COMMISSIONER OF INCOME TAX vs. INTERNATIONAL INSTITUTE OF

TCA.Nos.54 to 56 of 2021 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 15.02.2021 CORAM : The Honourable Mr.Justice T.S.SIVAGNANAM and The Honourable Ms.Justice R.N.MANJULA Tax Case Appeal Nos.54 to 56 of 2021 and C.M.P.Nos.1026 & 1028 of 2021 Commissioner of Income Tax, Chennai. ...Appellant in all cases Vs M/s. International Institute of Bio-Technology and Toxicology, 12, Harley's Road, Kilpauk, Chennai - 600 010. PAN: AAATF0061E ...Respondent in all cases COMMON PRAYER: Appeals under Section 260A of the Income Tax Act, 1961 against the common order dated 03.09.2019 made in ITA.Nos.1833 to 1835/Chny/2019 respectively for the assessment years 2010-11, 2011-12 and 2015-16 on the file of the Income Tax Appellate Tribunal, Madras 'A' Bench. 1/12 https://www.mhc.tn.gov.in/judis/ TCA.Nos.54 to 56 of 2021 For Appellant: Mr.J.Narayanasamy Senior Standing Counsel For Respondent: Mr.G.Baskar COMMON JUDGMENT (Delivered by

T.S.Sivagnanam,J

) These appeals, filed by the Revenue under Section 260A of the Income Tax Act, 1961 (for short, the Act), are directed against the common order dated 03.09.2019 made in ITA.Nos.1833 to 1835/Chny/2019 respectively for the assessment years 2010-11, 2011-12 and 2015-16 on the file of the Income Tax Appellate Tribunal, Madras 'A' Bench (for brevity, the Tribunal). 2. The appellant-Revenue has filed these appeals by raising the following substantial question of law for consideration: "Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that assessee is entitled for exemption u/s 10(21) of the Act by treating the assessee as Association when the said provision mandates exemption only to the association and not to the institutions? 2/12 https://www.mhc.tn.gov.in/judis/ TCA.Nos.54 to 56 of 2021 3. We have heard Mr.J.Narayanasamy, learned Senior Standing Counsel for the appellant-Revenue and Mr.G.Baskar, learned counsel for the respondent. 4. The assessee, International Institute of Bio-Technology and Toxicology registered as a Society under the provisions of the Tamil Nadu Societies Registration Act, 1975, filed their return of income for the assessment years 2010-11, 2011-12 and 2015-16 admitting NIL income and claimed exemption under Section 10(21) of the Act. 5. Originally, the Assessing Officer completed the assessments under Section 143(3) of the Act. However, the assessments were reopened and under Section 143(3) of the Act read with Section 147 of the Act, the Assessing Officer partially disallowed the exemption claimed under Section 10(21) of the Act. 6. Aggrieved by such orders, the assessee preferred appeals before the Commissioner of Income Tax (Appeals)-17, Chennai. Subsequently, the 3/12 https://www.mhc.tn.gov.in/judis/ TCA.Nos.54 to 56 of 2021 cases were transferred to the Commissioner of Income Tax (Appeals)-10, Chennai [for brevity the CIT(A)]. The CIT(A), by two separate orders dated 28.02.2019 one for both the assessment years 2010-11 and 2011-12 and the other for the assessment year 2015-16, partly allowed the assessee's appeals allowing the exemption claimed by the assessee under Section 10(21) of the Act. 7. Aggrieved by such orders, the Revenue preferred appeals before the Tribunal and since there was another issue pertaining to the depreciation claim, the assessee filed a cross objection against that portion of the order passed by the CIT(A) denying the claim of depreciation under Section 11 of the Act. The Tribunal, by the common impugned order, dismissed the Revenue's appeals and this is how the Revenue is before us by way of the present appeals. 8. After elaborately hearing the learned counsel for the parties and carefully perused the materials placed on record, we find that there is no error in the common order passed by the Tribunal in dismissing the 4/12 https://www.mhc.tn.gov.in/judis/ TCA.Nos.54 to 56 of 2021 Revenue's appeals. The Tribunal rightly took note of the statement of facts which have been furnished by the assessee, wherein the assessee had stated that the Assessing Officer was of the view that the assessee is not a Charitable Organization and that the activity done by them does not qualify as charitable purpose. 9. This view was objected to by the assessee by contending that it is engaged in activities of education and scientific research to the public and that the activities remain the same ever since its inception in the year 1987. Further, the assessee had placed materials and contended that the result of research and development carried on by it, the research services it provides to various entities and the cause of service to the public at large have been accepted by the Department consistently. The assessee had further pointed out that the view taken by the Assessing Officer is erroneous by comparing the assessee to the contractor of a hospital and it is a thorough misunderstanding of the activities of the assessee. The assessee has also placed the objects as well as the details of the activities to demonstrate their activities involving scientific research and development studies, which 5/12 https://www.mhc.tn.gov.in/judis/ TCA.Nos.54 to 56 of 2021 directly impact the safety in non-clinical, health and environmental areas and the services rendered by it are not akin to the contractor by any stretch of imagination. Further, the assessee pointed out that they are notified as engaged in scientific research within the meaning of Section 35(1)(ii) of the Act and they have been claiming exemption under Section 10(21) of the Act ever since its inception and the claim has been accepted by the Department consistently. Therefore, it was contended that the view taken by the Assessing Officer that the assessee should be treated as an institution instead of an association ignoring the earlier stand of the Department is illegal. 10. The Assessee referred to the decisions in the assessee's own case taken by the Tribunal in (i) ITA.No.2309/Mds/2005 dated 26.05.2006 for the assessment year 1997-98, (ii) ITA.No.12/Mds/2007 dated 19.11.2007 for the assessment year 1998-99, (iii) ITA.No.1523/Mds/2008 dated 29.06.2009 for the assessment year 2000-01 and (iv) ITA.No.317/Mds/2009 dated 16.07.2009 for the assessment 6/12 https://www.mhc.tn.gov.in/judis/ TCA.Nos.54 to 56 of 2021 year 2004-05, wherein the Tribunal has held that the assessee is eligible for exemption under Section 10(21) of the Act. It was further contended that the Assessing Officer failed to follow the decisions of the Tribunal in the assessee's own case, alleging that the orders have not attained finality. 11. The correctness of these submissions was tested before the CIT(A) as well as the Tribunal and the Revenue, though sought to rely upon a communication sent by the learned Senior Standing Counsel giving a list of cases, which have been represented to the Registry of this Court, upon rectification of the defects in the year 2009, miserably failed to establish that the appeals were admitted. Admittedly, the decisions of the Tribunal, which we have referred above dated 26.05.2006, 19.11.2007, 29.06.2009 and 16.07.2009, have not been reversed till date. Even going by the stand taken by the Assessing Officer in the orders of assessment that an appeal was represented to the Registry in the year 2009 pertaining to the assessment year 1998-99, it should be an appeal against the order in ITA.No.12/Mds/2007 dated 19.11.2007. However, there was nothing on record that the other orders of the Tribunal were challenged by the Revenue 7/12 https://www.mhc.tn.gov.in/judis/ TCA.Nos.54 to 56 of 2021 before this Court. 12. Be that as it may, the Tribunal rightly took note of the objectives of the assessee and their activities, which have been carried out ever since their inception in the year 1987. They are engaged in the research work in agricultural related activities and it is recognized as a leading nationally acclaimed society engaged in the field of research in Bio- Technology and Toxicology and they undertake various aspects including research and development studies that directly impact the safety in non- clinical, health and environmental areas and the Tribunal has rightly accepted the stand taken by the assessee and consequently reversed the finding of the Assessing Officer who treated the assessee acclaimed to have been a contractor. 13. Mr.J.Narayanasamy, learned Senior Standing Counsel appearing for the appellant would vehemently contend that the provisions of Section 10(21) of the Act is applicable only to research association and not to institutions. The Assessing Officer treated the assessee as an institution 8/12 https://www.mhc.tn.gov.in/judis/ TCA.Nos.54 to 56 of 2021 while granting approval under Section 35(1)(ii) by the competent authority as well as by the Directorate of Income Tax (Exemption) (DITE) and not as an association and therefore, the assessee cannot claim the benefit under Section 10(21) of the Act. 14. The above submission cannot be countenanced for more than one reason. Firstly, ever since the inception of the assessee society, they have been treated as an association. It is not disputed by the Revenue that the assessee is registered under the provisions of Tamil Nadu Societies Registration Act, 1975 and it has been treated as an association/society since 1987. The change done in the interregnum was set aside by the Tribunal, which decision stands confirmed as on date, in the light of the various orders passed by the Tribunal, which we have referred above. Therefore, the contention raised by the Revenue does not merit acceptance. 15. In our considered view, the observation made by the Assessing Officer is wholly unsustainable, going by the objectives, for which, the assessee association had been established. Thus, in the light of 9/12 https://www.mhc.tn.gov.in/judis/ TCA.Nos.54 to 56 of 2021 the above undisputed position, we find no good ground to interfere with the order passed by the Tribunal. 16. Accordingly, the appeals fail and they are dismissed and the substantial question of law is answered against the Revenue. No costs. Consequently, connected miscellaneous petitions are closed. (T.S.S.,J.) (R.N.M.,J.) 15.02.2021 Index: Yes/No Internet:Yes/No Speaking Judgment/Non speaking Judgment hvk 10/12 https://www.mhc.tn.gov.in/judis/ TCA.Nos.54 to 56 of 2021 To 1. The Income Tax Appellate Tribunal, Madras 'A' Bench, Chennai. 2. The Commissioner of Income Tax, Chennai. 11/12 https://www.mhc.tn.gov.in/judis/ TCA.Nos.54 to 56 of 2021 T.S.SIVAGNANAM,J AND R.N.MANJULA,J hvk T.C.A.Nos.54 to 56 of 2021 and C.M.P.Nos.1026 & 1028 of 2021 15.02.2021 12/12 https://www.mhc.tn.gov.in/judis/