Bishnu Krishna Shrestha v. Commissioner Of Income Tax Appeals-Iii, Jaipur , Havinghis Office At Statue Circle, Bhagwan Das Road, Cscheme, Jaipur, Rajasthan

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Civil Writs No. 18828/2017 1. Bishnu Krishna Shrestha, S/o Late Shri Ganesh ChandShrestha , 34, Vasant Marg, Vasant Vihar-1, South WestDelhiShrestha , 34, Vasant Marg, Vasant Vihar-1, South WestDelhi 2. M/s. S.b.l. Private Limited, Formerly Known As M/s S.b.lIndustries Ltd. , Sbl House 2, Commercial Complex,Shrestha Vihar, New Delhi, 11009 Through Gm- FinanceAnd Accounts, Mr. Rajesh Gupta.Industries Ltd. , Sbl House 2, Commercial Complex,Shrestha Vihar, New Delhi, 11009 Through Gm- FinanceAnd Accounts, Mr. Rajesh Gupta. ----Petitioners Versus 1. Commissioner Of Income Tax Appeals-Iii, Jaipur , HavingHis Office At Statue Circle, Bhagwan Das Road, CScheme, Jaipur, Rajasthan 302001His Office At Statue Circle, Bhagwan Das Road, CScheme, Jaipur, Rajasthan 302001 2. Income Tax Officer , Ward 72, Jaipur 3. Income Tax Appellate Tribunal, Jaipur Bench, Jaipur ,Having Its Office At Shivaji Nagar, Jaipur - 302007Having Its Office At Shivaji Nagar, Jaipur - 302007 4. Central Board Of Direct Taxes , Having Its Office At NorthBlock, New Delhi. Through Chairman.Block, New Delhi. Through Chairman. 5. Union Of India, Through The Secretary, Ministry OfFinance, Department Of Revenue , Having His Office AtThe Central Secretariat, North Block, New DelhiFinance, Department Of Revenue , Having His Office AtThe Central Secretariat, North Block, New Delhi ----Respondents For Petitioner(s) : Mr. J.P. Khaitan Senior Counsel with Mr. Agnibash Sengupta, Mr. Gunjan Pathak, Ms. Ishita RawatMr. Agnibash Sengupta, Mr. Gunjan Pathak, Ms. Ishita Rawat For Respondent(s): Mr. R.D. Rastogi ASG with Mr. SameerJain, Mr. C.S. Sinha, Mr. Daksh Pareek, Mr. Arjun SinghJain, Mr. C.S. Sinha, Mr. Daksh Pareek, Mr. Arjun Singh HON'BLE MR. JUSTICE KALPESH SATYENDRA JHAVERI HON'BLE MR. JUSTICE VIJAY KUMAR VYAS 10/07/2018 Order 1.By way of this petition, the petitioners herein havechallenged the provisions of Section 115JB & 80IC of the IncomeTax Act, 1961 to be ultravires inasmuch as the benefits grantedunder Section 80IC cannot be withdrawn by introduction ofprovisions of Section 115JB. 2.Counsel for the petitioners has taken us to the provisions ofSection 80IC & Section 115JB which reads as under:- “80-IC. Special provisions in respect of certainundertakings or enterprises in certain specialcategory States.—(1) Where the gross total incomeof an assessee includes any profits and gains derivedby an undertaking or an enterprise from any businessreferred to in sub-section (2), there shall, inaccordance with and subject to the provisions of thissection, be allowed, in computing the total income ofthe assessee, a deduction from such profits andgains, as specified in sub-section (3). (2) This section applies to any undertaking orenterprise,— (a) which has begun or begins to manufacture orproduce any article or thing, not being any article orthing specified in the Thirteenth Schedule, or whichmanufactures or produces any article or thing, notbeing any article or thing specified in the ThirteenthSchedule and undertakes substantial expansionduring the period beginning— (i)on the 23rd day of December, 2002 and endingbefore the 1st day of April, 2012, in any ExportProcessing Zone or Integrated InfrastructureDevelopment Centre or Industrial Growth Centre orIndustrial Estate or Industrial Park or Software Tech-nology Park or Industrial Area or Theme Park, asnotified by the Board in accordance with the schemeframed and notified by the Central Government inthis regard, in the State of Sikkim; or (a) which has begun or begins to manufacture orproduce any article or thing, not being any article orthing specified in the Thirteenth Schedule, or whichmanufactures or produces any article or thing, notbeing any article or thing specified in the ThirteenthSchedule and undertakes substantial expansionduring the period beginning— (i)on the 23rd day of December, 2002 and endingbefore the 1st day of April, 2012, in any ExportProcessing Zone or Integrated InfrastructureDevelopment Centre or Industrial Growth Centre orIndustrial Estate or Industrial Park or Software Tech-nology Park or Industrial Area or Theme Park, asnotified by the Board in accordance with the schemeframed and notified by the Central Government inthis regard, in the State of Sikkim; or (ii)on the 7th day of January, 2003 and ending beforethe 1st day of April, 2012, in any Export ProcessingZone or Integrated Infrastructure DevelopmentCentre or Industrial Growth Centre or IndustrialEstate or Industrial Park or Software Technology Parkor Industrial Area or Theme Park, as notified by theBoard in accordance with the scheme framed andnotified by the Central Government in this regard, inthe State of Himachal Pradesh or the State ofUttaranchal; or (iii)on the 24th day of December, 1997 and endingbefore the 1st day of April, 2007, in any ExportProcessing Zone or Integrated InfrastructureDevelopment Centre or Industrial Growth Centre orIndustrial Estate or Industrial Park or SoftwareTechno-logy Park or Industrial Area or Theme Park,as notified by the Board in accordance with thescheme framed and notified by the CentralGovernment in this regard, in any of the North-Eastern States; (b)which has begun or begins to manufacture orproduce any article or thing, specified in theFourteenth Schedule or commences any operationspecified in that Schedule, or which manufactures orproduces any article or thing, specified in theFourteenth Schedule or commences any operationspecified in that Schedule and undertakes substantialexpansion during the period beginning— (i)on the 23rd day of December, 2002 and endingbefore the 1st day of April, 2012, in the State ofSikkim; or (ii) on the 7th day of January, 2003 and endingbefore the 1st day of April, 2012, in the State ofHimachal Pradesh or the State of Uttaranchal; or (iii)on the 24th day of December, 1997 and endingbefore the 1st day of April, 2007, in any of the North-Eastern States. (3) The deduction referred to in sub-section (1) shallbe— (i)in the case of any undertaking or enterprisereferred to in sub-clauses (i) and (iii) of clause (a) orsub-clauses (i) and (iii) of clause (b), of sub-section(2), one hundred per cent of such profits and gainsfor ten assessment years commencing with the initialassessment year; (ii)in the case of any undertaking or enterprisereferred to in sub-clause (ii) of clause (a) or sub-clause (ii) of clause (b), of sub-section (2), onehundred per cent of such profits and gains for fiveassessment years commencing with the initialassessment year and thereafter, twenty-five per cent(or thirty per cent where the assessee is a company)of the profits and gains. (4) This section applies to any undertaking orenterprise which fulfils all the following conditions,namely:— (i)it is not formed by splitting up, or the reconstruc-tion, of a business already in existence : Provided that this condition shall not apply inrespect of an undertaking which is formed as a result of the re-establishment, reconstruction or revival bythe assessee of the business of any such undertakingas is referred to in section 33B, in the circumstancesand within the period specified in that section; (ii)it is not formed by the transfer to a new businessof machinery or plant previously used for anypurpose. (4) This section applies to any undertaking orenterprise which fulfils all the following conditions,namely:— (i)it is not formed by splitting up, or the reconstruc-tion, of a business already in existence : Provided that this condition shall not apply inrespect of an undertaking which is formed as a result of the re-establishment, reconstruction or revival bythe assessee of the business of any such undertakingas is referred to in section 33B, in the circumstancesand within the period specified in that section; (ii)it is not formed by the transfer to a new businessof machinery or plant previously used for anypurpose. Explanation.—The provisions of Explanations1and 2to sub-section (3) of section 80-IA shall apply for thepurposes of clause (ii) of this sub-section as theyapply for the purposes of clause (ii) of that sub-section. (5) Notwithstanding anything contained in any otherprovision of this Act, in computing the total income ofthe assessee, no deduction shall be allowed underany other section contained in Chapter VIA or insection 10A or section 10B, in relation to the profitsand gains of the undertaking or enterprise. (6) Notwithstanding anything contained in this Act,no deduction shall be allowed to any undertaking orenterprise under this section, where the total periodof deduction inclusive of the period of deductionunder this section, or under the second proviso tosub-section (4) of section 80-IB or under section10C, as the case may be, exceeds ten assessmentyears. (7) The provisions contained in sub-section (5) andsub-sections (7) to (12) of section 80-IA shall, so faras may be, apply to the eligible undertaking orenterprise under this section. (8) For the purposes of this section,— (i)"Industrial Area" means such areas, which theBoard, may, by notification in the Official Gazette,specify in accordance with the scheme framed andnotified by the Central Government; (ii)"Industrial Estate" means such estates, which theBoard, may, by notification in the Official Gazette,specify in accordance with the scheme framed andnotified by the Central Government; (iii)"Industrial Growth Centre" means such centres,which the Board, may, by notification in the OfficialGazette, specify in accordance with the schemeframed and notified by the Central Government; (iv)"Industrial Park" means such parks, which theBoard, may, by notification in the Official Gazette,specify in accordance with the scheme framed andnotified by the Central Government; (v)"Initial assessment year" means the assessmentyear relevant to the previous year in which theundertaking or the enterprise begins to manufacture or produce articles or things, or commencesoperation or completes substantial expansion; (vi)"Integrated Infrastructure Development Centre"means such centres, which the Board, may, bynotification in the Official Gazette, specify inaccordance with the scheme framed and notified bythe Central Government; (vii)"North-Eastern States" means the States ofArunachal Pradesh, Assam, Manipur, Meghalaya,Mizoram, Nagaland and Tripura; (viii)"Software Technology Park" means any park setup in accordance with the Software Technology ParkScheme notified by the Government of India in theMinistry of Commerce and Industry; (ix)"substantial expansion" means increase in theinvestment in the plant and machinery by at leastfifty per cent of the book value of plant andmachinery (before taking depreciation in any year),as on the first day of the previous year in which thesubstantial expansion is undertaken; (x)"Theme Park" means such parks, which the Board,may, by notification in the Official Gazette, specify inaccordance with the scheme framed and notified bythe Central Government.’. (vii)"North-Eastern States" means the States ofArunachal Pradesh, Assam, Manipur, Meghalaya,Mizoram, Nagaland and Tripura; (viii)"Software Technology Park" means any park setup in accordance with the Software Technology ParkScheme notified by the Government of India in theMinistry of Commerce and Industry; (ix)"substantial expansion" means increase in theinvestment in the plant and machinery by at leastfifty per cent of the book value of plant andmachinery (before taking depreciation in any year),as on the first day of the previous year in which thesubstantial expansion is undertaken; (x)"Theme Park" means such parks, which the Board,may, by notification in the Official Gazette, specify inaccordance with the scheme framed and notified bythe Central Government.’. ‘115JB. Special provision for payment of tax bycertain companies.—(1) Notwithstanding anythingcontained in any other provision of this Act, where inthe case of an assessee, being a company, theincome-tax, payable on the total income as computedunder this Act in respect of any previous yearrelevant to the assessment year commencing on orafter the 1st day of April, 2001, is less than sevenand one-half per cent of its book profit, the taxpayable for the relevant previous year shall bedeemed to be seven and one-half per cent of suchbook profit. (2) Every assessee, being a company, shall, for thepurposes of this section, prepare its profit and lossaccount for the relevant previous year in accordancewith the provisions of Parts II and III of Schedule VIto the Companies Act, 1956 (1 of 1956): Provided that while preparing the annual accountsincluding profit and loss account,— (i) the accounting policies; (ii) the accounting standards adopted for preparingsuch accounts including profit and loss account; (iii) the method and rates adopted for calculating thedepreciation, shall be the same as have been adopted for thepurpose of preparing such accounts including profitand loss account and laid before the company at itsannual general meeting in accordance with theprovisions of section 210 of the Companies Act, 1956(1 of 1956) : Provided further that where the company hasadopted or adopts the financial year under theCompanies Act, 1956 (1 of 1956), which is differentfrom the previous year under this Act,— (i) the accounting policies; (ii) the accounting standards adopted for preparingsuch accounts including profit and loss account; (iii) the method and rates adopted for calculating thedepreciation, shall correspond to the accounting policies,accounting standards and the method and rates forcalculating the depreciation which have been adoptedfor preparing such accounts including profit and lossaccount for such financial year or part of such finan-cial year falling within the relevant previous year. Explanation.—For the purposes of this section, "bookprofit" means the net profit as shown in the profitand loss account for the relevant previous yearprepared under sub-section (2), as increased by— (a) the amount of income-tax paid or payable, andthe provision therefor; or (b) the amounts carried to any reserves, bywhatever name called; or (c) the amount or amounts set aside to provisionsmade for meeting liabilities, other than ascertainedliabilities; or (d) the amount by way of provision for losses ofsubsidiary companies; or (e) the amount or amounts of dividends paid orproposed ; or (f) the amount or amounts of expenditure relatableto any income to which section 10 or section 10A orsection 10B or section 11 or section 12 apply, if any amount referred to in clauses (a) to (f) isdebited to the profit and loss account, and asreduced by (i) the amount withdrawn from any reserves orprovisions if any such amount is credited to the profitand loss account: Provided that, where this section is applicableto an assessee in any previous year (including therelevant previous year), the amount withdrawn from (c) the amount or amounts set aside to provisionsmade for meeting liabilities, other than ascertainedliabilities; or (d) the amount by way of provision for losses ofsubsidiary companies; or (e) the amount or amounts of dividends paid orproposed ; or (f) the amount or amounts of expenditure relatableto any income to which section 10 or section 10A orsection 10B or section 11 or section 12 apply, if any amount referred to in clauses (a) to (f) isdebited to the profit and loss account, and asreduced by (i) the amount withdrawn from any reserves orprovisions if any such amount is credited to the profitand loss account: Provided that, where this section is applicableto an assessee in any previous year (including therelevant previous year), the amount withdrawn from reserves created or provisions made in a previousyear relevant to the assessment year commencing onor after the 1st day of April, 2001 shall not bereduced from the book profit unless the book profit ofsuch year has been increased by those reserves orprovisions (out of which the said amount waswithdrawn) under this Explanation; or (ii) the amount of income to which any of theprovisions of section 10 or section 10A or section 10Bor section 11 or section 12 apply, if any such amountis credited to the profit and loss account; or (iii) the amount of loss brought forward orunabsorbed depreciation, whichever is less as perbooks of account. Explanation .—For the purposes of this clause,the loss shall not include depreciation; or (iv) the amount of profits eligible for deductionunder section 80HHC, computed under clause (a) orclause (b) or clause (c ) of sub-section (3) or sub-section (3A), as the case may be, of that section, andsubject to the conditions specified in that section; or (v) the amount of profits eligible for deductionunder section 80HHE computed under sub-section (3)or sub-section (3A), as the case may be, of thatsection, and subject to the conditions specified inthat section; or (vi) the amount of profits eligible for deductionunder section 80HHF computed under sub-section (3)of that section, and subject to the conditionsspecified in that section; or (vii) the amount of profits of sick industrial companyfor the assessment year commencing on and fromthe assessment year relevant to the previous year inwhich the said company has become a sick industrialcompany under sub-section (1) of section 17 of theSick Industrial Companies (Special Provisions) Act,1985 (1 of 1986) and ending with the assessmentyear during which the entire net worth of suchcompany becomes equal to or exceeds the accumu-lated losses. Explanation.—For the purposes of this clause, "networth" shall have the meaning assigned to it inclause (ga) of sub-section (1) of section 3 of the SickIndustrial Companies (Special Provisions) Act, 1985(1 of 1986). (3) Nothing contained in sub-section (1) shall affectthe determination of the amounts in relation to therelevant previous year to be carried forward to thesubsequent year or years under the provisions ofsub-section (2) of section 32 or sub-section (3) ofsection 32A or clause (ii) of sub-section (1) of section 72 or section 73 or section 74 or sub-section (3) ofsection 74A. (4) Every company to which this section applies, shallfurnish a report in the prescribed form from anaccountant as defined in the Explanation below sub-section (2) of section 288, certifying that the bookprofit has been computed in accordance with theprovisions of this section along with the return ofincome filed under sub-section (1) of section 139 oralong with the return of income furnished in responseto a notice under clause (i) of sub-section (1) ofsection 142. (5) Save as otherwise provided in this section, allother provisions of this Act shall apply to everyassessee, being a company, mentioned in thissection.’. 72 or section 73 or section 74 or sub-section (3) ofsection 74A. (4) Every company to which this section applies, shallfurnish a report in the prescribed form from anaccountant as defined in the Explanation below sub-section (2) of section 288, certifying that the bookprofit has been computed in accordance with theprovisions of this section along with the return ofincome filed under sub-section (1) of section 139 oralong with the return of income furnished in responseto a notice under clause (i) of sub-section (1) ofsection 142. (5) Save as otherwise provided in this section, allother provisions of this Act shall apply to everyassessee, being a company, mentioned in thissection.’. 3.Counsel for the petitioners contended that the Hon’ble PrimeMinister of India on 31[st] March, 2002 announced and promisedthat fiscal incentives will be provided to attract industrialinvestment for special category States including State ofUttarakhand. In this regard the office memorandum dated 7[th]January, 2003 has been filed alongwith petition which reads as under:- “Ministry of Commerce & Industry (Department of Industrial Policy & Promotion) New Delhi, dated 7[th] January, 2003 Office Memorandum Subject : New Industrial Police and otherconcessions for the State of Uttaranchal and theState of Himachal Pradesh The Hon’ble Prime Minister, during the visit toUttarnchal from 29[th] to 31[st] March, 2002, hadinteralia made an announcement that “Fax andCentral Excise Concessions to attract investmentsin the industrial sector will be worked out for theSpecial Category States including Uttaranchal. TheIndustries eligible for such incentives will beenvironment friendly with potential for localemployment generation and use of local resources. In pursuance of the above announcement discusson strategy and action plant for development ofindustries and generation complement in the Statesof Uttaranchal and Himachal Pradesh were heldwith the various related Ministries/agencies on theissue,inter-alia,infrastructure developmentfinancial concessions and to provide easy marketaccess. The new initiatives would provide the required incentives as well as an enablingenvironment for industrial development, improveavailablility of capital and increase market accessto provide a fillip to the private investment in theStateAccording, it has been decided to provide thefollowing package of incentives for the States ofUttaranchal and Himachal Pradesh. 3.1Fiscal incentives to new industrial units and toexisting units on their substantial expansion:New industrial units and existing industrial units ontheir substantial expansion as defined, set up inGrowthCentres,IndustrialInfrastructureDevelopment Centres(IIDCs), industrial Estates,Export Processing Zones,Theme Parks (FoodProcessing Parks, Software Technology Parks, etc.)as stated in Annexure-1 and other areas as notifiedfrom time to time by the Central Government areentitled to (I)100%(hundred per cent) outright excise dutyexemption for a period of 10 years from the date ofcommencement of commercial production. 100% income tax exemption for initial periodof five years and therafter 30 % for companies and25% for other than companies for a further periodof five years for the entire states of Uttaranchaland Himachal Pradesh from the date ofcommencement of commercial production. (ii) All New industries in the notified location wouldbe eligible for-capital investment subsidy @ 15% oftheir investment in plaint & machinery, subject to acelling of Rs. 30 Lakh. The existing units will alsobe entitled to this subsidy on their substantialexpansion, as defined. (iii) Thrust Sector Industries as mentioned inAnnexure-II are entitled to similar concessions asmentioned in para 3(i) &(ii) above in the entireState of Uttaranchal and Himachal Pradesh withoutany are restrictions. 3.2 Development of Industrial Infrastructure (ii) All New industries in the notified location wouldbe eligible for-capital investment subsidy @ 15% oftheir investment in plaint & machinery, subject to acelling of Rs. 30 Lakh. The existing units will alsobe entitled to this subsidy on their substantialexpansion, as defined. (iii) Thrust Sector Industries as mentioned inAnnexure-II are entitled to similar concessions asmentioned in para 3(i) &(ii) above in the entireState of Uttaranchal and Himachal Pradesh withoutany are restrictions. 3.2 Development of Industrial Infrastructure (I)The finding pattern under the Growth CentreScheme currently envisaging in Central Assistanceof Rs. 10 crore per centre is raised to Rs. 15 croreper centre. (ii)The financing pattern of integratedinfrastructure Development Centres (IIDC)between Government of India and SIDBI willchange from 2:3 to 4:1 and the GOI funds wouldbe in the nature of a grant, so as to provide therequired infrastructural support. 3.3 Other incentives: (I) Deendayal Hathkargha Protsahan Yojna andother incentives of Ministry of Textiles : Thefunding pattern between Government of India andboth the States would be changed from 50:50 to 90:10 under this Scheme Ministry of Textiles wouldextend its package of incentives, as notified forNorth-Eastern States, to the States of Uttarnchaland Himachal Pradesh also (ii)Ministry of Food Processing Industries wouldinclude Uttaranchal in difficult areas category. TheState of Himachal pradesh is already included inthe difficult areas category. (iii) Pradhan mantri Rozgar yojana (PMRY) :Ministry of Agro & Rural Industries would providefor States of Himachal Pradesh and Uttaranchalrelaxation under PMRY with respect to Age ( i.e.18-40 years from 18-35 years) and subsidy @ 15%of the project cost subject to a ceilling ofRs.15,000/- per entrepreneur) 3.4Ineligible Industries under the Policy:The list of industries excluded from the purview ofproposed concessions is at Annexure-III In addition, the Valley Notification S. O. No.102(E)dated 1[st] February, 1989(Annexure-IV) as amendedfrom time to time, issued by Ministry ofEnvironment & Forests would continue to operate inthe Doon Valley area and the industries notifiedunder it are excluded from the proposedconcessions, in the State of Uttranchal3.5Nodal Agency :The Nodal Agency for routing thesubsidies/incentives under various schemes underthis policy would be notified separately. 4.Government reserves the right to modify anypart of the policy in the interest of public5.The Ministry of Finance& Company Affairs(Department of Revenue), Ministry of Agro & RuralIndustries, Ministry of Textiles, Ministry of FoodProcessing Industries, Ministry of Small ScaleIndustries etc, are requested to amend act/Rules/Notifications etc and issue necessaryinstructions for giving effect to those decisions.” 4.He has also taken us through the prayers which wereclaimed before the High Court of Uttarakhand at Nainital whichreads as under:- “It is therefore, most respectfully prayedthat this Hon’ble Court may be pleasedtoA Issue a writ order or direction inthe nature of Certiorari quashing theorder/letter dated 5[th] June, 2008 (filed aspart of Annexure-3) passed by therespondent No.3. BDeclareandrestraintherespondents from implementing the 4.He has also taken us through the prayers which wereclaimed before the High Court of Uttarakhand at Nainital whichreads as under:- “It is therefore, most respectfully prayedthat this Hon’ble Court may be pleasedtoA Issue a writ order or direction inthe nature of Certiorari quashing theorder/letter dated 5[th] June, 2008 (filed aspart of Annexure-3) passed by therespondent No.3. BDeclareandrestraintherespondents from implementing the order/letter dated 5[th] June 2008(filed aspart of Annexure-3) passed by therespondent No.3 as the same would beviolative of Article 14& 19 of theConstitution of India. CIssue a writ, order or direction inthe nature of Mandamus directing therespondents not to apply Section 115JBof Income Tax, Act in the case of thepetitioner covered under Section 80-IC ofthe income Tax Act and also coveredunder the promise made by theGovernmentofIndiaon07.01.03(Annexure-4):D.Issue a writ, order or direction inthe nature of Mandamus declaring/holding that Section 80IC of the IncomeTaxActhasoverridingeffectover/bypasses the provisions of Section115B of the Income Tax Act and directingthe respondents to provide benefitsprovided under Section 80IC of theIncome Tax Act.E.Pass such further order or orders asthis Hon’ble Court amy deem fit andproper in the facts and circumstances ofthe case.” 5.The said petition was decided by Uttarakhand High Court on26[th] November, 2010 holding as under:- “The learned counsel for the petitioners, lastly,cited the judgment of the Hon’ble SupremeCourt rendered in the case of R. S. RaghunathVs. State of karnataka and another reported inAIR 1992 SC 81. In that case too, the Hon’bleSupreme Court was concerned with twoenactments. It was held, one of thoseenactments was special and the other was ageneral and the non obstante clause, in thegeneral statute, did not affect the specialstatute. It was contended that since Section80-IC is a special provision, Section 115JBdoes not affect the same. Section 115JB, beinga part of Chapter XIII-B of the Act, is also aspecial provision contained in the later part ofthe statute and, unless the context otherwiserequires, should be deemed t control Section80-IC. Furthermore, as aforesaid, while Section80-IC, as a special provision, allowsdeductions, Section 115JB, as a specialprovision, imposes a tax liability on an assessee, being a company, if its tax liability,assessed after grant of such deductions, it isless than what has been provided therein.” 6.Against which SLP was preferred in the Hon’ble SupremeCourt being SLP (Civil) 6319/2011 which was decided on 6[th] January, 2012. The order of the Supreme Court reads as under:-“In our view, the writ petition ought not tohave been filed before the High Court by thepetitioner and the petitioner ought to have goneby the normal statutory remedy. Be that as itmay, liberty is given to the petitioner to arguethe points raised in this petition before CIT(A).We are informed that appeal has been filedbefore CIT (A) and the same is pending CIT(A)will decide the matter uninfluenced byobservations made by the High Court in theimpugned judgment. Accordingly, the specialleave petition stands disposed of. All contentions on both sides are expresslykept open.” 7.Counsel for the petitioners has also taken us to the main ground of appeal namely that there is gross discrimination and in this regard it has been averred as under:- “The petitioners state that any different viewwould result in invidious discrimination andmanifestlyunjustandunreasonableconsequences, and would render the provisions ofsection 115JB of the Income Tax Act, 1961vulnerable to challenge for being violative ofArticle 14 read with Article 265 and 300A of theConstitution of India. To elaborate- 7.Counsel for the petitioners has also taken us to the main ground of appeal namely that there is gross discrimination and in this regard it has been averred as under:- “The petitioners state that any different viewwould result in invidious discrimination andmanifestlyunjustandunreasonableconsequences, and would render the provisions ofsection 115JB of the Income Tax Act, 1961vulnerable to challenge for being violative ofArticle 14 read with Article 265 and 300A of theConstitution of India. To elaborate- “(a) Section 80-IC is applicable to all categories ofassessees, whether they be individuals, firms,companies, etc. The exemption under section 80-ICis meant to be enjoyed by all assessees. (b)Section 115JB is applicable only to a companyassessee in whose case the income tax payable onits total income is less than 10% of its book profit. (C)Whereas all assessees, including a companyassessee in whose case the income tax payable onthe total income is more than 10% of the bookprofit, would enjoy the exemption under section80-IC and would not be called upon to pay anyincome tax, another company assessee havingsimilar undertaking in Uttarakhand would be called upon to pay tax under section 115JB merelybecause the income tax payable on its total incomeis less than 10% of its book profit. The positionwith respect to company assessees may beillustrated thus-(I)Company ‘A’ having a manufacturing unit inUttarakhand has a profit of Rs. 40 lacs which isexempt under section 80-IC. If section 115JB isapplied in its case, it will have a pay tax @ 10% onbook profit amounting to Rs.4 lacs.“Company ‘B’ having a manufacturing unit inUttarakhand has a profit of Rs. 40lacs from it andanother manufacturing unit elsewhere with a profitof Rs.60 lacs. Rs. 40 lacs is exempt under section80-IC. Normal tax on Rs.60 lacs @ 30% is Rs. 18lacs. Tax on book profit of Rs.100 lacs @ 10%under section 115Jb would be Rs. 10 lacs.Company’B’ would only pay normal tax of Rs. 18lacs on the income of its other unit, namely Rs.60lacs, and will not pay any tax on the profit of Rs.40lacs earned by the Uttarakhand unit. Since normaltax of Rs. 18 lacs would be more than 10% of thebook profit i.e., Rs.10 lacs, Company ‘B’ will nothave to pay any tax under section 115JB even inrespect of the income of the Uttarakhand unit. “ 8.Counsel for the petitioners has contended that in view of the various decisions of the Supreme Court, the provisions which hasbeen introduced by the legislation by amendment of Section115JB is discriminatory of the amount as the persons who aredoing business in the two States were granted different deductionwho are prepared to pay tax on the income which has beenderived by the unit in Uttarakhand and Himachal Pradeshwhereas, in other States there is no deduction as conferred underSection 80IC. 9.Counsel for the petitioners has relied upon followingdecisions of Supreme Court:- 1.Nagpur Improvement Trust and Ors. Vs.Vithal Rao and Ors.(1973) 1 SCC 500 :- 32. It will not be denied that a statute cannot tax some ownersof land leaving untaxed others equally situated. If the owners ofthe land cannot be taxed differently how can some owners beindirectly taxed by way of compulsory acquisition ? It is urged 9.Counsel for the petitioners has relied upon followingdecisions of Supreme Court:- 1.Nagpur Improvement Trust and Ors. Vs.Vithal Rao and Ors.(1973) 1 SCC 500 :- 32. It will not be denied that a statute cannot tax some ownersof land leaving untaxed others equally situated. If the owners ofthe land cannot be taxed differently how can some owners beindirectly taxed by way of compulsory acquisition ? It is urged that if this were the law it will tie the hands of the State inundertaking social reforms. We do not agree. There is nothing inthe Constitution which debars the State from bettering the lot ofmillions of our citizens. For instance there is nothing to bar theState from taxing unearned increment if the object is to denyowners the full benefit of increase of value due to developmentof a town. It seems to us, as we have already said, that toaccede to the contentions of the appellant and the States wouldbe destructive of the protection afforded by Article14 of theConstitution. The States would only have to constitute separateacquiring bodies for each city, or Division or indeed to achieveone special public purpose and lay down different principles ofcompensation. “ 2.Union of India (UOI) and Ors. Vs.A. SanyasiRao and Ors. (1996) 3 SCC 465 :- 22. However, the denial of relief provided by Sections 28 to 43Cto the particular businesses or trades dealt with inSection44ACcalls for a different consideration. Even accordingto Revenue, the provisions (Sections 44ACand206C) are only"machinery provisions". If so, why should the normal reliefsafforded to all assesses be denied to such traders? Prima facie,all assessees similarly placed under the Income Tax Act areentitled to equal treatment. In the matter of granting variousreliefs provided under Sections 28 to 43C, the assesseescarrying on business are similarly placed and should there be alaw, negativing such valuable reliefs to a particular trade orbusiness, it should be shown to have some basis and fair andrational. It has not been shown as to why the persons carryingon business in the particular goods specified in Section 44ACaredenied the reliefs available to others. No plea is put forward byRevenue that these trades are distinct and different even for thegrant of reliefs under Sections 28 to 43C of the Act. The denialof such reliefs to trades specified in Section 44AC, available toother assessees, has no nexus to the object sought to beachieved by the legislature. To this extent it appears to us thatthe non-obstacle clause in Section44AC denying such reliefshas no basis and so unfair and arbitrary and equality oftreatment is denied to such persons, necessitating grant ofappropriate relief (See Royappa v. State of TamilNaduMANU/SC/0380/1973: (1974)ILLJ172SC , Menak Gandhiv. Union of IndiaMANU/SC/0133/1978: [1978]2SCR621 , AjayHasia v. Khalid Mujib Sehravardi.” 3.State of U.P. and Ors. Vs.Deepak Fertilizersand Petrochemical Corporation Ltd (2007) 10SCC 342 :- 13. From a perusal of the notifications in question, it is evidentthat other fertilizers of the NPK category i.e. N.P.K. 12:32:16;N.P.K. 15:15:15; N.P.K. 20:20:0; N.P.K. 14:35:14 are includedin the exemption list, whereas it is a matter of fact that the NPK23:23:0 fertilizer is also a fertilizer of the same category, but itis omitted from the list. According to the notification dated2nd November, 1994, the intention of the State was not to taxthe sale of "potassium phosphatic fertilizers" but when we gointo enquiry of nomenclature of these chemical compounds, wefind that the NPK 23:23:0 is a "nitro-phosphate fertilizer" whichhas no potassium (K) ingredient. The Notifications dated10th April, 1995 and 15th May, 1995 clearly include NPK20:20:0, which is also a nitro-phosphate fertilizer with zero content of potassium (K). This classification made under thenotification dated 10th April, 1995 does not hold good on therational basis and is hence subject to scrutiny. The fact remainsstagnant that the notifications include a fertilizer NPK 20:20:0which is of the same category as that of fertilizer NPK 23:23:0,because both are nitro-phosphate fertilizers. This shows that thestate has not classified the two commodities on a rational basisfor the purpose of imposing tax. This court in the case of TataMotorsLtd. v. StateofMaharashtraandOrs.MANU/SC/0464/2004: AIR2004SC3618 , has held:It is no doubt true that the state has enormous powers oflegislation and in enacting fiscal laws. Great leverage isallowed in the matter of taxation laws because severalfiscal adjustments are to be made by the governmentdepending upon the needs of the revenue and theeconomic circumstances prevailing in the state. Even so anaction taken by the state cannot be irrational and soarbitrary so as to one set of rules for one period andanother set of rules for another period by amending thelaws in such a manner as to withdraw the benefit that hadbeen given resulting in higher burden so far as theassessee is concerned without any reason. Retrospective-withdrawal of the benefit of setoff only for a particularperiod should be justified on some tangible and rationalground, when challenged on the ground ofunconstitutionality. (Underlining is ours). 15. The learned Counsel appearing for the State relyingheavily on the case of Kerala Hotel and RestaurantAssociation and Ors. v. State of Kerala andOrs.MANU/SC/0170/1990: [1990]1SCR516 , contendedthat the State has widest latitude where measures ofeconomic and fiscal regulation are concerned. There is nodispute on this principle of law as enumerated in theaforesaid decision of this Court. However, this same lawmust not be repugnant to the Article14of the Constitution,i.e., it must not violate the right to equality of the peopleof India, and if such repugnancy prevails then, it shallstand void up to the level of such repugnancy underArticle 13(2)of the Constitution of India. Therefore, everylaw has to pass through the test of constitutionality, whichis nothing but a formal name of the test of rationality. Weunderstand that whenever there is to be made any type oflaw for the purpose of levying taxes on a particularcommodity or exempting some other commodity fromtaxation, a sought of classification is to be made. Certainly,this classification cannot be a product of a blind approachby the administrative authorities on which theresponsibility of delegated legislations is vested by theconstitution. In a nutshell, the notifications issued by theTrade Tax Department of the State of U.P., dated10th April, 1995 and 15th May, 1995 lack the sense ofreasonability because it is not able to strike a rationalbalance of classification between the items of the samecategory. As a result of this, NPK 23:23:0 is not givenexemption from taxation where as all other NPK fertilizers of the same category like that of NPK 20:20:0 are providedwith the exemption from taxation. of the same category like that of NPK 20:20:0 are providedwith the exemption from taxation. 16. The reasonableness of this classification must beexamined on the basis, that when the object of the taxingprovision is not to tax the sale of certain chemicalfertilizers included in the list, which clearly points out thatall the fertilizers with the similar compositions must beincluded without excluding any other chemical fertilizerwhich has the same elements and compositions. Thus,there is no reasonable nexus of such classification amongvarious chemical fertilizers of the same class by the state.This court in the case of Ayurveda Pharmacy (supra)held that two items of the same category cannot bediscriminated and where such a distinction is madebetween items falling in the same category it should bedone on a reasonable basis, in order to save such aclassification being in contravention of Article14of theConstitution of India.” 4. Nand Kishore Vs.State of Punjab(1995) 6 SCC 614 :- 19. It would then have to be seen the twin play of thenotion of deemed constitutionality and bar of constructiveres-judicata. Raising the constitutionality of a provision oflaw, as it appears to us, stands on a different footing thanraising a matter on a bare question of law, or mixedquestion of law and fact or on fact. There is a presumptionalways in favour of constitutionality of the law. The onus isheavy on the person challenging it. It is by the dischargeof onus that the presumption of constitutionality can becrossed over. When a person enters a Court for relief anddoes not challenge the constitutionality of the lawgoverning the matters directly and substantially in issue, itonly means and implies that he goes by the presumptionof constitutionality. He cannot on this stance be deemed tohave raised the question of constitutionality and thequestion of constitutionality to have been decided againsthim and such matter to have been directly andsubstantially in issue. The constitutionality of the Rulerelating to compulsory retirement cannot be deemed tohave been questioned and decided against the appellant onthe principles of "might and ought" or it being "directly andsubstantially in issue". It cannot be taken as a rule thatone of the pleas, either by the plaintiff or the defendant, inevery suit or proceeding, must of necessity relate to theconstitutionality of the law on which the cause is foundedor defended in order to obviate the plea of constructiveres-judicata being raised in an eventuality. It cannot alsobe taken as a rule that constitutionality of the law involvedis a matter directly and substantially in issue, and if not raised renders a mute decision in favour of itsconstitutionality barring the plea being raised in asubsequent suit. If there be read such a rule in all civillitigation, it would, to our mind, be against public policyvexing and burdening the courts to go into theconstitutionality of provisions of law in every case. Whenunder the impugned rule, the Government assumed toitself the power to compulsorily retire a permanentgovernment servant after ten years of qualifying service,the court's act of striking that Rule as unconstitutional isthe law which appeared on the scene, not only to breakthe presumption of constitutionality but to declare it void.In a sense the offending provision was never there and inthe other it was henceforth not there. In either event, itwould be within the ambit of the emphasised word inMathura Prasad's case.” 5. Kusum Ingots and Alloys Ltd. Vs. :Union ofIndia (UOI) and Ors. (2004) 6SCC 254 :- 5. Kusum Ingots and Alloys Ltd. Vs. :Union ofIndia (UOI) and Ors. (2004) 6SCC 254 :- 24. Learned counsel for the appellant in support of hisargument would contend that situs of framing law or rulewould give jurisdiction to Delhi High Court and in supportof the said contention relied upon the decisions of thisCourtin Nasiruddinv. StateTransportAppellateTribunalMANU/SC/0026/1975: [1976]1SCR505 and U.P.Rashtriya Chini Mill Adhikari Parishad, Lucknow v. State ofU.P. and Ors.MANU/SC/0422/1995: AIR1995SC2148 . Sofar as the decision of