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TMI Blog2014 (2) TMI 849X X X X Extracts X X X X X X X X Extracts X X X X ..... r, which is not the situation in the present case - the clarification issued by the CBDT does not take into account the provisions of Rule 10 of the Second Schedule to the Income-tax Act, 1961 and the provisions of Section 60(1) of the Code of Civil Procedure - The said clarification is contrary to such statutory provisions – thus, the action of revenue of attaching and withdrawing the sum of PPF account is set aside – Decided in favour of Assessee. - SPECIAL CIVIL APPLICATION No. 11575 of 2005 - - - Dated:- 12-2-2014 - MR. AKIL KURESHI AND MS. SONIA GOKANI, JJ. FOR THE APPELLANT : MR JP SHAH, ADVOCATE FOR MR MANISH J SHAH, ADVOCATE FOR THE RESPONDENT : MR SUDHIR M MEHTA, ADVOCATE JUDGEMENT Akil Kureshi, J. Petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r is that the order of assessment giving rise to the income-tax dues of the petitioner was under challenge before the Appellate Commissioner. Pending such appeal, the petitioner had deposited substantial amount of taxes and that therefore, the rest of the demand would be stayed. According to the petitioner, his outstanding dues even pending appeal were only Rs. 5,06,142/=. Despite this, the respondent recovered a sum of Rs. 9,05,000/= unilaterally from the PPF account of the petitioner. The petitioner has, therefore, challenged the said action of the respondent. Counsel for the petitioner placed heavy reliance on Section 9 of the Public Provident Fund Act, 1968 ["PPF Act" for short] to contend that the amount outstanding in the petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he statement of objects and reasons for enactment of the Act state inter alia that the object of the bill is to provide for the institution of a Provident Fund for general public. The fund is meant to be a medium for long term savings for individuals. With such object in mind, the Public Provident Fund Act was enacted. Section 3 of the PPF Act, 1968 provides for framing of the Public Provident Fund Scheme. Sub-section (1) of Section 3 provides that the Central Government may, by a notification in the official Gazette, frame a scheme to be called the Public Provident Fund Scheme for the establishment of a provident fund for the general public and there shall be established, as soon as may be after the framing of the Scheme, a Fund in accorda ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... background of such benevolent provisions. The provision of the PPF Act, 1968 seen in light of the PPF Scheme would demonstrate that the withdrawals and loans against the amount lying in the account of a subscriber are controlled thereby encouraging long term savings for an individual and discouraging withdrawals intermittently and pre-maturely. It can thus be seen that the PPF Scheme which covers all individuals whether employed in the public sector or not or covered under the labour welfare legislations or not. In essence, therefore, even for individuals not covered by the public employment and therefore enjoying contributory provident fund or pension scheme or organized sector, and therefore, covered under the labour welfare schemes, prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the PPF Act, 1925. Referring to clause (k) of Section 60 of the Code of Civil Procedure, the Court observed that so long as the amounts are provident fund dues, pensions and other compulsory deposits then, till they are actually paid to the government servant who is entitled to it on retirement or otherwise, the nature of the dues is not altered. The government is a trustee for those sums and has an interest in maintaining the objection in court to attachment. At this stage, we may refer to Rule 10 of Schedule-II to the Income-tax Act, 1961. The second schedule pertains to procedure for recovery of tax. Rules contained in the schedule make detailed provisions and the manner in which tax dues of the department could be recovered from the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vil Procedure complete a full circuit, making any amount lying in the public provident fund of a subscriber immune from attachment and sale for recovery of the income tax dues. We may recall that Rule 10 of Schedule-II to the Income-tax Act, 1961 exempts all such properties as by the Civil Procedure Code are exempted from attachment and sale in execution of a decree of a civil court from attachment and sale under the said schedule. In turn, clause (ka) of the provision to Section 60 (1) of the Code of Civil Procedure provides that all deposits and other sums in or derived from any fund to which the Public Provident Fund Act, 1968 applies in so far as they are declaring by the said Act not to be liable to attachment, shall not be liable for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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