Director General Of Income Tax (Exemption), Plot v. Per P. R. Ramchandra Menon, Chief Justice

HIGH COURT OF CHHATTISGARH, BILASPUR Writ Appeal No. 715 of 2018 NAFR {Arising out of order dated 26.04.2018 passed by the learned Single Judge in WritPetition (T) No. 217 of 2009} 1. Assistant Commissioner of Income Tax, Circle 1(1), Aaykar Bhawan, VyaparVihar, Bilaspur (C.G.) Vihar, Bilaspur (C.G.) 2. Commissioner of Income Tax, Bilaspur (C.G.), Aaykar Bhavan, Vyapar Vihar,Bilaspur (C.G.) Bilaspur (C.G.) 3. Chief Commissioner of Income Tax (C.G.), New Central Revenue Building, CivilLines, Raipur, Chhattisgarh. Lines, Raipur, Chhattisgarh. 4. Central Board of Direct Taxes, Through Secretary, North Block, New Delhi. 5. Union of India, Through Secretary, Ministry of Finance, Department of Revenue,North Block, New Delhi. North Block, New Delhi. 6. Director General of Income Tax (Exemption), Plot No. 15, II Floor, Laxmi Nagar,District Centre, New Delhi. District Centre, New Delhi. ---- Appellants Versus State Bar Council of Chhattisgarh, A body corporate under section 5 of theAdvocates Act, 1961, situated at High Court Premises, Bilaspur (C.G.), throughits officer on Special Duty and officiating Secretary, V.A. Narayanan, (Petitioner/Assessee in Writ Petition) Advocates Act, 1961, situated at High Court Premises, Bilaspur (C.G.), throughits officer on Special Duty and officiating Secretary, V.A. Narayanan, (Petitioner/Assessee in Writ Petition) ---- Respondents For Appellant :Shri Amit Chaudhari and Ms. Naushina Afrin Ali, Advocates.For Respondent:Shri Neelabh Dubey, Advocate. Hon'ble Shri P. R. Ramachandra Menon, Chief JusticeHon'ble Shri Justice Parth Prateem Sahu, JudgeJudgment on Board Per P. R. Ramchandra Menon, Chief Justice 10.02.2020 1.Heard on I.A. No. 1 of 2018, which is an application for condonation of delay of 79 days in filing the writ appeal. For the reasons stated in the application, it is allowed and the delay in filing of appeal is condoned. 2.Heard Shri Amit Chaudhari and Ms. Naushina Afrin Ali, the learned counsel forthe Appellant/Department as well as Shri Neelabh Dubey, the learned counselappearing for the Respondent/Assessee. the Appellant/Department as well as Shri Neelabh Dubey, the learned counselappearing for the Respondent/Assessee. 3.The learned standing counsel for the Appellant submits in response to the queryraised by this Court on 20.01.2020 with reference to the applicability of theCircular No. 3/2018 dated 11.07.2018 that, as categorically mentioned inparagraph 11, the monitory limits mentioned therein shall not apply to writmatters and hence it is not relevant. We hold it accordingly. raised by this Court on 20.01.2020 with reference to the applicability of theCircular No. 3/2018 dated 11.07.2018 that, as categorically mentioned inparagraph 11, the monitory limits mentioned therein shall not apply to writmatters and hence it is not relevant. We hold it accordingly. 4.Correctness and sustainability of the common verdict passed by the learnedSingle Judge, virtually allowing the writ petition filed by the State Bar Council ofChhattisgarh with regard to the course and proceedings pursued by the IncomeTax Department in declining the exemption sought for in terms of Section10(23A) of the Income Tax Act, 1961 (for short, 'Act of 1961') and assessing theincome in respect of the year 2004-05 fixing the liability to the tune of Rs.20,66,186/- is put to challenge in this appeal. Single Judge, virtually allowing the writ petition filed by the State Bar Council ofChhattisgarh with regard to the course and proceedings pursued by the IncomeTax Department in declining the exemption sought for in terms of Section10(23A) of the Income Tax Act, 1961 (for short, 'Act of 1961') and assessing theincome in respect of the year 2004-05 fixing the liability to the tune of Rs.20,66,186/- is put to challenge in this appeal. 5.There is no dispute with regard to the facts and figures. TheRespondent/Assessee is a statutory body constituted in terms of Section 3 ofthe Advocates Act, 1961 (for short, 'Advocates Act'). The State Bar Council wasthe same for the erstwhile undivided State of Madhya Pradesh and by virtue ofthe nature and operation of the institution, exemption was granted by theCentral Board of Direct Taxes (CBDT) in terms of the Section 10(23A) Act of1961. While so, the State was divided into two, carving out the State ofChhattisgarh, from the erstwhile undivided State of Madhya Pradesh pursuantto the Section 24(2) of the Madhya Pradesh Reorganization Act, 2000 (forshort, 'Act of 2000') with effect from 01.11.2000. By virtue of the turn of events,a separate Bar council known as the 'State Bar Council of Chhattisgarh' cameinto existence and was discharging the statutory duties conferred upon the BarRespondent/Assessee is a statutory body constituted in terms of Section 3 ofthe Advocates Act, 1961 (for short, 'Advocates Act'). The State Bar Council wasthe same for the erstwhile undivided State of Madhya Pradesh and by virtue ofthe nature and operation of the institution, exemption was granted by theCentral Board of Direct Taxes (CBDT) in terms of the Section 10(23A) Act of1961. While so, the State was divided into two, carving out the State ofChhattisgarh, from the erstwhile undivided State of Madhya Pradesh pursuantto the Section 24(2) of the Madhya Pradesh Reorganization Act, 2000 (forshort, 'Act of 2000') with effect from 01.11.2000. By virtue of the turn of events,a separate Bar council known as the 'State Bar Council of Chhattisgarh' cameinto existence and was discharging the statutory duties conferred upon the Bar Council as above, in terms of the Advocates Act. In the meanwhile, returnswere submitted by the Respondent/Bar Council in respect of the years 2004-05and 2005-06 claiming exemption, as it was being enjoyed hitherto in theerstwhile undivided State of Madhya Pradesh. But the Assessing Officer,observing that no specific exemption certificate in favour of the ChhattisgarhState Bar Council was produced, the exemption was disallowed. Rs.40,98,770/- was reckoned as the income and the tax liability was fixed to anextent of Rs.20.66,186/- which was required to be satisfied. Met with thesituation, the Respondent/Bar Council took up the matter before the AppellateAuthority in respect of the year 2004-05 where interference was declined, inturn leading to a further appeal before the Tribunal. After hearing, the matterwas remanded by the Tribunal to the Assessing Officer observing that theAssessee/Bar Council had already moved this Court by filing Writ Petition (T)No. 6095 of 2007 which was pending and hence to pursue further steps in tunewith the verdict to be passed by this Court in the writ petition. 6.It is relevant to note in this context, that the Respondent/Bar Council had in themeanwhile moved the Board (CBDT) by filing an application for exemptionwhich was considered and allowed, granting exemption from '2006-07'onwards. It was sought to be extended with effect from the previous years aswell, but the same was not acceded to and hence, a writ petition was filedbefore this Court challenging the course and events. 6.It is relevant to note in this context, that the Respondent/Bar Council had in themeanwhile moved the Board (CBDT) by filing an application for exemptionwhich was considered and allowed, granting exemption from '2006-07'onwards. It was sought to be extended with effect from the previous years aswell, but the same was not acceded to and hence, a writ petition was filedbefore this Court challenging the course and events. 7.The relief sought for in the writ petition was opposed by theAppellant/Department pointing out that, as per the scheme of statute, unlessthere was a specific order granting exemption in terms of Section 10(23A) ofthe Act of 1961, no relief could be extended. It is an admitted fact that theearlier exemption enjoyed by the Bar Council was in respect of the Bar Councilof the undivided State and after the formation of the new State, it was obligatoryAppellant/Department pointing out that, as per the scheme of statute, unlessthere was a specific order granting exemption in terms of Section 10(23A) ofthe Act of 1961, no relief could be extended. It is an admitted fact that theearlier exemption enjoyed by the Bar Council was in respect of the Bar Councilof the undivided State and after the formation of the new State, it was obligatory for the Chhattisgarh State Bar Council also to have made an application and tohave obtained a proper order granting exemption in terms of Section 10(23A) ofthe Act of 1961. In the absence of such order, it was contented that theproceedings pursued by the Department was perfectly within the four walls oflaw and not assailable under any circumstances. 8.After hearing both the sides, the learned Single Judge passed a common verdictreferring to the various provisions and in particular, Section 2(f), read withSections 78 and 79 of the Act of 2000, simultaneously referring to the relevantprovisions of the Advocates Act as well. Scrutiny was made and a finding, wasrendered, particularly, in the light of the functions to be discharged by the StateBar Council. It was accordingly held that the course pursued by theRespondent/Department was not correct or sustainable and a declaration wasmade to the effect that the State Bar Council was entitled to get exemption,which was to be have an effect from the previous years as well; thus, allowingthe writ petition, which is now put to challenge in this appeal. referring to the various provisions and in particular, Section 2(f), read withSections 78 and 79 of the Act of 2000, simultaneously referring to the relevantprovisions of the Advocates Act as well. Scrutiny was made and a finding, wasrendered, particularly, in the light of the functions to be discharged by the StateBar Council. It was accordingly held that the course pursued by theRespondent/Department was not correct or sustainable and a declaration wasmade to the effect that the State Bar Council was entitled to get exemption,which was to be have an effect from the previous years as well; thus, allowingthe writ petition, which is now put to challenge in this appeal. 9.During the course of hearing, it is virtually conceded that there is no dispute withregard to the genesis of the case; particularly, as to the formation of the newState of Chhattisgarh, after having the same carved out from the erstwhileundivided State of Madhya Pradesh. It is also a fact conceded that there has tobe only one Bar Council for the entire State as per the scheme of the AdvocatesAct and that the Bar Council of the undivided State was granted exemption interms of Section 10(23A) of the Act of 1961. After formation of the new State ofChhattisgarh, pursuant to the Act of 2000, the erstwhile Bar Council came to beseparated as two different Bar Councils. Needless to say that a formalapplication had to be submitted by the Chhattisgarh State Bar Council forcontinuing to enjoy the benefit of exemption, but that is only a technical andprocedural formality, insofar as the formation of new State and formation of theregard to the genesis of the case; particularly, as to the formation of the newState of Chhattisgarh, after having the same carved out from the erstwhileundivided State of Madhya Pradesh. It is also a fact conceded that there has tobe only one Bar Council for the entire State as per the scheme of the AdvocatesAct and that the Bar Council of the undivided State was granted exemption interms of Section 10(23A) of the Act of 1961. After formation of the new State ofChhattisgarh, pursuant to the Act of 2000, the erstwhile Bar Council came to beseparated as two different Bar Councils. Needless to say that a formalapplication had to be submitted by the Chhattisgarh State Bar Council forcontinuing to enjoy the benefit of exemption, but that is only a technical andprocedural formality, insofar as the formation of new State and formation of the new State Bar Council is a statutory consequence. This being the position, thisCourt is of the firm view that the analysis made by the learned Single Judgewith regard to the course pursued by the Department and declaration ofeligibility of the Chhattisgarh State Bar Council to get exemption in terms ofSection 10(23A) of the Act of 1961 are not liable to be interdicted in anymanner. 10.We do not find any merit in the appeal. The appeal stands dismissed. Sd/- Sd/- (P. R. Ramachandra Menon)(Parth Prateem Sahu) Chief Justice Judge