Wp(C)/4826/2014 Of M/S.iiahia Truat v. The Deputy Direictor Of Income Tax

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE P.R.RAMACHANDRA MENON WEDNESDAY, THE 12TH DAY OF MARCH 2014/21ST PHALGUNA, 1935 WP(C).No. 4826 of 2014 (C) --------------------------- PETITIONER : -------------------------- M/S.ILAHIA TRUST, MARKET - P.O., VELLORKUNNAM VILLAGE, ILAHIA SCHOOL, MUVATTUPUZHA, ERNAKULAM DISTRICT -686 673, REPRESENTED BY ITS CHAIRMAN, SHRI.K.M.PAREETH. BY SRI.T.M.SREEDHARAN,SENIOR ADVOCATE ADVS. SRI.V.P.NARAYANAN SMT.BOBY M.SEKHAR SMT.DIVYA RAVINDRAN RESPONDENT(S): ---------------------------- 1. THE DEPUTY DIRECTOR OF INCOME TAX, (EXEMPTION), RANGE - 4, KOCHI -682 016. (EXEMPTION), RANGE - 4, KOCHI -682 016. 2. THE COMMISSIONER OF INCOME TAX, KOCHI, CENTRAL REVENUE BUILDING, I.S.PRESS ROAD, KOCHI - 682 018. R1 & R2 BY SRI.JOSE JOSEPH, SC, FOR INCOME TAX THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 12-03-2014, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C).No. 4826 of 2014 (C) ----------------------------------------- APPENDIX PETITIONER(S)' EXHIBITS ------------------------------------- EXT.P-1: TRUE COPY OF THE CERTIFICATE OF REGISTRATION VIDE ORDERNO.CIT/CHN/T/12A/66/2006-07 DATED 30.11.2007 ISSUED BY THE COMMISSIONER OF INCOME TAX, KOCHI.NO.CIT/CHN/T/12A/66/2006-07 DATED 30.11.2007 ISSUED BY THE COMMISSIONER OF INCOME TAX, KOCHI. EXT.P-2: TRUE COPY OF THE TRUST DEED DATED 18.7.1992 VIDE REGISTERNO.156 OF SUB REGISTRAR, MUVATTUPUZHA.NO.156 OF SUB REGISTRAR, MUVATTUPUZHA. EXT.P-2(A): TRUE COPY OF THE AMENDMENT DEED DATED 1.7.1998 VIDE REGISTER NO.142 OF SUB REGISTRAR, MUVATTUPUZHA.REGISTER NO.142 OF SUB REGISTRAR, MUVATTUPUZHA. EXT.P-2(B): TRUE COPY OF THE AMENDMENT DEED DATED 23.5.2003 VIDE REGISTER NO.104 OF SUB REGISTRAR, MUVATTUPUZHA.REGISTER NO.104 OF SUB REGISTRAR, MUVATTUPUZHA. EXT.P-2(C): TRUE COPY OF THE AMENDMENT DEED DATED 5.9.2007 VIDE NO.180 OF SUB REGISTRAR, MUVATTUPUZHA.OF SUB REGISTRAR, MUVATTUPUZHA. EXT.P-3: TRUE COPY OF THE ASSESSMENT ORDER DATED 18.3.2013 ALONG WITH DEMAND NOTICE PASSED BY THE ASST.DIRECTOR OF INCOME TAX (EXEMPTION) WITH DEMAND NOTICE PASSED BY THE ASST.DIRECTOR OF INCOME TAX (EXEMPTION) EXT.P-4: TRUE COPY OF THE COMPUTATION OF INCOME AND ACKNOWLEDGEMENT DATED 17.9.2010 EXT.P-4(A): TRUE COPY OF THE AUDITED STATEMENT OF ACCOUNTS FOR THE ASSESSMENT YEAR 2010-11ASSESSMENT YEAR 2010-11 EXT.P-4(B): TRUE COPY OF THE AUDIT REPORT U/S. 12A(B) OF I.T. ACT, IN FORMNO.10B DATED 16.9.2010NO.10B DATED 16.9.2010 EXT.P-5: TRUE COPY OF THE ASSESSMENT DATED 9.1.2014 PASSED BY THE 1ST RESPONDENT ALONG WITH DEMAND NOTICE 1ST RESPONDENT ALONG WITH DEMAND NOTICE EXT.P-6: TRUE COPY OF THE LETTER NO.DDIT(E)/RAP/AUDIT/2013-14 DATED21.1.2014 ISSUED BY THE ADDL.COMMISSIONER OF INCOME TAX, COCHIN.21.1.2014 ISSUED BY THE ADDL.COMMISSIONER OF INCOME TAX, COCHIN. EXT.P-7: TRUE COPY OF THE OBJECTION CERTIFICATE DATED 24.8.1998 ISSUED BY THE GENERAL EDUCATION DEPARTMENT, THIRUVANANTHAPURAM.ISSUED BY THE GENERAL EDUCATION DEPARTMENT, THIRUVANANTHAPURAM. EXT.P-7(A): TRUE COPY OF THE ORDER NO.AC.AVII/1/1100/03 DATED 2.9.2003 ISSUED BY THE DY.REGISTRAR, M.G.UNIVERSITY ISSUED BY THE DY.REGISTRAR, M.G.UNIVERSITY sts WP(C)NO.4826/2014 EXT.P-7(B): TRUE COPY OF THE NO OBJECTION CERTIFICATE ISSUED BY THE GOVERNMENT AS PER G.O(MS) NO.356/10/H.EDN DATED 28.10.2010 EXT.P-7(C): TRUE COPY OF THE NOC ISSUED BY THE GOVERNMENT VIDE GO(MS) NO.144/11/11 EDN. DATED 20.8.2011 RESPONDENT(S)' EXHIBITS: NIL /TRUE COPY/ P.A.TO.JUDGE sts P.R. RAMACHANDRA MENON, J. ======================== -------------------------------------------- Dated this the 12th day of March, 2014 JUDGMENT The correctness and sustainability of Ext.P5 assessment order passed by the first respondent is under challenge in thiswrit petition. EXT.P-7(A): TRUE COPY OF THE ORDER NO.AC.AVII/1/1100/03 DATED 2.9.2003 ISSUED BY THE DY.REGISTRAR, M.G.UNIVERSITY ISSUED BY THE DY.REGISTRAR, M.G.UNIVERSITY sts WP(C)NO.4826/2014 EXT.P-7(B): TRUE COPY OF THE NO OBJECTION CERTIFICATE ISSUED BY THE GOVERNMENT AS PER G.O(MS) NO.356/10/H.EDN DATED 28.10.2010 EXT.P-7(C): TRUE COPY OF THE NOC ISSUED BY THE GOVERNMENT VIDE GO(MS) NO.144/11/11 EDN. DATED 20.8.2011 RESPONDENT(S)' EXHIBITS: NIL /TRUE COPY/ P.A.TO.JUDGE sts P.R. RAMACHANDRA MENON, J. ======================== -------------------------------------------- Dated this the 12th day of March, 2014 JUDGMENT The correctness and sustainability of Ext.P5 assessment order passed by the first respondent is under challenge in thiswrit petition. 2. The case of the petitioner is that, the eligibility and claim of the petitioner to have exemption being a 'Trust' under Section11 of the Income Tax Act has been simply denied, while passingExt.P5 order. and this made the petitioner to approach this Court.There is also a challenge with regard to the violation of principlesof natural justice. 3. The learned Standing Counsel for the respondents submits that the version of the petitioner that the claim forexemption has been denied in toto is not correct. The issue hasbeen considered and analysed meticulously, and that whereinterference is necessary, appropriate extent of relief has beengiven and in respect of the rest, the claim has been rejected,with reference to the actual facts and figures as discernible from paragraph '9' of the assessment order which reads as follows: “9. This assessment is completed in following manner (After adding back the depreciation amount) Computation Gross income under head business and profession = Rs149059700 Income from other sources and agriculture = Rs 5122371 Net income = Rs154182071 Less Application of income (revenue) = Rs 131218847 Less depreciation disallowed and added back in income = Rs 28756096 Actual Application of Money = Rs102462751 But shortfall on account of depreciation is not consideredfor tax demand; this is due to effect of High Court'sverdict on identical issue. (If it is added back in taxableincome it will lead to undue litigation) Yet a clear messageis given to assessee that depreciation cannot be claimedin any future assessment year, even he had filed thereturn he has to revise the same. Application of Income for other than charitable or religious purposes = Rs 49095532 Total Taxable Income Rs 49095532” 4. It is also pointed out that, the petitioner is having an effective alternative remedy by way of appeal before the appellate authority and in the said circumstance, interfere is notliable to be made as a matter of course, more so in view of the W.P.C. No. 4826 of 2014 law declared by the Apex Court in Commissioner of IncomeTax and Others v. Chhabil Dass Agarwal [2013] 357 ITR 357(SC). 5. After hearing both the sides and after going through theimpugned order, this Court finds that the denial of exemption isnot a blanket denial. In view of the contents of the said order,the correctness of the figures will have to be examined by thecompetent authority with reference to the relevant records. Thiscannot be pursued in a proceeding under Article 226 of theConstitution of India, more so when the petitioner is having aneffective alternative remedy by way of appeal. 6. In the said circumstance, the petitioner is relegated toavail the statutory remedy by way of appeal, also filing I.A forstay, if so advised. If any such proceedings are filed within 'twoweeks' from the date of receipt of a copy of this judgment beforethe appropriate authority, the I.A for stay shall be considered andappropriate orders shall be passed, in accordance with law, at theearliest, at any rate, within 'one month' thereafter. Status quoshall be maintained with regard to the coercive proceedings, if W.P.C. No. 4826 of 2014 -4- 6. In the said circumstance, the petitioner is relegated toavail the statutory remedy by way of appeal, also filing I.A forstay, if so advised. If any such proceedings are filed within 'twoweeks' from the date of receipt of a copy of this judgment beforethe appropriate authority, the I.A for stay shall be considered andappropriate orders shall be passed, in accordance with law, at theearliest, at any rate, within 'one month' thereafter. Status quoshall be maintained with regard to the coercive proceedings, if W.P.C. No. 4826 of 2014 -4- any, till such time. The petitioner shall produce a copy of thejudgment along with a copy of the writ petition before theappellate authority for further steps. The writ petition is disposed of. P.R. RAMACHANDRA MENON, JUDGE. kp/-