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2017 (11) TMI 465 - HC - Income TaxValidity and applicability of 'income computation and disclosure standards' (“ICDS”) issued by CBDT - scope of validation laws whereby the Parliament seeks to rectify the defects pointed by the judiciary - Excessive delegation of legislative powers - Held that:- it is only a competent legislature that can make a validation law to override judicial precedents and that too by actually removing the defect pointed out by such precedent. Such a power is not available to the executive. In other words, where there is a binding judicial precedent, by virtue of Articles 141 and 144 of the Constitution, it is not open to the executive to override it unless there is an amendment to the Act by way of a validation law. To that extent, Section 145 (2), as amended, has to be read down to restrict power of the Central Government to notify ICDS that do not seek to override binding judicial precedents or provisions of the Act. The power to enact a validation law is an essential legislative power that can be exercised, in the context of the Act, only by the Parliament and not by the executive. If Section 145 (2) of the Act as amended is not so read down it would be ultra vires the Act and Article 141 read with Article 144 and 265 of the Constitution. The ICDS is not meant to overrule the provisions of the Act, the Rules thereunder and the judicial precedents applicable to the provisions of the Act as they stand. As noted hereinbefore, the challenge in the present case is to a few clauses of the various ICDSs notified on 29th September, 2016 by the Central Board of Direct Taxes (“CBDT”), Department of Revenue, Ministry of Finance. ICDS-I, ICDS-II, Paragraph 10(a) & 12 of ICDS-III, para 5, para 6 & para 8(1) of ICDS-IV, ICDS-VI, ICDS-VII and Part-A of the ICDS-VIII failed to pass the test of judicial scrutiny. Specific ICDS as noted have been struck down as ultra vires the Act, the impugned notification Nos. 87 and 88 dated 29th September 2016 and Circular No. 10 of 2017 issued by the CBDT are also held to be ultra vires the Act and struck down as such.
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