M/S.KERALA STATE EX-SERVICE LEAGUE,TVM V. THE ASSISTANT DIRECTOR OF INCOME TAX

WP(C)/8360/2010

AI Insights

The case involves the Kerala State Ex-Services League, a charitable organization, which sought to have its registration under Section 12AA of the Income Tax Act recognized from its date of incorporation in 1992, rather than from 2005 when it was actually granted. The organization faced denial of tax exemption for the assessment year 2003-2004 due to the lack of registration for that year, leading to an appeal that was also rejected. The organization then filed a writ petition challenging the rejection and seeking expedited action on its registration application. The court's decision emphasized the need for timely administrative action to resolve the registration issue, which directly affected the organization's tax exemption status for prior years.

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 755692 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 19-12-2014
• Assessment Year: misc
• Laws Referred To: Income Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: P K R MENON; JOSE JOSEPH
• Assessee Lawyers: S K DEVI; K P PRADEEP; K N PILLAI
• Keywords: Assessment Order; Charitable organization; Income tax exemption; Registration Denial
• Section: 12AA; 12A

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR. JUSTICE A.K.JAYASANKARAN NAMBIAR FRIDAY, THE 19TH DAY OF DECEMBER 2014/28TH AGRAHAYANA, 1936 WP(C).NO. 8360 OF 2010 (T) --------------------------- PETITIONER(S): ---------------- M/S KERALA STATE EX-SERVICES LEAGUE TC 27/4411, VIMUKTHA BHADA BHAVAN, NEAR AKG CENTRE KUNNUKUZY.P.O, THIRUVANANTHAPURAM-REPRESENTED BY ITS SECRETARY, RAVEENDRANATH. BY ADVS.SMT.S.K.DEVI SRI.K.P.PRADEEP (PAYYANNUR) SRI.K.N.VIKRAMATHITHYAN PILLAI RESPONDENT(S): --------------- 1. THE ASSISTANT DIRECTOR OF INCOME TAX (EXEMPTION)DEPARTMENT OF REVENUE, GOVERNMENT OF INDIA, AAYAKAR BHAVAN, KOWDIAR THIRUVANANTHAPURAM-695 003. 2. THE ADDITIONAL DIRECTOR OF INCOME TAX (EXEMPTION)DEPARTMENT OF REVENUE, GOVERNMENT OF INDIA AAYAKAR BHAVAN, KOWDIAR, THIRUVANANTHAPURAM-695 003. 3. THE COMMISSIONER OF INCOME TAX (APPEAL), DEPARTMENT OF REVENUE, GOVERNMENT OF INDIA AAYAKAR BHAVAN, KOWDIAR, THIRUVANANTHAPURAM-695003. 4. TAX RECOVERY OFFICER,RANGE I,INCOME TAX OFFICE, DEPARTMENT OF REVENUE, GOVERNMENT OF INDIA AAYAKAR BHAVAN, KOWDIAR, THIRUVANANTHAPURAM-695 003. 5. THE COMMISSIONER OF INCOME TAX, DEPARTMENT OF REVENUE, GOVERNMENT OF INDIA AAYAKAR BHAVAN, KOWDIAR, THIRUVANANTHAPURAM-695 003. BY ADV. SRI.P.K.R.MENON,SR.COUNSEL, GOI(TAXES) BY ADV. SRI.JOSE JOSEPH, SC, FOR INCOME TAX THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 19-12-2014, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C).NO. 8360 OF 2010 (T) APPENDIX PETITIONER'S EXHIBITS: EXT.P1: TRUE COPY OF THE ASSESSMENT ORDER NO.PAN AAATT7429G DATED 27/3/2006 ISSUED BY THE 1ST RESPONDENT EXT.P2: TRUE COPY OF THE ORDER IN APPEAL DATED 20.01.2010 NO.ITA 56- T/06-07 PASSED BY THE THIRD RESPONDENT EXT.P3: TRUE COPY OF THE ORDER NO.C 301/ADIT (E)/87/2005-06 DATED 28/09/06 EXT.P4: TRUE COPY OF THE APPLICATION SUBMITTED THROUGH THE SECOND RESPONDENT FOR REGISTRATION UNDER S.12AA EXT.P5: TRUE COPY OF THE JUDGMENT DATED 14.08.2008 IN W.P.(C). NO.24658 OF 2008 OF THIS HON'BLE COURT EXT.P6: TRUE COPY OF THE ORDER DATED 17.09.2008 IN C.NO.301/ADIT (E)/ 87/2005-06 ISSUED BY THE FIRST RESPONDENT EXT.P7: TRUE COPY OF THE ORDER IN APPEAL IN ITA 1006/C/08 DATED 27.10.2009 OF THE ITAT, ERNAKULAM RESPONDENTS' EXHIBITS: NIL //TRUE COPY// P A TO JUDGE A.K.JAYASANKARAN NAMBIAR, J. ............................................................. W.P.(C).No.8360 of 2010 ............................................................. Dated this the 19th day of December, 2014 J U D G M E N T The petitioner is a welfare and charitable organisation of ex- servicemen. By an application dated 16.12.2004 preferred before the Income Tax Authorities, it had applied in terms of Section 12A of the Income Tax Act for registration under Section 12AA of the said Act. By Ext.P3 order dated 28.09.2006, the registration was granted to the petitioner association with effect from 01.04.2005. Insofar as the date of incorporation of the petitioner association was 05.02.1992, and the registration that was sought for by the petitioner was with effect from that date, the petitioner preferred an application before the 5th respondent for giving effect to Ext.P3 registration from 05.02.1992 onwards. The said application was rejected by the 5th respondent by Ext.P6 order dated 17.09.2008, on the ground that the application, in respect of the period from 05.02.1992, had been preferred after more than 12 years. Aggrieved by Ext.P6 order, therefore, the petitioner approached the Income Tax Appellate Tribunal by way of an appeal. By Ext.P7 order dated 03.11.2009, the appellate tribunal took note of the fact that the 5th respondent had not decided the issue raised by the petitioner on merits and therefore set aside Ext.P6 order and remitted the file back to the 5th respondent for proper adjudication W.P.(C).No.8360 of 2010 2 on merits, after affording an opportunity of being heard to the petitioner. It is pointed out that no consequential order as directed by the Appellate Tribunal has been passed by the 5th respondent till date. In the meanwhile, however, by Ext.P1 assessment order for the assessment year 2003-2004, the petitioner was denied the benefit of exemption under the Income Tax Act on the income earned by it. This was on account of the fact that the petitioner association did not have a registration under Section 12AA of the Act for the said assessment year. The petitioner therefore preferred an appeal before the 3rd respondent, which also came to be rejected by Ext.P2 order dated 20.01.2010 for the same reasons. Realising, therefore, that no purpose would be served by preferring a further appeal against Ext.P2, before the Income Tax Appellate Tribunal, in a situation where the petitioner had not been granted a registration under Section 12AA for the assessment year in question, and the 5th respondent had not passed consequential orders pursuant to Ext.P7 order of the Appellate Tribunal, the petitioner opted to challenge Ext.P2 order also through the present writ petition. Thus, in the writ petition, while Ext.P2 order of the 3rd respondent is impugned, there is also a direction sought to the 5th respondent to pass consequential orders pursuant to Ext.P7 order. W.P.(C).No.8360 of 2010 3 2. I have heard Dr.K.P.Pradeep, the learned counsel for the petitioner and Sri.Jose Joseph the learned Standing counsel for the respondent Income Tax Department. 3. On a consideration of the facts and circumstances of the case, as also the submissions made across the Bar, I note that in the instant case, the Income Tax Appellate Tribunal, by Ext.P9 order dated 03.11.2009, had set aside Ext.P6 order passed by the 5th respondent and directed him to pass a fresh order, on the application preferred by the petitioner, on merits. The order to be passed by the 5th respondent, pursuant to the directions of the Appellate Tribunal in Ext.P7 order, would have a bearing on the eligibility of the petitioner for exemption in respect of the assessment years prior to 2005-2006. It is therefore necessary that the 5th respondent passes orders expeditiously on the application preferred by the petitioner, for granting the effect of the registration granted under Ext.P3 from 05.02.1992, the date on which the petitioner association was incorporated. The 5th respondent is therefore directed to pass orders, as directed by the Appellate Tribunal in Ext.P5 order, within a period of two months from the date of receipt of a copy of this judgment, after hearing W.P.(C).No.8360 of 2010 4 the petitioner. I further note that, in Ext.P2 order passed by the 3rd respondent in the appeal preferred by the petitioner against Ext.P1 assessment order, reliance is placed on Ext.P6 order of the 5th respondent for dismissing the appeal preferred by the petitioner. In view of the fact that the Appellate Tribunal had in Ext.P7 order set aside Ext.P6 order of the 5th respondent, I feel that Ext.P2 order passed by the 3rd respondent also needs to be set aside for basing its decision on an order of the 5th respondent that was since set aside by the Appellate Tribunal. That apart, I am of the view that, unless the 5th respondent passes orders pursuant to the directions in Ext.P7 order of the Tribunal, there will be no meaningful adjudication of the appeal preferred by the petitioner against Ext.P1 assessment for the assessment year 2003-2004, where the issue of whether or not the petitioner has a registration under Section 12AA of the Income Tax Act would have a bearing. Thus, I quash Ext.P2 order of the 3rd respondent and direct him to consider the appeal preferred by the petitioner against Ext.P1 assessment order afresh, after hearing the petitioner and after considering the order to be passed by the 5th respondent pursuant to the directions of the Appellate Tribunal in Ext.P7 order. Resultantly, the writ petition is disposed as above. It is made W.P.(C).No.8360 of 2010 5 clear that, pending final orders to be passed by the 3rd respondent in the appeal preferred by the petitioner against Ext.P1 assessment order, no recovery steps for realisation of any differential tax amount shall be pursued against the petitioner. A.K.JAYASANKARAN NAMBIAR JUDGE mns W.P.(C).No.8360 of 2010 6 "