Export Promotion Council For ... vs Director General Of Income Tax ...
2010 Latest Caselaw 2510 Del

            THE HIGH COURT OF DELHI AT NEW DELHI
%                                    Judgment delivered on: 11.05.2010

+           WP(C) 2969/2010

EXPORT PROMOTION COUNCIL FOR
HANDICRAFTS & ANR                                             ..... Petitioner

                                     - versus -


DIRECTOR GENERAL OF INCOME TAX
(EXEMPTIONS) & ANOTHER                                        ..... Respondents

Advocates who appeared in this case:-

For the Petitioner      : Mr C. S. Aggarwal with Mr Prakash Kumar
For the Respondent      : Ms P. L. Bansal

CORAM:-
HON'BLE MR JUSTICE BADAR DURREZ AHMED
HON'BLE MR JUSTICE V.K. JAIN

1. Whether Reporters of local papers may be allowed to see the judgment ?

2. To be referred to the Reporter or not ?

3. Whether the judgment should be reported in Digest ?

BADAR DURREZ AHMED, J (ORAL)

1. This is the second round of litigation before this Court in respect

of the very same subject matter, which is the grant of exemption under

Section 10(23C)(iv) of the Income Tax Act, 1961 (hereinafter referred to as

'the said Act').

2. In the first round, the petitioner had approached this Court by

way of a writ petition being WP(C) No. 5579/2008, which was disposed of

by this Court on 29.01.2009 by the following order:-

"After hearing counsel for the parties in some detail, it appears that the Petition can be disposed of on the short ground that the Petitioner may, if so advised, withdraw its utilization/

investment with which India Exposition Mart Ltd. (IEML) and utilize/invest those funds as per Section 11 (5) of the Income Tax Act, 1961 (Act). Learned counsel for the Revenue agrees that since this is the only objection against the Petitioner, in respect of its application for exemption under Section 10 of the Act, the Petitioners may apply afresh after compliance is made under section 11 (5) and that application shall be deemed to have been filed on 22.5.2007 when the application for according exemption was filed in the first instance. For all intents and purposes, this application will be treated as a substitute for the earlier application. The fresh application shall not prejudice, in any manner, the position which obtained in the financial year 2001-2002 to 2004-2005. The fresh application shall be made not later than eight weeks from today whereupon the Revenue shall pass an appropriate order.

In view of the above, it is a logical corollary that the impugned order is set aside. It is so ordered.

The Petition is disposed of."

3. A plain reading of the aforesaid order makes it clear that the only

objection against the grant of exemption was that the petitioner had invested

some funds in India Exposition Mart Limited (IEML), which, according to

the revenue, was not in accordance with the provisions of Section 11(5) of

the said Act. It is further clear from the aforesaid order that the counsel for

the revenue had agreed that this was the only objection against the petitioner

and that in respect of the application for exemption, the petitioner may

apply afresh after complying with Section 11(5) of the said Act. In other

words, the petitioner was advised to withdraw the said investment from

India Exposition Mart Limited and to place the said withdrawn funds into

appropriate investments as stipulated in Section 11(5) of the said Act. The

Court also made it clear that if this was done and an application was made,

such application would be deemed to have been filed on 22.05.2007 and for

all intents and purposes it would be treated as a substitute for the earlier

application. It was also made clear that the fresh application would not

prejudice, in any manner, the position which obtained in respect of the

financial years 2001-2002 to 2004-2005. The present application was in

respect of the financial years 2007-2008 to 2009-2010 corresponding to

assessment years 2008-2009 to 2010-2011. By virtue of the said order, the

earlier order of the Director General of Income Tax (Exemption), New

Delhi was set aside and the matter was to be considered afresh. It is an

admitted position that consequent thereto, the amount lying with the India

Exposition Mart Limited has been withdrawn by the petitioner within eight

weeks, as indicated in the order of the High Court, and the money received

has been deposited in current account No.00291131000407 with the

Oriental Bank of Commerce, Mahipalpur Branch, Delhi, with effect from

31.03.2009.

4. Consequently, the petitioner had complied with the direction

given in the said order of withdrawing the amount lying invested in India

Exposition Mart Limited and in placing the said amount in a scheduled bank

in accordance with Section 11(5) of the said Act. However, despite this

having been done, the Director General of Income Tax (Exemption) did not

grant exemption to the petitioner under Section 10(23C)(iv) for all the

assessment years 2008-2009 to 2010-2011 but limited the exemption to the

assessment years 2009-2010 and 2010-2011. In other words, he denied

exemption for the assessment year 2008-2009.

5. After having heard the arguments advanced by the learned

counsel for the parties and examining the order passed by this Court in the

earlier round in detail, we are of the view that it was not open to the

Director General of Income Tax (Exemption) to have refused exemption for

the assessment year 2008-2009, when the petitioner had withdrawn the

investment in India Exposition Mart Limited and placed the same in a

scheduled bank in compliance with the provisions of Section 11(5) of the

said Act. It was made clear in the order passed by this Court that the second

application that would be moved by the petitioner pursuant to the order of

the High Court, would be treated as having been filed on 22.05.2007 and

was to be an entire substitute of the original application.

6. Consequently, the impugned order to the extent that it denies

exemption for the assessment year 2008-2009 is set aside. The respondent

is directed to grant exemption for the assessment year 2008-2009 also in

view of the fact that the petitioner has already complied with the directions

given by this Court in the earlier order.

The writ petition stands allowed to the extent indicated above.

There shall be no order as to costs.

BADAR DURREZ AHMED, J

V.K. JAIN, J MAY 11, 2010 SR