AERAO LEATHER PRIVATE LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) The challenge in this writ petition is to the validity of Section 28(iiib) and Section 2(24)(vb) of the Income-tax Act with retrospective effect by the Finance Act of 1990.

(2.) Briefly stated the facts are that the petitioner is an exporter and pursuant to the policy of the Government of India it received Cash Compensatory Support (hereinafter referred to as CCS). The present writ petition pertains to the assessment year 1987-88. The petitioner had filed a return declaring 'Nil' income and it claimed that CCS was not taxable. The Deputy Commissioner of Income-tax, however, on 13th October, 1989 held that this receipt was taxable and assessed the petitioner at a net income of Rs. 1,53,33,927. Further appeal to the Commissioner of Income-tax (Appeals) was also unsuccessful and the same was dismissed on 16th March, 1990.

(3.) On 23rd May, 1990, the Assessing Officer demanded tax and interest from the petitioner. The total amount demanded was Rs. 43,53,369, inclusive of interest. It seems that the petitioner had filed an appeal to the Income-tax Appellate Tribunal but vide order dated 22nd June, 1990 the application for stay of realisation of the tax was refused. On 25th June, 1990 the Assessing Officer rejected the petitioner's application for waiver of interest under Section 139(8.) and Section 215 of the Act. Thereafter on 25th June, 1990 an application under Section 264 had been filed before the Commissioner of Income-tax for waiver of interest.