2019 (11) TMI 1009 - HC - Income Tax

Trust's Registration Denied for Pension Scheme, Not Charitable Activity

M/s. GCDA EMPLOYEES PENSION FUND TRUST GREATER COCHIN DEVELOPMENT AUTHORITY Versus THE COMMISSIONER OF INCOME TAX-I, COCHIN

The Court upheld the dismissal of the assessee trust's registration under Section 12AA of the Income Tax Act, determining that the trust's purpose of ... Review petition - Registration u/s 12AA denied - Charitable purpose u/s 2(15) - Payment of pension to the retired employees of the GCDA - the finding in the judgment sought to be reviewed that the employees of the GCDA are contributing to the Pension Fund and from out of that contribution, the employees and their dependents are getting pension, would not constitute a mistake apparent from the face of the record, coming within the review jurisdiction of this Court under Order XLVII Rule 1 of the Code of Civil Procedure, 1908. HELD THAT:- In Thungabhadra Industries Ltd v. Government of Andhra Pradesh [1963 (10) TMI 25 - SUPREME COURT] the Apex Court held that, review is, by no means an appeal in disguise, whereby an erroneous decision is reheard and corrected, but lies only for correcting patent errors. Later, in Lily Thomas v. Union of India [2000 (5) TMI 1045 - SUPREME COURT] the Apex Court reiterated that, the power of review can be exercised for correction of a mistake but not to substitute a view. The review cannot be treated like an appeal in disguise. The mere possibility of two views on the subject is not a ground for review. Whilst exercising the power of review, this Court cannot be oblivious of the provisions contained in Order XLVII, Rule 1 of the Code of Civil Procedure, 1908 and that, the limits within which this Courts can exercise the power of review have been well settled in a catena of decisions. Review petition dismissed. Issues Involved:1. Whether the assessee trust qualifies for registration under Section 12AA of the Income Tax Act as a charitable trust.2. Whether the payment of pension by the assessee trust constitutes a 'general public utility' under clause (15) of Section 2 of the Income Tax Act.3. Whether the review petition demonstrates a mistake apparent from the record to warrant a review of the previous judgment.Detailed Analysis:1. Registration under Section 12AA of the Income Tax Act:The assessee trust, formed by the Greater Cochin Development Authority (GCDA), sought registration under Section 12AA of the Income Tax Act. The application was dismissed by the Commissioner of Income Tax-I, Kochi, due to restrictions in Clause H of the trust deed, which impeded amendments to the object clause, raising doubts about the genuineness of the trust's objectives and activities. This decision was upheld by the Income Tax Appellate Tribunal, Cochin Bench, which concluded that the trust's purpose of providing pensions did not qualify as a charitable activity.2. Charitable Purpose and General Public Utility:The core issue was whether the trust's activity of paying pensions to GCDA employees could be considered a 'general public utility' under clause (15) of Section 2 of the Income Tax Act. The Tribunal and the Court both held that pension payments are not charitable activities but deferred payments for services rendered by employees. The Court noted that the trust's objective of paying pensions from contributions made by GCDA employees or the GCDA itself does not qualify as an object of general public utility. The Court referenced various judgments to support that pension is a right and a statutory obligation, not charity.3. Review Petition and Mistake Apparent from the Record:The review petition argued that the Court's previous judgment erroneously assumed that employees contributed to the Pension Fund, whereas the GCDA made the entire contribution. However, the Court held that this factual error did not affect the legal conclusion that the trust's activities did not constitute a 'general public utility.' The Court emphasized that review jurisdiction under Order XLVII Rule 1 of the Code of Civil Procedure, 1908, is limited to correcting patent errors and cannot be used to reargue the case or substitute a different view.Conclusion:The review petition was dismissed as the Court found no mistake apparent from the record that would warrant a review. The Court reiterated that pension payments, whether funded by employees or the employer, do not fall within the definition of 'charitable purpose' under clause (15) of Section 2 of the Income Tax Act. The trust's objective did not qualify for registration under Section 12AA as a charitable trust.