M/S. TAMIL NADU STATE MARKETING CORPORATION LIMITED Vs. UNION OF INDIA
LAWS(SC)-2020-11-34
SUPREME COURT OF INDIA
Decided on November 25,2020

M/S. Tamil Nadu State Marketing Corporation Limited Appellant
VERSUS
UNION OF INDIA Respondents

JUDGEMENT

M.R.SHAH, J. - (1.)Leave granted.
(2.)Feeling aggrieved and dissatisfied with the impugned judgment and order dated 11.03.2020 passed by the High Court of Judicature at Madras in Writ Petition No. 6284 of 2020, by which the High Court has not entertained the said writ petition at this stage and consequently has dismissed the said writ petition without deciding the issue involved in the writ petition on merits, the original writ petitioner has preferred the present appeal.
(3.)That the appellant herein - original writ petitioner filed the aforesaid writ petition before the High Court challenging the validity of Section 40(a)(iib) of the Income Tax Act, 1961. It was the case on behalf of the original writ petitioner that the amount which is deductible in computing the income chargeable in terms of the Income Tax Act is not being allowed under the garb of the aforesaid provision. According to the original writ petitioner, the said provision is discriminatory and violative of Article 14 of the Constitution of India, inasmuch as there are many Central Government undertakings which have not been subjected to any such computation of income tax and are enjoying exemption. At this stage it is required to be noted that a show cause notice was issued by the assessing officer for the Assessment Year 2017-18 stating that the VAT expense levied on the appellant is an exclusive levy by the State Government and therefore squarely covered by Section 40(a)(iib) of the Income Tax Act and therefore VAT expenditure is not allowable as deduction in accordance with Section 40(a)(iib) of the Income Tax Act, while computing the income of the appellant. That the assessing officer finalised the assessment and passed the assessment order for the Assessment Year 2017-18 vide order dated 30.12.2019. 3.1 The High Court vide judgment and order dated 26.02.2020 in Writ Petition No. 538 of 2020 set aside the assessment order dated 30.12.2019 insofar as disallowance in terms of Section 40(a)(iib), on the ground of violation of principles of natural justice. Thus, the matter was pending before the assessing officer. The appellant thereafter filed the present writ petition No. 6284 of 2020 before the High Court challenging the vires of Section 40(a)(iib) of the Income Tax Act being ultra vires Articles 14, 19 and 265 of the Constitution of India. By the impugned judgment and order, as observed hereinabove, the High Court has dismissed the said writ petition without deciding the validity of Section 40(a)(iib) of the Income Tax Act by observing that the issue of raising a challenge to the vires of the provision at this stage need not be entertained as the matter is still sub judice before the Income Tax Authority, even though it is open to the aggrieved party to question the same at the appropriate moment. 3.2 Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the High Court in dismissing the said writ petition, without deciding the vires of Section 40(a)(iib)of the Income Tax Act on merits, the original writ petitioner - M/s Tamil Nadu State Marketing Corporation Limited has preferred the present appeal.
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