CBDT Grants Income Tax Exemption to Chandigarh High Court Legal Services Committee on Costs; Grants Bank Interest

The Central Board of Direct Taxes (CBDT) granted income tax exemption to the Chandigarh High Court Legal Services Committee on amounts received as legal costs in court proceedings. The exemption extended to bank interest earned on such funds. The Board recognized the Committee’s charitable and public welfare objectives, qualifying it under Section 10(23C) of the Income Tax Act, which exempts organizations engaged in promoting legal aid and public welfare. The ruling ensures that funds received for legal services are utilized effectively without tax liability, thereby supporting access to justice for economically weaker sections. It also provides guidance to other legal service committees on the correct tax treatment of similar receipts, reinforcing the principle that charitable or statutory bodies performing public functions can avail tax benefits under law. The decision emphasizes government support for legal aid initiatives and aligns with the broader social justice framework.