Bar Council Of Chhattisgarh Entitled To I-T Exemption: Chhattisgarh HC Reminds Bar Council, Its Duties [Read Order]

I deem it proper to remind the duty of the petitioner State Bar Council, as rendered by the Supreme Court, to ensure quality service of competent lawyers to the litigating public, to spread legal literacy, promote law reforms and provide legal assistance to the poor and downtrodden people, the court said.

The Chhattisgarh High Court has held that Bar Council of the state is entitled for income tax exemption under Section 10(23A) of the Income Tax Act, 1961 with effect from the date of constitution of the Council.

Challenging the assessment orders, the State Bar Council had approached the high court contending that it started functioning with effect from 1-11-2000 upon reorganization of the State of Madhya Pradesh, but did not make any application for fresh exemption under Section 10(23A) of the IT Act presumably on the ground that the notification issued by the Central Government exempting the Bar Council of Madhya Pradesh from the provisions of the IT Act under Section 10(23A), dated 9-8-1966 would also be applicable to the Bar Council of Chhattisgarh by virtue of the provisions contained in Section 2(f) read with Sections 78 and 79 of the Madhya Pradesh Reorganisation Act.

The issue before the high court was whether notification dated 9-8-1966 exempting the State Bar Council of Madhya Pradesh under Section 10(23A) of the Income Tax Act, applicable in the erstwhile undivided State of Madhya Pradesh, would be applicable to the newly constituted State of Chhattisgarh, including the State Bar Council of Chhattisgarh.

Justice Sanjay K Agrawal observed that the notification dated 9-8-1966 is a law within the meaning of Section 2(f) of the Act of 2000 which was in existence in the erstwhile State of MP exempting the State Bar Council of Madhya Pradesh under Section 10(23A) of the IT Act and would also be applicable to the State Bar Council of Chhattisgarh till it is modified or altered by the competent authority by virtue of the provisions contained in Sections 78 and 79 of the Act of 2000.

The court observed: “It is quite vivid that the notification dated 9-8-1966 issued by the Central Government exempting the State Bar Council of MP from taxation of income other than those specifically excluded under Section 10(23A) of 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.”

While quashing the assessment orders, the court further observed : “I deem it proper to remind the duty of the petitioner State Bar Council, as rendered by the Supreme Court, to ensure quality service of competent lawyers to the litigating public, to spread legal literacy, promote law reforms and provide legal assistance to the poor and downtrodden people. I hope and trust that the State Bar Council will follow and observe the duty of the Council religiously and scrupulously as indicated.”