MAHADEVA UPENDRA SINAI ETC. ETC. versus UNION OF INDIA & ORS.

MAHADEVA UPENDRA SINAI ETC. ETC. versus UNION OF INDIA & ORS.

The 2nd Proviso to Clause (3) of the 1970 Order is ultra vires the Central Government's powers under Clause (7) of Regulation II of 1963, as it attempts to change the fundamental scheme of the Indian Income-tax Act by substituting actual depreciation with notional depreciation, thereby disadvantaging assessees in the former Portuguese territories and introducing difficulties rather than resolving them.

Parties
Petitioner: Mahadev A Upendra Sinai etc. etc.; Respondent: Union of India & Ors.
Jurisdiction
India
Judgment Date
07 November 1974
Procedural Posture
Writ Petition Under Article 32 / Supreme Court Final Judgment
Outcome
Petitions allowed (by majority); 2nd Proviso to Clause (3) of the 1970 Order declared ultra vires and unenforceable. (Alagiriswami J., dissenting, would have dismissed the petitions).
Legal Topics
Ultra Vires, Taxation Laws (extension to Union Territories), Income Tax, Removal of Difficulties Orders, Executive Powers, Retrospective Effect, Depreciation Allowance, Written Down Value
Tax Law Constitutional Law Ultra Vires Taxation Laws (extension to Union Territories) Income Tax Removal of Difficulties Orders Executive Powers Retrospective Effect +2 more

Case Brief

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Parties

Mahadev A Upendra Sinai etc. etc.

Petitioner

Union of India & Ors.

Respondent

Procedural Posture

Writ Petition Under Article 32 / Supreme Court Final Judgment

Legal Issues

  1. 1 Validity of 2nd Proviso to Clause (3) of the Taxation Laws (Extension to Union Territories) (Removal of Difficulties) Order, 1970
  2. 2 Whether the said proviso is ultra vires the powers vested under Clause (7) of Regulation II of 1963
  3. 3 Whether depreciation 'notionally allowed' can replace 'actually allowed' for computation under the Indian Income-tax Act in the erstwhile Portuguese territories

Ratio Decidendi

The 2nd Proviso to Clause (3) of the 1970 Order is ultra vires the Central Government's powers under Clause (7) of Regulation II of 1963, as it attempts to change the fundamental scheme of the Indian Income-tax Act by substituting actual depreciation with notional depreciation, thereby disadvantaging assessees in the former Portuguese territories and introducing difficulties rather than resolving them.

Court Disposition

Petitions allowed (by majority); 2nd Proviso to Clause (3) of the 1970 Order declared ultra vires and unenforceable. (Alagiriswami J., dissenting, would have dismissed the petitions).

Orders

  • The 2nd Proviso to Clause (3) of the Taxation Laws (Extension to Union Territories) (Removal of Difficulties) Order, 1970 is ultra vires the powers of the Central Government under Clause (7) of Regulation II of 1963.
  • Revenue authorities are not entitled to levy tax on the basis of depreciation allowance computed in accordance with the impugned proviso.