MS H.P.STATE ENVIRONMENT PROTECTION V. CHIEF COMMISSIONER OF INCOME TAX

CWP/2066/2009

AI Insights

The case revolves around the Himachal Pradesh State Environment Protection and Pollution Control Board (the Board) seeking exemption from income tax under specific clauses of the Income Tax Act, 1961, claiming that its activities are charitable. The Chief Commissioner of Income Tax rejected this application, leading the Board to file a writ petition. The court examined whether the Board's activities, which include regulatory functions like granting permissions for economic activities and collecting fees, qualify as charitable under the law. The court concluded that these activities are regulatory and do not fall under the 'advancement of any other object of general public utility' as required for the tax exemption sought.

• Counselvise Citation: [2009] 140 COUNSELVISE.COM (IT) 765001 (HC-HIMACHAL_PRADESH)
• Appeal Type: Others
• Pronouncement Date: 07-12-2009
• Assessment Year: misc
• Laws Referred To: Water (Prevention and Control of Pollution) Act, 1974, Income Tax Act, 1961, Air (Prevention and Control of Pollution) Act, 1981
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: VINAY KUTHIALA
• Assessee Lawyers: M M KHANNA; GOVERDHAN SHARMA
• Keywords: Charitable Activities; Environmental protection; Exemption; Pollution Control; Regulatory functions
• Section: 17; 23; 2(15); 24; 10(23c)(iv); 10(23c)(v); 4(3)

Judgement Text

"IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA. CWP No. 2066/2009 Decided on:7.12.2009 _____________________________________________ M/s Himachal Pradesh State Environment Protection and pollution Control Board. …Petitioner. Versus Chief Commissioner of Income Tax. …Respondent. ______________________________________________________ Coram: Hon’ble Mr. Justice R.B. Misra, Acting Chief Justice. Hon’ble Mr. Justice Rajiv Sharma, Judge. Whether approved for reporting?1 No For the petitioner : Mr. M.M. Khanna with Mr. Goverdhan Sharma, Advocates. For the Respondent : Mr. Vinay Kuthiala, Advocate. ___________________________________________________ Material facts necessary for the adjudication of this petition are that the petitioner-Board has been constituted under the provisions of Water (Prevention and Control of Pollution) Act, 1974 (hereinafter referred to as ‘the Act’ for brevity sake). Petitioner submitted an application for grant of exemption under section 10 (23C) (iv) & (v) of the Income Tax Act, 1961. The 1 Whether reporters of the local papers may be allowed to see the judgment? No 2 same was rejected by the Chief Commissioner of Income Tax on 11.12.2008. Mr. M.M. Khanna has vehemently argued that the impugned Annexure P-1 is contrary to law and facts. He then contended that the petitioner-Board was entitled to exemption on the basis of application submitted on 15.5.2007 and 30.5.2007. Mr. Vinay Kuthiala has supported the impugned order. We have heard the learned counsel for the parties and have gone through the pleadings carefully. Petitioner-Board has been constituted, as noticed above, as per sub-section (3) of section 4 of the Act in 1974-75. The petitioner has sought approval under clauses (iv) and (v) of section 10 (23C) of the Income Tax Act, 1961. The main thrust of the Board before the authorities was that it is performing charitable activities as per section 2 (15) of the Income Tax Act, 1961. It was also contended that assuming hypothetically that the Board was not doing charitable functions, it was discharging its duties for the advancement of general public utility. We have gone through the entire scheme of the Act. The functions to be discharged by the Board are enumerated under section 17 of the Water (Prevention and Control of Pollution) Act, 1974. The Board has been vested with the power to give consent/permission to start or continue the economic activities subject to regulatory measures for achieving pollution control and environmental protection. It has been empowered to collect fees for giving the consent/permission. There are specific 3 provisions for carrying out search and seizure as per section 23 of the Water (Prevention and Control of Pollution) Act, 1974 and section 24 of the Air (Prevention and Control of pollution) Act, 1981. The Board can prosecute and penalize the persons as per Chapter-VI of the Air (Prevention and Control of pollution) Act, 1981 and Chapter-VII Water (Prevention and Control of Pollution) Act, 1974. The Board, in fact, as noticed by the Chief Commissioner of Income Tax has admitted in its annual report for financial year 2005-06 that it is performing regulatory functions. We are of the considered view that the Board is primarily discharging regulatory functions as per Water (Prevention and Control of Pollution) Act, 1974 and Air (Prevention and Control of pollution) Act, 1981. These activities cannot be termed as charitable functions and also would not fall within the ambit of expression “advancement of any other object of general public utility”. The wealth generated by the Board is accumulated. The details of the surplus income accumulated are provided in the assessment for the financial year with effect from 2002 till 2007. The Chief Commissioner of Income Tax has adversely commented upon the manner in which the annual reports are being prepared by the Board. The Accounts for the financial year 2006-2007 have not been audited even after the lapse of more than 2½ years. Similarly, the Income Tax Assessments for the assessment year 2008-2009 have not been furnished. The order passed by the Chief Commissioner of Income Tax is in conformity with law. There is neither any 4 jurisdictional error nor any procedural irregularity in the order and we uphold the same. Accordingly, there is no merit in the writ petition and the same is dismissed. No costs. (R.B. Misra), Acting Chief Justice (Rajiv Sharma), Judge 7.12. 2009. *awasthi* "