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TMI Blog2018 (5) TMI 440X X X X Extracts X X X X X X X X Extracts X X X X ..... the IT Act, was applicable and was in force in the new State of Chhattisgarh with effect from 1-11-2000 and would fall within the meaning of law under Section 2(f) of the Act of 2000 and by virtue of that, the State Bar Council of Chhattisgarh was entitled to have exemption under Section 10(23A) of the IT Act from the operation of IT Act, but that was not understood properly by the Income Tax Authorities and holding that the petitioner Council is not entitled for the said exemption, the petitioner Council was assessed to income tax imposing tax liability to the extent indicated herein-above ignoring the law in force at the time of assessment and the order of recovery was passed. Petitioner Council was entitled and eligible to be exempted by virtue of the notification dated 9-8-1966 read with Sections 2(f), 78 and 79 of the Act of 2000 with effect from 1-11-2000, as it was not modified or altered by the Central Government upon reorganisation of the State of Chhattisgarh with effect from 1-11-2000 by the Act of 2000 and therefore the assessing authority has committed grave jurisdictional error in not holding so and proceeded to assess the tax liability of the petitioner Council u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner Council are that the exemption granted by the Central Government to the erstwhile Bar Council of Madhya Pradesh by notification dated 9-8- 1966 would constitute a law within the meaning of Sections 2(f), 78 and 79 of the Act of 2000 and that would continue to operate and would apply to the State Bar Council of Chhattisgarh, as it is not a new State Bar Council, though it is State Bar Council of Chhattisgarh constituted but by virtue of Section 24(2) of the Act of 2000, it is a bifurcation of the undivided State Bar Council of Madhya Pradesh into two Bar Councils namely, the Bar Council of Madhya Pradesh and the Bar Council of Chhattisgarh by amending Section 3(1)(a) of the A Act, therefore, no separate exemption is to be granted by the Central Government by virtue of the provisions contained in sub-section (23A) of Section 10 of the IT Act and unless the Central Government withdraws the exemption already granted to the Bar Council of Madhya Pradesh on 9-8-1966, it would continue to apply to the Bar Council of Chhattisgarh. It has further been pleaded that the respondents did not understand the law properly and assessment orders were issued, then only the petitioner by w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, the order of assessment passed by the assessing officer of the respondents Department is per se without jurisdiction and without authority of law. He would additionally submit that even otherwise, when the respondent Department did not follow the law mandated by the Act of 2000 and assessment order was made, the State Bar Council of Chhattisgarh was forced to claim exemption with effect from 1-11-2000, but erroneously, again the exemption was granted with effect from 1-4-2005 i.e. for assessment year 2006-07 and onwards, and did not assign any valid and acceptable reason for not granting exemption with retrospective effect that is 1-11-2000 which the petitioner Council was entitled by operation of law, as it is not the case of the respondent Department that the petitioner Council is not entitled and not eligible for exemption under sub-section (23A) of Section 10 of the IT Act with effect from 1-11-2000. Therefore, the impugned order is liable to be set aside. 8. Countering the argument, Mr. Amit Chaudhari, learned Senior Standing Counsel appearing for the respondents Department, vehemently opposed the submissions made by Mr. Dubey, learned counsel for the petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation dated 9-8- 1966, the Act of 2000 came into force with effect from 1-11-2000. A special provision relating to Bar Council and Advocates has been made in Section 24 of the Act of 2000, sub-sections (1) and (2) of which provide as under: - 24. Special provision relating to Bar Council and Advocates.-(1) On and from the appointed day, in the Advocates Act, 1961 (25 of 1961), in Section 3, in sub- section (1), in clause (a), for the words and Madhya Pradesh , the words Madhya Pradesh and Chhattisgarh shall be substituted. (2) Any person who immediately before the appointed day is an advocate on the roll of the Bar Council of the existing State of Madhya Pradesh may give his option in writing, within one year from the appointed day to the Bar Council of such existing State, to transfer his name on the roll of the Bar Council of Chhattisgarh and notwithstanding anything contained in the Advocates Act, 1961 (25 of 1961) and the rules made thereunder, on such option so given his name shall be deemed to have been transferred on the roll of the Bar Council of Chhattisgarh with effect from the date of the option so given for the purposes of the said Act and the rules made t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anner; (f) to manage and invest the funds of the Bar Council; (g) to provide for the election of its members. (gg) to visit and inspect Universities in accordance with the directions given under clause (i) of sub-section (1) of section 7; (h) to perform all other functions conferred on it by or under this Act; (i) to do all other things necessary for discharging the aforesaid functions. 16. The Supreme Court in the matter of Commissioner of Income Tax, Bombay v. The Bar Council of Maharashtra AIR 1981 SC 1462 while dealing with the question of entitlement of the Bar Council of Maharashtra for exemption under Sections 11 and 10(23A) of the IT Act has noticed the aforesaid object of the Bar Council and held as under: - 10. It is clear that sub-section (1) lays down the obligatory functions while sub-section (2) indicates what are the optional or discretionary functions that could be undertaken by the State Bar Council and from amongst the obligatory functions it will be wrong to pick out one and say it is the primary or dominant object or purpose. All the clauses of sub-section (1) will have to be considered in light of the main objective sought t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udes any enactment, ordinance, regulation, order, bye-law, rule, scheme, notification or other instrument having, immediately before the appointed day, the force of law in the whole or in any part of the existing State of Madhya Pradesh; 19. Thus, the above-stated definition of law includes notification dated 9-8-1966, which is an exemption granted by the Central Government to the erstwhile State Bar Council of M.P.. Thus, the notification dated 9-8-1966 is a notification included in the above- stated definition of law under Section 2(f) of the Act of 2000. 20. Part X of the Act of 2000 deals with Legal and Miscellaneous Provisions. Sections 78 and 79 of the Act of 2000, which come under Part X, respectively provide for Territorial extent of laws and Power to adapt laws, which state as under: - 78. Territorial extent of laws.-The provisions of Part II of this Act shall not be deemed to have effected any change in the territories to which any law in force immediately before the appointed day extends or applies, and territorial references in any such law to the State of Madhya Pradesh shall, until otherwise provided by a competent Legislature or other Competent Authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by a competent legislature or other competent authority. A conjoint reading of both these provisions makes it abundantly clear that the territorial references in any law in force immediately before the appointed day must be construed as meaning the territories within the existing State of Bihar before the appointed day. To facilitate their application in respect of the State of Bihar or Jharkhand, the appropriate Government may, before the expiration of two years from that day, by order, make such adaptations and modifications of the law as it may consider necessary or expedient by way of repeal or amendment. Till such law is so repealed or amended in accordance with law, it shall have effect. After their amendment or alteration, they shall have effect subject to the adaptations and modifications made. We, therefore, find no difficulty in holding that the notification of the Government of Bihar issued under Section 7(3)(b) of the Bihar Finance Act, 1981 and published in the gazette on 22-12-1995 being SO No. 478 is law as defined by Section 2(f) of the Act. The said notification holds the field and applies to all the territories which comprised the undivided State of Bihar. The S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... State of Bihar. Under Section 85, they shall continue to operate until repealed or amended in the manner provided. As a natural consequence, the entrepreneurs are entitled to the benefits and incentives provided in the said notification. ... 22. Similarly, a Division Bench of this Court in the matter of Gurumukh Singh Hora v. State of Chhattisgarh and others AIR 2005 Chhattisgarh 1 has clearly held that all the laws including any enactment, ordinance, regulation, order, bye-law, rule, scheme, notification or other instruments which were having the force of law before the appointed day in the whole of the State of Madhya Pradesh were to be continued in the State of Chhattisgarh as per the provisions of Section 79 of the Act of 2000, and observed as under: - 14. It is true that as per sub-section (f) of Section 2 of the Act, 2000, all the laws including any enactment, ordinance, regulation, order, bye-law, rule, scheme, notification or other instruments which were having the force of law before the appointed day in the whole of the State of Madhya Pradesh were to be continued in the State of Chhattisgarh as per the provisions of Section 79 of the Act, 2000. 15. As per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as not modified or altered by the Central Government upon reorganisation of the State of Chhattisgarh with effect from 1-11-2000 by the Act of 2000 and therefore the assessing authority has committed grave jurisdictional error in not holding so and proceeded to assess the tax liability of the petitioner Council under the IT Act. Since the order itself is without jurisdiction and without authority of law, the alternative remedy would not come in the way of the petitioner. Apart from this, the writ petitions are pending since 2007 and 2009 and thus, after eight years, the writ petitions cannot be thrown out on the ground of availability of alternative remedy when the parties appeared and argued the issue and the case is reached to the stage of final hearing. Therefore, the plea of alternative remedy raised on behalf of the respondents is hereby rejected. 25. Even for the assessment year 2004-05, the petitioner Council filed appeal which was dismissed and the matter went up to the Income Tax Appellate Tribunal and the Tribunal set aside the order holding that the matter is pending consideration before the High Court. 26. There is an additional reason for not upholding the order ..... X X X X Extracts X X X X X X X X Extracts X X X X
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