UNION OF INDIA Vs. WARREN TEA LTD

JUDGEMENT

(1.) The respondents had filed WP No. 1232 (W) of 1997 challenging the vires of Circular No, 600, dt. 23rd May, 1991, issued by the Central Board of Direct Taxes (CBDT) so far as it was inconsistent with and repugnant to Rule 8 of the IT Rules, 1962 (Rules) r/w Section 2(1A) of the IT Act, 1961 (Act) in relation to deduction under Section 80HHC of the Act. By a judgment and order dt. 24th Sept., 1998, the learned Single Judge was pleased to hold that the interpretation of CBDT in construing the provisions of Section 80HHC and Rule 8 through Circular No. 600, dt. 23rd May, 1991, was incorrect and accordingly a declaration was issued that the said circular was not attracted in the case of the petitioners.

(2.) The Department had preferred APO No. 792 of 1999 and the State of West Bengal, which was not a party to the proceeding, sought leave to and preferred APOT No. 229 of 1999 against the said judgment. During the pendency of these appeals, Sub-section (4B) was inserted in Section 80HHC through Finance Act, 1999, w.e.f. 1st of April, 1992. Mr. P.K. Mullick, learned senior counsel, appearing on behalf of the Department-appellant in APO No, 792 of 1999 had pointed out that the appeal has since become infructuous by reason of the amendment inserting sub- Section (4B) in Section 80HHC. This contention is supported by Mr. Anindya Mitra, learned senior counsel, appearing with Mr. Dipak Shorn on behalf of the appellant State in APOT No, 229 of 1999. However, Dr. Debiprosad Pal, learned senior counsel appearing with Mr, Pranab Kumar Pal and Mr. Chandranath Mukherjee opposed the said contention and pointed out that the amendment has not affected the effect of the decision of the learned Single Judge under appeal. He had also sought for leave to challenge the vires of Sub-section (4B) in relation to its retrospectivity. Upon leave being granted by this Court, the writ petition was amended and the vires of the amendment was allowed to be argued in these appeals though objected to by Mr. S.K. Kapoor, learned Additional Solicitor General, appearing with Mr. Mullick,

(3.) The question seems to be very interesting. This has been argued ably by the respective counsel for the respective parties. We seem to be benefited by the erudite arguments and counter-arguments spread over to various branches of the Act, citing various decisions by Dr. Pal and Mr. Kapoor, respectively. We, however, are not called upon to answer ail the arguments made. We shall confine ourselves only to the principal issues relevant for the purpose of determining the question put forth before us. Since vires of the amended Sub-section (4B) has been challenged and the question of ultra vires having been opposed on the ground that the amendment was clarificatory in nature and, therefore, retrospectivity of the amendment is intra vires, in our view, the appeal has not become infructuous and requires determination, which we attempt to do as hereafter.