INDIAN INSTITUTE OF INFORMATION TECHNOLOGY AND MANAGEMENT-KERALA V. THE COMMISSIONER OF INCOME TAX

ITA/1072/2009

AI Insights

The case involves the Indian Institute of Information Technology and Management-Kerala Technopark, Trivandrum, which appealed against the decision of the Income Tax Appellate Tribunal. The primary contention was whether the appellant was entitled to claim exemption under Section 11 of the Income Tax Act, 1961, which pertains to charitable institutions, or under Section 10(23C)(iiiab), which specifically addresses educational institutions not operated for profit. The Tribunal and the High Court found that the appellant, while being an educational institution, did not qualify as a charitable institution since it did not provide education as a relief to the poor or free of cost, which is a requisite under the amended definition of 'charitable purpose' post-April 1, 2009. The court thus ruled that the appellant was correctly classified under Section 10(23C)(iiiab) and not under Section 11.

• Counselvise Citation: [2018] 140 COUNSELVISE.COM (IT) 767666 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 11-09-2018
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: V K SHAMSUDHEEN
• Assessee Lawyers: E K NANDAKUMAR; ANIL NAIR; PREETHA
• Keywords: Charitable purpose; Educational institution; Exemption Claim; Income tax appeal
• Section: 11; 12A; 2(15); 10(23C)(iiiab)

Judgement Text

"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 of I.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 TAX TRIVANDRUM. 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: ITA 1072/2009 2 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 the appellant is not entitled to claim exemption u/s.11 of the IT Act, 1961 and in rejecting the application filed before the respondent ? II. Whether the appellate tribunal was justified in coming to the conclusion that sec.10(23C)(iiiab) and section 11 are mutually exclusive and the applicability of the former section ruled out the latter ? III. Having found that the appellant was imparting education admittedly not for profit and considering the legislative intent, whether the appellate tribunal was justified in holding that section 11 ruled out when exemption was claimable under a specific provisions of section 10 ?” 2. The appellant-Institution is a company registered under the Companies Act, 1956, wholly owned by the Government of Kerala and is imparting education and training programmes in information technology and management. The appellant applied for registration under Section 12A of the Income Tax Act, 1961 (for brevity 'the Act') in Form 10A. But the request was rejected on the ground that the assessee is not a charitable ITA 1072/2009 3 institution, but only an educational institution entitled to exemption under Section 10(23C)(iiiab) of the Act. 3. Senior Advocate Sri.P.K.R.Menon appearing for the Revenue submits that the only exemption that the appellant is entitled to is under Section 10(23C)(iiiab) and that it is not a charitable institution as claimed. 4. The thrust of the argument of the learned Counsel for the appellant is that the appellant institution falls within the definition of an institution constituted for “charitable purpose\" as defined under Section 2(15) of the Act, which prior to the amendment with effect from 01.04.2009 vide Finance Act, 2008, reads as follows:- \"'Charitable purpose' includes relief of the poor, education, medical relief, and the advancement of any other object of general public utility.\" The argument of the learned Counsel is that education having been included in the definition of 'charitable purpose' would entitle the appellant-institution the benefit. We are not however, inclined to agree with the learned Counsel for the appellant. Primarily, a charitable institution or an institution functioning for charitable purpose has to include relief for the poor. The education and medical relief is connected with 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 is imparted free of cost in advancement of any other object of general public utility. Annexure A, which is the request of the appellant addressed to the ITA 1072/2009 4 Commissioner of Income Tax, describes the institution as wholly owned by the Government of Kerala with the main object of conducting various educational and training programmes in information technology and management. It is also stated therein that the entire activity of the company will come under “research and development in various educational purpose\". This description would not bring the activity of the institution under “charitable purpose” as defined under Section 2(15) of the Act. However, the institution would definitely come within the purview of the definition 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 any person, any income falling within any of the following clauses shall not be included - xx xx (23C) any income received by any person on behalf of - xx xx (iiiab) any university or other educational institution existing solely for educational purposes and not for purposes of profit, and which is wholly or substantially financed by the Government; or.....” From the records available, it is clear that the institution is an educational institution constituted solely for educational purposes, being run not for profit. The application of the appellant was therefore rightly rejected. We ITA 1072/2009 5 find no reason, whatsoever, to upset the finding of the Tribunal in the impugned order. The appeal is therefore rejected. No order as to costs. Sd/- K.VINOD CHANDRAN JUDGE Sd/- ASHOK MENON JUDGE ITA 1072/2009 6 APPENDIX PETITIONER'S/S EXHIBITS: ANNEXURE A A TRUE COPY OF THE APPLICATION BY APPELLANT TO THE RESPONDENT DATED 20.8.2001. ANNEXURE B A TRUE COPY OF THE COMMUNICATION ISSUED BY THE RESPONDENT DATED 21.1.2002. ANNEXURE C A TRUE COPY OF THE APPLICATION BY THE APPELLANT DATED 14.2.2002. ANNEXURE D A TRUE COPY OF THE APPLICATION BY THE APPELLANT TO RECONSIDER THE MATTER DATED 4.3.2002. ANNEXURE E TRUE COPY OF THE ORDER OF THE COMMISSIONER OF INCOME TAX, TRIVANDRUM REFUSING REGISTRATION DATED 14.8.2002. ANNEXURE F A CERTIFIED COPY OF THE ORDER OF THE INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH DATED 19.10.2004. RESPONDENT(S) EXHIBITS : NIL /TRUE COPY/ PA TO JUDGE dkr "