1990 (9) TMI 36 - HC - Income Tax

Summary

Issues:
1. Deduction of Rs. 4 crores claimed by the company in its income-tax return.
2. Challenge to the constitutionality of sub-sections (9), (10), and (11) of section 40A of the Income-tax Act, 1961.
3. Allegation of discrimination under article 14 of the Constitution.
4. Request to alter the date in sub-sections (10) and (11) from March 1, 1984, to March 31, 1984.

Analysis:

1. The Assam Frontier Tea Ltd. claimed a deduction of Rs. 4 crores in its income-tax return for the assessment year 1984-85, which was rejected by the Income-tax Officer citing section 40A(9) of the Income-tax Act, 1961. The company deposited the amount with two associations for welfare activities in its tea estates, and the dispute arose regarding the deductibility of this amount as an expense.

2. The company filed a writ petition challenging the constitutionality of sub-sections (9), (10), and (11) of section 40A of the Income-tax Act, 1961, alleging that these provisions were ultra vires articles 14, 265, and 300A of the Constitution. The Revenue authorities resisted the petition, arguing that the deductions were not permissible under the extant provisions of the Act and were inserted to prevent tax evasion.

3. The key issue raised was the allegation of discrimination under article 14 of the Constitution. The company contended that assessees who made similar contributions before March 1, 1984, were allowed deductions, while those who paid afterward were not. However, the court found that the company failed to establish a violation of article 14, as all assessees were uniformly affected by the provisions.

4. The company requested the alteration of the date in sub-sections (10) and (11) from March 1, 1984, to March 31, 1984, to allow the recovery of unspent amounts. The court examined historical reasons and speeches made by the Finance Minister to understand the intent behind the provisions. Despite arguments for altering the date based on precedents, the court held that the company was not discriminated against and dismissed the petition.

In conclusion, the court rejected the writ petition, finding no violation of article 14 and refusing to alter the date in the provisions. The judgment emphasized the uniform application of tax laws and the legislative intent behind the contested provisions.