The Tribunal allowed the assessee’s claim.

On appeal by the Revenue the Punjab and Haryana High Court
upheld the decision of the Tribunal and held as under:

“(i) It was clear by reference to the statutory provisions
of the Act that the assessee had been constituted with the object of
warehousing of agricultural produce and other activities and matters connected
therewith. Constitution of the assessee was under the statutory provisions by
way of a Notification in the Official Gazette by the State Government with the
approval of the Central Warehousing Corporation. The Central Warehousing
Corporation is constituted u/s.3 by the Central Government. The functions of
the assessee were statutory functions of acquiring and building godowns and
warehouses and running of such warehouses for storage of agricultural produce
and other similar commodities; providing facilities for transport of
agricultural produce and to act as an agent of the Central Warehousing
Corporation for purchasing, selling, storing and distribution of such produce.
These being statutory functions of the assessee they clearly fell u/s.2(15)
and, therefore, no fault could be found with the finding recorded by the
Tribunal.

(ii) Mere fact that the assessee could acquire, hold and
dispose of the property which was feature of every juristic person and that it
was deemed to be a company and could declare dividend would not in any manner
deviate it from the character of the charitable institution.

(iii) In view of aforesaid, the Tribunal was right in law,
in directing to grant the registration u/s.12AA, even when under the
Warehousing Corporation Act, the assessee-corporation was a deemed company and
was liable for income-tax in respect of its income, profits and gains.”