TaxTMI 
TaxTMI 
2021 (11) TMI 576
X X X X Extracts X X X X
X X X X Extracts X X X X
....os.18 & 19/Coch/2017 of Income Tax Appellate Tribunal (for short 'the Tribunal'), Cochin Bench, Cochin. The details of the Assessment Years etc are stated in the following tabular form: Sl. No. Assessment Year & Date of Assessment Order Order of Commissioner of Income Tax Income Tax Appellate Tribunal ITA No. 1 2011-12; dtd.31.01.2014 ITA 98/R-1/E/CIT(A)-II/2013- 14 DT.24.11.2016 ITA NO.18/COCH/2017 DTD 01.08.2017 05/01/18 2 2012-13; dtd.18.03.2015 ITA 18/R-1/E/CIT(A)-I/2015-16 DT.24.11.2016 ITA NO.19/COCH/2017 DTD 01.08.2017 07/01/18 2.1 The appeals are admitted on the following substantial questions of law. "1. Whether, on the facts and in the circumstances of the case. - i. Does the assessee, a company registered under the Companies Act, come within the true ambit of section 10(26B) of the Income Tax Act? ii. Is the assessee entitled to the benefit of Section 10(268) of the Income Tax Act? 2. Whether, on the facts and in the circumstances of the case and the reasoning and conclusion of the Tribunal being based on the submissions, statements and written submissions of the assessee and without any independent finding being rendered and evidence ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ations, Autonomous Bodies, Affiliated Bodies etc. The conclusion of the above consideration is that the assessee is a Corporation under the Companies Act, therefore, not entitled to the exemption under Section 10(26B). The CIT (Appeals) confirmed the findings of the Assessing Officer in all aspects, including the claim of exemption under Section 10(26B) of the Act. 5. Being aggrieved by the orders denying exemption under Section 10(26B), as noted above, the assessee filed appeal before the Tribunal. The Tribunal examined the factual and legal aspects and by following the decisions reported in CIT v. Harijan Evam Nirbal Varg Avas Nigam 226 ITR 696 and Arunachal Pradesh Forest Corporation Ltd v. ACIT (2007) 290 ITR 139, held as follows: " 7.9 In the light of the above said reasoning and the judicial pronouncements cited supra, we are of the view that the assessee which is financed and established by the Government for promoting the interest of the members of the scheduled tribes living in the Lakshadweep Islands, is entitled to the benefit of section 10(26B) of the I.T. Act. Since we hold that the assessee is entitled to the benefit of section 10(26B) of the I.T. Act, the other gr....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of the assessee would arise if the assessee falls within one or the other entities contemplated by Section 10(26B) of the Act. A Company incorporated per se is outside the benefit of the sub-section granting exemption. The approach of the Tribunal is illegal and erroneous. Thus, warrants interference of this Court under Section 260A, by answering substantial question no.1 in favour of the Revenue and against the assessee. 7.2 The learned Senior Counsel commends to the Court that the rule of construction: Noscitur a Sociis is also an apt interpretative tool to the case on hand, and the meaning of an unclear word is to be judged by the company it keeps. Therefore, the word 'established' if understood in the company of the words surrounding it, means established by or under an enactment of Parliament/State legislature. Lastly, he relies on the judgment reported in State Level Committee v. Morgardshammar India Ltd (1996) 101 Sales Tax Cases 1 to argue that the choice between a strict and a liberal construction arises only in a case of doubt in regard to the intention of the Legislature. The interpretative process arises where meaning is not manifest in the plain words of the Statute.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....two ways: firstly, by finding out the approach adopted by the Tribunal- whether is correct or not and, secondly, construct Section 10(26B) and find out the applicability to the different situations, including the case on hand. We are examining the issue by dealing with the legal argument advanced by both the counsel on Section 10(26B) of the Act. Section 10(26B) reads as follows: "(26B) any income of a corporation established by a Central, State or Provincial Act or of any other body, institution or association (being a body, institution or association wholly financed by Government) where such corporation or other body or institution or association has been established or formed for promoting the interests of the members of the Scheduled Castes or the Scheduled Tribes or backward classes or of any two or all of them." 9.2 Section 10 is part of Chapter III dealing with incomes which do not form part of total income. In other words, it deals with the income exempted from computation under the Act. By applying the interpretative tool of literal construction to Section 10(26B), we notice that the sub-section deals with entities that fall within the exempted purview and the qualifica....
X X X X Extracts X X X X
X X X X Extracts X X X X
....se in Section 10(26B) between the words Central, State, or Provincial Act or of any other body, institution or association. The Section deals with not only a Corporation established by Central/State, but it also deals with income of any other body, institution or association, which is fully financed by the Government, and such body, institution or association has been formed for promoting the interests of the members of the Scheduled Castes or the Scheduled Tribes or backward classes or of any two or all of them. The requirement of sub-section (26B) is not that it is limited only to entities brought into existence by an Act of Parliament or Legislature. 9.5 There could be an instance of establishing a Corporation under an enactment by the Centre/State. Centre/State can also establish a Corporation in the manner known to law. These entities automatically do not become eligible for exemption under section 10(26B). They become eligible for claiming exemption only when these entities are formed for promoting the interests of the members of the Scheduled Castes or the Scheduled Tribes or backward classes or of any two or all of them. When it comes to income of any other body, instituti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....in subsection (26B) is attributable where the Section deals with Centre/State/Provincial Act. When it comes to body, institution or association, the corresponding expression used is 'formed'. Incorporation of a Company under the Companies Act is again incorporating a body with legal identity and status. By having incorporated as a Corporation or Company under the Companies Act, ought not to be used against the assessee for denying the benefit of exemption under Section 10(26B) of the Act. 9.7 The decisions on which reliance is made by the Revenue are clearly distinguishable and the ratio is not applicable to the case on hand. This Court is construing Section 10(26B), both by keeping in mind the golden rule of construction and also Noscitur a Sociis, and the inescapable conclusion is that the assessee though incorporated under the Companies Act falls within the ambit of exemption envisaged by Section 10(26B) and is entitled to benefit of exemption. 9.8 We take judicial notice of the fact that Centre/State Governments, as the case may be, bring into existence what is known as Government Companies. All these companies are not immediately entitled to be bracketed within the a....