A S IBRAHIM Vs. UNION OF INDIA

JUDGEMENT

(1.) THE petitioner is a forest contractor. Consequent to his participation in a tender-cum-auction sale of cashew crops for the year 1995-96, he has been awarded with a work order dated October 28, 1995 (annexure "A"), for the areas referred to therein subject to his fulfilling the conditions of the agreement. One of the conditions, which is of a general nature incorporated in all sale notifications issued by the Forest Department, is to the following effect :

(2.) THE present writ petition has been filed by the petitioner with a prayer to restrain the respondents from collecting income-tax at the rate of 15 per cent. as income-tax on the bid amounts payable by them and also the surcharge at the rate of 10 per cent. on the said income-tax, by declaring section 206C of the Income-tax Act, 1961 ("the Act" in short), as constitutionally invalid.

(3.) SECTION 44AC of the Act provides a special provision for computing profits and gains from business in the aforesaid trades by providing for a presumptive income at the rates mentioned in the schedule to the said section. The provisions of section 44AC as well as section 206C as originally introduced were challenged before various High Courts on the grounds of legislative competence as also on the ground of offending Part - III of the Constitution. The Supreme Court, considering the importance of the question involved, under its order dated October 9, 1990, passed in C.M. (Transfer) Petitions Nos. 109-277 of 1990 (Union of India v. Shankar Prasad) made the following observations and directions in relation to all the writ petitions challenging the validity of section 44AC/206C of the Act :