2017 (9) TMI 1106 - HC - Income Tax

Fringe Benefit Tax (FBT) - Writ of Declaration to declare Sections 115 WA to WL of the Income Tax Act, 1961 as introduced by the Finance Act 2005, as well as the Rules made in the Income Tax Rules, 1994, as ultra vires Articles 14, 19(1)(g) of the Constitution of India - Held that - The petitioner is directed to abide by the decision of the Hon ble Supreme Court where the challenge to the impugned provisions are pending. It is made clear that in the event the Hon ble Supreme Court upholds the impugned legislation and the Department initiates action or proceeds with the action already initiated, the petitioner/assessee is not entitled to plead limitation and the period during which this Writ Petition is pending as well as the period till the matter is decided by the Hon ble Supreme Court, shall stand excluded for computation of limitation

Summary

Issues:
Challenge to the constitutionality of Sections 115 WA to WL of the Income Tax Act, 1961 and the Income Tax Rules, 1994 by a petitioner association.

Analysis:
The petitioner filed a Writ Petition seeking a declaration to declare certain sections of the Income Tax Act and Rules as ultra vires Articles 14, 19(1)(g) of the Constitution of India and beyond the legislative competence of Parliament concerning the petitioner association. Both the petitioner's counsel and the Revenue's counsel acknowledged that a similar matter is pending before the Hon'ble Supreme Court, which has been transferred from other High Courts as well.

Considering the matter's current status before the Supreme Court, the High Court decided to dispose of the Writ Petition with appropriate directions, allowing both parties to follow the Supreme Court's decision. The Revenue's counsel expressed concerns about the petitioner later claiming actions are barred by limitation if the Supreme Court upholds the legislation. To address this, the Court issued an order directing the petitioner to abide by the Supreme Court's decision and clarified that if the impugned legislation is upheld, the petitioner cannot plead limitation for actions taken during this period.

Ultimately, the High Court disposed of the Writ Petition without costs, ensuring the petitioner and the Revenue abide by the Supreme Court's decision regarding the challenged provisions. The Court's order aimed to safeguard the Revenue's interests in case actions are taken based on the impugned legislation upheld by the Supreme Court, preventing the petitioner from pleading limitation during the pending period and until the Supreme Court's final decision.