LAWS(KER)-2014-10-98

R. SURENDRAN Vs. UNION OF INDIA

Decided On October 31, 2014
R. Surendran Appellant
V/S
UNION OF INDIA Respondents

JUDGEMENT

(1.) The petitioner, who is an advocate by profession and an assessee under the Income-tax Act, 1961, challenges exhibit P10 notification dated April 21, 2009, by which the Income-tax Rules, 1962, were amended to provide for accelerated depreciation at the rate of 50 per cent, for new commercial vehicles that were acquired on or after the 1st day of January, 2009, but before the 1st day of October, 2009, and put to use before the first day of October, 2009, for the purposes of business or profession. The petitioner, having purchased a new motor car on December 11, 2009, found that he was not entitled to the accelerated depreciation envisaged under exhibit P10 notification in view of the fact that he had not purchased the car during the period envisaged for accelerated depreciation under exhibit P10 notification. In the writ petition, the notification is impugned on the ground that, in differentiating between those assessees who had acquired commercial vehicles during the period from April 1, 2009, to September 30, 2009, and those who had purchased motor vehicles between October 1, 2009, and March 31, 2010, the notification had virtually differentiated between assessees who were similarly situated, for the purposes of assessment during the assessment year 2010-11. It is the specific contention of the petitioner that by effecting a classification between assessees in a particular financial year, which classification did not have any rational basis that had any nexus to the object sought to be achieved by the legislation, the fundamental right of the petitioner, against discriminatory treatment, under article 14 of the Constitution of India had been infringed. The petitioner also impugns the notification on the ground that the amendment to the Rules, that had the effect of granting the benefit of enhanced depreciation in the middle of a financial year to only certain assessees, militated against the settled position in law that the law, as applicable on the first day of the financial year, had to apply to all those who were similarly placed, during the said year. A statement has been filed on behalf of the respondents wherein it is pointed out that the amendment to the Rules, through exhibits P9 and P10 notifications, were necessitated pursuant to the announcement by the Union Government of additional measures for stimulating the economy for minimising the impact of the global financial crisis on the Indian economy. Exhibit R2(A) press release is produced, along with the statement, to show that as a measure designed to counter the recessionary trend, it was announced by the Union Government that accelerated depreciation of 50 per cent, will be provided for commercial vehicles which are purchased on or after January 1, 2009, but before March 31, 2009, which date was subsequently extended to September 30, 2009, vide exhibit P10 notification. It is clarified that the benefit of higher depreciation of 50 per cent, was extended to the acquisition of new commercial vehicles during the period specified in view of the fact that the Government of India had opined that the automobile industry still needed support during the period when the recessionary trend was noticed. The Explanatory Memoranda in respect of exhibits P9 and P10 notifications, which were laid on the table of the Lok Sabha and Rajya Sabha, are also produced as exhibit R2(B) and exhibit R2(C) along with the statement of the respondents. It is the specific contention of the respondents, therefore, that in view of the fact that the benefit of accelerated depreciation, in respect of commercial vehicles purchased and put to use during the prescribed period, was in furtherance of the policy decision of the Government taking into account the recessionary trend in the economy, there was a valid basis for the extension of the benefit of accelerated depreciation only in respect of vehicles purchased and put to use during the period fixed by the Union Government for providing the stimulus to the economy. It is contented that when there was a rational basis for the classification of vehicles for the purposes of grant of accelerated depreciation benefit, it was not open to the petitioner to impugn the notifications as offending the provisions of article 14 of the Constitution of India.

(2.) I have heard Sri K.P. Pradeep, the learned counsel appearing on behalf of the petitioner as also Sri P.K.R. Menon, the learned senior standing counsel appearing on behalf of the respondents.

(3.) On a consideration of the facts and circumstances of the case as also the submissions made across the Bar, I note that the challenge in the writ petition is against exhibit P10 notification that had the effect of amending the Income-tax Rules, 1962, to provide for an enhanced rate of depreciation of 50 per cent, as against the regular rate of depreciation of 15 per cent applicable to commercial vehicles, for such vehicles as were purchased and put to use between April 1, 2009, and September 30, 2009, in the financial year 2009-10, relevant to assessment year 2010-11. The contention of the petitioner is that by limiting the benefit of accelerated depreciation to such vehicles as were purchased and put to use between April 1, 2009, and September 30, 2009, those assessees who had purchased similar vehicles and put them to use between October 1, 2009, and March 31, 2010, in the same financial year, were discriminated against and, hence, the petitioner, who belonged to the latter category of assessees, was aggrieved by the breach of his rights, against discriminatory treatment, envisaged under article 14 of the Constitution of India. Learned counsel for the petitioner would place reliance on the decisions reported in Kunnathat Thathunni Moopil Nair v. State of Kerala, 1961 AIR(SC) 552 and Shashikant Laxman Kale v. Union of India, 1990 4 SCC 366 in support of the proposition that the classification that was brought about by the Legislature had to be rational in that it had to be based on some qualities or characteristics which are to be found in all the persons grouped together and not in others who are left out and further, those qualities or characteristics had to have a reasonable relation to the object of the legislation. It is his contention that, in the instant case, there was no basis for a classification among the two categories of assessees for the purposes of grant of accelerated depreciation. He would also place reliance on the decision of the Supreme Court in Mysore Minerals Ltd. v. CIT, 1999 AIR(SC) 3185 to contend that the allowance for depreciation is granted to replace the value of an asset to the extent it has depreciated during the period of accounting relevant to the assessment year and as the value has, to that extent, been lost, the corresponding allowance for depreciation takes place. It is emphasised that the concept of depreciation takes into account the depreciation of the value of an asset during the period of accounting, which, under the Income-tax Act, is a whole year. It is his submission, therefore, that in the instant case, the benefit of accelerated depreciation ought to have been extended to all assessees for the whole year instead of confining it to only a specified period during the financial year. Lastly, counsel for the petitioner would also refer to the decision of the Supreme Court in Varkisons Engineers v. State of Kerala, 2009 16 SCC 120 for the proposition that the imposition of a different tariff in the middle of the assessment year could not be validly sustained and the provisions of the statute as on the 1st day of the financial year had to be applicable to assessments for the said year.