Law & Society

Tamil Nadu State Marketing Corporation Ltd vs Union Of India

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The appellant herein – original writ petitioner filed the aforesaid writ petition before the High Court challenging the validity of Section 40(a)(iib). It was the case on behalf of the original writ petitioner that the amount which is deductible in computing the income chargeable in terms of the Income Tax Act is not being allowed under the garb of the aforesaid provision. According to the original writ petitioner, the said provision is discriminatory and violative of Article 14 of the Constitution of India, inasmuch as there are many Central Government undertakings which have not been subjected to any such computation of income tax and are enjoying exemption.

It is to be noted that a show cause notice was issued by the assessing officer for the Assessment Year stating that the VAT expense levied on the appellant is an exclusive levy by the State Government and therefore squarely covered by Section 40(a)(iib). The appellant filed the present writ petition before the High Court challenging the vires of Section 40(a)(iib) being ultra vires Articles 14, 19 and 265. By the impugned judgment and order, as observed hereinabove, the High Court has dismissed the said writ petition without deciding the validity of Section 40(a)(iib).

The High Court has observed that the issue of raising a challenge to the vires of the provision at this stage need not be entertained, as the matter is still sub judice before the Income Tax Authority, even though it is open to the aggrieved party to question the same at the appropriate moment. The High Court has not decided the issue with respect to vires of Section 40(a)(iib) of the Income Tax Act on merits, the matter is required to be remanded to the High Court to decide the writ petition on merits.

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