Param Hans Swami Uma Bharti Mission v. Chief Commissioner Of Income Tax, Panchkula And Anr

CW P-23889-201 ] 303IN THE HIGH COURT OF PUNJAB AND HARYANAAT CHANDIGARH CW P-23889-201Date of decision: February 01, 2016 Param Hans Swami Uma Bharti Mission ...Petitioner Versus Chief Commissioner of Income Tax, Panchkula and anr ..Respondents CORAM:HON'BLE MR. JUSTICE RAJTVE BHALLAHON'BLE MRS. JUSTICE LISA GILL Present:Mr. Sandeep Goyal, Advocatefor the petitioner. Mr. Denesh Goyal, Advocatefor the respondent. RAJIVE BHALLA, J(OQRAL) The petitioner prays for issuance of a writ in the nature ofcertiorari, setting aside orders dated 15[th]September, 2011 and 13[th]October, 2011, passed by the Chief Commissioner of Income Tax,Haryana, Panchkula, whereby applications dated 30[th]March, 2008 and11[th]October, 2010, filed by the petitioner have beendismissed, beingbarred by time. Counsel for the petitioner submits that the petitioner is asociety, duly registered under the Societies Registration Act, 1860 andfor the purposes of Section 10 (23 C) (vi), was granted exemption frompayment of tax for, assessment year 2007-08, vide order dated##[nd]February, 2008 (Annexure P-4), passed by Chief Commissioner of CW P-23889-201 2 Income Tax, Haryana, Panchkula. The petitioner filed an application on%$[th]March, 2008 seeking exemption for assessment year 2008-09 butinstead of receiving a decision in that regard the petitioner was servedwith a notice under Section 147 of the Act, seeking to assess thepetitioner to tax for assessment years 2008-09, on the premise that noorder has been passed under Section 10 (23C) (vi). The AssessingOfficer, however, dropped assessment proceedings, when it wasbrought to his notice that the Central Board of Direct Taxes (hereinafterreferred to as the 'CBDI1") has issued Circular No.7/10, dated27.10.2010 clarifying that approval issued under Section 10 (23 C) (vi)Shall be a one time approval valid till it is withdrawn, provided it isgranted on or after 1[St]December, 2006. The petitioner filed anapplication to withdraw applications dated 30[th]March, 2009 and11[th]June, 2010, but the Chief Commissioner ignored the circular anddismissed the applications as barred by time and held that the applicantis not entitled to exemption for assessment years 2008-09 and 2009-10. Counsel for the petitioner further submits that though thecircular was notified on 27[th]October, 2010, but as Clause (4) makes itapplicable to exemption orders passed on or after |[St]December, 2006,the exemption granted to the petitioner in the year 2007-08 wouldremain in force as it has not been withdrawn. | Counsel for the revenue on the other hand submits thatcontentions raised by the petitioner are not only misconceived butcontrary to the circular. The circular was issued on 27[th]October, 2010and does not operate retrospectively. The applications were, therefore, CW P-23889-201 3 rightly declinedIn support of his argument, counsel for the revenuerefers to Clause (5) of the circular and states that as the amendmenttakes effect from the first day of October, 2009, only approvals existingon or granted after l October, 2009 shall be deemed to have beenextended in perpetuity unless specifically withdrawn. Counsel for therevenue further submits that a perusal of the impugned order revealsthat as the application for exemption was filed, beyond the period oflimitation, the application was rightly rejected. — We have heard counsel for the parties, appraised the paper-book and duly considered the arguments. The dispute in the presentcase 1s whether in view of CBDT circular dated 27[th]of October, 2010,the petitioner was required, to file an application tor exemption and ifnot, whether the Chief Commissioner could have rejected theapplication, for exemption? We need not burden the order with irrelevant facts as ourOpinion would depend upon Clause (4) and (5) of the CBDT circularwhich, read as follows:- We have heard counsel for the parties, appraised the paper-book and duly considered the arguments. The dispute in the presentcase 1s whether in view of CBDT circular dated 27[th]of October, 2010,the petitioner was required, to file an application tor exemption and ifnot, whether the Chief Commissioner could have rejected theapplication, for exemption? We need not burden the order with irrelevant facts as ourOpinion would depend upon Clause (4) and (5) of the CBDT circularwhich, read as follows:- (4)Approvals under sub-clauses (vi) and (via) of section 10 (23C)are governed by the procedure contained in rule 2CA. Rule2CA was amended with effect from 1-12-2006, inter alia bysubstitution of the existing sub-rule 3 by a new provision whichis reproduced below: “(3) The approval of the Central Board of Direct Taxes orChief Commissioner or Director General, as the case may be,granted before the I[Si]day of December, 2006 shall at any onetime have effect for a period not exceeding three assessmentyears © Read in isolation, without anyfurther guidance as was given byway of explanatory notes to Finance Act, 2006 in respect ofway of explanatory notes to Finance Act, 2006 in respect of CW P-23889-201 amendment of sub-clauses (iv) and (v) of Section 10(23 C), theabove amendment leaves some scopefor doubt about the periodof validity of the approval under Section 10(23C) (vi) and (via)on or after 1-12-2006. For the removal of doubts if any in thisregard, it is clarified that as in the case of approvals under sub-clauses (iv) and (v) ofSection 10(23C), any approval issued onor after 1-12-2006 under sub-clause (v1) or (via) of that sub-section would also be a one time approval which would be validtill it is withdrawn. (5)“Therefore, it is proposed to omit the proviso to clause (v1) ofsub-section (5) ofsection 80G to provide that the approval oncegranted shall continue to be valid in perpetuity. Further, theCommissioner will also have the power of withdraw theapproval if the Commissioner 1s satisfied that the activities ofsuch institution orfund are not genuine or are not being carriedout in accordance with the objects of the institution or fund.This amendment will take effect from 1[Si]day of October, 2009.Accordingly, existing approvals expiring on or after I[Si]October,2009 shall be deemed to have been extended in perpetuityunless specifically withdrawn ”sub-section (5) ofsection 80G to provide that the approval oncegranted shall continue to be valid in perpetuity. Further, theCommissioner will also have the power of withdraw theapproval if the Commissioner 1s satisfied that the activities ofsuch institution orfund are not genuine or are not being carriedout in accordance with the objects of the institution or fund.This amendment will take effect from 1[Si]day of October, 2009.Accordingly, existing approvals expiring on or after I[Si]October,2009 shall be deemed to have been extended in perpetuityunless specifically withdrawn ” A perusal of Clause (4), reveals that approvals granted onor after 1[St]December, 2006, shall be valid till they are withdrawn. Theargument by counsel for the revenue that the circular would come intoeffect trom October, 2010, by reference to Clause (5) of the circular isnot tenable as Clause (5) of the circular, applies to approvals grantedunder Section 80(4) and not to exemptions granted under Section 10(23 ) (vi) of the Act. We, therefore, have no hesitation in holding that as Clause(4) of CBDT, circular No.7 of 2010, provides that an exemption oncegranted shall operate in perpetuity till withdrawn, the impugned orders CW P-23889-201 5 passed by ignoring Clause (4) are contrary to law. The petition isallowed, the impugned orders are set asideand the Commissioner ofIncome Tax Exemption, Chandigarh, the officer empowered, toconsider an application for exemption, is directed to pass a fresh orderafter taking into consideration Clause (4) of the CBDT circular. We, therefore, have no hesitation in holding that as Clause(4) of CBDT, circular No.7 of 2010, provides that an exemption oncegranted shall operate in perpetuity till withdrawn, the impugned orders CW P-23889-201 5 passed by ignoring Clause (4) are contrary to law. The petition isallowed, the impugned orders are set asideand the Commissioner ofIncome Tax Exemption, Chandigarh, the officer empowered, toconsider an application for exemption, is directed to pass a fresh orderafter taking into consideration Clause (4) of the CBDT circular. Parties are directed to appear before the Commissioner ofIncome Tax Exemption on 02.03.2016, who shall decide the matterwithin three months. (RAJIVE BHALLA)JUDGE February 01, 2016m. sharma (LISA GILL)JUDGE