Circular No. 125-Income Tax dated 26-11-1973

879. Court fee or stamp duty payable on power of attorney or vakalatnama filed before Income-tax Officer/on applications or petitions filed before Commissioner and other income-tax authorities

CLARIFICATION 1

1. The Institute of Chartered Accountants of India have repre­sented to the Board requesting for reconsideration of its earlier instructions that a power-of-attorney in favour of chartered accountants was required to be stamped in the manner prescribed in the Stamp Act.

2. The issue raised by the Institute of Chartered Accountants of India was considered earlier in the Board’s Circular No. 9 (XL-48) of 1958, dated 18-5-1958 and No. 3-P(LX-69) of 1968, dated 20-2-1968 [printed here as Clarifications 3 and 2]. In the Circu­lar of 1958 the Board directed, after a very careful considera­tion of the question whether accountants and income-tax practi­tioners should file vakalatnama or power-of-attorney and, if the latter, what were the scales of court fees or stamp duty leviable thereon:

“A document purporting to authorise a person who is not a pleader or mukhtar duly appointed under section 7 of the Legal Practi­tioners Act, 1879, is not a vakalatnama or a mukhtarnama and requires to be stamped as a power-of-attorney under the Stamp Act. Therefore, the power-of-attorney in favour of registered accountant or an income-tax practitioner or any other person who is not a duly appointed mukhtar under section 7 of the Legal Practitioners  Act is a power-of-attorney (and not a vakalatnama or mukhtarnama) and requires to be stamped not under the Court Fees Act, but under the provisions of the Stamp Act as in force in the particular area, i.e., subject to the local amendments.”

These instructions were reviewed in the light of the judgment of the Bombay High Court (Nagpur Bench) in the case of L.M. Mahurkar v.STO [1967] 66 ITR 561, wherein it was held that the sales tax authority was a revenue Court and the letter of authorisation presented before it should be governed by the Court Fees Act and not by the Indian Stamp Act. The Board were advised that no reconsideration of the earlier instructions was necessary and that the instructions contained in Circular of 1958 may continue to be followed till there was a contrary decision from the Courts. In the Circular of 1963, therefore, the earlier instruc­tions were reiterated.

3. In the light of the representation made by the Institute of Chartered Accountants of India the matter has again been consid­ered carefully. The Board are advised that the existing instruc­tions may continue to be followed in all charges except the Punjab charges. Insofar as the Punjab charges are concerned the letter of authorisation presented by the income-tax practitioners and chartered accountants before the income-tax authority may be governed by the Court Fees Act in view of the decision of the erstwhile Punjab Chief Court in Ganpat v. Prem Singh [1912] 15 IC 122 wherein it was held that the power-of-attorney empowering any person to represent another in a civil court should be governed only by the provisions of the Court Fees Act and not by the Stamp Act.

Circular : No. 125 [F.No. 274/1/73-ITJ], dated 26-11-1973.

CLARIFICATION 2

1. In the case of L.M. Mahurkar v. STO [1967] 66 ITR 561, the Nagpur Bench of the Bombay High Court have held that as sales tax authority is a revenue court, the letters of authorisation pre­sented before it should be governed by the Court Fees Act and not by the Indian Stamp Act. A question has been raised whether following this decision, letters of authorisation to be presented by income-tax practitioners and chartered accountants before an income-tax authority should be governed by the Court Fees Act or by the Indian Stamp Act.

2. The Board are advised that the instructions contained in Circular No. 9(XL-48), dated 18-5-1958 [printed here as Clarifi­cation 3] may continue to be followed until there is a contrary decision from the Supreme Court.

Circular : No. 3-P(XL-69), dated 20-2-1968.

CLARIFICATION 3

After the issue of the Board’s Circular No. 50 (XL-43) of 1956, dated 28-12-1956 [printed here as Clarification 5], the question has been raised whether accountants and income-tax practitioners should file vakalatnamas or powers-of-attorney and if the latter, what the scales of court fees or stamp duties were leviable thereon.

The Board have been advised that a document purporting to autho­rise a person who is not a pleader or mukhtar duly appointed under section 7 of the Legal Practitioners Act, 1879, is not a vakalat­nama or a mukhtarnama and requires to be stamped as a power-of-attorney under the Stamp Act. Therefore, the power-of-attorney in favour of a registered accountant or an income-tax practitioner or any other person who is not a duly appointed mukhtar under section 7 of the Legal Practitioners Act is a power-of-attorney (and not a vakalatnama or mukhtarnama) and requires to be stamped not under the Court Fees Act, but under the provisions of the Stamp Act as in force in the particular area, i.e., subject to the local amendments.

Circular : No. 9 (XL-48), dated 18-5-1958.

CLARIFICATION 4

A question has been raised as to which of the applications or petitions presented before the Commissioner of Income-tax and the Central Board of Revenue are liable to Court fees as per item No. 3 of the Schedule annexed to the Board’s Circular No. 50(XL-43), dated 28-12-1956 [printed here as Clarification 5].

The Board have been advised that all applications or petitions or representations which invoke any jurisdiction, authority, power, discretion, etc., whether real or supposed, vested in the Commis­sioner of Income-tax or the Central Board of Revenue under the Income-tax Act or any other Act, shall be liable to court fee under article 1(c) of Schedule II to the Court Fees Act, 1870. Applications or representations which are in the form of com­plaints such as excessive delay in disposal of any matter, ill-treatment, etc., which are not strictly referable to any provi­sions in the Income-tax Act or any other Act, would not be liable to court fee. There would, of course, be borderline cases when allegation regarding misconduct, etc., form the grounds of an application or a petition for exercising any jurisdiction, etc., vested in the authority concerned under the Income-tax Act. Such cases would be liable to court fee under article 1(c) of Schedule II to the Court Fees Act, 1870.

In order to illustrate the above classification, the following illustrations are given :

A. Liable to court fee :

    (a)   applications for stay of recovery or for grant of instalments for payment of tax ;

    (b)   applications for compromise assessments or for issue of directions to Income-tax Officers when assessments are pending ;

    (c)   applications for transfer of cases from one Income-tax Officer to another ;

    (d)   applications for hearing or for adjournment in connec­tion with sections 33A and 33B proceedings ;

    (e)   applications under section 23A and subsequent applica­tions for adjournments, etc. ;

     (f)   applications for recognition of provident funds ;

    (g)   applications for rectification of mistakes, under section 35 of the Income-tax Act, in the orders of the Commis­sioner or Income-tax ; and

    (h)   applications for remission of post-certificate interest (or cost) demanded by the Certificate Officer.

B. Not liable to court fee :

    (a)   petitions requesting for directions to the Income-tax Officer about undue delay in the issue of refunds ; and

    (b)   complaints and representations against harassment caused by the Officers of the Income-tax Department.

The above illustrations are by no means exhaustive. The Commis­sioners, however, need not be unduly meticulous in this matter and in doubtful cases the discretion should always be exercised in favour of the assessees.

So far as petitions under section 33A are concerned, the exemp­tion from court fees, as mentioned on page 542 of the Income-tax Manual, Part III (10th edition), will continue.

Circular : No. 36 (XL-52), dated 19-11-1958.

CLARIFICATION 5

A question has been raised as to what are the current amounts of court fees payable on applications and other documents presented before the various income-tax authorities. The Board have been advised that court fees on documents presented before the income-tax authorities are chargeable according to the scales laid down in the Court Fees Act, 1870 and the amendments made in different States are not to be taken into consideration. The amounts of court fees payable at present on various documents filed before the various income-tax authorities in all the charges of the Commissioners of Income-tax are shown in the Schedule annexed hereto.

SCHEDULE

SHOWING THE AMOUNTS OF COURT FEES PAYABLE ON VARIOUS DOCUMENTS PRESENTED BEFORE THE INCOME-TAX AUTHORITIES

Circular : No. 50(XL-43) of 1956, dated 28-12-1956.