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Issues involved:
Challenge to the constitutional validity of section 143(1A)(a)(B) of the Income-tax Act, 1961 and related demands and notices. Details of the Judgment: The petitioner, a private limited company involved in drug manufacturing, challenged the provisions of section 143(1A)(a)(B) of the Income-tax Act, 1961, along with demands raised and notices issued. The company had filed returns showing business losses and carry forwards from previous years. The Deputy Commissioner of Income-tax made adjustments under section 143(1)(a), resulting in additional tax imposed under section 143(1A). Appeals and rectification applications were filed, contesting the additional tax imposition. The petitioner argued that the retrospective effect of section 143(1A)(a)(B) was unconstitutional, alleging it to be penal in nature and not covered under the Constitution. The respondents contended that Parliament had the authority to enact income tax laws, including retrospective provisions, to prevent tax evasion. The High Court analyzed the provisions of section 143(1A)(a)(B) and concluded that it aimed to deter taxpayers from manipulating tax liabilities by directly taxing deducted losses. The Court upheld the retrospective application of the provision, stating it was not penal but compensatory to prevent tax evasion. Referring to legal precedent, the Court affirmed Parliament's authority to enact laws prospectively and retrospectively in taxation matters. In the judgment, the Court dismissed the petition, finding no illegality in section 143(1A)(a)(B) of the Income-tax Act, 1961. The petitioner's challenge was deemed without merit, and any security amount held was ordered to be refunded.
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