INDIAN INSTITUTE OF MANAGEMENT V. THE DEPUTY COMMISSIONER OF INCOME TAX

WP(C)/8372/2019

AI Insights

The case involves the Indian Institute of Management, Kozhikode, challenging an assessment order (Ext.P2) for the year 2016-2017 under the Income Tax Act. The petitioner argued that the assessing officer failed to consider their claim for exemption under Section 10(23C) and the implications of Section 12A correctly. The court agreed with the petitioner, noting that the assessing officer overlooked critical aspects of the law regarding educational institutions financed by the government and the applicability of exemptions for the year in question. The court directed a re-assessment, emphasizing the need for a proper legal interpretation of the exemptions claimed.

• Counselvise Citation: [2019] 140 COUNSELVISE.COM (IT) 754625 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 11-10-2019
• Assessment Year: misc
• Laws Referred To: Income Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: JOSE JOSEPH
• Assessee Lawyers: M GEORGE
• Keywords: Assessment Order; Educational institution; Income tax exemption; Government Financed; Legal Perspective
• Section: 12AA; 12A; 10(23)(c)

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE A.K.JAYASANKARAN NAMBIAR FRIDAY, THE 11TH DAY OF OCTOBER 2019 / 19TH ASWINA, 1941 WP(C).No.8372 OF 2019(V) PETITIONER: INDIAN INSTITUTE OF MANAGEMENT IIM CAMPUS P.O, KUNNAMANGALAM, KOZHIKODE 673570, BY LT. COL M. JULIUS GEORGE(RETD), CHIEF ADMINISTRATIVE OFFICER. BY ADVS. SRI.P.RAGHUNATH SRI.PREMJIT NAGENDRAN RESPONDENTS: 1 THE DEPUTY COMMISSIONER OF INCOME TAX (EXEMPTIONS) 2ND FLOOR, SAN JUAN TOWERS, I.S PRESS ROAD, KOCHI-682018. 2 COMMISSIONER OF INCOME TAX(EXEMPTIONS) 2ND FLOOR, SAN JUAN TOWERS, I.S. PRESS ROAD, KOCHI- 682018. BY ADV.SRI.JOSE JOSEPH THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 11.10.2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C).No.8372 OF 2019(V) 2 JUDGMENT The challenge in the Writ Petition is against Ext.P2 order of assessment passed in relation to the petitioner for the assessment year 2016-2017 under the Income Tax Act. The main contention urged by the learned counsel for the petitioner is that while passing Ext.P2 assessment order, the assessing authority did not consider the issue of exemption claimed by the petitioner in its true legal perspective. It is pointed out that while the exemption claimed under Section 10(23)C of the Income Tax Act had been rejected, on the ground that, the petitioner did not produce an approval for the purposes of the grant of exemption, such approval is not contemplated in terms of the express provisions of Section 10(23)C (iiiab). It is stated that as per the said provision, the income of any University or other educational institution existing solely for educational purposes and not for the purposes of profit and wholly or substantially financed by the Government has to be excluded while computing the total income of the previous year of the assessee. This aspect is not seen considered in Ext.P2 assessment order. Similarly, it is pointed out that the Assessing Officer did not also consider the impact of the first proviso to Section 12 A of the Income Tax Act, WP(C).No.8372 OF 2019(V) 3 which clearly made the provisions of Sections 11 and 12 applicable to the income received by an assessee who had been granted registration under Section 12AA, in any assessment year for which assessment proceedings were pending before the Assessing Officer as on the date of obtaining such registration. It is stated that the registration was obtained in the assessment year 2017-2018, and therefore, by virtue of the proviso the benefit of the registration ought to have been extended even for the assessment year 2016-2017 for which the assessment proceedings were pending at the time of grant of registration. 2. I have heard the learned counsel appearing for the petitioner and also the learned Standing counsel appearing for the respondents. On a consideration of the facts and circumstances of the case and the submissions made across the bar, I find force in the contention of learned counsel for the petitioner that Ext.P2 assessment order does not reflect an application of mind while dealing with the claim for exemption both under Section 12A of the Income Tax Act as also under Section 10(23) C of the Act. A perusal of the reasoning of the Assessing Officer would clearly indicate that WP(C).No.8372 OF 2019(V) 4 he has completely overlooked the impact of the first proviso to Section 12 A of the Income Tax Act as also the fact that the proviso to Section 10(23)C had no application to a case that was covered by Section 10(23)C (iiiab) under which category, the petitioner had claimed exemption. Under such circumstances, I am of the view that Ext.P2 assessment order cannot be legally sustained, and the same is accordingly quashed. The 1st respondent is directed to complete the assessment pertaining to the petitioner for the said assessment year afresh, after hearing the petitioner. To enable the 1st respondent to do so, I direct the petitioner to appear before the 1st respondent at his office at 11 am on 04.11.2019. The 1st respondent shall pass fresh orders of assessment as directed within a month thereafter. Sd/- A.K.JAYASANKARAN NAMBIAR JUDGE mns WP(C).No.8372 OF 2019(V) 5 APPENDIX PETITIONER'S/S EXHIBITS: EXHIBIT P1 PHOTOCOPY OF THE ORDER DATED 28.07.2017 U/S. 12AA OF THE ACT ISSUED BY SECOND RESPONDENT. EXHIBIT P2 PHOTOCOPY OF ASSESSMENT ORDER FOR 2016.17 DATED 18.12.2017. EXHIBIT P3 PHOTOCOPY OF APPLICATION U/S. 154 OF THE ACT DATED 17.01.2019. EXHIBIT P4 PHOTOCOPY OF ORDER DATED 04.03.2019 ON EXT P3 APPLICATION. RESPONDENTS EXHIBITS:NIL //TRUE COPY// P.A TO JUDGE "