VIJAYA BANK V. THE COMMISSIONER

WP/15632/2017

AI Insights

The case involves the Vijaya Bank Staff Welfare Fund Trust, which sought to challenge the rejection of its application for renewal of grant of approval under Section 10[23AAA] of the Income Tax Act, 1961 by the Commissioner of Income Tax [Exemptions], Bengaluru. The Trust argued that the rejection was unjustified as it was based on an unrelated issue concerning the assessment year 2012-13, where funds were allegedly diverted for purchasing gold coins for employees' momentos, which was under separate appellate consideration. The court examined whether the respondent's decision to deny renewal for the years 2015-16, 2016-17, and 2017-18 was justified based on the alleged past violations and found that the respondent had not adequately demonstrated any ongoing violations that would affect the subsequent years' approvals.

• Counselvise Citation: [2019] 140 COUNSELVISE.COM (IT) 732834 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 27-09-2019
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: JEEVAN NEERALGI
• Assessee Lawyers: SHANKAR; M LAVA; S ANNAMALI
• Keywords: Approval Renewal; Employee welfare; Income Tax; Trust; Writ petition
• Section: 10(23AAA)

Judgement Text

"IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 27TH DAY OF SEPTEMBER, 2019 BEFORE: THE HON’BLE MRS. JUSTICE S.SUJATHA WRIT PETITION No.15632/2017 (T – IT) BETWEEN: VIJAYA BANK STAFF WELFARE FUND TRUST REP. BY ITS TRUSTEE SRI NARENDRA R. BHAT VIJAYA BANK , HEAD OFFICE 41/2, MG ROAD BANGALORE-560 001. …PETITIONER (BY SRI SHANKAR.A, SENIOR COUNSEL A/W SRI M.LAVA AND SRI S.ANNAMALI, ADVS.) AND: THE COMMISSIONER OF INCOME TAX [EXEMPTIONS] BENGALURU, 6TH FLOOR UNITY BUILDING ANNEXE MISSION ROAD BENGALURU-560027. …RESPONDENT (BY SRI JEEVAN J. NEERALGI, ADV.) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO QUASH THE IMPUGNED ORDER DATED 30.12.2015 VIDE ANNEXURE-A PASSED BY THE RESPONDENT REJECTING THE APPLICATION MADE BY THE PETITIOENR FOR RENEWAL OF GRANT OF APPROVAL UNDER SECTION 10(23AAA) OF THE INCOME-TAX ACT, 1961 AND ETC., THIS PETITION COMING ON FOR HEARING, THIS DAY, THE COURT MADE THE FOLLOWING:- - 2 - O R D E R The petitioner has challenged the order dated 30.12.2015 passed by the respondent whereby the application made by the petitioner for renewal of grant of approval under Section 10[23AAA] of the Income Tax Act, 1961 [‘Act’ for short] has been rejected inter alia seeking for a direction to the respondent to grant approval under Section 10[23AAA] of the Act to the petitioner-Trust relating to the assessment years 2015- 16, 2016-17 and 2017-18. 2. The petitioner is claiming to be a Trust established by a nationalized bank i.e., Vijaya Bank vide duly registered Deed of Declaration of Trust dated 21.09.2002 with the object of providing welfare facilities to the employees of Vijaya Bank and their family under various schemes approved by the Board of Trustees of the petitioner-Trust from time to time out of the interest earned on corpus of the petitioner-Trust. - 3 - 3. It is the contention of the petitioner-Trust that the approval under Section 10[23AAA] of the Act was accorded by the department from the assessment year 2003-04 to 2014-15. On the application filed for renewal of approval under Section 10[23AAA] of the Act relating to the assessment years in question, the respondent vide order impugned, rejected the said approval. However, the renewal of approval for the assessment years 2018-19, 2019-20 and 2020-21 has been granted by the respondent-authority. Hence, this writ petition. 4. Learned Senior Counsel Sri.A.Shankar representing the learned counsel for the petitioner would submit that no valid reason has been assigned by the respondent to reject the application for renewal of approval under Section 10[23AAA] of the Act, except observing that during the assessment year 2012-13 the income and funds to the extent of Rs.4,62,06,000/- was - 4 - diverted towards purchase of gold coins which was given as momentos to all the confirmed/permanent employees of the Bank on the occasion of the 80th year celebrations, violating the very basic condition laid down by the Act for grant/approval under Section 10[23AAA] of the Act. 5. It is submitted that the assessments were concluded relating to the assessment year 2012-13 disallowing the deductions claimed in terms of the approval granted under Section 10[23AAA] of the Act against which the petitioner has filed appeal and the matter is pending consideration before the Appellate Authority. The issue relating to the purchase of gold coins given as momentos to the employees of the Bank on the occasion of 80th year celebrations vis-à-vis disallowing of the deductions on that basis is a separate cause of action which is not germane for renewal of approval relating to the assessment years 2015-16, - 5 - 2016-17 and 2017-18. Each assessment year is different and distinct. Any default or violation of law committed by the petitioner if is found, resultant action has been initiated by disallowing the deduction relating to the assessment year 2012-13 and that being a separate cause of action, the respondent-authority ought not have rejected the application of the petitioner on that ground. 6. Learned counsel for the respondent made an endeavor to justify the impugned order. It was submitted that the momentos given to the employees of the Bank on the occasion of the 80th years celebrations would not come within the purview of the welfare of the employees in terms of the object of the Trust and as such rejection of the application for renewal of approval relating to the assessment years in question is justifiable. 7. I have given careful consideration to the arguments advanced by the learned counsel appearing for the parties and perused the material on record. - 6 - 8. The reason assigned by the respondent- authority for rejection of approval under Section 10[23AAA] of the Act relating to the assessment years in question is alleged diversion of income and funds towards purchase of gold coins given as momentos to the employees of the bank on the occasion of 80th year celebrations. If there is any violation of objects of the Trust, the same would be applicable to the related assessment year. It is apparent that the said Act of alleged violation of the objects of the Trust is not followed regularly in the subsequent years. The approval under Section 10[23AAA] of the Act being accorded for the respective assessment years and not in general, it was obligatory on the part of the respondent-authority to examine whether such violation of the objects of the Trust was committed during the assessment years in question. No such default is recorded. - 7 - 9. There being no such allegations made against the petitioner-Trust relating to the assessment years in question, it was incumbent on the respondent- authority to renew the approval under Section 10[23AAA] of the Act. It is also significant to note that for the assessment years 2018-19 to 2020-21 such renewal of approval under Section 10[23AAA] of the Act has been granted. It is also not in dispute that relating to the assessment year 2014-15, the benefit of Section 10[23AAA] of the Act has been extended to the petitioner by the Assessing Authority as per the assessment order dated 30.11.2016. If that being the position, the petitioner cannot be denied with grant/approval under Section 10[23AAA] of the Act for the assessment years 2015-16, 2016-17 and 2017-18. 10. It is clear that the assessments having been concluded relating to the assessment years 2012-13, the matter is now pending before the Appellate - 8 - Authority on the issue of disallowance of deductions claimed under Section 10[23AAA] of the Act. Under such circumstances, without expressing any opinion on the merits or demerits of the issue pending before the Appellate Authority relating to the assessment year 2012-13, this Court deems it appropriate to direct the respondent to renew the approval under Section 10[23AAA] of the Act relating to the assessment years 2015-16, 2016-17 and 2017-18 in question, in an expedite manner. Ordered accordingly. With the aforesaid observations and directions, writ petition stands disposed of. In view of disposal of the writ petition, all the pending I.As stand disposed of. Sd/- JUDGE NC. "