2002 (1) TMI 27 - HC - Income Tax

Issues Involved:
1. Applicability of Section 288 of the Income-tax Act, 1961.
2. Definition and applicability of "Power of Attorney" under the Kerala Stamp Act, 1959.
3. Distinction between Court Fees Act and Stamp Act.
4. Legitimacy of the Rs. 50 stamp duty requirement for authorisation by chartered accountants.
5. Potential discrimination under Article 14 of the Constitution of India.

Detailed Analysis:

1. Applicability of Section 288 of the Income-tax Act, 1961:
Section 288 authorises representatives, including legal practitioners and chartered accountants, to appear on behalf of assessees in income-tax proceedings. The court extracted the relevant section, highlighting that an authorised representative must be a person authorised by the assessee in writing, including legal practitioners, accountants, and other specified persons.

2. Definition and Applicability of "Power of Attorney" under the Kerala Stamp Act, 1959:
The Income-tax Department mandated that authorisation for chartered accountants to represent assessees must bear a Rs. 50 stamp duty, as per the definition of "power of attorney" in Section 2(p) of the Kerala Stamp Act, 1959. The court examined Exhibit P-2, which justified this requirement by distinguishing it from authorisations covered under the Kerala Court Fees Act, 1959. The court upheld that such authorisation is indeed a "power of attorney" subject to stamp duty under the Stamp Act.

3. Distinction between Court Fees Act and Stamp Act:
The petitioners argued that the Court Fees Act should govern the fee for authorisation, not the Stamp Act. They cited the Supreme Court judgment in Hindustan Steel Ltd. v. Dilip Construction Co., which differentiates between the fiscal nature of the Stamp Act and the administrative purpose of the Court Fees Act. However, the court noted that the Kerala Court Fees and Suits Valuation Act, 1959, does not apply to documents presented before officers serving under the Central Government, thus excluding income-tax proceedings from its purview.

4. Legitimacy of the Rs. 50 Stamp Duty Requirement for Authorisation by Chartered Accountants:
The court examined whether the Rs. 50 stamp duty stipulated in Exhibit P-2 was sustainable. It concluded that the authorisation document creates a right for the accountant to represent the assessee, making it a chargeable instrument under the Stamp Act. The court found no merit in the argument that the authorisation should be treated as a "mukhtarnama" under the Court Fees Act, which would attract a lower fee. The court held that the relevant provision is Article 44 of the Stamp Act, which mandates the Rs. 50 stamp duty.

5. Potential Discrimination under Article 14 of the Constitution of India:
The petitioners argued that differentiating the fee based on the profession of the representative (chartered accountants vs. advocates) was discriminatory and violated Article 14 of the Constitution. However, the court did not delve deeply into this issue, noting the absence of parties representing the interest of such groups in the proceedings. The court focused on the statutory interpretation and upheld the distinction made by the Income-tax Department.

Conclusion:
The court upheld the requirement for a Rs. 50 stamp duty on authorisation documents for chartered accountants under the Kerala Stamp Act, 1959, rejecting the petitioners' arguments that the Court Fees Act should apply. The court found no basis for the claim of discrimination under Article 14 and concluded that the Stamp Act's provisions were clear and applicable. The original petitions were dismissed, and the orders insisting on the stamp duty were upheld.

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