Ita/1072/2009 Of Indian Institute Of Information Technology And Management-Kerala v. The Commissioner Of Income Tax

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE ASHOK MENON TUESDAY ,THE 11TH DAY OF SEPTEMBER 2018 / 20TH BHADRA, 1940 ITA.No. 1072 of 2009 AGAINST THE ORDER/JUDGMENT IN ITA 346/2002 ofI.T.A.TRIBUNAL,COCHIN BENCH APPELLANT/S: INDIAN INSTITUTE OF INFORMATION TECHNOLOGY AND MANAGEMENT-KERALA TECHNOPARK, TRIVANDRUM. BY ADV. SRI.E.K.NANDAKUMAR (SR) SRI. ANIL D.NAIR SMT. PREETHA RESPONDENT/S: THE COMMISSIONER OF INCOME TAXTRIVANDRUM. BY SR.G.P. V.K. SHAMSUDHEEN THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 11.09.2018, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: JUDGMENT Ashok Menon, J. The assessee is on appeal challenging the order of the Income Tax Appellate Tribunal. The following questions of law arise for consideration: “I.Whether on the facts and in the circumstances of the case,the appellate tribunal was justified in holding that theappellant is not entitled to claim exemption u/s.11 of the ITAct, 1961 and in rejecting the application filed before therespondent ?the appellate tribunal was justified in holding that theappellant is not entitled to claim exemption u/s.11 of the ITAct, 1961 and in rejecting the application filed before therespondent ? II.Whether the appellate tribunal was justified in coming to theconclusion that sec.10(23C)(iiiab) and section 11 aremutually exclusive and the applicability of the former sectionruled out the latter ?conclusion that sec.10(23C)(iiiab) and section 11 aremutually exclusive and the applicability of the former sectionruled out the latter ? III. Having found that the appellant was imparting educationadmittedly not for profit and considering the legislativeintent, whether the appellate tribunal was justified in holdingthat section 11 ruled out when exemption was claimableunder a specific provisions of section 10 ?”admittedly not for profit and considering the legislativeintent, whether the appellate tribunal was justified in holdingthat section 11 ruled out when exemption was claimableunder a specific provisions of section 10 ?” 2.The appellant-Institution is a company registered under theCompanies Act, 1956, wholly owned by the Government of Kerala and isimparting education and training programmes in information technologyand management. The appellant applied for registration under Section 12Aof the Income Tax Act, 1961 (for brevity 'the Act') in Form 10A. But therequest was rejected on the ground that the assessee is not a charitable institution, but only an educational institution entitled to exemption underSection 10(23C)(iiiab) of the Act. 3.Senior Advocate Sri.P.K.R.Menon appearing for the Revenuesubmits that the only exemption that the appellant is entitled to is underSection 10(23C)(iiiab) and that it is not a charitable institution as claimed. Senior Advocate Sri.P.K.R.Menon appearing for the Revenue 4.The thrust of the argument of the learned Counsel for theappellant is that the appellant institution falls within the definition of aninstitution constituted for “charitable purpose" as defined under Section2(15) of the Act, which prior to the amendment with effect from 01.04.2009vide Finance Act, 2008, reads as follows:- "'Charitable purpose' includes relief of the poor, education,medical relief, and the advancement of any other object ofgeneral public utility." 3.Senior Advocate Sri.P.K.R.Menon appearing for the Revenuesubmits that the only exemption that the appellant is entitled to is underSection 10(23C)(iiiab) and that it is not a charitable institution as claimed. Senior Advocate Sri.P.K.R.Menon appearing for the Revenue 4.The thrust of the argument of the learned Counsel for theappellant is that the appellant institution falls within the definition of aninstitution constituted for “charitable purpose" as defined under Section2(15) of the Act, which prior to the amendment with effect from 01.04.2009vide Finance Act, 2008, reads as follows:- "'Charitable purpose' includes relief of the poor, education,medical relief, and the advancement of any other object ofgeneral public utility." The argument of the learned Counsel is that education having beenincluded in the definition of 'charitable purpose' would entitle theappellant-institution the benefit. We are not however, inclined to agreewith the learned Counsel for the appellant. Primarily, a charitableinstitution or an institution functioning for charitable purpose has toinclude relief for the poor. The education and medical relief is connectedwith the relief to the poor, and no where it is stated that the appellant-institution is imparting education for the poor or that the education isimparted free of cost in advancement of any other object of general publicutility. Annexure A, which is the request of the appellant addressed to the Commissioner of Income Tax, describes the institution as wholly owned bythe Government of Kerala with the main object of conducting variouseducational and training programmes in information technology andmanagement. It is also stated therein that the entire activity of thecompany will come under “research and development in various educationalpurpose". This description would not bring the activity of the institutionunder “charitable purpose” as defined under Section 2(15) of the Act.However, the institution would definitely come within the purview of thedefinition of “educational institution” as defined under Section 10(23C)(iiiab), which reads thus:- “Income not included in total income. 10.In computing the total income of a previous year of anyperson, any income falling within any of the following clausesshall not be included - xxxx (23C)any income received by any person on behalf of - xx xx (iiiab) any university or other educational institutionexisting solely for educational purposes and not for purposes ofprofit, and which is wholly or substantially financed by theGovernment; or.....” From the records available, it is clear that the institution is an educational institution constituted solely for educational purposes, being run not forprofit. The application of the appellant was therefore rightly rejected. We find no reason, whatsoever, to upset the finding of the Tribunal in theimpugned order. The appeal is therefore rejected. No order as to costs. Sd/-K.VINOD CHANDRANJUDGESd/-ASHOK MENONJUDGE APPENDIX PETITIONER'S/S EXHIBITS: ANNEXURE AA TRUE COPY OF THE APPLICATION BY APPELLANT TO THE RESPONDENT DATED 20.8.2001. ANNEXURE CA TRUE COPY OF THE APPLICATION BY THE APPELLANT DATED 14.2.2002. ANNEXURE DA TRUE COPY OF THE APPLICATION BY THE APPELLANT TO RECONSIDER THE MATTER DATED 4.3.2002. ANNEXURE ETRUE COPY OF THE ORDER OF THE COMMISSIONER OF INCOME TAX, TRIVANDRUM REFUSING REGISTRATION DATED 14.8.2002. ANNEXURE FA CERTIFIED COPY OF THE ORDER OF THE INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH DATED 19.10.2004. RESPONDENT(S) EXHIBITS : NIL /TRUE COPY/ dkr PA TO JUDGE