THE CONSTITUTION OF INDIA – promise to follow – whether government is strictly following- in Budget 2016 tax provisions which are not as per Constitution must be omitted.

[CA DEV KUMAR KOTHARI]

The Constitution day:

In October, 2015  while laying the foundation stone of Dr. B. R. Ambedkar Memorial in Mumbai, Prime Minister Narendra Modi announced that this year onwards, November 26 would be observed as Constitution Day.

The Constitution Day events will be a part of the year-long nationwide celebrations to mark the 125th birth anniversary of Ambedkar.

Messages regularly beamed in channels of Door Darshan(DD):

In various channels of DD the message is regularly beamed:

In Hindi:

AAIEYE HUM SAB BHARATVASI SANVIDHAN KI SACHHI BHAVANA KE PALAN KEE PRATIGYA LE  – ISSUED BY MINISTRY OF SOCIAL JUSTICE AND EMPOWREMENT.

Un- constitutional provisions:

Challenge of various provisions as unconstitutional is not new and many times provisions made by the Parliament and State Legislator have been struck down/ declared invalid by Courts in India.

There are many provisions, which are not challenged by public but they may not be valid. The Courts can consider validity / constitutionality only when a provision is challenged on this ground and not in case of appeals. Therefore, merely because some provision has not been challenged on ground of ultravirse and courts have considered the provision in appeals does not mean that the provision is constitutionally valid.

A provision can be unconstitutional on many grounds.

The governments must be careful in enacting provisions:

Governments must take care while making provisions which are constitutionally valid. However, many provisions are made which are not within scope of the Constitution of India. However, it appears that governments also take chance and consider that the provision shall not be challenged and it will work even if it is not in accordance with the COI.  

Namo government must delete provisions in tax laws which are apparently not within scope of the COI:

As per provisions of the COI, the Parliament of India / Central Government of India is authorised to impose tax on income other than agricultural income. However, we find many provisions by which capital receipts’ which have no element of profit, gain or income have been deemed as income. This is not proper for the Government.

Unfortunately, even during tenure of Shri Narendra Modi as Prime Minister and Shri Arun Jaitly as the Finance Minister some provisions have been enacted which may not be constitutionally valid.

For example, in the definition of income various kind of capital  receipts like government grant, subsidy, assistance  etc. have been included by deeming such receipts as income by insertion of clause (xviii) in sub-section (24) of section 2. [in short S.2.24.xviii] this was vide the Finance Act, 2015 w.e.f.  01.04.2016.]

Similarly many other receipts which are in nature of capital receipt and are not income have been deemed as income by amendments in the Income-tax Act. Just few  examples:

Provision	Brief nature	Remarks
S.2.24 (iia)	Voluntary contributions … w.e.f. 01.04.1973	Capital receipt -these are received with directions for use. Are not income but deemed as income.
S.2.24 (x)	Employees contribution to PF, SAF ESI ….w.e.f 01.04.1988. There is no receipt of money- a deduction by way of accounting entry cannot be called that a  sum has been  received. Even if a sum is actually received, it is for onward payment to PF.	A statutory liability , governed by other stringent laws, is not and cannot be income but has been deemed income.
S. 2.24 various clauses read with clauses of S.28 and S.56	Capital, premium, gifts in cash or kind by individual, HUF and some type of companies. There are presumptions under law whereby certain capital receipts are deemed to be income thought they are gifts, capital receipts.	Presumption is not proper. If in gift, there is element of income it can be taxes under other provisions like S.68. The AO must prove that there is income.

In budget 2016, all tax  provisions must be reviewed thoroughly and if there is any doubt about constitutional validity, the same must be omitted or suitably amended.  On the aspect of constitutional validity, there are many articles available on this website, the same can be considered while reviewing tax provisions requiring complete adherence to the Constitution of India.

Here's a look at the difficult circumstances under which our Constitution was adopted:

»	271 men and women who were part of the Constituent Assembly, drafted the Indian Constituion after three years of debate over the governing charter of India.
»	The Constitution consists of 90,000 words carefully handwritten in English and Hindi. The books were also illustrated with events from Indian history exquisitely prepared by the great national artist, Nandalal Bose of Santiniketan.
»	There were no foreign consultants involved in framing the Constitution. The founders were adamant that Indians should have full control over the drafting procedure. Thus, the assistance of several lawyer-members were sought: Nehru, Prasad, Ambedkar, and Alladi Krishnaswami Ayyar were part of the historic draft.
»	Based on expert inputs, the Assembly's Constitutional Adviser B.N. Rau prepared an initial draft constitution in February 1948. Rau's draft was further revised by Ambedkar's drafting committee and issued in November 1948.
»	The Assembly took almost a year to discuss it. More than 2,000 amendments were considered and several were accepted. The drafting committee produced a revised draft, which was eventually adopted by the Assembly, with some changes, as the Constitution on November 26, 1949.
»	When the Assembly convened for its final session on January 24, 1950, its secretary, H.V.R. Iengar announced that Rajendra Prasad had been elected unopposed as India's first President. He invited members to sign the Constitution's calligraphic copies. Nehru was the first to do so and members from Madras followed him.
»	After the last member had signed the books, Prasad decided that he, too, must do so. But, rather than signing behind the last signatory, he inserted his name in the small space between the last line of the text and Nehru's signature.
»	Two days later, the Constitution became fully effective. At a ceremony held in Rashtrapathi Bhavan's Durbar Hall, Governor General Rajagopalachari solemnly proclaimed India as a “Sovereign, Democratic Republic”.
»	Through its unprecedented abolition of untouchability, the Constitution serves as a powerful emancipation proclamation ending centuries of caste-based discrimination and social exclusion.
»	The Constitution expressly guarantees every citizen important fundamental rights, which may be subject to only certain restrictions. These rights include the ability to freely speak and express oneself; the freedom of conscience and to profess, practise, and even propagate a religion; basic protections against arbitrary arrest and detention by authorities, and various cultural and educational guarantees.