Jaintia Alloys Pvt. Ltd. and Shri Santosh Jaiswal V. The Union of India and Commissioner, Income Tax, Guwahati and Income Tax Officer, Ward 3(2), Guwahati

WP(C)/5975/2003

AI Insights

The case involves two writ petitions filed by Jaintia Alloys Pvt. Ltd. and Premier Cryogenics Ltd., challenging the notices issued under Section 154 of the Income Tax Act for rectification of assessments for the Assessment Year 2001-2002. The petitions also contested the validity of Section 115-JB of the Income Tax Act, which imposed a tax on industrial units in backward areas, arguing it contradicted the benefits of tax deductions under Section 80-IB. The court heard the arguments and found that the legislative intent behind Section 115-JB was valid and did not infringe upon the deductions promised under Section 80-IB.

• Counselvise Citation: [2009] 140 COUNSELVISE.COM (IT) 697818 (HC-ASSAM NAGALAND MEGHALAYA MANIPUR TRIPURA MIZORAM AND ARUNACHAL PRADESH)
• Appeal Type: Others
• Pronouncement Date: 26-03-2009
• Assessment Year: misc
• Laws Referred To: Income Tax Act of 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: U BHUYAN
• Assessee Lawyers: A K SARAF
• Keywords: Income Tax; Industrial Undertaking; Promissory Estoppel; Rectification of Assessment; Tax Exemption
• Section: 154; 115-JB; 80-IB; 115-JA

Judgement Text

"WP(C) 5975/2003 BEFORE THE HON’BLE MR. JUSTICE RANJAN GOGOI THE HON’BLE MR. JUSTICE C.R. SARMA IN THE GAUHATI HIGH COURT (The High Court of Assam, Nagaland, Meghalaya, Manipur, Tripura, Mizoram and Aru nachal Pradesh ) WRIT PETITION (C) NO. 1890 of 2002 And WRIT PETITION (C) NO. 5975 of 2003 IN WRIT PETITION (C) NO. 1890 of 2002 1. Jaintia Alloys Pvt. Ltd., A Private Company incorporated under the Companies Act, 1956 and having its office at Saikaria Complex, 4th Floor, S.J. Road, Athgaon, Guwahati. 2. Shri Santosh Jaiswal resident of 20, Vrindaban Market, Athgaon, Guwahati - 1, Director of the petitioner No.1 Company. & & & &.PETITIONERS -VERSUS- 1. The Union of India represented by the Secretary to the Government of India, Department of Finance and Taxation, Delhi. 2. Commissioner, Income Tax, Guwahati. 3. Income Tax Officer, Ward 3(2), Guwahati. &..RESPONDENTS IN WRIT PETITION (C) NO. 5975 of 2003 1. Premier Cryogenics Ltd., A Public Limited Company incorporated under the Companies Act 1956 and having its office at Maniram Dewan Road, Chandmari, Guwahati. 2. Shri Abhijit Barooah, Resident of Rajgarh Road, Guwahati-3, Managing Director of the petitioner No.1 Company. & & & &.PETITIONERS -VERSUS- 1. The Union of India represented by the Secretary to the Government of India, Department of Finance and Taxation, Delhi. 2. Commissioner of Income Tax, Guwahati. 3. Assistant Commissioner of Income Tax, Circle-3, Guwahati. &..RESPONDENTS P R E S E N T THE HON’BLE MR. JUSTICE RANJAN GOGOI THE HON’BLE MR. JUSTICE C.R. SARMA For the petitioners : Dr. A.K. Saraf Sr. Advocate. (in WP(C) No.1890/02 & WP(C) 5975/03) For the respondents : Mr. U.Bhuyan Standing Counsel, I.T. Deptt. (in WP(C) No.1890/02 & WP(C) 5975/03) Date of hearing : 25.3.2009 Date of Judgment and : 26.3.2009 Order JUDGMENT AND ORDER (Oral) Both the writ petitions having raised common questions of law we re heard together and are being disposed of by this common order. 2. We have heard Dr. A.K. Saraf, learned senior counsel for the pet itioners in both the cases and Shri U. Bhuyan, learned Standing Counsel, Income Tax Department. 3. The challenge in the writ petitions is against the notices issue d by the respondents under Section 154 of the Income Tax Act for rectification o f the assessments of the petitioners for the Assessment Year 2001-2002. The writ petitioners have also challenged the validity of the provision of Section 115-J B of the Income Tax Act of 1961 in so far as it seeks to impose tax on the indus trial units owned by the petitioners. 4. The challenge made in the writ petition lies within a short comp ass. According to the petitioners, under Section 80-IB of the Act, an industrial undertaking located in a industrially backward State specified in 8th Schedule of the Act are eligible for 100% deduction of the profit and gains derived from such undertakings for five assessment years and, thereafter, to deduction of 30% of the profits and gains for a further period of five years. According to the p etitioners, their units are entitled to the aforesaid deductions. The petitioner s further contend that Section 115-JB of the Act which seeks to impose tax at th e rate of 7.5% of the book profit of an industrial unit like the petitioners whi ch are situated in a notified industrial backward area is illegal and unconstitu tional as it seeks to override the benefits granted under Section 80-IB. In this regard the petitioner also contends that prior to the introduction of Section 1 15-JB of the Act, the provision of Section 115-JA were in force under which, par ticularly Clause-(V) to Explanation to Section 115-JA(2), the amount of profit d erived by an industrial undertaking located in an industrially backward State an d District, as referred to in sub-section (4) and (5) of Section 80-IB, were eli gible to claim deduction of 100% of such profits and gains. 5. A reading of the writ petitions would indicate that the challeng e therein have been structured on the basis that the units of the petitioners ha d been set-up pursuant to what the petitioners comprehends to be a promise conta ined in Section 80-IB of the Act. There are clear and categorical averments made in the writ petitions that had it not been for the aforesaid promise of tax exe mption conferred by Section 80-IB made with a view to foster industrial growth i n the North-East region, the petitioners would not have set-up their industrial units. As the promise contained in Section 80-IB has been sought to be breached by the introduction of Section 115-JB of the Act, the petitioners contend that t he aforesaid provision of the Act in so far as the Units covered by Section 80-I B is concerned, would be unconstitutional and the actions taken on that basis in cluding the impugned notices issued under Section 154 of the Act would be void a nd inoperative in law. 6. Having noticed the pleadings made in the writ petitions and the contentions advanced in support of the challenge made, the Court can only observ e that the contentions on the bass of which the writ petitions have been structu red are wholly unacceptable in law. The doctrine of promissory estoppel cannot b e made applicable to nullify legislative exercise inasmuch as the legislature ca nnot be estopped from exercising its powers so long as such exercise is in confo rmity with the provisions of the VIIth Schedule of the Constitution and the same does not transgress the fundamental rights guaranteed by Part-III of the Consti tution. A reading of the provisions of Sections 80-IB, 115-JA and 115-JB of the Act make it amply clear that initially the benefit of deduction was contemplated by Section 80-IB (4 and 5) and Clause-(V) to Explanation contained in Section 1 15-JA(2). By enacting the provisions of Section 115-JB, the legislature had rest ricted the said benefits by making the industrial units like those of the petiti oners liable to tax at the rate of 7.5% of book profit. 7. The legislature cannot be denied the power to curtail benefits e arlier granted, as has been done in the present case, so long as the subject mat ter of the legislative exercise lies within the domain of the legislative power conferred by the Constitution, which position is admitted in the present writ pe titions. Curtailment of the benefit earlier granted by a legislative act cannot be invalidated on the principles of promissory estoppel. 8. For the aforesaid reasons, we do not find any merit whatsoever i n any of the writ petitions under consideration. Both the writ petitions are, th erefore, dismissed. The interim orders passed therein are vacated. "