Rp/241/2015 Of M/S.gcda Employees Pension Fund Trust v. The Commissioner Of Income Tax-I,Cochin

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE V.CHITAMBARESH & THE HONOURABLE MR. JUSTICE ANIL K.NARENDRAN TUESDAY, THE 05TH DAY OF NOVEMBER 2019 / 14TH KARTHIKA, 1941 RP.No.241 OF 2015 IN ITA. 131/2014 AGAINST THE JUDGMENT IN ITA 131/2014 OF HIGH COURT OF KERALA REVIEW PETITIONER/S: M/S.GCDA EMPLOYEES PENSION FUND TRUSTGREATER COCHIN DEVELOPMENT AUTHORITY, KADAVANTHRA,COCHIN - 682 020 REPRESENTED BY TRUSTEE, THE SECRETARY, GREATER COCHIN DEVELOPMENT AUTHORITY. BY ADVS.SRI.T.M.SREEDHARAN (SR.)SRI.V.P.NARAYANAN RESPONDENT/RESPONDENT: THE COMMISSIONER OF INCOME TAX-I,CR BUILDING, I.S PRESS ROAD,COCHINPIN - 682 018. BY SRI.JOSE JOSEPH, SC, FOR INCOME TAX THIS REVIEW PETITION HAVING BEEN FINALLY HEARD ON22.10.2019, THE COURT ON 05.11.2019, PASSED THE FOLLOWING: R.P.No.241 of 2015 in I.T.A.No.131 of 2014 ANIL K.NARENDRAN,J. O R D E R “CR” This review petition is one filed by the GCDA Employees' Pension Fund Trust (for brevity, 'the assessee trust'), under OrderXLVII of Rule 1 of the Code of Civil Procedure, 1908, seekingreview of the judgment of this Court dated 08.10.2014 in ITANo.131 of 2014. 2.Heard the learned Senior counsel for the petitionerand also the learned Standing Counsel for Income TaxDepartment, representing the respondent-Commissioner ofIncome Tax-I, Kochi. 3. The assessee trust was formed by the Greater Cochin Development Authority (for brevity, 'the GCDA'), which is anauthority constituted under the provisions of the Madras TownPlanning Act, 1920 and the Travancore Town Planning Act, 1108,vide G.O.(Ms.)No.19/76/LA&SWD dated 23.01.1976. The GCDAobtained registration under Section 12AA of the Income Tax Act,1961. By Annexure E Government order, i.e., G.O. R.P.No.241 of 2015 in I.T.A.No.131 of 2014 (Ms.)No.201/94/ LAD dated 31.08.1994, the State Governmentextended pension scheme to the employees of the GCDA, witheffect from 01.01.1994, subject to the condition that noexpenditure from the Consolidated Fund of the State will beincurred on this issue. Accordingly, Part III of the Kerala ServiceRules are made applicable to GCDA employees, with effect from01.01.1994. The assessee trust was formed by the GCDA, videAnnexure A registered trust deed dated 09.02.2006, to establisha separate fund in order to operate as a recognised ProvidentFund for the benefit of the managerial, supervisory and otherstaff of the GCDA. The words 'Provident Fund' appearing inAnnexure A trust deed was substituted by the words 'PensionFund', vide Annexure B rectification deed dated 30.01.2008. 4.The assessee trust submitted an application dated27.06.2012 before the respondent-Commissioner of Income Tax-I, Kochi for registration under Section 12AA of the Income TaxAct, which ended in dismissal by Annexure C order dated28.12.2012, on the ground that, in view of the restriction R.P.No.241 of 2015 in I.T.A.No.131 of 2014 imposed in Clause H of Annexure A trust deed, any amendmentof the object clause is not possible. For that reason, therespondent was not satisfied with the genuineness of theobjectives and activities of the assessee trust. ChallengingAnnexure C order of the respondent dated 28.12.2012, theassessee trust filed I.T.A.No.503/Coch/2013 before the IncomeTax Appellate Tribunal, Cochin Bench, which ended in dismissalby Annexure D order dated 29.11.2014. R.P.No.241 of 2015 in I.T.A.No.131 of 2014 imposed in Clause H of Annexure A trust deed, any amendmentof the object clause is not possible. For that reason, therespondent was not satisfied with the genuineness of theobjectives and activities of the assessee trust. ChallengingAnnexure C order of the respondent dated 28.12.2012, theassessee trust filed I.T.A.No.503/Coch/2013 before the IncomeTax Appellate Tribunal, Cochin Bench, which ended in dismissalby Annexure D order dated 29.11.2014. 5.A reading of paragraph 4 of Annexure D order wouldshow that, before the Tribunal it was contended that the assesseetrust was formed with a sole object of providing pension to theemployees, who retired from the GCDAand that, in the largerinterest, payment of pension has to be considered as a charity. Inparagraph 5 of Annexure D order, the Tribunal noticed that, it isnot in dispute that the assessee trust was established by theGCDA, a statutory authority established under a Stateenactment, for providing pension to its employees, who retiredfrom service. It is well settled principles of law that pension is not R.P.No.241 of 2015 in I.T.A.No.131 of 2014 a charity. The Government is not doing any charity by payingpension to the retired employees. Payment of pension is nothingbut a deferred payment of salary for the work done by theemployees. 6.The Tribunal in Annexure D order opined that thefund/trust established by the GCDA for paying pension to itsemployees, who retired from service cannot be a charitableactivity. Instead of paying pension directly to the employees whoretired from service, the assessee trust has been established forpaying pension. Therefore, the character of payment remains thesame. Pension is paid due to the statutory obligation as per theservice rules. Hence, it cannot be construed as a public utility ascontended by the assessee trust. In view of the above, theTribunal by Annexure D order rejected the appeal, holding thatthe assessee trust is not entitled for a registration under Section12AA of the Income Tax Act, as a charitable Trust. 7.Feeling aggrieved by Annexure D order dated29.11.2014 of Income Tax Appellate Tribunal, Cochin Bench, the R.P.No.241 of 2015 in I.T.A.No.131 of 2014 petitioner filed ITA No.131 of 2014, which ended in dismissal bythe judgment dated 08.10.2014, which is sought to be reviewedby filing this review petition. 8.Before this Court, in ITA No.131 of 2014, the learnedSenior Counsel for the assessee trust contended that, even if it istrue that the distribution of pensionary benefits is to theemployees of the GCDA itself, that activity of the assessee trustis a 'general public utility' attracting the provisions of clause (15)of Section 2 of the Income Tax Act and therefore, the assesseetrust is entitled to registration as prayed for. The Senior Counselhas also placed reliance on the judgment in Commissioner ofIncome Tax v. Bar Council of Maharashtra [(1981) 130 ITR28 (SC)], Hiralal Bhagawati v. Commissioner of IncomeTax [(2000) 246 ITR 188 (Guj)], Coffee Board v. DeputyCommissioner of Agricultural Income Tax [(1964) 52 ITR126 (Mys)], Commissioner of Income Tax v. AndhraChamber of Commerce [(1965) 55 ITR 722 (SC)],Commissioner of Agricultural Income Tax v. Rubber Board R.P.No.241 of 2015 in I.T.A.No.131 of 2014 [(1997) 226 ITR 722 (Ker)], Commissioner of Income Taxv. Ahmedabad Rana Caste Association [(1983) 140 ITR 1(SC)] and Norka Roots v. Commissioner of Income Tax[(2010) 320 ITR 733] in support of his contentions. R.P.No.241 of 2015 in I.T.A.No.131 of 2014 [(1997) 226 ITR 722 (Ker)], Commissioner of Income Taxv. Ahmedabad Rana Caste Association [(1983) 140 ITR 1(SC)] and Norka Roots v. Commissioner of Income Tax[(2010) 320 ITR 733] in support of his contentions. 9.In the judgment sought to be reviewed, this Courtnoticed that the object of the trust is to pay pension to theemployees of the GCDA or their dependants from out of thecorpus collected from the beneficiaries themselves. In otherwords, the employees of the GCDA are contributing and from outof that contribution, they or their dependants are gettingpension. Such an object implemented by the assessee trustcannot be said to be an object of general public utility attractingclause (15) of Section 2 of the Income Tax Act. The decisionscited were cases where the beneficiaries are persons other thanthe contributories and therefore, the principles laid down in thosecases are not applicable to the facts of the case on hand.Regarding the list of institutions holding registration underSection 12A/12AA of the Income Tax, for the financial year 2012- R.P.No.241 of 2015 in I.T.A.No.131 of 2014 13, produced as Annexure F, this Court observed that, theeligibility for registration depends upon the object of each ofthose trusts. The objects of those trusts are not before thisCourt. In such circumstances, the said list cannot be relied on.Therefore, in the judgment sought to be reviewed, this Courtfound no reason to disagree with the view taken by the IncomeTax Appellate Tribunal in Annexure D order. 10.In the review petition, it is contended that, theemployees are not making any contributions towards PensionFund and the entire amount towards Pension Fund is contributedby the GCDA. However, in the judgment sought to be reviewed,this Court proceeded on the assumption that the employees ofthe GCDA are contributing and from out of that contribution, theemployees and their dependants are getting pension. The aboveerroneous finding has resulted in the dismissal of ITA No.131 of2014, which would constitute a mistake apparent from therecord, coming within the purview of review jurisdiction underOrder XLVII of Rule 1 of the Code of Civil Procedure, 1908. 11.The learned Senior Counsel for the assessee trustwould reiterate that, even if the distribution of pension is to theemployees of the GCDA, that activity of the assessee trust is a'general public utility' attracting the provisions of clause (15) ofSection 2 of the Income Tax Act. Therefore, the assessee trust isentitled to registration under Section 12AA of the said Act, assought for. 12.Per contra, the learned Standing Counsel for theIncome Tax Department would contend that, even if the entirecontribution towards Pension Fund is made by the GCDA, theobject of the assessee trust to establish a separate fund, in orderto operate as a recognised Pension Fund for the benefit of themanagerial, supervisory and other staff of the GCDA is not anactivity of 'general public utility' attracting the provisions ofclause (15) of Section 2 of the Income Tax Act and therefore, inthe judgment sought to be reviewed, this Court rightly agreedwith the view taken by the Income Tax Appellate Tribunal inAnnexure D order. R.P.No.241 of 2015 in I.T.A.No.131 of 2014 12.Per contra, the learned Standing Counsel for theIncome Tax Department would contend that, even if the entirecontribution towards Pension Fund is made by the GCDA, theobject of the assessee trust to establish a separate fund, in orderto operate as a recognised Pension Fund for the benefit of themanagerial, supervisory and other staff of the GCDA is not anactivity of 'general public utility' attracting the provisions ofclause (15) of Section 2 of the Income Tax Act and therefore, inthe judgment sought to be reviewed, this Court rightly agreedwith the view taken by the Income Tax Appellate Tribunal inAnnexure D order. R.P.No.241 of 2015 in I.T.A.No.131 of 2014 13.Section 11 of the Income Tax Act deals with incomefrom property held for charitable or religious purposes andSection 12 deals with income of trusts or institutions fromcontributions. As per sub-section (1) of Section 12, any voluntarycontributions received by a trust created wholly for charitable orreligious purposesor by an institution established wholly for suchpurposes(not being contributions made with a specific directionthat they shall form part of the corpus of the trust or institution)shall for the purposes of Section 11 be deemed to be incomederived from property held under trust wholly for charitable orreligious purposesand the provisions of that section and Section13 shall apply accordingly. Section 12A of the Act deals withconditions for applicability of Sections 11 and 12. Section 12AA ofthe Act deals with the procedure for registration by theCommissioner for Income Tax, on receipt of an application forregistration of a trust or institution made under clause (a) orclause (aa) of sub-section (1) of Section 12A. 14.As per clause (15) of Section 2 of the Income Tax Act, R.P.No.241 of 2015 in I.T.A.No.131 of 2014 'charitable purpose' includes relief of the poor, education, yoga,medical relief, preservation of environment (includingwatersheds, forests and wildlife) and preservation of monumentsor places or objects of artistic or historic interest, and theadvancement of any other object of general public utility. As perthe first proviso to clause (15) of Section 2, the advancement ofany other object of general public utility shall not be a charitablepurpose, if it involves the carrying on of any activity in the natureof trade, commerce or business, or any activity of rendering anyservice in relation to any trade, commerce or business, for a cessor fee or any other consideration, irrespective of the nature ofuse or application, or retention, of the income from such activity.As per the second proviso to clause (15) of Section 2, the firstproviso shall not apply if the aggregate value of the receipts fromthe activities referred to therein is twenty-five lakh rupees or lessin the previous year. 15.The first and second provisos to clause (15) of Section2 of the Income Tax Act was substituted by the Finance Act, 2015 R.P.No.241 of 2015 in I.T.A.No.131 of 2014 with effect from 01.04.2016. After the amendment, the provisoto clause (15) of Section 2 provides that, the advancement ofany other object of general public utility shall not be a charitablepurpose, if it involves the carrying on of any activity in the natureof trade, commerce or business, or any activity of rendering anyservice in relation to any trade, commerce or business, for a cessor fee or any other consideration, irrespective of the nature ofuse or application, or retention, of the income from such activity,unless- (i) such activity is undertaken in the course of actualcarrying out of such advancement of any other object of generalpublic utility; and (ii) the aggregate receipts from such activity oractivities during the previous year, do not exceed twenty percent, of the total receipts, of the trust or institution undertakingsuch activity or activities, of that previous year. 16.In the instant case, as evident from Annexure A trustdeed and Annexure B rectification deed, the assessee trust wasformed to establish a separate fund in order to operate as arecognised Pension Fund for the benefit of the managerial, R.P.No.241 of 2015 in I.T.A.No.131 of 2014 supervisory and other staff of the GCDA. The Government, whileextending pension scheme to the employees of the GCDA byAnnexure E order, whereby Part III of the Kerala Service Rulesare made applicable to the employees of GCDA, with effect from01.01.1994, made it clear that, no expenditure from theConsolidated Fund of the State will be incurred on this issue.Therefore, as rightly noticed by the Income Tax AppellateTribunal in Annexure D order, instead of paying pension directlyto the employees who retired from service, the GCDA formed theassessee trust for payment of pension to its retired employees. 17.It is well settled that pension is not a charity or bountynor is it a conditional payment solely dependent on the sweet willof the employer. Pension is in the nature of deferred paymentearned for rendering long and satisfactory service with theemployer. It is a social security measure, consistent with thesocio-economic requirements, providing safeguards to theemployees in their later years of life, who have shed their sweatand blood for their employer during their long service. R.P.No.241 of 2015 in I.T.A.No.131 of 2014 18.In State of Rajasthan v. Mahendra Nath Sharma[(2015) 9 SCC 540] the Apex Court noticed that, theantiquated notion of pension being a bounty, a gratuitouspayment depending upon the sweet will or grace of the employernot claimable as a right and, therefore, no right to pension canbe enforced through court has been swept under the carpet bythe decision of the Constitution Bench in Deokinandan Prasadv. State of Bihar [(1971) 2 SCC 330], wherein the Courtauthoritatively ruled that pension is a right and the payment of itdoes not depend upon the discretion of the Government but isgoverned by the rules and a Government servant coming withinthose rules is entitled to claim pension. It was further held thatthe grant of pension does not depend upon anyone's discretion.It is only for the purpose of quantifying the amount, havingregard to service and other allied matters, that it may benecessary for the authority to pass an order to that effect, butthe right to receive pension flows to the Government servant notbecause of any such order but by virtue of the rules. This view R.P.No.241 of 2015 in I.T.A.No.131 of 2014 was reaffirmed in State of Punjab v. Iqbal Singh [(1976) 2SCC 1]. 19.Payment of pension to the retired employees of theGCDA, in discharge of the statutory obligation under Part III ofthe Kerala Service Rules, is not a charity or bounty nor is it aconditional payment solely dependent on the sweet will of theGCDA. Therefore, the question whether the contribution towardsPension Fund is made by the employees or by the employer, i.e.,the GCDA, has no relevance while considering an application forregistration under Section 12AA of the Income-tax Act, subject tothe conditions in Section 12A, read with clause (15) of Section 2of the said Act. Even if the entire contribution towards PensionFund is paid by the GCDA, the object of the assessee trust toestablish a separate fund in order to operate as a recognisedPension Fund for the benefit of the managerial, supervisory andother staff of the GCDA would not fall within the definition of'charitable purpose' as defined in clause (15) of Section 2 of theAct. The said object of the assessee trust cannot also be said to R.P.No.241 of 2015 in I.T.A.No.131 of 2014 R.P.No.241 of 2015 in I.T.A.No.131 of 2014 be an activity of 'general public utility' attracting the provisions ofclause (15) of Section 2 of the Act. Therefore, the finding in thejudgment sought to be reviewed that the employees of the GCDAare contributing to the Pension Fund and from out of thatcontribution, the employees and their dependents are gettingpension, would not constitute a mistake apparent from the faceof the record, coming within the review jurisdiction of this Courtunder Order XLVII Rule 1 of the Code of Civil Procedure, 1908. 20.In Thungabhadra Industries Ltd v. Governmentof Andhra Pradesh the Apex Court heldthat, review is, by no means an appeal in disguise, whereby anerroneous decision is reheard and corrected, but lies only forcorrecting patent errors. Later, in Lily Thomas v. Union ofIndia [(2006) 3 SCC 224] the Apex Court reiterated that, thepower of review can be exercised for correction of a mistake butnot to substitute a view. The review cannot be treated like anappeal in disguise. The mere possibility of two views on thesubject is not a ground for review. -17- 21.Whilst exercising the power of review, this Courtcannot be oblivious of the provisions contained in Order XLVII,Rule 1 of the Code of Civil Procedure, 1908 and that, the limitswithin which this Courts can exercise the power of review havebeen well settled in a catena of decisions. In the result, this review petition fails, and the same is,accordingly, dismissed. Sd/- V.CHITAMBARESH JUDGE Sd/-ANIL K. NARENDRAN JUDGE das