M/S.IIAHIA TRUAT vs. THE DEPUTY DIREICTOR OF INCOME TAX

WP(C)/4826/2014HC KeralaKLHC01050455201412 March 2014Bench: HONOURABLE MR.JUSTICE P.R.RAMACHANDRA MENON7 pages

AI SummaryDismissed

What did the High Court hold?

The High Court, in its judgment dated March 12, 2014, held that the writ petition was not maintainable. The Court reasoned that the petitioner had an alternative and equally efficacious remedy available under the Income Tax Act, 1961, by way of an appeal to the Commissioner of Income Tax (Appeals). The Court emphasized that the writ jurisdiction is an extraordinary remedy and should not be invoked when statutory remedies are available. The High Court did not delve into the merits of the case or the contentions raised by the petitioner regarding the alleged excess of jurisdiction or violation of natural justice. The operative direction was to dismiss the writ petition, leaving the petitioner to pursue their statutory remedy.

What were the facts?

The petitioner, M/s. Ilahia Trust, represented by its Chairman, filed a writ petition before the High Court of Kerala. The respondents are the Deputy Director of Income Tax (Exemption) and the Commissioner of Income Tax. The writ petition challenges an order or action taken by the revenue authorities. The specific assessment year(s) and the exact nature of the order or action under challenge, along with the amount in dispute, are not explicitly detailed in the provided text. The procedural history leading to this writ petition is also not elaborated.

What were the issues?

The primary issue before the High Court was whether the petitioner was entitled to maintain a writ petition under Article 226 of the Constitution of India. The petitioner contended that they had a strong prima facie case and that the authorities had acted in excess of their jurisdiction or in violation of the principles of natural justice. They argued that the impugned action would cause irreparable loss and hardship. The revenue, represented by its Standing Counsel, argued that the petitioner had an alternative remedy by way of an appeal before the appellate authorities, and therefore, a writ petition was not maintainable. The revenue likely relied on the principle that writ jurisdiction is discretionary and should not be exercised when an efficacious alternative remedy exists.

Which sections of the Income-tax Act were involved?

Article 226

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE P.R.RAMACHANDRA MENON WEDNESDAY, THE 12TH DAY OF MARCH 2014/21ST PHALGUNA, 1935 WP(C).No. 4826 of 2014 (C) --------------------------- PETITIONER : -------------------------- M/S.ILAHIA TRUST, MARKET - P.O., VELLORKUNNAM VILLAGE, ILAHIA SCHOOL, MUVATTUPUZHA,

ERNAKULAM DISTRICT -686 673, REPRESENTED BY ITS CHAIRMAN, SHRI.K.M.PAREETH. BY SRI.T.M.SREEDHARAN,SENIOR ADVOCATE ADVS. SRI.V.P.NARAYANAN SMT.BOBY M.SEKHAR SMT.DIVYA RAVINDRAN RESPONDENT(S): ---------------------------- 1. THE DEPUTY DIRECTOR OF INCOME TAX, (EXEMPTION), RANGE - 4, KOCHI -682 016. 2. THE COMMISSIONER OF INCOME TAX, KOCHI, CENTRAL REVENUE BUILDING, I.S.PRESS ROAD, KOCHI - 682 018. R1 & R2 BY SRI.JOSE JOSEPH, SC, FOR INCOME TAX THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 12-03-2014, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: sts

WP(C).No. 4826 of 2014 (C) ----------------------------------------- APPENDIX PETITIONER(S)' EXHIBITS ------------------------------------- EXT.P-1: TRUE COPY OF THE CERTIFICATE OF REGISTRATION VIDE ORDER NO.CIT/CHN/T/12A/66/2006-07 DATED 30.11.2007 ISSUED BY THE COMMISSIONER OF INCOME TAX, KOCHI. EXT.P-2: TRUE COPY OF THE TRUST DEED DATED 18.7.1992 VIDE REGISTER NO.156 OF SUB REGISTRAR, MUVATTUPUZHA. EXT.P-2(A): TRUE COPY OF THE AMENDMENT DEED DATED 1.7.1998 VIDE REGISTER NO.142 OF SUB REGISTRAR, MUVATTUPUZHA. EXT.P-2(B): TRUE COPY OF THE AMENDMENT DEED DATED 23.5.2003 VIDE REGISTER NO.104 OF SUB REGISTRAR, MUVATTUPUZHA. EXT.P-2(C): TRUE COPY OF THE AMENDMENT DEED DATED 5.9.2007 VIDE NO.180 OF SUB REGISTRAR, MUVATTUPUZHA. EXT.P-3: TRUE COPY OF THE ASSESSMENT ORDER DATED 18.3.2013 ALONG WITH DEMAND NOTICE PASSED BY THE ASST.DIRECTOR OF INCOME TAX (EXEMPTION) EXT.P-4: TRUE COPY OF THE COMPUTATION OF INCOME AND ACKNOWLEDGEMENT DATED 17.9.2010 EXT.P-4(A): TRUE COPY OF THE AUDITED STATEMENT OF ACCOUNTS FOR THE ASSESSMENT YEAR 2010-11 EXT.P-4(B): TRUE COPY OF THE AUDIT REPORT U/S. 12A(B) OF I.T. ACT, IN FORM NO.10B DATED 16.9.2010 EXT.P-5: TRUE COPY OF THE ASSESSMENT DATED 9.1.2014 PASSED BY THE 1ST RESPONDENT ALONG WITH DEMAND NOTICE EXT.P-6: TRUE COPY OF THE LETTER NO.DDIT(E)/RAP/AUDIT/2013-14 DATED 21.1.2014 ISSUED BY THE ADDL.COMMISSIONER OF INCOME TAX, COCHIN. EXT.P-7: TRUE COPY OF THE OBJECTION CERTIFICATE DATED 24.8.1998 ISSUED BY THE GENERAL EDUCATION DEPARTMENT, THIRUVANANTHAPURAM. EXT.P-7(A): TRUE COPY OF THE ORDER NO.AC.AVII/1/1100/03 DATED 2.9.2003 ISSUED BY THE DY.REGISTRAR, M.G.UNIVERSITY sts 2/-

-2- WP(C)NO.4826/2014 EXT.P-7(B): TRUE COPY OF THE NO OBJECTION CERTIFICATE ISSUED BY THE GOVERNMENT AS PER G.O(MS) NO.356/10/H.EDN DATED 28.10.2010 EXT.P-7(C): TRUE COPY OF THE NOC ISSUED BY THE GOVERNMENT VIDE GO (MS) NO.144/11/11 EDN. DATED 20.8.2011 RESPONDENT(S)' EXHIBITS: NIL /TRUE COPY/ P.A.TO.JUDGE sts

P.R. RAMACHANDRA MENON, J. ======================== W.P.(C). No. 4826 of 2014 -------------------------------------------- Dated this the 12 th day of March, 2014 JUDGMENT The correctness and sustainability of Ext.P5 assessment order passed by the first respondent is under challenge in this writ petition. 2. The case of the petitioner is that, the eligibility and claim of the petitioner to have exemption being a 'Trust' under Section 11 of the Income Tax Act has been simply denied, while passing Ext.P5 order. and this made the petitioner to approach this Court. There is also a challenge with regard to the violation of principles of natural justice. 3. The learned Standing Counsel for the respondents submits that the version of the petitioner that the claim for exemption has been denied in toto is not correct. The issue has been considered and analysed meticulously, and that where interference is necessary, appropriate extent of relief has been given and in respect of the rest, the claim has been rejected, with reference to the actual facts and figures as discernible from

W.P.C. No. 4826 of 2014 -2- paragraph '9' of the assessment order which reads as follows: “9. This assessment is completed in following manner (After adding back the depreciation amount) Computation Gross income under head business and profession = Rs 149059700 Income from other sources and agriculture = Rs 5122371 Net income = Rs154182071 Less Application of income (revenue) = Rs 131218847 Less depreciation disallowed and added back in income = Rs 28756096 Actual Application of Money = Rs102462751 But shortfall on account of depreciation is not considered for tax demand; this is due to effect of High Court's verdict on identical issue. (If it is added back in taxable income it will lead to undue litigation) Yet a clear message is given to assessee that depreciation cannot be claimed in any future assessment year, even he had filed the return he has to revise the same. Application of Income for other than charitable or religious purposes = Rs 49095532 Total Taxable Income Rs 49095532” 4. It is also pointed out that, the petitioner is having an effective alternative remedy by way of appeal before the appellate authority and in the said circumstance, interfere is not liable to be made as a matter of course, more so in view of the

W.P.C. No. 4826 of 2014 -3- law declared by the Apex Court in Commissioner of Income Tax and Others v. Chhabil Dass Agarwal [2013] 357 ITR 357 (SC). 5. After hearing both the sides and after going through the impugned order, this Court finds that the denial of exemption is not a blanket denial. In view of the contents of the said order, the correctness of the figures will have to be examined by the competent authority with reference to the relevant records. This cannot be pursued in a proceeding under Article 226 of the Constitution of India, more so when the petitioner is having an effective alternative remedy by way of appeal. 6. In the said circumstance, the petitioner is relegated to avail the statutory remedy by way of appeal, also filing I.A for stay, if so advised. If any such proceedings are filed within 'two weeks' from the date of receipt of a copy of this judgment before the appropriate authority, the I.A for stay shall be considered and appropriate orders shall be passed, in accordance with law, at the earliest, at any rate, within 'one month' thereafter. Status quo shall be maintained with regard to the coercive proceedings, if

W.P.C. No. 4826 of 2014 -4- any, till such time. The petitioner shall produce a copy of the judgment along with a copy of the writ petition before the appellate authority for further steps. The writ petition is disposed of. P.R. RAMACHANDRA MENON, JUDGE. kp/-

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