Urban Improvement Trust, Bikaner V. Union Of India, Through Its Secretary, Ministry Of Finance, Department Of Revenue, Government Of India, New Delhi and Income-Tax Officer, Ward-2(2), Bikaner (Raj.)

SAW/1061/2019

AI Insights

The case involves multiple appeals by the Urban Improvement Trust, Bikaner against the Union of India and the Income-Tax Officer, challenging the tax assessment proceedings initiated against them. The core issue was whether the Urban Improvement Trusts, being local authorities, are exempt from income tax under Section 10(20) of the Income Tax Act, 1961. The Supreme Court had previously ruled that these trusts do not fall under the definition of local authorities as per the amended provisions of the Act. The High Court of Rajasthan, referencing this Supreme Court decision, rejected the appeals, affirming that the trusts are taxable entities.

• Counselvise Citation: [2019] 140 COUNSELVISE.COM (IT) 802889 (HC-RAJASTHAN)
• Appeal Type: Others
• Pronouncement Date: 18-09-2019
• Assessment Year: misc
• Other Referred Cases: Income Tax Officer & Ors. vs. Urban Improvement Trust & Ors. reported in AIR 2018 SC 5085, Union of India & Ors. vs. R.C. Jain & Ors. reported in AIR 1981 SC 951
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Assessee Lawyers: RAJEEV PUROHIT; N R BUDANIA
• Keywords: Assessment of tax; Income Tax; Jurisdiction; Local Authorities; Urban Improvement Trust
• Section: 10(20)

Judgement Text

"HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR (1) D.B. Spl. Appl. Writ No. 1098/2019 Urban Improvement Trust, Bikaner, Inside Public Park, Bikaner (Raj.) Through Its Secretary ----Appellant Versus 1. Union Of India, Through Its Secretary, Ministry Of Finance, Department Of Revenue, Government Of India, New Delhi. 2. Income-Tax-Officer, Ward-2(2), Bikaner (Raj.). ----Respondents (2) D.B. Spl. Appl. Writ No. 1033/2019 Urban Improvement Trust, Bikaner, Inside Public Park, Bikaner (Raj.) Through Its Secretary ----Appellant Versus 1. Union Of India, Through The Secretary, Ministry Of Finance, Department Of Revenue, Government Of India, New Delhi 2. Income-Tax Officer, Ward-2(2), Bikaner (Raj.) ----Respondents (3) D.B. Spl. Appl. Writ No. 1034/2019 Urban Improvement Trust, Bikaner, Inside Public Park, Bikaner (Raj.) Through Its Secretary ----Appellant Versus 1. Union Of India, Through The Secretary, Ministry Of Finance, Department Of Revenue, Government Of India, New Delhi 2. Income-Tax Officer, Ward-2(2), Bikaner (Raj.) ----Respondents (2 of 4) [SAW-1098/2019] (4) D.B. Spl. Appl. Writ No. 1061/2019 Urban Improvement Trust, Bikaner, Inside Public Park, Bikaner (Raj.)Through Its Secretary. ----Appellant Versus 1. Union Of India, Through The Secretary, Ministry Of Finance Department Of Revenue, Government Of India, New Delhi. 2. Income-Tax Officer, Ward-2(2), Bikaner (Raj.). ----Respondents For Appellant(s) : Mr. Rajeev Purohit, Mr. N.R. Budania. HON'BLE MR. JUSTICE SANDEEP MEHTA HON'BLE MR. JUSTICE ABHAY CHATURVEDI Judgment 18/09/2019 Heard. Perused the material available on record. These four appeals arise out of common judgment dated 24.05.2019 passed by the learned Single Bench of this Court in a bunch of writ petitions led by S.B. Civil Writ Petition No.7158/2006 whereby, the writ petitions preferred by various Urban Improvement Trusts in the State of Rajasthan challenging the action of the Assessing Officer (Income Tax) in initiating the proceedings against the Trusts/ Development Authorities for assessment of tax under the provisions of Income Tax Act, 1961 (herein after referred to as ‘the Act of 1961’). The contention of the Trusts before the learned Single Bench was that they, being local authorities within the meaning of Section 10(20) of the Act of 1961, their income was not (3 of 4) [SAW-1098/2019] assessable to tax and as such, the proceedings initiated were without jurisdiction. The learned Single Bench relied upon the Supreme Court decision in the case of Income Tax Officer & Ors. vs. Urban Improvement Trust & Ors. reported in AIR 2018 SC 5085 whereby, the Supreme Court reversed/ set aside the Division Bench decision of this Court deciding the issue in favour of the assessee UIT and held that the Urban Improvement Trust constituted and established under the Rajasthan Urban Improvement Act, 1959 does not fall within the definition of local authorities within the meaning of Clause 3 of Explanation to Section 10(20) of the Act of 1961. The contention of Shri Rajeev Purohit, Advocate representing the petitioner UIT Bikaner is that the Hon’ble Apex Court, whilst considering the controversy in the case of Income Tax Officer & Ors. vs. Urban Improvement Trust & Ors., did not take into account an earlier Larger Bench decision of this Court in the case of Union of India & Ors. vs. R.C. Jain & Ors., reported in AIR 1981 SC 951 wherein a contrary preposition of law was expounded. We have given our thoughtful consideration to this submission and are of the firm opinion that Hon’ble the Supreme Court decided the case of Union of India vs. R.C. Jain (supra) passed in the year 1981 by relying upon the provisions of Income Tax Act as they then existed. Thereafter Section 10(20) of the Income Tax Act has been amended by the Finance Act, 2002 and the Supreme Court judgment in the case of Income Tax Officer & Ors. vs. UIT & Ors. (supra) was passed after elaborating upon the amended provisions. As such, the earlier decision wherein, the interpretation was given to a statute as it existed (4 of 4) [SAW-1098/2019] then, cannot govern the present controversy and the subsequent decision passed after appreciating the current statutory provision of law would have to prevail. In view the discussion made herein above, we find no merit in these appeals and the same are hereby rejected summarily. A copy of this order be placed in each file. (ABHAY CHATURVEDI),J (SANDEEP MEHTA),J 60-Tikam/- "