N.SHEELA V. THE ASSISTANT COMMISSIONER OF INCOME TAX

WP(C)/21301/2018

AI Insights

The case involves N. Sheela, the proprietrix of Swathi Exports, who contested the denial of income tax deductions under section 80 HHC for the assessment years 2003-04 and 2004-05. Despite the Supreme Court's nullification of the retrospective amendment to section 80 HHC, which affected her deductions, the Assessing Officer treated her subsequent application as a request for correction rather than compliance with the judicial verdict. The High Court of Kerala intervened, emphasizing the need for administrative bodies to adhere to Supreme Court precedents and directed a fresh assessment of her application.

• Counselvise Citation: [2018] 140 COUNSELVISE.COM (IT) 755195 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 27-06-2018
• Assessment Year: misc
• Other Referred Cases: WP(C) No.15227 of 2016, WP(C) No.19601 of 2016
• Laws Referred To: Income Tax Act 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: CHRISTOPHER ABRAHAM
• Assessee Lawyers: N D PREMACHANDRAN
• Keywords: Assessment; Deduction; Income Tax; Judicial precedent; Retrospective amendment
• Section: 80 HHC

Judgement Text

" IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR. JUSTICE DAMA SESHADRI NAIDU WEDNESDAY, THE 27TH DAY OF JUNE 2018 / 6TH ASHADHA, 1940 WP(C).No. 21301 of 2018 PETITIONER(S) : N.SHEELA, PROPRIETRIX, SWATHI EXPORTS, MUNDAKKAL, KOLLAM. BY ADV.SRI.N.D.PREMACHANDRAN RESPONDENT(S): 1. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 1, KOLLAM- 691 001. 2. THE JOINT COMMISSIONER OF INCOME TAX, OFFICE OF THE JOINT COMMISSIONER, KARBALA JUNCTION, KOLLAM- 691 001. BY SRI.CHRISTOPHER ABRAHAM THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 27-06-2018, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ACM WP(C).No. 21301 of 2018 (K) APPENDIX PETITIONER(S)' EXHIBITS : EXT P1 COPY OF THE ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 2003-04 DATED 31.03.06. EXT P2 COPY OF THE ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 2004-05 DATED 27.12.06. EXT P3 A COPY OF THE ORDER OF THE HON'BLE SUPREME COURT. EXT P4 COPY OF THE APPLICATION SUBMITTED BY THE PETITIONER DATED 30/03/16. EXT P5 A COPY OF THE LETTER DATED 22.02.18. EXT P6 A COPY OF THE APPLICATION DATED 08.03.18. EXT P7 COPY OF THE JUDGMENT OF THIS HON'BLE COURT IN WP(C) NO.15227 OF 2016 DATED 15.04.16. EXT P8 COPY OF THE JUDGMENT IN WP(C) NO.19601 OF 2016 DATED 08.06.2016. RESPONDENT(S)' EXHIBITS : NIL //TRUE COPY// PA TO JUDGE ACM DAMA SESHADRI NAIDU, J. =========================== W.P (C) No.21301 of 2018 =========================== Dated this the 27th day of June 2018 JUDGMENT The petitioner, an exporter, deals in cashew kernels. As an assessee, she claimed deduction of income under section 80 HHC of the Income Tax Act 1961. But the Assessing Officer assessed her income for 2003- 2004 and 2004-2005 without providing for any deduction under section 80 HHC of the Act. 2. The petitioner, then, challenged the retrospective amendment of 80 HHC (3) taxation loss (Second Amendment Act 2005). When similar writ petitions had been filed in many other States, the Supreme Court consolidated all the matters and allowed the Gujarat High court to dispose of the writ petitions. 3. The Gujarat High Court nullified the amendment. Later, the judgment taken to Supreme Court, it refused to interfere. 4. Now, the petitioner complains that despite the highest court nullifying the amendment, still the Assessing Officer refuses to allow the petitioner to have the advantage of deduction. So, in this writ petition, she seeks a direction to the Assistant Commissioner of Income W.P (C) No.21301 of 2018 2 Tax to allow her the statutory deduction and refund the tax collected in excess. 5. The petitioner’s counsel submits that, rather than comply with the Supreme Court judgment, the Assessing Officer has treated the petitioner's application as one for correction and rejected it. 6. In contrast, the Standing Counsel for the IT Department has contended that the Assessing Officer has correctly treated the petitioner’s application only as one for correction. He also contends that it is barred by limitation. 7. Heard Sri N.D.Premachandran, the learned counsel for the petitioner and Sri Christopher Abraham, the learned Standing Counsel for the respondent, besides perusing the records. 8. Indeed, once a statutory provision, original or amended, is declared ultra vires the Constitution, the legal fiction comes into play: the nullified provision is said to have never existed. An authority may have decided based on a provision later nullified. An aggrieved person may challenge a provision or proceeding and, eventually, emerge successful. Then, she can approach the authority to correct his proceedings according to the judicial verdict. As the verdict binds the authority, it does not lie in the authority to say that the aggrieved person aims to correct a concluded finding. Such an approach is W.P (C) No.21301 of 2018 3 impermissible. 9. It is the constitutional obligation of every administrative agency to follow the precedents of the Supreme Court and consider the suitor’s claim. It is inescapable if that authority was a party to those judicial proceedings. So I set aside Ext.P5. I also direct the Assistant Commissioner of Income Tax to consider the petitioner's Ext.P4 application, keeping in view the statutory nullification, and pass appropriate orders, after hearing the parties on either side. The authority will conclude the proceedings, preferably, in one month. Sd/- DAMA SESHADRI NAIDU, JUDGE ACM W.P (C) No.21301 of 2018 4 "