1986 (9) TMI 25 - HC - Income Tax

Court limits inherent power under section 151 of CPC when clarifying tax exemption for religious institutions

The High Court, in a case involving an application seeking clarification and modification of a judgment regarding a religious institution's entitlement to ... Reference Issues: Application under section 151 of the Code of Civil Procedure seeking clarification and modification of a judgment, entitlement of a religious institution to income tax exemption under sections 11 and 12 of the Income-tax Act, 1961, exercise of inherent power by the High Court in correcting judgments, limitations of the powers conferred by section 151 of the Code of Civil Procedure.Analysis:The judgment pertains to an application under section 151 of the Code of Civil Procedure seeking clarification and modification of a previous judgment. The High Court was asked to clarify and rectify a judgment regarding the entitlement of a religious institution to income tax exemption under sections 11 and 12 of the Income-tax Act, 1961. The question referred to the High Court was whether the income derived by the religious institution was eligible for exemption. The Income-tax Appellate Tribunal had initially ruled in favor of the institution, but a Division Bench of the High Court reversed this decision, ruling against the institution.The applicant contended that they were entitled to the benefit of a specific provision of the Income-tax Act, which had not been granted, leading to a mistake apparent on the face of the record. However, the court highlighted that the power under section 151 of the Code of Civil Procedure is limited to ex debit justitiae, inherent in the court's duty to ensure justice between parties. The court emphasized that this power cannot be used when the Code itself provides for a procedure or situation.The High Court, in deciding the reference application, was exercising advisory jurisdiction limited to powers conferred by the income tax Act. The court noted that the power to correct judgments is distinct from appellate power and that the remedy for errors in a judgment lies in filing an appeal. The court emphasized the limits to the exercise of powers under section 151 of the Code of Civil Procedure, citing a Supreme Court observation on the importance of not wasting time on unargued grounds.The applicant argued that the court was obligated to correct a mistake regarding the applicability of a specific provision, which had allegedly been raised but not considered. However, the court found that the present case did not warrant a review of the judgment, as it would exceed the scope of section 151 of the Code of Civil Procedure. Ultimately, the court rejected the application, directing the parties to bear their own costs.