|
The Tax Publishers2020 TaxPub(DT) 4997 (SC) : (2020) 429 ITR 0327 : (2020) 317 CTR 0961 : (2021) 276 TAXMAN 0378 INCOME TAX ACT, 1961
Section 40(a)(iib)
Where assessee challenged vires of section 40(a)(iib) before Madras High Court by way of writ petition, as same could be decided by the High Court alone in exercise of powers under Article 226 of the Constitution of India, the High Court ought to have decided the issue with regard to vires of section 40(a)(iib) on merits, irrespective of the fact that matter was sub judice before the Income Tax Authority.
|
Business disallowance under section 40(a)(iib) - Vires of section 40(a)(iib) challenged by assessee - Whether High Court could entertain challenge of assessee, even though matter was pending before AO -
Assessee was challenging order of AO, wherein VAT expenditure was denied to be allowed as deduction under section 40(a)(iib). On appeal, Madras High Court remanded the matter on ground of violation of principles of natural justice. While issue was pending before AO, assessee filed writ petition before High Court, challenging vires of section 40(a)(iib). Issue was as regards order of High Court holding that issue of raising a challenge to vires of provision could not be entertained as matter was sub-judice before AO. Held: When the vires of section 40(a)(iib) were challenged, which can be decided by the High Court alone in exercise of powers under article 226 of the Constitution of India, the High Court ought to have decided the issue with regard to vires of section 40(a)(iib) on merits, irrespective of the fact whether the matter was sub judice before the Income Tax Authority. Vires of a relevant provision goes to the root of the matter. Once the show cause notice was issued by AO calling upon assessee to show cause as to why the VAT expenditure was not allowable as deduction in accordance with section 40(a)(iib), while computing income of assessee, it could be said that the cause of action had arisen for the assessee to challenge the vires of section 40(a)(iib) and assessee may not have to wait till the assessment proceedings before AO were finalised.
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2017-18
IN THE SUPREME COURT OF INDIA (CIVIL APPELLATE JURISDICTION)
SUBSCRIBE FOR FULL CONTENT
|