ORDER
S.K. Yadav, J.M.
1. This appeal by the assessee is directed against the order of the CIT, Gandhinagar passed Under Section 12AA(1)(b)(ii) of the Act, whereby he rejected the assessee’s application Under Section 12A for registration of the assessee.
2. The facts of the case are that the Government of Gujarat vide Gujarat Maritime Board Act, 1981 constituted the Gujarat Maritime Board (GMTB in short) for the purpose of maintaining and developing the Ports in the State of Gujarat. GMTB i.e., the assessee applied for registration Under Section 12A of the Act with the CIT, Gandhinagar. The CIT after allowing an opportunity of being heard to the assessee rejected the assessee’s application Under Section 12A of the Act. The CIT rejected the assessee’s application on the following grounds which are summarised, at pp. 26 to 28 of his order. The same are reproduced below for ready reference :
“(1) Within the meaning of preamble to the Gujarat Maritime Board Act, 1981 the handing over of ownership, control management of the port organisation hitherto belonging to the State Government is considered not to have created a lawful trust within the meaning of term trust used for the purpose of Sections 11, 12, 12A, 12AA and 13 of the IT Act, 1961.
(2) Gujarat Maritime Board was created as a local authority within the meaning of term “person” for the purpose of IT Act, 1961 and with effect from its inception to March, 2003, the applicant continues to be local authority in the eyes of law. It cannot be considered as a public trust or charitable trust of any other kind.
(3) The application filed Under Section 12A is late by 21 years and the unusual delay stated by the applicant to be the absence of any requirement on its part to file for such registration as a charitable trust since the absolute exemption was enjoyed by the Board from the charge of income-tax under earlier provision of Section 10(20) cannot be considered to be a valid reason excepting an attempt on the part of the Gujarat Maritime Board to come out of the charge of income-tax.
(4) The application filed contained certain technical defects relating to the name and address of the original founder/author/settlor of the trust property and the nature of property held under trust which has not been remedied during the proceedings Under Section 12A of the IT Act, 1961.
(5) On a proper interpretation of the intention behind the enactment of the provisions of Sections 11, 12, 12A, 12AA and 13 of the IT Act, 1961, it appears that the tax incentive proposed in the scheme of exemption from charge of income-tax is more applicable to the cases of private individual and groups and association who create valid public trust and dedicate its income for the purpose of general public welfare. The scheme of Section 11 to 13, specifically the restrictive provision of Section 13 cannot be made applicable to the case of public enterprises/public sector undertakings/public sector utility service provider. The basic incentive provided in the exemption section cannot be intended for utilisation of public property and application of income of public property administered through Government reaching the people as a whole.
(6) The reliance on the Court decision are found to be applicable to the facts and circumstances of the case of the Board.
(7) The provisions of Gujarat Maritime Board Act, 1981 have not specifically mentioned about the income of the port authority to be exempt from the charge of income-tax.
(8) The absence of profit motive in the functioning of Board does not by itself create a situation of total exemption from the charge of income-tax in respect of income which it has earned likely to earn from its activities comprising of providing various infrastructural facilities and also deriving income ancillary to its principal activities such as rental income from let out property/sale of goods like water, petroleum to its customers, income from investments, etc.
(9) The extent of utilisation of its income from different sources for any genuine charitable activities could only be assessed in the course of regular scrutiny assessment proceedings for each year separately.”
3. We have heard both the parties and perused the material placed before us. Sections 12A and 12AA of the IT Act which are relevant to the controversy before us read as under :
“12A. Conditions as to registration of trusts, etc.–The provisions of Section 11 and Section 12 shall not apply in relation to the income of any trust or institution unless the following conditions are fulfilled, namely :
(a) the person in receipt of the income has made an application for registration of the trust or institution in the prescribed form and in the prescribed manner to the CIT before the 1st day of July, 1973, or before the expiry of a period of one year from the date of the creation of the trust or the establishment of the institution, whichever is later and such trust or institution is registered Under Section 12AA :
Provided that where an application for registration of the trust or institution is made after the expiry of the period aforesaid, the provisions of Sections 11 and 12 shall apply in relation to the income of such trust or institution,–
(i) from the date of the creation of the trust or the establishment of the institution if the CIT is, for reasons to be recorded in writing, satisfied that the person in receipt of the income was prevented from making the application before the expiry of the period aforesaid for sufficient reasons;
(ii) from the 1st day of the financial year in which the application is made, if the CIT is not so satisfied;
(b) where the total income of the trust or institution as computed under this Act without giving effect to the provisions of Section 11 and Section 12 exceeds thousand rupees in any previous year, the accounts of the trust or institution for that year have been audited by an accountant as defined in the Explanation below Sub-section (2) of Section 288 and the person in receipt of the income furnishes along with the return of income for the relevant assessment year the report of such audit in the prescribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed.
(c) xx xx xx
12AA. Procedure for registration–(1) The CIT, on receipt of an application for registration of a trust or institution made under Clause (a) of Section 12A, shall–
(a) call for such documents or information from the trust or institution as he thinks necessary in order to satisfy himself about the genuineness of activities of the trust or institution and may also make such inquiries as he may deem necessary in this behalf; and
(b) after satisfying himself about the objects of the trust or institution and the genuineness of its activities, he–
(i) shall pass an order in writing registering the trust or institution;
(ii) shall, if he is not so satisfied, pass an order in writing refusing to register the trust or institution, and a copy of such order shall be sent to the applicant :
Provided that no order under Sub-clause (ii) shall be passed unless the applicant has been given a reasonable opportunity of being heard.
(1A) All applications, pending before the Chief CIT on which no order has been passed under Clause (b) of Sub-section (1) before the 1st day of June, 1999, shall stand transferred on that day to the CIT and the CIT may proceed with such applications under that Sub-section from the stage at which they were on that day.
(2) Every order granting or refusing registration under Clause (b) of Sub-section (1) shall be passed before the expiry of six months from the end of the month in which the application was received under Clause (a) of Section 12A.”
4. We have considered the rival submissions with reference to each and every ground given by the CIT for refusing the registration of the assessee Under Section 12A of the Act. Our finding in this regard is as under :
(i) The first ground given by the CIT for refusing the registration of the assessee is that the assessee cannot be considered to be a lawful trust within the meaning of term “trust” used under Sections 11, 12 and 13 of the IT Act, 1961. Section 12AA which is extracted above in para 3 above provides procedure for registration of trust. As per Section 12AA(1) any trust or institution can make an application Under Section 12A(a) of the Act for the registration. It is contended by the learned counsel before us that the assessee is not a trust but it is an institution which is lawfully created by the State Government. Therefore, it is an institution which is entitled to apply for registration Under Section 12A of the Act. The learned Departmental Representative could not satisfy us that the assessee is not an institution. We, therefore, hold that the assessee is an institution within the meaning of Section 12A(1).
5. The CIT has held that the assessee was created as a local authority within the meaning of “person” for the purpose of IT Act, 1961 and therefore, it cannot be considered as a public trust or charitable trust. We find that Section 2(31) of the IT Act, 1961 defines the word “person” as under:
“2(31)–‘Person’ includes–
(i) an individual,
(ii) a HUF,
(iii) a company,
(iv) a firm,
(v) an AOP or a BOI, whether incorporation or not,
(vi) a local authority, and
(vii) every artificial juridical person, not falling within any of the preceding sub-clauses.”
In the above definition of the “person” there is no mention of either trust or institution. As per Section 12A of the Act only trust or institution are entitled to registration. If the view of the CIT is accepted as correct, then, no person would be entitled to registration Under Section 12A of the Act. Therefore, if a person is a trust or institution, it is entitled to registration Under Section 12A of the Act. Therefore, even though, as per definition of person it is failing in other category like company, AOP or local authority, in para 4 we have already held that the assessee is an institution and, therefore, merely because within the definition of “person” it is termed as local authority it would be no bar to apply for the registration Under Section 12A of the Act.
6. The CIT has mentioned that the application is late by 21 years which is unusual delay. That as per proviso to Section 12A(a) if there is delay in filing of application for the registration of institution and the CIT is satisfied that the assessee was prevented from making the application within time for sufficient reason, then the assessee would be entitled to registration from the date of creation of the trust. But if the CIT is not satisfied with the reasons for delay in making the application, the assessee would be entitled to registration from the 1st day of financial year in which the application is made. Therefore, because of delay in filing of the application the registration of the assessee cannot be refused. The assessee made the application on 13th Nov., 2002 and, therefore, since the CIT is not satisfied with the reasons for delay in filing of the application, the assessee would be entitled to the registration from 1st April, 2002 and not for the earlier period.
7. The CIT has refused to register the trust on the ground that the assessee has not given technical details viz. name and address of the original founder/ author/settlor of the trust property. It was explained by the learned counsel that the assessee was created by Gujarat Maritime Board Act, 1981 passed by the State Government, which is approved by the President of India. Copy of the Act was duly submitted before the CIT. It was not the case of creation of trust by some individual and, therefore, there was no specific name of any founder or settlor of the trust and, therefore, the CIT was not justified in denying to register the institution for want of name of the settlor or author of the trust.
7.1 After considering the arguments of both the parties, we agree with the contention of the learned counsel. When the assessee came into existence by an Act of the legislature, there is no person who can be named as founder/author or settlor. Since no individual is a founder/author or settlor of the assessee, the question of furnishing the name and address of the founder/author or settlor by the assessee, does not arise.
8. The CIT has stated that Sections 11, 12 and 13 provide tax incentives to the private individuals and not to the public enterprises/public sector undertakings. The learned senior Departmental Representative also vehemently contended that the assessee is a statutory body and it is discharging its duties as provided in GMTB Act, 1981. The statutory bodies or public enterprises or public sector undertakings are created for discharging their specific duties and, therefore, they cannot be said to be doing any charitable work. He contended that the statutory body is not entitled to exemption under Section 11.
The learned counsel for the assessee has strongly opposed to the above submissions of the learned Departmental Representative. 8.1 After considering the arguments of both the side’s and the facts of the case, we are unable to agree with the stand of the Revenue Section 12A does not make any distinction between the trust and institution created by the private individuals or by the Government. If an assessee is an institution whose object is charitable as defined Under Section 2(15) of the Act, in our opinion, the trust/ institution would be entitled to registration Under Section 12A of the Act.
9. The CIT has mentioned that GMTB Act, 1981 have not specifically mentioned that income of the port authority could be exempt from the charge of income-tax. In our opinion, it is irrelevant consideration for the registration of the institution Under Section 12A of the Act. In fact, had GMTB Act, 1981 provided that income of the port authority would be exempt from charge of income-tax, there would have been no necessity for the assessee to apply Under Section 12A for registration because then it was not required to claim exemption under Sections 11 and 12 and 13 of the Act. Since GMTB Act has not provided about the exemption of income of the port authority, therefore the assessee is required to claim the exemption under the provisions of the IT Act.
10. It has also been mentioned by the CIT that the assessee may earn income from its activity of providing infrastructural facilities and also from other ancillary activities such as rental income from letting out of the property, sale of goods, etc. which may not be exempted. It is also contended by the learned Departmental Representative that the assessee does not have any income which is exempt Under Section 11. However, in our opinion, whether part of the income is exempt or not is irrelevant for the registration of the institution. This issue would be relevant only when the assessment of a particular assessment year would be made by the AO. For the registration of the institution, the CIT has to satisfy himself about the object of the institution and genuineness of the activities of the institution and not about the nature of the income. If the object of the institution falls within the definition of charitable purposes Under Section 2(15) of the Act and the institution is genuinely carrying out such object, the CIT must register the institution. Therefore, the moot question to examine is whether the object of the assessee institution is charitable or not ? Section 2(15) of the IT Act defines the words “charitable purpose” as under :
“2(15) ‘charitable purpose’ includes relief of the poor, education, medical relief, and the advancement of any other object of general public utility.”
From the above definition of “charitable purpose”, it is evident that advancement of any other object of general public utility is also charitable purpose. The above definition of “charitable purpose” is modified by the Finance Act, 1983, w.e.f. 1st April, 1984. Before the above amendment, the purpose, i.e., advancement of any other object of general public utility was qualified by the words “not involving the carrying on of any activity for profit”. However, the Finance Act, 1983 has omitted the words “not involving the carrying on of any activity for profit”. Therefore, after the omission of the above words, if an activity which is for the purpose of advancement of an object of general public utility is carried out with profit motive, it would fall within the definition of “charitable purpose” Under Section 2(15). Though the legislature by simultaneous amendment Under Section 11 (4A) has provided that the exemption Under Section 11 shall not be available in relation to any income of a trust or an institution being profit and gains of business unless the business is incidental to the attainment of the object of the trust. However, this exercise whether the assessee has income from business or not and if there is business income whether it is incidental to the attainment of the object of the trust or not, is to be carried by the AO while making the assessment of each year. But so far as the registration of trust is concerned, the CIT has to examine whether the object of the assessee falls within the definition of “charitable purpose” Under Section 2(15). The object of the assessee institution is to maintain and develop the ports in the State of Gujarat. Maintenance and development of ports is necessary for transport of goods and persons by sea. In the present scenario of globalisation of the trade and industry, the transport of goods from one country to other which is mostly through sea has become essential. Therefore, the development and maintenance of ports is certainly the object of general public utility. While taking this view, we derive support from the decision of the Hon’ble apex Court in the case of CIT v. Andhra Pradesh State Road Transport Corporation (1986) 159 ITR 1 (SC). It is also not in dispute that the assessee institution is genuinely engaged in the activities of development and maintenance of ports in the State of Gujarat. Therefore, in our opinion, the assessee duly fulfils both the conditions of Section 12A which are necessary for the registration of the institution Under Section 12A. We therefore direct the CIT to register the trust Under Section 12A w.e.f. 1st April, 2002.
11. In the result, the assessee’s appeal is allowed.