Joe Antony Vs ITO (Kerala High Court)
The Kerala High Court considered writ petitions challenging assessment orders in which exemption claimed under Section 10(16) of the Income Tax Act was declined. The petitioners, Medical Post Graduation students, contended that amounts assessed as taxable income were stipends received for pursuing their postgraduate studies and were therefore exempt.
The assessing authorities had conducted detailed inquiries and concluded from records, communications/reports of educational authorities, returns filed by the petitioners and TDS deducted that the receipts had the characteristics of salary rather than stipend.
The High Court accepted the proposition that stipend received by a Medical PG student is liable for exemption under Section 10(16), but held that the nature of the particular receipts was a factual dispute. The question whether the amounts constituted “stipend” could not be resolved in a writ petition under Article 226 of the Constitution.
The Court therefore disposed of the writ petitions, directing the petitioners to pursue the statutory remedies against the assessment orders. To facilitate this, coercive proceedings arising from the assessment orders were directed to remain in abeyance for two months. The period from filing of the respective writ petitions—24.01.2026 and 17.04.2026—until issuance of certified copies of the judgments was directed to be excluded while computing limitation for the statutory appeals.
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
In both these cases, the petitioners are assessees under the Income Tax Act. The challenge raised in both these writ petitions are against the orders of assessment passed against the petitioners, wherein, the exemption claimed by the petitioners under Sec.10(16) of the Income Tax Act was declined. According to the petitioners, both of them are students of Medical Post Graduation courses, who are entitled to get stipend from the institution where they are undergoing studies. According to the petitioners, the amounts which were assessed as income in the impugned assessment orders, were infact, the stipends received by them, for carrying out the post graduate studies in the said establishment and therefore, liable to be exempted under Sec.10(16) of the Income Tax Act. The challenge raised in these writ petitions are against those orders, and according to the petitioners, the assessment orders suffer from blatant illegality, which warrant interference by this Court under Article 226 of Constitution of India.
2. I have heard the learned counsel appearing for the petitioners and the learned standing counsels for the respondents.
3. On carefully going through the contents of the impugned assessment orders, it is seen that, a detailed inquiry has been conducted by the assessing authority before entering into the conclusion that the amounts referred to above are to be treated as income assessable for tax. Even while, accepting the legal proposition that the stipend of Medical PG student is liable to be exempted from payment of tax, in the light of Sec.10(16) of the Income Tax Act, the authority, based on the records that they could collect during the course of inquiry, entered into factual findings to the effect that, the character of the income received by the petitioners is not that of a stipend, but salary. Certain communications/reports of educational authorities were also relied on and the returns submitted by the petitioners as well as the TDS deducted, were also formed the basis of said finding.
4. Thus, even-though the contention of the petitioners that the income by way of stipend is liable to be exempted by virtue of Sec.10(16) of the Income Tax Act is to be accepted, the factual findings entered into by the assessing authorities as to the nature of the income, to the effect that, it has all the characteristics of a salary, cannot be ignored. The same being a factual dispute, it cannot be resolved in a writ petition. Therefore, exemption claimed by the petitioners under Sec.10(16) of the Income Tax Act, can be availed by the petitioners only if it is shown that, the income falls within expression “stipend”, and the question as to whether the income received by the petitioners is stipend or not, is a question of fact. Therefore, even-while accepting the proposition urged by the learned counsel for the petitioners as referred to above, in the light of factual dispute, the issue involved in this writ petition cannot be resolved invoking the powers of this Court under Article 226 of Constitution of India.
In such circumstances, this writ petition is disposed of, relegating the petitioners to invoke the statutory remedies against the impugned assessment orders. In order to facilitate the petitioners to invoke such remedies, it is ordered that, the coercive proceedings based on the impugned assessment orders shall be kept in abeyance for a period of two months. Further, the period from the date of filing of these writ petitions i.e, 24.01.2026 in W.P.(C) No. 3699 of 2026 and 17.04.2026 in W.P.(C). No. 15438 of 2026, till the date of issuance of the certifiied copies of these judgments, shall be excluded while computing the period of limitation for filing the statutory appeal.
