2020 (2) TMI 846 - HC - Income Tax

Exemption u/s 10(23A) to Bar Council - exemption certificate in favour of the Chhattisgarh State Bar Council was produced - exemption which was considered and allowed, granting exemption from '2006-07' onwards - Department pointing out that, as per the scheme of statute, unless there was a specific order granting exemption in terms of Section 10(23A) of the Act of 1961, no relief could be extended - HELD THAT - During the course of hearing, it is virtually conceded that there is no dispute with regard to the genesis of the case; particularly, as to the formation of the new State of Chhattisgarh, after having the same carved out from the erstwhile undivided State of Madhya Pradesh. It is also a fact conceded that there has to be only one Bar Council for the entire State as per the scheme of the Advocates Act and that the Bar Council of the undivided State was granted exemption in terms of Section 10(23A) of the Act of 1961. After formation of the new State of Chhattisgarh, pursuant to the Act of 2000, the erstwhile Bar Council came to be separated as two different Bar Councils. Needless to say that a formal application had to be submitted by the Chhattisgarh State Bar Council for continuing to enjoy the benefit of exemption, but that is only a technical and procedural formality, insofar as the formation of new State and formation of the new State Bar Council is a statutory consequence. This being the position, this Court is of the firm view that the analysis made by the learned Single Judge with regard to the course pursued by the Department and declaration of eligibility of the Chhattisgarh State Bar Council to get exemption in terms of Section 10(23A) of the Act of 1961 are not liable to be interdicted in any manner.

Summary

Issues:
Delay in filing the writ appeal, applicability of Circular No. 3/2018, correctness and sustainability of the common verdict, exemption under Section 10(23A) of the Income Tax Act, 1961, formation of separate Bar Council for Chhattisgarh State, interpretation of relevant provisions of Acts.

Delay in Filing Writ Appeal:
The judgment addressed an application for condonation of delay of 79 days in filing the writ appeal, which was allowed for the reasons stated in the application.

Applicability of Circular No. 3/2018:
The court clarified that the monetary limits mentioned in Circular No. 3/2018 dated 11.07.2018 do not apply to writ matters, as categorically mentioned in paragraph 11, and hence are not relevant.

Correctness and Sustainability of the Common Verdict:
The appeal challenged the common verdict passed by the learned Single Judge, which allowed the writ petition filed by the State Bar Council of Chhattisgarh regarding the Income Tax Department's denial of exemption under Section 10(23A) of the Income Tax Act, 1961, and the assessment of income for the year 2004-05. The court analyzed the facts and figures, highlighting the formation of a separate Bar Council for Chhattisgarh State and the need for a specific exemption certificate post-state division. The court found that the course pursued by the Department was not correct or sustainable, declaring the State Bar Council entitled to exemption, effective from previous years as well.

Exemption under Section 10(23A) of the Income Tax Act, 1961:
The judgment examined the requirement for a specific order granting exemption under Section 10(23A) of the Act of 1961 for the Chhattisgarh State Bar Council, emphasizing the procedural necessity post-state formation. The court noted that the earlier exemption granted was for the undivided State, necessitating a formal application for continuation of exemption for the new State Bar Council.

Formation of Separate Bar Council for Chhattisgarh State:
The judgment detailed the formation of a separate Bar Council for Chhattisgarh State post-state division from Madhya Pradesh, highlighting the statutory requirement for only one Bar Council per state under the Advocates Act. The court acknowledged the technical and procedural formality of submitting a formal application for exemption by the Chhattisgarh State Bar Council post-state formation.

Interpretation of Relevant Provisions of Acts:
The judgment extensively interpreted various provisions, including Section 2(f), Sections 78 and 79 of the Act of 2000, and relevant sections of the Advocates Act. The court analyzed the functions of the State Bar Council and concluded that the course pursued by the Department was incorrect and unsustainable, affirming the eligibility of the Chhattisgarh State Bar Council for exemption under Section 10(23A) of the Act of 1961.

In conclusion, the court dismissed the appeal, affirming the decision of the learned Single Judge and upholding the eligibility of the Chhattisgarh State Bar Council for exemption under Section 10(23A) of the Income Tax Act, 1961.