2013 (11) TMI 482 - ALLAHABAD HIGH COURT

Constitutional validity of amendments in Section 80 HHC(3) of the Income Tax Act, 1961 brought by the Taxation Laws (Amendment) Act, 2005 - Deduction in respect of DEPB and DFRC benefits - classification between exporters with less than Rs.10 crore and more than Rs. 10 crore export turnover - Held that:- as per plain reading of the unamended provisions of Section 80HHC, deduction was not available in respect of profit on the transfer of DEPB. It became available to exporters in respect of DEPB credit sale and DFRC referable to Section 28(iiid)/(iiie), when 2nd, 3rd and 4th Proviso in Section 80 HHC(3) were inserted. Simultaneously clauses (iiid)(iiie) were also inserted in Section 28 of the Act by the Taxation Laws (Amendment) Act, 2005 with retrospective effect from 1.4.1998. Thus, no one can have grievance falling under the scope of Section 80HHC against the amended provisions inasmuch as such eligible person would be getting benefit of deduction under section 80HHC with retrospective effect. - The petitioners do not have any right to be aggrieved for the reason that deduction or exemption is available strictly in accordance with the statutory provisions. No one has any fundamental right for deduction or to ask for deletion or modification of the conditions so as to qualify for exemption or deduction. - Decided against the assessee.

Retrospectivity - Held that:- the amendment in Section 80HHC made by the Taxation Laws ( Amendment) Act, 2005 with retrospective effect from 1.4.1998, does not suffer from the vice of unconstitutionality. The amendment so made with retrospective effect is accordingly held to be valid. - Decided against the assessee.

Classification & Article 14 - issue of discrimination - Held that:- classification of exporters on the basis of turn over of less than Rs. 10 crores and more than Rs. 10 crores is a valid classification based on intelligible differentia. The exporters having export turn-over not exceeding Rs. 10 crores referable to the 2nd Proviso of Section 80HHC(3) fall under one group while the exporter having export turn-over exceeding Rs. 10 crores referable to 3rd and 4th proviso of Section 80HHC(3) fall under another group. Thus, the classification so made is founded on an intelligible differentia which distinguishes the exporters falling under one group (having export turn-over not exceeding Rs. 10 crores) from those who fall under another group (exporters having export turned over exceeding Rs. 10 crores). - provisions are not violative of Article 14 of the Constitution of India. The classification as provided in the 2nd, 3rd and 4th proviso are wholly valid and based on intelligible differentia. - Decided against the assessee.

Principles of estoppel - promissory estoppel - Held that:- there is no estoppel against the legislature and the vires of the Act cannot be tested by invoking the said plea but so far as the government was concerned the rule of estoppel did apply. Thus, it is clear that there cannot be any promissory estoppel against the legislature even if on the basis of the representation or promise made certain concessions have been allowed. The legislature is not bound by the principles of promissory estoppel. In view of this settled position of law, we reject the contention of the petitioners that the impugned provision is violative of the principles of promissory estoppel. - Decided against the assessee.

Presumption of Validity - Held that:- A provision conferring very wide and expansive powers on authority can be construed in conformity with legislative intent of exercise of power within constitutional limitations. Where a Statute is silent or is inarticulate, the Court would attempt to transmutate the inarticulate and adopt a construction which would lean towards constitutionality albeit without departing from the material of which the law is woven. These principles have given rise to rule of "reading down" the provisions if it becomes necessary to uphold the validity of the law. - the petitioners have completely failed to rebut the presumption of constitutional validity of the impugned provision.

The provisions of Section 80 HHC(3) of the Act as amended by the Taxation Laws (Amendment Act) 2005 to be wholly valid with retrospective effect from 1.4.1998. - Decided against the assessee.