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2017 (4) TMI 1036 - HC - Income TaxRestriction on multiplicity of claims of deductions - Validity of Section 80(5) and the fourth proviso to S.10B (1) - whether Section 80(5) inserted by Finance Act, 2009 with effect from 01.04.2003 and the fourth proviso to S.10B (1)inserted by the Finance Act, 2006 w.e.f. 01.04.2006 as arbitrary, discriminatory, unreasonable, and violative of Article 14 of the Constitution of India? Held that:- As far as Section 80A (5) was concerned, it was added to prevent multiplicity of claims of deductions with respect to the same transactions, under the Act. The insertion of the impugned provisions does not curtail any vested rights that the petitioner or assessee had, but only imposes upon them a duty, an obligation to claim deductions in a timely manner and in the return so filed. The right to claim such deductions still vests in the assessees who are eligible for it. The other perspective in such cases is that the impugned provisions are interwoven into the mechanism which Parliament found appropriate to create for the purpose of claiming deductions. In such cases, (unlike in cases where no such benefits are sought) the assessee has to necessarily claim the benefit while filing a return within the time, under Section 139 (1). These provisions are rather like limitation periods, which are statutes of repose (“Limitation is a statute of repose. The fourth proviso to Section 10B (1) is a qualifying proviso and it only seeks to limit the general provision in Section 10B (1) with a further stipulation or condition. As held in State of A.P. v. Nallamilli Ramli Reddi, (2001 (8) TMI 1396 - SUPREME COURT) Article 14 of the Constitution of India permits reasonable classification on fulfillment of two factors: (a) that the classification must be found on intelligible differentia which distinguishes persons grouped together from others who are left out of the group, and (b) that differentia must have a reasonable connection with the object sought to be achieved. As discussed earlier, the objective behind insertion of the impugned provisions was to defeat multiple claims of deductions and to ensure better tax compliance. Thus, the impugned provisions (fourth proviso to Section 10B (1) and Section 80A (5)) so inserted acknowledge the existence of persons owning 100% EOUs and seek to limit their time to claim deductions under the Act. The decision in Sham Bhar Khandige v. Agricultural I.T.O., AIR (1962 (8) TMI 67 - SUPREME COURT], is authority for the proposition that where there are more than one methods of assessing a tax and the Legislature selects one among such many, the Court will not be justified to invalidate the law on the ground that the Legislature should have adopted another method, which in the opinion of the Court, is more reasonable or appropriate, the exception being where the court is convinced that the method adopted is capricious and fanciful. Thus with the addition of the fourth proviso to Section 10B(1) of the Act, the manner of claiming deduction is now time barred under the provisions of the Section 139(1) and relief cannot be granted after expiry of the time mentioned in Section 139(1). Thus, Parliament acted within its power to differentiate between a return of income filed under Section 139(1) and a belated return filed under Section 139(4) for the purposes of deductions claimed Section 10B(1). For the foregoing reasons, the order of the CIT (A) has to be and is upheld; the challenge to the provisions has to fail.
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