Cochin Chamber of Commerce and Industry vs Commissioner of Income Tax

K.S. Paripoornan, J.—At the instance of an assessee to Income Tax, the Income Tax Appellate Tribunal has referred the following two questions of law for the decision of this court :

"1. Whether, on the facts and in the circumstances of the case, the income from interest on Government securities, dividend from shares in companies and interest from bank deposits in respect of which no activity for profit is carried on by the assessee-Chamber of Commerce are exempt under the provisions of Section 11 of the Income Tax Act, 1961 ?

When no objection is raised by the assessing authority and the Appellate Assistant Commissioner that the assessee had not filed an application in Form No. 10 for accumulation of income or that it had not applied for registration u/s 12A of the Act, was the Appellate Tribunal justified in holding for the first time that the assessee had not filed such application or had not applied for such registration ?"

The assessee is the Cochin Chamber of Commerce and Industry. It is a company in which the public have substantial interest. We are concerned with the assessment year 1973-74 for which the accounting period ended on June 30, 1972. The assessee filed a return claiming that its income was exempt u/s 11 of the Income Tax Act. The Income Tax Officer held that the assessee is not entitled to exemption and that its income was taxable. In appeal, the Appellate Assistant Commissioner by a common order passed for the years 1973-74 and 1974-75 affirmed the decision of the Income Tax Officer. The Appellate Tribunal, by a common order for the present assessment year 1973-74 and for the year 1974-75, held that the assessee is not entitled to the exemption u/s 11 of the Act. The Appellate Tribunal held that the assessee failed to show that they had applied for registration u/s 12A of the Act or that they had filed an application in Form No. 10 asking for accumulation of the unexpended portion of income. The Tribunal referred to its decision in I. T. A, Nos. 859 and 860 for the assessment years 1970-71, etc., and affirmed the decision of the authorities below. It is thereafter at the instance of the assessee that the Tribunal has referred the above questions of law for the decision of this court.

We heard counsel for the applicant-assessee Mr. Vellappally as also counsel for the respondent-Revenue Mr. P. K. R. Menon. The order of the Appellate Tribunal regarding the assessment years 1970-71, 1971-72, 1972-73, 1974-75 and 1975-76 came up before this court in I. T. R. Nos. 342 to 346 of 1982 Cochin Chamber of Commerce and Industry Vs. Commissioner of Income Tax, ). A Bench of this court, by its judgment dated February 21, 1989, held as follows (at page 538) :

"The assessee-applicant was in receipt of income from interest on Government securities, dividend from shares in companies and interest from bank deposits. It is a public charitable trust entitled to exemption of its income u/s 11 of the Income Tax Act regarding its income from interest on Government securities, dividend from shares in companies and interest from bank deposits. The certificate granted by the Commissioner of Income Tax dated August 18, 1975, shows that the application filed by the assessee u/s 12A was admitted and the application in Form No. 10 was received. The question whether the assessee applied for registration u/s 12A of the Act or filed an application in Form No. 10 is a question of fact. The Appellate Tribunal has dealt with the question in a cryptic manner. The fact-finding authority ignored the records available in the case and proceeded on an incorrect basis. That matter should be disposed of by the Appellate Tribunal afresh after notice to parties."

A perusal of the common judgment rendered by this court in ITR Nos. 342 to 346 of 1982 Cochin Chamber of Commerce and Industry Vs. Commissioner of Income Tax, ) dated February 21, 1989, shows that the questions of law formulated in these references are also identical. Following , the earlier Bench judgment dated February 21, 1989, aforesaid, we answer question No. 1 referred to this court in the affirmative, in favour of the assessee and against the Revenue. Similarly, following the earlier Bench judgment dated February 21, 1989, we decline to answer question No. 2 referred to this court. At the same time, we direct the Income Tax Appellate Tribunal to restore the appeal to file and dispose of the same in accordance with law and in the light of the available records, which, according to the assessee, show that the application filed by the assessee u/s 12A was admitted and the application in Form No. 10 was received. This is a matter which should be verified after notice to the parties and the decision rendered by the Income Tax Appellate Tribunal. Question No. 2 is answered as above.

The reference is disposed of accordingly.

A copy of this judgment under the seal of the court and the signature of the Registrar will be forwarded to the Income Tax Appellate Tribunal, Cochin Bench.