MS P J NIRMAN PRIVATE LIMITED THROUGH ITS DIRECTOR NIRMAL SINGH V. UNION OF INDIA THROUGH ITS SECRETARY MINISTRY OF FINANCE

WPC/6583/2018

AI Insights

The case involved M/s. P.J. Nirman Private Limited challenging the constitutionality and application of Section 43CA of the Income Tax Act, 1961, as amended by the Finance Act, 2013. The petitioner argued that this section, which pertains to the full value of consideration for the transfer of assets other than capital assets, was ultra-vires the Constitution. The petitioner contended that the section led to double taxation and discriminatory treatment based on varying state laws regarding stamp duty valuation. Additionally, it was argued that the section improperly substituted 'total income' with 'the valuation assessed by any Authority of a State Government for the purpose of payment of stamp duty'. The petition was ultimately withdrawn by the petitioner to seek redress from a different forum.

• Counselvise Citation: [2020] 140 COUNSELVISE.COM (IT) 685829 (HC-JHARKHAND)
• Appeal Type: Others
• Pronouncement Date: 21-07-2020
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961, Finance Act, 2013, Constitution of India
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: RAJIV SINHA; RAHUL LAMBA
• Assessee Lawyers: DEEPAK SINHA
• Keywords: Discrimination; Double taxation; Notional income; Stamp Duty; Ultra Vires; Valuation
• Section: 43CA; 56(2)(vii)(b)

Judgement Text

"IN THE HIGH COURT OF JHARKHAND AT RANCHI W. P. (T) No. 6583 of 2018 M/s. P.J.Nirman Private Limited, District-East Singhbhum… Petitioner Versus 1. Union of India 2. Principal Commissioner of Income Tax, Patna 3. Commissioner of Income Tax, Ranchi …. Respondents --- CORAM: Hon’ble Mr. Justice Aparesh Kumar Singh Hon’ble Mrs. Justice Anubha Rawat Choudhary Through Video Conferencing --- For the Appellant : Mr. Deepak Kumar Sinha, Advocate For the Respondent-U.O.I : Mr. Rajiv Sinha, ASGI For the Respondent-Income Tax Dept. : Mr. Rahul Lamba, Advocate ---- 06/21.07.2020 Mr. Deepak Kumar Sinha, learned counsel for the petitioner, Mr. Rajiv Sinha, learned ASGI for the Union of India and Mr. Rahul Lamba, learned counsel for the Income Tax Department are present through Video Conferencing. Petitioner has approached this Court with the following prayer: “ a) For a declaration that Section 43CA of the Income Tax Act, 1961 inserted vide Finance Act, 2013 w.e.f 01.04.2014 by which the Special provision for full value of consideration for transfer of assets other than capital assets has been provided is ultra-vires the Constitution of India as the Income Tax Act, 1961 is a law made under Entry 82, Schedule VII- List I of the Constitution of India and Section 4 and 5 of the said Act contemplates levy or tax upon all income and by no stretch of imagination the meaning an scope of ‘total income’ be substituted by ‘the Valuation assessed by any Authority of a State Government for the purpose of payment of stamp duty’. b) For a declaration that the effect of application of Section 43CA of the Act and Section 56(2)(vii)(b) of the Income Tax Act, 1961 substituted by Finance Act, 2013 w.e.f 01.04.2014 is that in cases where the consideration involved in a transaction of purchase or sale of land or building is less than the stamp duty value, then, the excess of such value over the actual consideration would be treated as income both in the hands of the transferor as per section 43CA of the Act as well as the transferee as per section 56(2)(vii)(b)(ii), resulting into double taxation and is an attempt to tax the notional income. c) For a further declaration that there is discrimination in application of Section 43CA and Section 56(2)(vii)(b)(ii) of the Act as it is known fact that the levy of stamp duty is a state subject and each state in the country provides for such a levy where the determination of value on which the levy is imposed is based on different principle method and basis and 2. there is no uniform method applied on a universal basis in the whole country and therefore the computation on income in relation to transfer or receipt of land or building based on the stamp duty value de hors the differences in manner, method and basis of such levy in different states discloses a discriminatory treatment. d) For a further declaration that the value of stamp duty paid on the value of purchase or sale of land building cannot be treated to be the assessable value for the purpose of imposition of tax as the value of such land and building may differs on account of location, area, nature of property and other related reasons. e) For a declaration that Section 43CA of the Act does not provide the rate of tax or manner of liability but in effect substitutes the ‘valuation of the Stamp Valuation Authority’ with the ‘total income’ of the assesse while assessing the liability of the income tax which amounts to alteration of the subject matter of the Income Tax Act itself. f) For a further declaration that the subject matter of the Act is income other than agricultural income and the relevant Finance Act by introducing section 43CA seeks to change/alter/substitute the subject matter of the Act as what is brought under the net of income-tax is not all income received or deemed to received or accrues or arises or is deemed to accrue or arise to the assesse but the valuation of the Stamp Valuation Authority, which evidently is beyond the provisions of the Constitution of India. g) For any other appropriate writ(s), order(s), direction(s) as your Lordships may deem fit and proper under the facts and circumstances of this case.” Learned counsel for the petitioner Mr. Deepak Kumar Sinha at the outset seeks permission to withdraw this writ petition in order to move before the appropriate Forum. Learned counsel for the Income Tax Department does not object to the prayer. Accordingly, the instant petition is dismissed as withdrawn. (Aparesh Kumar Singh, J.) (Anubha Rawat Choudhary, J.) jk "