TMI Blog2022 (2) TMI 187X X X X Extracts X X X X X X X X Extracts X X X X ..... 022 - Honourable Mr. Justice R. Mahadevan And Honourable Mr. Justice Mohammed Shaffiq For the Appellant : Mr.Karthik Ranganathan JUDGMENT R.MAHADEVAN, J. This tax case appeal has been filed by the appellant / Revenue, against the order of the Income Tax Appellate Tribunal I-2 Delhi Bench, New Delhi, dated 15.09.2017 passed in I.T.A No. 5774/Del/2014 relating to the assessment year 2009-10, raising the following substantial question of law:- Whether the Tribunal is correct in law in allowing stay beyond a period of 365 days in contravention to the provision of IT Act stipulated in Sec.254(2A) read with the provision thereto? 2. Mr.Karthik Ranganathan, learned counsel for the appellant fairly submitted that the Hon'ble Supreme Court in Deputy Commissioner of Incometax v. Pepsi Foods Ltd., [(2021) 126 taxmann.com 69 (SC)] has ruled that any order of stay shall stand vacated after the expiry of the period mentioned in the section 254(2A), only if the delay in disposing of the appeal is attributable to the assessee and the same is applicable to the facts of the present case, in favour of the assessee. 3. For better appreci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reasonable must satisfy two tests: (i) the classification must be founded on intelligible differentia and (ii) the differentia must have a rational relation with the object sought to be achieved by the legislation in question. In this connection it must be borne in mind that the object itself should be lawful. The object itself cannot be discriminatory, for otherwise, for instance, if the object is to discriminate against one section of the minority the discrimination cannot be justified on the ground that there is a reasonable classification because it has rational relation to the object sought to be achieved. [at page 47] Since the object of the third proviso to Section 254(2A) of the Income-tax Act is the automatic vacation of a stay that has been granted on the completion of 365 days, whether or not the assessee is responsible for the delay caused in hearing the appeal, such object being itself discriminatory, in the sense pointed out above, is liable to be struck down as violating Article 14 of the Constitution of India. Also, the said proviso would result in the automatic vacation of a stay upon the expiry of 365 days even if the Appellate Tribunal could not t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ascular Diseases [Sarah Mathew v. Institute of CardioVascular Diseases, (2014) 2 SCC 62 : (2014) 1 SCC (Cri) 721] , this Court held that for the purpose of computing limitation under section 468 of the Code of Criminal Procedure, 1973 the relevant date is the date of filing of the complaint and not the date on which the Magistrate takes cognizance, applying the aforesaid maxim as follows: (SCC pp. 96-97, para 39) 39. As we have already noted in reaching this conclusion, light can be drawn from legal maxims. Legal maxims are referred to in Bharat Kale [Bharat Damodar Kale v. State of A.P., (2003) 8 SCC 559 : 2004 SCC (Cri) 39] , Japani Sahoo [Japani Sahoo v. Chandra Sekhar Mohanty, (2007) 7 SCC 394 : (2007) 3 SCC (Cri) 388] and Vanka Radhamanohari [Vanka Radhamanohari v. Vanka Venkata Reddy, (1993) 3 SCC 4 : 1993 SCC (Cri) 571] . The object of the criminal law is to punish perpetrators of crime. This is in tune with the well-known legal maxim nullum tempus aut locus occurrit regi, which means that a crime never dies. At the same time, it is also the policy of law to assist the vigilant and not the sleepy. This is expressed in the Latin maxim vigilantibus et non dormientibus, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trochem Ltd. v. BIFR, (2016) 4 SCC 1 : (2016) 2 SCC (Civ) 478] . Thus, while leaving the provision otherwise intact, we strike down the word mandatorily as being manifestly arbitrary under Article 14 of the Constitution of India and as being an excessive and unreasonable restriction on the litigant's right to carry on business under Article 19(1)(g) of the Constitution. The effect of this declaration is that ordinarily the time taken in relation to the corporate resolution process of the corporate debtor must be completed within the outer limit of 330 days from the insolvency commencement date, including extensions and the time taken in legal proceedings. However, on the facts of a given case, if it can be shown to the Adjudicating Authority and/or Appellate Tribunal under the Code that only a short period is left for completion of the insolvency resolution process beyond 330 days, and that it would be in the interest of all stakeholders that the corporate debtor be put back on its feet instead of being sent into liquidation and that the time taken in legal proceedings is largely due to factors owing to which the fault cannot be ascribed to the litigants before the Adjudicati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the right of any appellant to file a proper appeal, if the right of appeal is not otherwise lost by lapse of time or for any other valid reason. We are, therefore, of the opinion that the provisions contained in Order 20 Rule 11 of the Code do not in the facts and circumstances of the present case deprive the appellant of his right to file an appeal against the decree. This judgment is distinguishable as it does not deal with the constitutional validity of an appeal provision. 20 . Likewise, the judgment in Janardhana Rao (supra), which held that a right of appeal is neither a natural nor inherent right but has to be regulated in accordance with the law in force at the relevant time, the conditions of the appellate provision having to be strictly fulfilled, is also a judgment which has no reference to the constitutional validity of an appeal provision being assailed. In point of fact, this Court's judgment in Mardia Chemicals (supra) comes nearer home when the constitutional validity of a condition for the exercise of the right of appeal is assailed. This was felicitously put by this Court as follows: 60. The requirement of pre-deposit of any amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us, oppressive, unreasonable, arbitrary and hence violative of Article 14 of the Constitution of India. 21 . The learned ASG then relied upon judgments which indicate that when Article 14 of the Constitution of India is applied to tax legislation, greater freedom in the joints must be allowed by the Court in adjudging the constitutional validity of the same. For this purpose, he relied upon State of M.P. v. Bhopal Sugar Industries Ltd. [1964] 6 SCR 846. In this case, the judgment of this Court held that if the statute discloses a permissible policy of taxation, the Courts will uphold it. If, however, the tax was imposed deliberately with the object of differentiating between persons similarly circumstanced, such tax would be liable to be struck down. 22 . We have already seen how unequals have been treated equally so far as assessees who are responsible for delaying appellate proceedings and those who are not so responsible, resulting in a violation of Article 14 of the Constitution of India. Also, the expression permissible policy of taxation would refer to a policy that is constitutionally permissible. If the policy is itself arbitrary and discriminatory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16(3) of the Act which has to be read in conjunction with Section 24(2) in this case for the present purpose. If the purpose of a particular provision is easily discernible from the whole scheme of the Act which in this case is, to counteract the effect of the transfer of assets so far as computation of income of the assessee is concerned then bearing that purpose in mind, we should find out the intention from the language used by the Legislature and if strict literal construction leads to an absurd result i.e. result not intended to be subserved by the object of the legislation found in the manner indicated before, and if another construction is possible apart from strict literal construction then that construction should be preferred to the strict literal construction. Though equity and taxation are often strangers, attempts should be made that these do not remain always so and if a construction results in equity rather than in injustice, then such construction should be preferred to the literal construction. Furthermore, in the instant case we are dealing with an artificial liability created for counteracting the effect only of attempts by the assessee to reduce tax liability b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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