WHIRLPOOL OF INDIA LTD Vs. UNION OF INDIA

JUDGEMENT

(1.) In this writ petition, the petitioner challenges the retrospectivity of the amendment made to Section 115 JB of the Income Tax Act, 1961 by the Finance (No.2) Act, 2009 by insertion of clause (i) to Explanation 1 with retrospective effect from 01.04.2001.

(2.) The petitioner is a public limited company incorporated under the Companies Act, 1956 and is engaged in the business of manufacture and trading/export of consumer items such as refrigerators, washing machines, etc. It was assessed to income tax on the "book profit" computed in accordance with the provisions of Section 115 JB of the Act. This section was inserted into the Act by the Finance Act, 2000 w.e.f. 01.04.2001. It made special provision for payment of tax by certain companies. The gist of the section, shorn of the details, is that certain companies were liable to pay tax on their "book profit" if the total income computed in accordance with the provisions of the Act was less than 18% of its book profit. In that case, book profit was deemed to be the total income of such companies. These companies were required to prepare their profit and loss account in accordance with the provisions of parts II and III of Schedule VI to the Companies Act, 1956. Explanation 1 to the section permitted certain adjustments to be made to the figure of book profit as shown in the profit and loss account prepared as per the Companies Act.

(3.) After the judgment of the Supreme Court was rendered in favour of the company-assessees, the Finance (No.2) Bill, 2009 was introduced in the Lok Sabha on 06.07.2009 to give effect to the financial proposals of the Central Government for the financial year 2009-10. The Bill proposed an amendment to Section 115 JB as follows: -