Appeal details
Counselvise Citation
[2016] 132 COUNSELVISE.COM (IT) 8813 (ITAT-CHENNAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
2 year(s) 2 month(s) 10 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
15-07-2016
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
A
Assessment Year
2005-2006
Appeal Filed On
05-05-2014
Judgement Text
, / , IN THE INCOME TAX APPELLATE TRIBUNAL A SMC BENCH, CHENNAI ... , BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER ./ ITA NOS.1195, 1196, 1197 & 1198/MDS/2014 ' #$' / ASSESSMENT YEARS : 2005-2006 TO 2008-09 M/S ADVOCATES WELFARE FUND OF THE BAR COUNCIL OF TAMIL NADU, BAR COUNCIL BUILDINGS, HIGH COURT CAMPUS, CHENNAI - 600 104. PAN : AAATA 8205 B V. THE DEPUTY DIRECTOR OF INCOME TAX (EXEMPTIONS) II, CHENNAI - 600 034. (&'/ APPELLANT) (()&'/ RESPONDENT) ./ ITA NOS.1603 & 1604/MDS/2014 ' #$' / ASSESSMENT YEARS : 2007-08 & 2008-09 THE DEPUTY DIRECTOR OF INCOME TAX (EXEMPTIONS) II, CHENNAI - 600 034. V. M/S ADVOCATES WELFARE FUND OF THE BAR COUNCIL OF TAMIL NADU, BAR COUNCIL BUILDINGS, HIGH COURT CAMPUS, CHENNAI - 600 104. (&'/ APPELLANT) (()&'/ RESPONDENT) ./ ITA NOS.1199, 1200, 1201, 1202, 1203 & 1204/MDS/201 4 ' #$' / ASSESSMENT YEARS : 2003-04, 2005-06 TO 2009-10 M/S BAR COUNCIL OF TAMIL NADU, BAR COUNCIL BUILDINGS, HIGH COURT CAMPUS, CHENNAI - 600 104. PAN : AAATB 5945 K V. THE DEPUTY DIRECTOR OF INCOME TAX (EXEMPTIONS) II, CHENNAI - 600 034. (&'/ APPELLANT) (()&'/ RESPONDENT) 2 I.T.A. NOS.1195 TO 1204/MDS/14 I.T.A. NOS.1603 TO 1606/MDS/14 ./ ITA NOS.1605 & 1606/MDS/2014 ' #$' / ASSESSMENT YEARS : 2007-08 & 2008-09 THE DEPUTY DIRECTOR OF INCOME TAX (EXEMPTIONS) II, CHENNAI - 600 034. V. M/S BAR COUNCIL OF TAMIL NADU, BAR COUNCIL BUILDINGS, HIGH COURT CAMPUS, CHENNAI - 600 104. (&'/ APPELLANT) (()&'/ RESPONDENT) '*+ , - /ASSESSEES BY : SH. R. VENKATESH, CA .# , - /REVENUE BY : SH. P. RADHAKRISHNAN, JCIT / # , +0 / DATE OF HEARING : 16.06.2016 12$ , +0 / DATE OF PRONOUNCEMENT : 15.07.2016 / O R D E R ALL THE APPEALS OF TWO INDEPENDENT ASSESSEES AND CROSS APPEALS OF THE REVENUE ARE DIRECTED AGAINST THE RES PECTIVE ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS) VII, CHENNAI, DATED 27.02.2014. SINCE COMMON ISSUE ARISES FOR CONSIDER ATION IN ALL THESE APPEALS, I HEARD THESE APPEALS TOGETHER AND D ISPOSING OF THE SAME BY THIS COMMON ORDER. 2. SHRI R. VENKATESH, THE LD. REPRESENTATIVE FOR TH E ASSESSEE, SUBMITTED THAT THE ASSESSEE-BAR COUNCIL OF TAMIL NA DU IS A STATUTORY REGULATORY BODY ESTABLISHED UNDER ADVOCAT ES ACT, 1961 TO REGULATE THE PROFESSION OF LEGAL PRACTICE IN INDIA. THE ASSESSEE-BAR COUNCIL OF TAMIL NADU HAS ESTABLISHED A WELFARE FUN D FOR THE 3 I.T.A. NOS.1195 TO 1204/MDS/14 I.T.A. NOS.1603 TO 1606/MDS/14 BENEFIT OF PRACTICING ADVOCATES. ACCORDING TO THE LD. REPRESENTATIVE, ADVOCATES WELFARE FUND IS NOT A LE GAL ENTITY. IN FACT, IT IS A FUND ESTABLISHED BY BAR COUNCIL OF TA MIL NADU FOR THE WELFARE OF LEGAL PRACTITIONERS. HOWEVER, BOTH THE AUTHORITIES BELOW TREATED THE ADVOCATES WELFARE FUND AS A SEPARATE L EGAL ENTITY AND ASSESSED THE INCOME. REFERRING TO THE ORDER OF THE DIRECTOR OF INCOME TAX (EXEMPTIONS) DATED 29.08.2011, A COPY OF THE SAME IS AVAILABLE ON RECORD, THE LD. REPRESENTATIVE SUBMITT ED THAT ON THE BASIS OF APPLICATION FILED ON 25.02.2011, REGISTRAT ION UNDER SECTION 12AA OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT ') WAS GRANTED WITH EFFECT FROM 25.02.2011. THE ASSESSEE FILED AN APPLICATION BEFORE THE CBDT UNDER SECTION 119(2)(B) OF THE ACT PRAYING FOR CONDONATION OF DELAY FOR THE ASSESSMENT YEAR 2003-0 4 ONWARDS TILL 24.02.2011 IN FILING THE APPLICATION FOR REGISTRATI ON UNDER SECTION 12AA OF THE ACT. THE CBDT, IN FACT, CONDONED THE D ELAY IN FILING THE APPLICATION FOR THE ASSESSMENT YEARS 2003-04 TO 201 0-11. HOWEVER, THE CBDT KEPT IT OPEN TO GRANT REGISTRATIO N UNDER SECTION 12AA TO THE DIRECTOR OF INCOME TAX (EXEMPTIONS). S INCE THE DELAY IN FILING THE APPLICATION FOR REGISTRATION WAS COND ONED FOR ASSESSMENT YEARS 2003-04 TO 2010-11, ACCORDING TO T HE LD. REPRESENTATIVE, THE ASSESSEES CLAIM FOR EXEMPTION UNDER SECTION 4 I.T.A. NOS.1195 TO 1204/MDS/14 I.T.A. NOS.1603 TO 1606/MDS/14 11 OF THE ACT HAS TO BE EXAMINED AFTER THE ORDER OF THE DIRECTOR OF INCOME TAX (EXEMPTIONS) FOR THE ASSESSMENT YEARS 20 03-04 TO 2010-11. 3. THE LD. REPRESENTATIVE FOR THE ASSESSEE FURTHER CLARIFIED THAT CONSEQUENT TO THE ORDER OF THE CBDT CONDONING THE D ELAY IN FILING THE APPLICATION FOR REGISTRATION UNDER SECTION 12AA OF THE ACT FOR THE ASSESSMENT YEARS 2003-04 TO 2010-11, THE DIRECTOR O F INCOME TAX (EXEMPTIONS) HAS TO NOW EXAMINE WHETHER REGISTRATIO N HAS TO BE GRANTED AFTER SATISFYING HIMSELF ABOUT THE FULFILME NT OF CONDITIONS PRESCRIBED UNDER THE PROVISIONS OF THE ACT. AFTER THE ORDER OF THE DIRECTOR OF INCOME TAX (EXEMPTIONS), THE MATTER HAS TO BE RE- EXAMINED BY THE ASSESSING OFFICER. THEREFORE, THE LD. REPRESENTATIVE SUBMITTED THAT THE MATTER MAY BE REM ITTED BACK TO THE FILE OF THE ASSESSING OFFICER FOR RECONSIDERATI ON. 4. ON THE CONTRARY, SH. P. RADHAKRISHNAN, THE LD. D EPARTMENTAL REPRESENTATIVE, SUBMITTED THAT THOUGH THE ASSESSEE CLAIMS THAT ADVOCATES WELFARE FUND ESTABLISHED BY BAR COUNCIL OF TAMIL NADU, IS NOT AN INDEPENDENT LEGAL ENTITY, THE REGISTRATIO N WAS GRANTED SEPARATELY TO THE ADVOCATES WELFARE FUND ON THE BA SIS OF APPLICATION FILED BY THE FUND ITSELF ON 25.02.2011. THE ADVOCATES 5 I.T.A. NOS.1195 TO 1204/MDS/14 I.T.A. NOS.1603 TO 1606/MDS/14 WELFARE FUND APPLIED FOR PERMANENT ACCOUNT NUMBER A ND THE INCOME TAX DEPARTMENT HAS ALLOTTED PERMANENT ACCOUN T NUMBER. THEREFORE, ACCORDING TO THE LD. D.R., FOR ALL PRACT ICAL PURPOSES, THE ADVOCATES WELFARE FUND WAS TREATED AS A SEPARATE L EGAL ENTITY. THEREFORE, ACCORDING TO THE LD. D.R., THE CONTENTIO N OF THE LD. REPRESENTATIVE FOR THE ASSESSEE THAT THE ADVOCATES' WELFARE FUND WAS ESTABLISHED BY BAR COUNCIL OF TAMIL NADU AND IT IS NOT A SEPARATE LEGAL ENTITY IS MISCONCEIVED. 5. REFERRING TO THE ORDER OF THE DIRECTOR OF INCOME TAX (EXEMPTIONS) DATED 29.08.2011, THE LD. D.R. SUBMITT ED THAT THE REGISTRATION WAS GRANTED TO ADVOCATES WELFARE FUND UNDER SECTION 12AA OF THE ACT. HOWEVER, THE APPLICATION FILED BY THE BAR COUNCIL OF TAMIL NADU FOR CONDONATION OF DELAY FOR ASSESSME NT YEARS 2003- 04 TO 2010-11 WAS ALLOWED BY THE CBDT. THE ADVOCAT ES' WELFARE FUND HAS NOT FILED ANY APPLICATION FOR CONDONATION OF DELAY FOR REGISTRATION UNDER SECTION 12AA OF THE ACT. THEREF ORE, ACCORDING TO THE LD. D.R., IN THE CASE OF ADVOCATES' WELFARE FUN D, NO PURPOSE WOULD BE SERVED EVEN IF THE MATTER WAS REMITTED BAC K TO THE FILE OF THE ASSESSING OFFICER. ACCORDING TO THE LD. D.R., IN THE CASE OF ADVOCATES' WELFARE FUND, THE REGISTRATION WAS GRANT ED WITH EFFECT FROM 25.02.2011. MOREOVER, THE ADVOCATES' WELFARE FUND HAS NOT 6 I.T.A. NOS.1195 TO 1204/MDS/14 I.T.A. NOS.1603 TO 1606/MDS/14 FILED ANY APPLICATION FOR CONDONING THE DELAY FOR E ARLIER ASSESSMENT YEARS. THEREFORE, IT MAY NOT BE NECESSARY TO REMIT THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER. 6. I HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHE R SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ORDER OF THE DIRECTOR OF INCOME TAX (EXEMPTIONS) DATED 29.08.201 1 CLEARLY SAYS BAR COUNCIL OF TAMIL NADU AND ITS UNIT ADVOCATES' WELFARE FUND IN THE PREAMBLE PORTION OF THE ORDER. IT IS NOT IN DI SPUTE THAT BAR COUNCIL OF TAMIL NADU WAS ESTABLISHED UNDER THE PRO VISIONS OF THE ADVOCATES ACT, 1961. THE BAR COUNCIL OF TAMIL NADU CONSTITUTED A FUND CALLED ADVOCATES' WELFARE FUND FOR THE WELFARE OF THE PRACTICING ADVOCATES. THE ASSESSEE NOW CLAIMS BEFORE THIS TRI BUNAL THAT THE APPLICATION FOR REGISTRATION UNDER SECTION 12AA OF THE ACT WAS FILED ON 25.02.2011 AND THE DIRECTOR OF INCOME TAX (EXEMP TIONS) GRANTED APPROVAL UNDER SECTION 12AA WITH EFFECT FRO M 25.02.2011. THE BAR COUNCIL OF TAMIL NADU HAS FILED THE APPLICA TION BEFORE THE CBDT FOR CONDONATION OF DELAY IN FILING THE APPLICA TION FOR REGISTRATION UNDER SECTION 12AA OF THE ACT FOR THE ASSESSMENT YEARS 2003-04 TO 2010-11. IN FACT, THE DELAY WAS CONDONE D AND THE MATTER WAS LEFT TO THE DISCRETION OF THE DIRECTOR O F INCOME TAX (EXEMPTIONS) TO SATISFY HIMSELF ABOUT THE FULFILMEN T OF THE CONDITIONS 7 I.T.A. NOS.1195 TO 1204/MDS/14 I.T.A. NOS.1603 TO 1606/MDS/14 PRESCRIBED UNDER THE ACT WHICH ARE NECESSARY FOR GR ANTING REGISTRATION UNDER SECTION 12AA OF THE ACT. IT IS NOT IN DISPUTE THAT FOR ASSESSMENT YEARS 2003-04 TO 2010-11, THE CLAIM OF EXEMPTION UNDER SECTION 11 OF THE ACT WAS REJECTED BY THE AUT HORITIES BELOW ON THE GROUND THAT THERE WAS NO REGISTRATION UNDER SEC TION 12AA OF THE ACT. IN VIEW OF THE CBDTS ORDER DATED 27.05.2016, CONDONING THE DELAY IN FILING THE APPLICATION FOR ASSESSMENT YEAR S 2003-04 TO 2010- 11, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE MATTER NEEDS RECONSIDERATION BY THE ASSESSING OFFICER IN THE CAS E OF BAR COUNCIL OF TAMIL NADU. 7. NOW COMING TO THE ADVOCATES' WELFARE FUND, THE R EVENUE CLAIMS THAT THE ASSESSEE ITSELF APPLIED FOR PERMANE NT ACCOUNT NUMBER TO TREAT ITSELF AS A SEPARATE LEGAL ENTITY. HOWEVER, THE ASSESSEE CLAIMS THAT IT IS A PART OF BAR COUNCIL OF TAMIL NADU, THEREFORE, IT CANNOT BE TREATED AS A SEPARATE LEGAL ENTITY. I HAVE CAREFULLY GONE THROUGH THE ADVOCATES ACT, 1961 AND THE ADVOCATES' WELFARE FUND ACT, 2001. SECTION 3 OF ADVOCATES ACT , 1961 ENABLES TO CONSTITUTE BAR COUNCILS IN THE RESPECTIVE STATES . SECTION 4 OF THE ADVOCATES ACT, 1961 ENABLES CONSTITUTION OF BAR COU NCIL OF INDIA. SECTION 5 OF THE ADVOCATES ACT, 1961 CLEARLY SAYS T HAT EVERY BAR COUNCIL ESTABLISHED EITHER UNDER SECTION 3 OR 4 OF THE ADVOCATES 8 I.T.A. NOS.1195 TO 1204/MDS/14 I.T.A. NOS.1603 TO 1606/MDS/14 ACT, 1961, SHALL BE A BODY CORPORATE HAVING PERPETU AL SUCCESSION AND A COMMON SEAL, WITH A POWER TO ACQUIRE AND HOLD PROPERTY. THEREFORE, BAR COUNCIL OF TAMIL NADU IS A STATUTORY BODY CONSTITUTED UNDER SECTION 3 OF THE ADVOCATES ACT, 1961 AS CLAIM ED BY THE ASSESSEE. 8. SECTION 3 OF THE ADVOCATES' WELFARE FUND ACT, 20 01 ENABLES THE RESPECTIVE STATE GOVERNMENTS TO CONSTITUTE A FU ND CALLED ADVOCATES' WELFARE FUND. SECTION 4 OF THE ADVOC ATES' WELFARE FUND ACT, 2001 ENABLES THE RESPECTIVE STATE GOVERNM ENTS TO APPOINT TRUSTEE COMMITTEE FOR THE PURPOSE OF ADMINI STERING THE FUND. THE OFFICE-BEARER OF THE BAR COUNCIL OF TAMI L NADU AND ADVOCATES' WELFARE FUND ARE TOTALLY DIFFERENT. BAR COUNCIL OF TAMIL NADU WAS ADMINISTERED BY THE ELECTED CHAIRMAN OR VI CE-CHAIRMAN, WHILE ADVOCATES' WELFARE FUND IS ADMINISTERED BY TH E TRUSTEE COMMITTEE NOMINATED BY THE RESPECTIVE STATE GOVERNM ENTS. THEREFORE, IT IS OBVIOUS THAT BAR COUNCIL OF TAMIL NADU AND ADVOCATES' WELFARE FUND ARE TWO DIFFERENT STATUTORY BODIES ESTABLISHED UNDER THE RESPECTIVE STATUTORY ENACTMEN TS, NAMELY, THE ADVOCATES ACT, 1961 AND THE ADVOCATES' WELFARE FUND ACT, 2001. SUB-SECTION (2) OF SECTION 4 OF THE ADVOCATES' WELF ARE FUND ACT, 2001 CLEARLY SAYS THAT TRUSTEE COMMITTEE OF ADVOCAT ES' WELFARE 9 I.T.A. NOS.1195 TO 1204/MDS/14 I.T.A. NOS.1603 TO 1606/MDS/14 FUND SHALL BE A BODY CORPORATE HAVING PERPETUAL SUC CESSION AND COMMON SEAL WITH POWER TO ACQUIRE AND HOLD AND DISP OSE OF THE PROPERTY. THEREFORE, THE PARLIAMENT IN ITS WISDOM MADE IT VERY CLEAR THAT BAR COUNCIL OF TAMIL NADU IS A SEPARATE LEGAL ENTITY AND ADVOCATES' WELFARE FUND IS ANOTHER LEGAL ENTITY. T HEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE TWO ENTITIES HAVE TO BE TREATED SEPARATELY AND THE REGISTRATION, IF ANY, FO R CLAIMING EXEMPTION UNDER SECTION 11 OF THE ACT HAS TO BE OBT AINED SEPARATELY. IN OTHER WORDS, THE REGISTRATION OBTAI NED BY THE BAR COUNCIL OF TAMIL NADU UNDER SECTION 12AA OF THE ACT CANNOT BE A BASIS FOR CLAIMING EXEMPTION UNDER SECTION 11 OF TH E ACT FOR ADVOCATES' WELFARE FUND. THE ADVOCATES' WELFARE FU ND AND THE BAR COUNCIL OF TAMIL NADU, SHALL OBTAIN THE NECESSA RY APPROVAL / REGISTRATION UNDER SECTION 12AA OF THE ACT, SEPARAT ELY. 9. IN THE CASE BEFORE US, EVEN THOUGH THE PREAMBLE OF ORDER OF THE DIRECTOR OF INCOME TAX (EXEMPTIONS) DATED 29.08 .2011 SAYS BAR COUNCIL OF TAMIL NADU AND ITS UNIT ADVOCATES' WELFARE FUND, THE BODY OF THE ORDER CLEARLY SAYS THAT THE REGISTR ATION WAS GRANTED ONLY TO THE FUND AND NOT TO THE BAR COUNCIL. THE C BDT, HOWEVER, AFTER EXAMINING THE APPLICATION FILED BY THE BAR CO UNCIL OF TAMIL NADU, FOUND THAT THE REGISTRATION WAS GRANTED WITH EFFECT FROM 10 I.T.A. NOS.1195 TO 1204/MDS/14 I.T.A. NOS.1603 TO 1606/MDS/14 25.02.2011 ON THE BASIS OF APPLICATION DATED 25.02. 2011. THEREFORE, THERE IS A CONFUSION AS TO WHETHER THE B AR COUNCIL OF TAMIL NADU AND ADVOCATES' WELFARE FUND HAVE FILED A NY JOINT APPLICATION FOR REGISTRATION OR THE INDIVIDUAL APPL ICATION FILED BY THE RESPECTIVE STATUTORY BODY WAS CLUBBED TOGETHER BY T HE DIRECTOR OF INCOME TAX (EXEMPTIONS) AND PASSED A COMMON ORDER. THESE FACTS ARE NOT CLEAR FROM THE ORDER OF THE LOWER AUT HORITIES. UNDER THE SCHEME OF THE INCOME-TAX ACT, EACH STATUTORY BODY H AS TO FILE INDEPENDENT APPLICATION FOR REGISTRATION UNDER SECT ION 12AA OF THE ACT. BE THAT AS IT MAY, NOW REGISTRATION WAS GRANT ED APPARENTLY TO THE ADVOCATES' WELFARE FUND BY THE ORDER OF THE DIR ECTOR OF INCOME TAX (EXEMPTIONS) DATED 29.08.2011 AND THE CBDT HAS CONDONED THE DELAY IN FILING THE APPLICATION FOR REGISTRATIO N UNDER SECTION 12AA OF THE ACT FOR THE ASSESSMENT YEARS 2003-04 TO 2010 -11 TO THE BAR COUNCIL OF TAMIL NADU. IN VIEW OF THESE FACTUAL CO NFUSION, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE MATT ER NEEDS TO BE RE- EXAMINED BY THE ASSESSING OFFICER. ACCORDINGLY, TH E ORDERS OF THE AUTHORITIES BELOW ARE SET ASIDE AND THE ENTIRE ISSU E IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSIN G OFFICER SHALL RE- EXAMINE THE MATTER AFRESH IN THE LIGHT OF THE REGIS TRATION GRANTED BY THE DIRECTOR OF INCOME TAX (EXEMPTIONS) ON 29.08.20 11 AND THE 11 I.T.A. NOS.1195 TO 1204/MDS/14 I.T.A. NOS.1603 TO 1606/MDS/14 ORDER THAT MAY BE PASSED BY THE DIRECTOR OF INCOME TAX (EXEMPTIONS) CONSEQUENT TO THE ORDER OF CBDT DATED 27.05.2016 AND THEREAFTER DECIDE THE SAME IN ACCORDANCE WITH L AW AFTER GIVING A REASONABLE OPPORTUNITY TO THE ASSESSEE. 10. IN THE RESULT, THE APPEALS FILED BY BOTH THE AS SESSEES AND THE REVENUE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 15 TH JULY, 2016 AT CHENNAI. SD/- ( ... ) (N.R.S. GANESAN) /JUDICIAL MEMBER /CHENNAI, 4 /DATED, THE 15 TH JULY, 2016. KRI. , (+56 76$+ /COPY TO: 1. '*+ /ASSESSEES 2. ASSESSING OFFICERS 3. / 8+ () /CIT(A)-VII, CHENNAI-34 4. DIT(EXEMPTIONS), CHENNAI 5. 6#9 (+ /DR 6. :' ; /GF.
