The Income Tax Appellate Tribunal Chennai, ruled that no income tax payable on Tamil Nadu Advocates welfare fund.
The tribunal noted that the Tamil Nadu Advocate’s Welfare Fund Act, 1987 was created by the State Legislature for providing death benefits to the family members of the deceased advocates, who have joined as members in the said scheme. The source of income for the said scheme is income generated through sale of welfare fund stamps, lifetime subscription from members, interest on corpus deposits and Government grant.
The tribunal observed that section 16 of the Advocate’s Welfare Act, 2001 deals with the Recognition of the Association by the State Bar Council and nothing has been mentioned therein regarding the prior approval from the Bar Council of India before forming a welfare fund.
“Since, the assessee fund is enacted prior to the formation of the Central Act namely Advocate’s Welfare Fund Act, 2001 and the saving clause is provided u/s. 38 by the Advocate’s Welfare Fund Act, 2001, there is an exemption for the applicability of the Central Act of the State of Tamilnadu. Since, section 23 of the Central Act provides for exemption of Income-tax to the Advocates Welfare Fund of the State against the provisions of section 11 and section 2(15) of the Act is not applicable to the Tamilnadu Advocates welfare Fund”, the tribunal said.
The bench viewed that the assessee is exempted from income-tax and uphold the order of the CIT(A) and hence, dismissed the appeal of the revenue.
Facts
the Tamil Nadu Advocates Welfare Fund (TNAWF) was created u/s. 6(2) of the Advocates Act 1961 and constituted by the state legislature under the Tamil Nadu Advocates Welfare Fund Act 1987 as Tamil Nadu Advocates Welfare Fund Trust Committee.
The assessee had filed return of income for the assessment year 2013-14 on 29.09.2013, declaring a total income of Rs. Nil. The gross income earned by the assessee was Rs.2.79 crores against the revenue expenditure of Rs.3.54 crores. The case was selected for scrutiny u/s. 143(2) of the Act and concluded the assessment by passing an order by the Assessing Officer on 23.03.2016 u/s. 143(3) of the Act, by denying the exemption u/s. 11 of the Act by invoking the proviso to section 2(15) of the Act for the reason that the assessee has involved in the nature of trade or business by selling the welfare funds stamps.
Case Information
Case Name : Income Tax Officer (Exemptions), Ward-3, Chennai v/s Tamilnadu Advocate Welfare Fund, High Court Campus, High Court, Chennai.
Judicial Level & Location : ITAT, Chennai
Appeal Number : ITA Nos.: 699 & 700/Chny/2024
Date of Ruling : 2024-07-24
Ruling in favour of: Respondent
Judges: MANU KUMAR GIRI, JUDICIAL MEMBER AND S. R. RAGHUNATHA, ACCOUNTANT MEMBER
Petitioner Advocate: Shri. D. Hema Bhupal, JCIT
Respondent Advocate: Shri. M.K. Rangaswamy, CA
