Allowed

Shri Manak Chand Agarwal and a v. U O I and Ors.

Rajasthan HC3 Jul 2017CW/784/2004

Case brief

AI extract

What is this about?

The High Court set aside an impugned order invoking Section 179 of the Income Tax Act against a public limited company. The court held the provision does not apply to public limited companies, as the department lacks authority to alter a company's nature.

What did the court decide?

The impugned order dated 18th November, 2003 invoking Section 179 of the Income Tax Act is set aside.

Shri Manak Chand Agarwal and a Vs U O I and Ors. — Income Tax | Rajasthan HC (2017)

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HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR

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S.B. Civil Writ Petition No. 784 / 2004

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Shri Manak Chand Agarwal S/o Late Sh. Bhajan Lal Sarraf R/o F-3, Subham Apartment, D-255, Devi Marg, Bani Park, Jaipur – 16.

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Shri Dharmendra Kumar Agarwal S/o Sh. Manak Chand Agarwal, Aged 33 years, R/o. Swaroop Market, Saraogi Mohalla, Beawar (Ajmer).

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----Petitione

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Versus

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Union of India Through, Chairman, Central Board of Direct Taxes, New Delhi.

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The Chief Commissioner, Income Tax Department, Statue Circle, Jaipur.

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Income Tax Officer, Ward-2(2), Statue Circle, Jaipur.

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----Respondents _____________________________________________________ For Petitioner(s) : Mr.Anant Kasliwal with

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Mr.Vaibhav Kasliwal Mr.Loknath Acharya Mr.Saurabh Jain Mr.Charu Pareek

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For Respondent(s) : Mr.Anuroop Singhi

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(2 of 3)

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HON'BLE MR. JUSTICE M.N.BHANDARI

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Judgment

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03/07/2017

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By this writ petition, a challenge is made to the order dated 18^th November, 2003.

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Learned counsel submits that the respondents issued an order on 18^th November, 2003 by invoking Section 179 of the Income Tax Act, 1961 (for short “the Act of 1961”). It was in ignorance of its applicability. Section 179 of the Act of 1961 does not apply to the public limited company. The respondents treated the petitioners to be a private limited company without any authority to this effect. The impugned order deserves to be set aside in the light of the facts given above. It is also stated that on receipt of copy of the order, a reply was given with a prayer to review the order but no heed was paid to it. The respondents rather passed an order to maintain their stand thus the petitioners were left with no option but to serve with them with the notice for demand of justice. When no heed was paid to the aforesaid, rather, an order was passed on 08^th January, 2004 to show that the petitioners are not the limited company, this writ petition was filed.

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Learned counsel for the respondent/s has opposed the petition. It is submitted that though going by the Companies Act, 1956 (for short “the Act of 1956”), the petitioners may be a public limited company but going in the transaction and the documents, it was reckoned to be private limited company and, accordingly,

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(3 of 3)

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Section 179 of the Act of 1961 was invoked. It was, however, could not be denied that Section 179 of the Act of 1961 does not apply to the public limited company.

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I have considered rival submissions of the parties and perused the record.

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It is not in dispute that Section 179 of the Act of 1961 does not apply to the public limited company. The respondents invoked Section 179 of the Act of 1961 treating the petitioners to be a private limited company, though, as per the Act of 1956 and the documents show it to be public limited company. The Department is not having authority to change the nature of the company by making it to be public limited company to private limited company. The record shows the petitioners to be a public limited company thus Section 179 of the Act of 1961 could not have been invoked.

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In view of the above, the impugned order dated 18^th November, 2003 is set aside. Section 179 of the Act of 1961 could not have been invoked against a public limited company. The writ petition is accordingly allowed.

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(MN BHANDARI) J.

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Preeti, PA/101

Shri Manak Chand Agarwal and a v. U O I and Ors.

Case brief

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Shri Manak Chand Agarwal and a v. U O I and Ors.

Case brief

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