Cochin Devaswom Board vs Government of India and Others

K.P. Radhakrishna Menon, J.—The Cochin Devaswom Board, a body constituted under the Travancore-Cochin Hindu Religious Institutions Act, 1950, hereinafter referred to as "the Board" is the petitioner.

Accepting the Board''s application exhibit P-2, the Central Government issued exhibit P-3 notification which reads :

"In exercise of the powers conferred by Clause (v) of Sub-section (23C) of Section 10 of the Income Tax Act, 1961 (43 of 1961), the Central Government hereby notifies "Cochin Devaswom Board, Trichur" for the purpose of the said Section for and from the assessment year 1972-73."

By virtue of this notification, the petitioner-Board has been enjoying Income Tax exemption since the assessment year 1972-73. The validity of the above notification is purported to be limited by the Central Board of Direct Taxes to the assessment year 1984-85, as evidenced by exhibit P-4. It has further been stated in exhibit P-4 that if the petitioner-Board wanted extension of the tax exemption for subsequent years, it should seek renewal of the notification, exhibit P-3. The petitioner-Board thereupon made an application exhibit, P-5, to the Central Government for the renewal of the notification (vide exhibit P-5). This was followed by another application, exhibit P-12, where the petitioner-Board has repeated that exhibit P-3 enables it to claim tax exemption for subsequent years as well. This contention of the Board was not only rejected by the Central Board of Direct Taxes, but the Central Board further declared that the petitioner-Board was not entitled to get the tax exemption at all (vide exhibit P-14). The third respondent, thereafter, has issued exhibit P-15 notice calling upon the petitioner to file Income Tax returns for the assessment years 1985-86 and 1986-87. The petitioner, on receipt of exhibit P-15 notice, has filed this original petition seeking to quash exhibit P-4, P-14 and P-15.

Is the petitioner-Board entitled to the tax exemption provided for under exhibit P-3 notification de hors exhibits P-4 and P-14 and consequently avoid filing of the returns for the assessment years 1985-86 and 1986-87, is the question before me. Clause (v) of Sub-section (23C) of Section 10 of the Income Tax Act, 1961, as it stood then, requires to be considered in this context. It reads :

"Incomes not included in total income. -- In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included . . . any income received by any person on behalf of... (v) any trust (including any other legal obligation) or institution, being a trust or institution wholly for public religious purposes or wholly for public religious and charitable purposes, which may be notified by the Central Government in the Official Gazette, having regard to the manner in which the affairs of the trust or institution are administered and supervised for ensuring that the income accruing thereto is properly applied for the purposes thereof."

Exhibit P-3 notification admittedly is one issued under the above sub-clause. It can be seen from exhibit P-3 that the Central Government, has notified the petitioner-Board as an institution entitled to tax exemption for and from the assessment year 1972-73. This notification thus enables the petitioner-Board to claim tax exemption for all time. The Central Board of Direct Taxes, however, by exhibit P-4, limited the validity of the notification, exhibit P-3, to the assessment year 1984-85. Not only that, the Central Board of Direct Taxes further declared, as is seen from exhibit P-14, that the petitioner-Board is not entitled to get the tax exemption at all. Counsel for the petitioner argues that the Central Board of Direct Taxes has no power to vary the notification, exhibit P-3, issued by the Central Government or to issue, exhibit P-14, notification under the above sub-clause.

The incidental question thus arising for consideration is, has the Central Board of Revenue the power to modify/vary exhibit P-3 notification issued by the Central Government or to issue exhibit P-14 notification, under the above sub-clause ? The answer, in my view, depends upon the construction of Section 21 of the General Clauses Act. Section 21 reads :

"21. Power to issue to include power to add to, amend, vary or rescind, notifications, orders, rules or bye-laws.--Where, by any Central Act or Regulation, a power to issue notifications, orders, rules, or bye-laws is conferred, then that power includes a power, exercisable in the like manner and subject to the like sanction, and conditions if any, to add to, amend, vary or rescind any notifications, orders, rules or bye-laws so issued."

This section embodies the principle that the power to create includes the power to destroy and also the power to alter what is created. However, the power to amend which is included in the power to create, according to the section, is exercisable in the like manner and subject to like sanction and conditions, if any, as govern the making of the notification, order, etc. It, therefore, "follows that the power to cancel, modify, amend, etc., must necessarily be exercised within the limits prescribed under the section. It is also fundamental that the nature and extent of the application of this section must be governed by the relevant statute which confers the power to issue the notification, (vide Gopi Chand Vs. The Delhi Administration, and Lachmi Narain and Others Vs. Union of India (UOI) and Others, . Applying this principle to the facts of the case, it can be stated without any fear of contradiction that only the Central Government have the power to issue or to cancel, vary or amend a notification already issued under Clause (v) of Sub-section (23C) of Section 10 of the Income Tax Act. If that be so, the Central Board of Revenue which is but a creature of the statute which contains the above sub-clause in exercise of which the Central Government have issued exhibit P-8 notification, has no power to alter, vary or cancel the notification, exhibit P-3. Exhibit P-4 proceeding of the Central Board of Revenue which purports to vary exhibit P-3 notification, therefore, is not sustainable in law. So is the position regarding exhibit P-14.

In the light of what is stated above, exhibit P-15 notice calling upon the petitioner-Board to submit Income Tax returns for the years made mention of therein is not sustainable in law.

The original petition, accordingly, is allowed and exhibits P-4, P-14 and P-15 are quashed.