SooperKanoon Citation | sooperkanoon.com/425049 |
Subject | Direct Taxation |
Court | Andhra Pradesh High Court |
Decided On | Feb-11-1988 |
Case Number | Case Referred No. 146 of 1984 |
Judge | G. Ramanujulu Naidu and ;Y.V. Anjaneyulu, JJ. |
Reported in | (1989)75CTR(AP)91; [1989]175ITR574(AP) |
Acts | Income Tax Act, 1961 - Sections 11, 12, 12A, 13 and 254 |
Appellant | Commissioner of Income-tax |
Respondent | Hyderabad Secunderabad Foodgrains Association Ltd. |
Appellant Advocate | M.S.N. Murthy, Adv. |
Respondent Advocate | K.L. Rathi, Adv. |
Excerpt:
direct taxation - charitable institution - sections 11, 12, 12a, 13 and 254 of income tax act, 1961 - assessee claimed exemption under section 11 being charitable institution - commissioner ordered income tax officer to examine whether requirements under section 12, 12a and 13 satisfied - feeling aggrieved appeal preferred by assessee - when commissioner accepted contention of assessee it become necessary to examine whether conditions under section 12, 12a and 13 satisfied or not - order of exemption under section 11 at threshold by then commissioner without examining fulfillment of requires condition cannot be upheld - held, commissioner was right in not following erroneous order of his predecessor.
- motor vehicles act (59 of 1988)section 149 (2): [v. gopala gowda & jawad rahim, jj] insurers entitlement to defend the action joint appeal by insured and insurer - held, the language employed in enacting sub-section (2) of section 149 appears to be plain and simple and there is no ambiguity in it. it shows that when an insurer is impleaded and has been given notice of the case, it is entitled to defend the action only on grounds enumerated in sub-section (2) of section 149 of the act, and no other grounds are available to it. the insurer is not allowed to contest the claim of the injured or heirs of the deceased on other grounds, which are available to the insured. if insurer is permitted to contest the claim on other grounds it would mean adding more grounds of contest to the insurer and will be negation of the intention of the legislature and annihilate mandate of the provisions of sections 170 and 149 of the act. the insured can pursue appeal only after giving up the insurer as the appellant and not otherwise. in the instant case, the insurer has not withdrawn from party array but has remained prosecuting the appeal with the insured on the grounds which are available only to the insured. therefore, the joint appeal as filed by the insured and the insurer is not maintainable.
section 166: [v. gopala gowda & jawad rahim, jj] claim for compensation accident due to mechanical defect in the vehicle held, it is not in dispute that the claimant suffered injuries in an accident, which occurred during the course of his employment, albeit due to his negligence but law does not render him remediless. statutory right is conferred on him, accruing by virtue of his employment under insured to claim compensation under workmens compensation act. the insurer is statutorily duty bound to discharge the liability of the owner of the vehicle, to pay such compensation to the employee, as mandated under the provisions of section 149 of the act. the right of an injured employee or his dependents as the case may be to be compensated, when injury is suffered or death occurs during his employment, is recognised not only under workmens compensation act, but also under benevolent provisions under section 166 and 167 of the m.v. act. the right of driver to seek compensation is not restricted only to the workmens compensation act, it has been enlarged to enable such person to seek just compensation (sections 166 and 168), conferring upon him the right of election engrafted under section 167 of the act to choose either of the two forum. the only defence which the insurer could take is limit of its liability as enumerated under section 147 of the act, leading to contest, inter alia, only between insured and insurer and does not impact claimants right to recover the compensation determined by the tribunal which crystallizes into enforceable right against both. in the instant case, the claimant/driver has exercised right of election under section 167 of the act to seek compensation under section 166 of the act resulting in award passed by the tribunal. therefore, the insured and the insurer have no escape but to discharge the said award as directed. undisputedly, in this case as deduced for proved facts, the vehicle in question was not properly maintained by the owner and despite faulty brake system, the claimant had undertaken the hazardous journey to his peril at the behest of and at the instruction of the owner. the owner is therefore, tortfeasor.
section 168: [v. gopala gowda & jawad rahim, jj] insurers limit of liability - held, it is well settled that the liability of the insurance company for payment of compensation can be statutory or contractual. is for the insurance company to show that the insurance policy was a statutory policy and not a contractual policy to restrict its liability. that issue was neither raised before the tribunal nor is raised in this appeal requiring decision. thus, if at all the insurer has any valid ground to restrict its liability, it can proceed against the insured but firstly it has to discharge the award as required under section 149 (1) of the act. where the owner/insured has failed to maintain the vehicle as per prescribed safety standards and has caused the claimant to drive the vehicle with mechanical defects, the owner would be the tortfeasor and the claimant can maintain a petition seeking compensation under the provisions of the act, instead of seeking compensation under the workmens compensation act. on facts, held, the material evidence on record, particularly, with regard to the income of the claimant, his age, medical evidence and the evidence relating to pecuniary loss has not been considered by the tribunal in the correct perspective, which has resulted in passing of the impugned award, disproportionate to the pecuniary loss and the loss of future income of the victim. the settled principles governing determination of compensation has been given a go-bye. compensation of rs.4,15,150/- awarded by the tribunal was enhanced to rs.8,20,000/-. - but, then, the commissioner who heard and disposed of the appeal for the assessment year 1977-78 set aside the assessment with a direction to the income-tax officer to consider whether the assessee satisfied the requirements of sections 12, 12a and 13 of the act. the assessee felt aggrieved by the directions of the commissioner to the income-tax officer to examine the provisions contained in sections 12, 12a and 13 of the act because no such direction was given by the predecessor commissioner of income-tax (appeals). according to the assessee, once the present commissioner disposing of the appeal for the assessment year 1977-78 agreed in all respects with the conclusion of the predecessor commissioner, it is not open to the present commissioner to go further and give directions to the income-tax officer to examine whether the provisions contained in sections 12, 12a and 13 are satisfied or not. the income-tax officer did not consider it necessary to go into these aspects because at the threshold, he refused the assessee's claim under section 11. once the claim that the assessee is a public charitable institution is rejected, then the further question, whether the conditions specified in sections 12, 12a and 13 are satisfied or not, is superfluous at the stage. but, once the commissioner accepted the contention that the assessee is a public charitable institution, it becomes necessary to examine whether the conditions specified for exemption of income in sections 12, 12a and 13 are satisfied. in the circumstances, we are satisfied that the order of the commissioner is perfectly justified and the tribunal was in error in interfering with that order.y.v. anjaneyulu, j.1. the following three questions are referred for the consideration of this court by the income-tax appellate tribunal at the instance of the commissioner of income-tax : '(1) whether, on the facts and in the circumstances of the case, the appellate tribunal was justified in holding that the commissioner of income-tax (appeals) erred in directing the income-tax officer to recompute the income under section 11, subject to the conditions under sections 12, 12a and 13 of the income-tax act, 1961 (2) whether, on the facts and in the circumstances of the case, under the powers vested in the first appellate authority under the income-tax act, the commissioner of income-tax (appeals) could not have given such directions, irrespective of the orders of his predecessor (3) whether, on the facts and in the circumstances of the case, the tribunal was justified in holding that in view of the finding given in the appeal, it is not necessary for the tribunal to consider all the issues raised by the assessee in respect of the jurisdiction of the income-tax officer to make the assessment in question ?' 2. the questions relate to the assessment year 1977-78. the question whether the assessee is a public charitable institution and, therefore, its income is exempt under section 11 of the income-tax act, 1961, it appears, came up for consideration first for the assessment years 1974-75, 1975-76 and 1976-77. the income-tax officer rejected the assessee's claim that it is a public charitable institution and, therefore, held that the provisions of section 11 have no application. there are also other disputes in the matter of assessments to which we need not make a reference. the assessee carried the matter in appeal for the aforesaid three assessment years. it appears, the commissioner of income-tax (appeals), after examining the assessee's contention, accepted the plea that it is a public charitable institution and that therefore, its income is entitled to exemption under section 11 of the act. having arrived at that conclusion, it would appear that the learned commissioner directed that the income of the assessee should be exempt for the assessment years 1974-75, 1975-76 and 1976-77. that was the position so far as the three assessment years preceding the year under consideration are concerned. 3. now, for the assessment year 1977-78, once again the same question has come up for consideration. the income-tax officer again refused the assessee's claim that it was a public charitable institution. the assessee carried the matter in appeal. the commissioner of income-tax (appeals) examined the matter at length and came to the conclusion that his predecessor was right in holding that the assessee was a public charitable institution entitled to its income being exempted by reason of the provisions contained in section 11 of the act. but, then, the commissioner who heard and disposed of the appeal for the assessment year 1977-78 set aside the assessment with a direction to the income-tax officer to consider whether the assessee satisfied the requirements of sections 12, 12a and 13 of the act. the assessee felt aggrieved by the directions of the commissioner to the income-tax officer to examine the provisions contained in sections 12, 12a and 13 of the act because no such direction was given by the predecessor commissioner of income-tax (appeals). according to the assessee, once the present commissioner disposing of the appeal for the assessment year 1977-78 agreed in all respects with the conclusion of the predecessor commissioner, it is not open to the present commissioner to go further and give directions to the income-tax officer to examine whether the provisions contained in sections 12, 12a and 13 are satisfied or not. therefore, the assessee carried the matter to the tribunal and had no difficulty in convincing the tribunal about the correctness of his contention. the tribunal held that the commissioner, while disposing of the present appeal for the assessment year 1977-78, ought not to have given the directions that he did and allowed the appeal. that is how the present reference is carried by the commissioner. 4. while the matter relating to the reference was pending before the commissioner, apparently, the assessee sought a cross question also for reference to the effect that question no. 3 relates to this. 5. we have heard learned counsel for the revenue and sri k.l. rathi, for the assessee. it is elementary that the provisions contained in section 11 concerning the exemption of a public charitable institution do not take automatic effect. they take effect subject to the fulfilment of the conditions specified in the other provisions such as sections 12, 12a and 13 of the act. there are conditions relating to the accumulation of income by a charitable institution. in the event of accumulation, the amount has to be invested in approved securities. there are also further restraints about the trustees being related to the settlor and in that even, the provisions contained in section 13 would come into operation. these are all matters which should have been gone into at the assessment stage. the income-tax officer did not consider it necessary to go into these aspects because at the threshold, he refused the assessee's claim under section 11. once the claim that the assessee is a public charitable institution is rejected, then the further question, whether the conditions specified in sections 12, 12a and 13 are satisfied or not, is superfluous at the stage. but, once the commissioner accepted the contention that the assessee is a public charitable institution, it becomes necessary to examine whether the conditions specified for exemption of income in sections 12, 12a and 13 are satisfied. it is for this purpose that the commissioner had given directions which, in our opinion, he was quite justified in doing so. the commissioner of income-tax (appeals), while disposing of the appeal for the earlier assessment years 1974-75, 1975-75 and 1976-77, was in error in straightaway declaring the exemption under section 11 without examining the fulfilment of the conditions specified in sections 12, 12a and 13. the commissioner of income-tax (appeals) disposing of the present appeal for the assessment year 1977-78, is under no obligation to follow an erroneous order of his predecessor. in the circumstances, we are satisfied that the order of the commissioner is perfectly justified and the tribunal was in error in interfering with that order. 6. we, accordingly, answer question no. 1 in the negative, that is, in favour of the revenue and against the assessee. question no. 2 is again answered in favour of the revenue to the effect that the commissioner of income-tax (appeals) has power under law to give directions while setting aside the assessment. 7. now, as regards question no. 3, sri rathi contends that before the tribunal, a number of other contentions were raised and they remained to be considered and disposed of by the tribunal as the assessee did not withdraw the same. the tribunal did not, however, consider those grounds because the basic claim of the assessee as a public charitable institution was accepted. we agree with mr. rathi that the tribunal is under an obligation to consider all the pleas raised by the assessee in the appeal. while passing an order conformably to this judgment, the tribunal is directed to consider all the said issues and pass appropriate orders. the reference is answered accordingly. no costs.
Judgment:Y.V. Anjaneyulu, J.
1. The following three questions are referred for the consideration of this court by the Income-tax Appellate Tribunal at the instance of the Commissioner of Income-tax :
'(1) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in holding that the Commissioner of Income-tax (Appeals) erred in directing the Income-tax Officer to recompute the income under section 11, subject to the conditions under sections 12, 12A and 13 of the Income-tax Act, 1961
(2) Whether, on the facts and in the circumstances of the case, under the powers vested in the first appellate authority under the Income-tax Act, the Commissioner of Income-tax (Appeals) could not have given such directions, irrespective of the orders of his predecessor
(3) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that in view of the finding given in the appeal, it is not necessary for the Tribunal to consider all the issues raised by the assessee in respect of the jurisdiction of the Income-tax Officer to make the assessment in question ?'
2. The questions relate to the assessment year 1977-78. The question whether the assessee is a public charitable institution and, therefore, its income is exempt under section 11 of the Income-tax Act, 1961, it appears, came up for consideration first for the assessment years 1974-75, 1975-76 and 1976-77. The Income-tax officer rejected the assessee's claim that it is a public charitable institution and, therefore, held that the provisions of section 11 have no application. There are also other disputes in the matter of assessments to which we need not make a reference. The assessee carried the matter in appeal for the aforesaid three assessment years. It appears, the Commissioner of Income-tax (Appeals), after examining the assessee's contention, accepted the plea that it is a public charitable institution and that therefore, its income is entitled to exemption under section 11 of the Act. Having arrived at that conclusion, it would appear that the learned Commissioner directed that the income of the assessee should be exempt for the assessment years 1974-75, 1975-76 and 1976-77. That was the position so far as the three assessment years preceding the year under consideration are concerned.
3. Now, for the assessment year 1977-78, once again the same question has come up for consideration. The Income-tax officer again refused the assessee's claim that it was a public charitable institution. The assessee carried the matter in appeal. The Commissioner of Income-tax (Appeals) examined the matter at length and came to the conclusion that his predecessor was right in holding that the assessee was a public charitable institution entitled to its income being exempted by reason of the provisions contained in section 11 of the Act. But, then, the Commissioner who heard and disposed of the appeal for the assessment year 1977-78 set aside the assessment with a direction to the Income-tax officer to consider whether the assessee satisfied the requirements of sections 12, 12A and 13 of the Act. The assessee felt aggrieved by the directions of the Commissioner to the Income-tax Officer to examine the provisions contained in sections 12, 12A and 13 of the Act because no such direction was given by the predecessor Commissioner of Income-tax (Appeals). According to the assessee, once the present Commissioner disposing of the appeal for the assessment year 1977-78 agreed in all respects with the conclusion of the predecessor Commissioner, it is not open to the present Commissioner to go further and give directions to the Income-tax Officer to examine whether the provisions contained in sections 12, 12A and 13 are satisfied or not. Therefore, the assessee carried the matter to the Tribunal and had no difficulty in convincing the Tribunal about the correctness of his contention. The Tribunal held that the Commissioner, while disposing of the present appeal for the assessment year 1977-78, ought not to have given the directions that he did and allowed the appeal. That is how the present reference is carried by the Commissioner.
4. While the matter relating to the reference was pending before the Commissioner, apparently, the assessee sought a cross question also for reference to the effect that question No. 3 relates to this.
5. We have heard learned counsel for the Revenue and Sri K.L. Rathi, for the assessee. It is elementary that the provisions contained in section 11 concerning the exemption of a public charitable institution do not take automatic effect. They take effect subject to the fulfilment of the conditions specified in the other provisions such as sections 12, 12A and 13 of the Act. There are conditions relating to the accumulation of income by a charitable institution. In the event of accumulation, the amount has to be invested in approved securities. There are also further restraints about the trustees being related to the settlor and in that even, the provisions contained in section 13 would come into operation. These are all matters which should have been gone into at the assessment stage. The Income-tax officer did not consider it necessary to go into these aspects because at the threshold, he refused the assessee's claim under section 11. Once the claim that the assessee is a public charitable institution is rejected, then the further question, whether the conditions specified in sections 12, 12A and 13 are satisfied or not, is superfluous at the stage. But, once the Commissioner accepted the contention that the assessee is a public charitable institution, it becomes necessary to examine whether the conditions specified for exemption of income in sections 12, 12A and 13 are satisfied. It is for this purpose that the Commissioner had given directions which, in our opinion, he was quite justified in doing so. The Commissioner of Income-tax (Appeals), while disposing of the appeal for the earlier assessment years 1974-75, 1975-75 and 1976-77, was in error in straightaway declaring the exemption under section 11 without examining the fulfilment of the conditions specified in sections 12, 12A and 13. The Commissioner of Income-tax (Appeals) disposing of the present appeal for the assessment year 1977-78, is under no obligation to follow an erroneous order of his predecessor. In the circumstances, we are satisfied that the order of the Commissioner is perfectly justified and the Tribunal was in error in interfering with that order.
6. We, accordingly, answer question No. 1 in the negative, that is, in favour of the Revenue and against the assessee. Question No. 2 is again answered in favour of the Revenue to the effect that the Commissioner of Income-tax (Appeals) has power under law to give directions while setting aside the assessment.
7. Now, as regards question No. 3, Sri Rathi contends that before the Tribunal, a number of other contentions were raised and they remained to be considered and disposed of by the Tribunal as the assessee did not withdraw the same. The Tribunal did not, however, consider those grounds because the basic claim of the assessee as a public charitable institution was accepted. We agree with Mr. Rathi that the Tribunal is under an obligation to consider all the pleas raised by the assessee in the appeal. While passing an order conformably to this judgment, the Tribunal is directed to consider all the said issues and pass appropriate orders. The reference is answered accordingly. No costs.