Tuesday, 12 March 2024

Payment of Admitted Tax Due before Filing an Appeal before the Joint Commissioner (Appeals) or the Commissioner (Appeals) [Section 249(4)]

Section 249(4) provides that appeal shall not be admitted unless—

(a) where a return of income has been filed by the assessee:

Ø the assessee has paid the tax due on the income returned by him on or before the filing of appeal [Mandatory]

(b) where no return of income has been filed by the assessee:

Ø the assessee has paid an amount equal to the amount of advance tax which was payable by him.

In case assessee has not filed its return, the Joint Commissioner (Appeals) or the Commissioner (Appeals) on an application made by the assessee, may, for any good or sufficient reason to be recorded in writing, exempt him from payment of tax.

 

Text of Section 249(4)

[1][(4) No appeal under this Chapter shall be admitted unless at the time of filing of the appeal, —

(a) where a return has been filed by the assessee, the assessee has paid the tax due on the income returned by him; or

(b) where no return has been filed by the assessee, the assessee has paid an amount equal to the amount of advance tax which was payable by him:

PROVIDED that, [2][in a case falling under clause (b) and] on an application made by the appellant in this behalf, the [3][***]  [4][Joint Commissioner (Appeals) or the] Commissioner (Appeals) may, for any good and sufficient reason to be recorded in writing, exempt him from the operation of the provisions of [5][that clause.”]]

 

KEY NOTE

1.   Inserted by the Taxation Laws (Amendment) Act, 1975, with effect from 01.10.1975.

2.   Inserted by the Direct Tax Laws (Amendment) Act, 1989, with effect from 01.04.1989.

3.   Words “Deputy Commissioner (Appeals) or, as the case may be, the” omitted by the Finance (No. 2) Act, 1998, with effect from 01.10.1998. Earlier “Deputy Commissioner (Appeals)” was substituted for “Appellate Assistant Commissioner” by the Direct Tax Laws (Amendment) Act, 1987, with effect from 01.04.1988 and “or, as the case may be, the” was inserted by the Finance (No. 2) Act, 1977, with effect from 10.07.1978.

4.   Inserted by the Finance Act, 2023, with effect from 01.04.2023.

5.   Substituted for “this sub-section” by the Direct Tax Laws (Amendment) Act, 1989, with effect from 01.04.1989.

 

What is contemplated by clause (a) of sub-section (4) of section 249 [Section 249(4)(a)]

What is contemplated by clause (a) of sub-section (4) of section 249 is that when there is an undisputed liability, the appeal filed by the assessee in respect of the disputed liability cannot be admitted unless the assessee pays the admitted liability. The object of clause (a) of sub-section (4) of section 249 is not to entertain the appeal where the assessee fails to pay the undisputed tax liability.

Joint Commissioner (Appeals) or the Commissioner (Appeals) empowered to grant exemption from the payment of tax equal to the amount of advance tax [Proviso to Section 249(4)]

On going through the prescription of proviso to sub-section (4) of section 249 it transpires that the Joint Commissioner (Appeals) or the Commissioner (Appeals) has been empowered to grant exemption from the payment of tax equal to the amount of advance tax which was payable by the assessee in a situation where no return is filed by the assessee. It implies that where the assessee did not file any return for the relevant year and still the assessment was made, the assessee can file first appeal even without the payment of tax provided he satisfies the Joint Commissioner (Appeals) or the Commissioner (Appeals) for the reasons of non-payment of tax. The power of the first appellate authority as per the directive of proviso is not to accept the delayed payment of such tax, but to exempt the payment of tax altogether. The operation of proviso is restricted only to clause (b ) and is not applicable to clause (a) which deals with a situation in which return was filed by the assessee. Thus in such a situation where the return was originally filed by the assessee, the Joint Commissioner (Appeals) or the Commissioner (Appeals) has no power to grant exemption from the making of payment of tax due on the income returned. The requirement of payment of tax in a case covered under clause (a) is to be examined at the time of admission of first appeal.

 

Undisputed tax to be paid before filing appeal [Section 249(4)]

Before filing an appeal, undisputed tax, if any, remaining unpaid should first be paid. An appeal is not as a matter of fact admissible if any tax remains unpaid.

Disqualification to file an appeal

(a) where a return has been filed by the assessee, the assessee has not paid the tax due on the income returned by him;

(b) where no return has been filed by the assessee, the assessee has not paid an amount equal to the amount of advance tax which was payable by him.

 

As per section 249(4) unless and until, assessee has paid income tax due on income returned by him, no appeal under Chapter XX will be admitted and statute does not give any discretion to appellate authority to entertain an appeal or to extend time for paying self assessment tax, except in respect of cases falling under section 249(4)(b) in terms of proviso under said section

The appeal filed by the assessee against certain addition was not considered on merits and was dismissed by the Commissioner (Appeals) on ground that assessee had not paid self assessment tax which assessee had admitted before appellate authority.

On appeal, the assessee submitted that Commissioner (Appeals) ought to have granted time to it to pay self assessment tax. However, when appeal was heard, additional grounds were raised by assessee regarding wrong computation of income. The Tribunal upon considering grounds of appeal raised by assessee at first instance as well as additional grounds, rejected same by holding that self assessment tax was admittedly not paid and there was no satisfactory evidence to substantiate assessee's plea that assessee had wrongly computed income. On appeal.

Held : Section 249(4) provides that, unless and until, assessee has paid income tax due on income returned by him, no appeal under Chapter XX will be admitted and the Statute does not give any discretion to appellate authority to entertain an appeal nor extend time for paying self assessment tax, except in respect of cases falling under clause (b) of section 249(4) in terms of proviso under the said section.

Though such a ground was raised in the appeal memorandum filed before the Tribunal, the assessee appears to have been more interested in canvassing the additional ground with regard to offering a sum of Rs. 82.37 crores relating to inbuilt revenue which according to the assessee was an inadvertent income. The Tribunal had rightly held that there was no satisfactory evidence placed before it to substantiate assessee's plea that they wrongly computed admitted income. Thus, no substantial question of law owner for consideration. [In favour of revenue] (Related Assessment year : 2012-13) – [Pesco Beam Environmental Solutions (P) Ltd. v. DCIT (2020) 275 Taxman 211 : 119 taxmann.com 123 (Mad.)]

 

In terms of section 249(4)(a), stipulation as to payment of tax ante filing of first appeal is only directory and not mandatory and, therefore, where appeal is filed without payment of tax but subsequently required amount of tax is paid, appeal shall be admitted on making payment of tax and taken up for hearing on merits

The Karnataka High Court in the case of CIT v. K. Satish Kumar Singh (2012) 209 Taxman 502 : 19 taxmann.com 154 (Karn.) and in the case of PCIT v. Abdul Zahid M (2017) 394 ITR 727 : 88 taxmann.com 592 (Karn.) took the view that if admitted tax on returned income is paid then the appeal has to be admitted for adjudication by the Commissioner (Appeals) on merits. The Hon’ble Mumbai ITAT in the case of Bhumiraj Constructions v. Addl. CIT (2011) 131 ITD 406 : 11 taxmann.com 333 (ITAT Mumbai) had an occasion to deal with a case where an appeal by the Assessee was dismissed for non-payment of tax due on the income declared in the return of income. The Tribunal firstly observed that there is a distinction between a mandatory and directory provision. If the non-compliance with the requirement of law exposes the assessee to the penal provision, then it is mandatory, but if no penal consequences follow on non-fulfilment of the requirement, then usually it is a directory provision. Omission to comply with a mandatory requirement renders the action void, whereas omission to do the directory requirement makes it only defective or irregular. On the removal of such defect, the irregularity stands removed and the status of validity is attached.

The Tribunal examined the objective behind section 249(4) and observed that the same is to ensure the payment of tax on income returned before the admission of appeal. If such payment after the filing of appeal but before it is taken up for disposal validates the defective appeal, then there is no reason as to why the doors of justice be closed on a poor assessee who could manage to make the payment of tax at a later date. The stipulation as to the payment of tax ante the filing of first appeal is only directory and not mandatory. Whereas the payment of such tax is mandatory but the requirement of paying such tax before filing appeal is only directory.

When the defect in the appeal, being the non-payment of such tax, is removed, the earlier defective appeal becomes valid. It implies that all the consequences which follow on the removal of defect are that the validity is attached to the appeal from the date when it was originally filed and not when the defect is removed. The Tribunal ultimately held that if tax due on income returned is paid even after disposal of the appeal by the Commissioner (Appeals), if such payment is made the defect in the appeal due to non-compliance of a directory requirement of paying such tax before the filing of the appeal, stood removed. Ex-consequential the appeal should have been revived by the first appellate authority.

In the present case, the taxes due on returned income is claimed to has been paid. Therefore the appeal by the Assessee against the order of assessment should be admitted and adjudicated by the Commissioner (Appeals) on merits. In the decision referred to above, it has been held that if the admitted taxes are paid at a later point of time, then the appeal of the assessee should be considered as properly instituted and should be heard and decided by the Commissioner (Appeals) on merits. In view of aforesaid, the order of the Commissioner (Appeals) is set aside and the Commissioner (Appeals) is directed to decide the appeal on merits, subject to verification of payment of taxes (excluding interest) due on the returned income. In the result, the appeal by the assessee is allowed for statistical purposes. [In favour of assessee/Matter remanded] (Related Assessment year : 2006-07) - [Annapoorneshwari Investment v. DCIT(C) [2019] 177 ITD 717 : 107 taxmann.com 417 (ITAT Bangalore)]

Admitted tax as per return of income – Requirement of paying admitted tax before filing appeal is directory – When defect is removed, earlier defective appeal becomes valid. Accordingly, the matter was remanded to Commissioner (Appeals)

For relevant year, Assessing Officer completed assessment under section 143(3) making certain additions to assessee’s income. Assessee filed appeal before Commissioner (Appeals). Commissioner (Appeals) noticed that assessee had not paid taxes on returned income and therefore in view of provisions of section 249(4)(a), appeal filed by assessee was dismissed in limine as unadmitted. In terms of sub-section (4) of section 249, payment of tax is mandatory but requirement of paying such tax before filing appeal is only directory. Tribunal held that payment of admitted tax as per return of income before filing of an appeal is directory, therefore, when defect in appeal, being non-payment of such tax, is removed, earlier defective appeal becomes valid. Accordingly, the matter was remanded to Commissioner (Appeals) for disposal of appeal on merits, subject to verification of payment of taxes due by assessee on returned income. [In favour of assessee/Matter remanded] (Related Assessment Year : 2013-14) – [Sushila Devi Malu (Smt.) v. ITO (2019) 174 ITD 627 (ITAT Bangalore)]

 

Revised return filed not in compliance with requirements of section 139(5) was non-est and same could not constitute a return contemplated in section 249(4)(a)

The assessee was an individual in whose case a search action under section 132(1) was carried out. For the assessment year under consideration, assessee had not filed its regular return under section 139(1) and it was only after a notice under section 153A was issued, assessee filed return of income declaring the total income at Rs. 1.55 crores. Subsequently, the assessee filed a revised return declaring an income of Rs. 6.32 crores. In the assessment finalized under section 143(3) read with section 153A the Assessing Officer determind the total income at Rs. 7.23 crores after making certain additions/disallowances on account of low withdrawals, unexplained credits and rent from property, etc.

The assessee challenged the additions in appeal before the Commissioner (Appeals). The Commissioner (Appeals) referred to the provisions of section249(4), which prescribed that no appeal would be admitted unless at the time of filing of appeal, assessee had paid the tax due on the income returned by him. The Commissioner (Appeals) referred to clause (a) of section 249(4) of the Act and noted that the assessee had not paid the tax on the income declared in the revised return and, therefore, the appeal was dismissed as unadmitted. On Second appeal:

Where assessee filed revised return not in compliance with requirements of section 139(5), same was non-est and could not constitute a return contemplated in section 249(4)(a). [In favour of assessee] (Related Assessment years : 2008-09 and 2009-10) – [Mohammed Farooque Sarang v. DCIT(C) [2017] 164 ITD 573 : 81 taxmann.com 374 (ITAT Mumbai)]

The revenue pointed out that at the time of filing of appeal before the Commissioner (Appeals), admittedly the tax on the income returned was not paid. Under these circumstances, the rigors of section249(4)(a) clearly come into operation and the appeal before the Commissioner (Appeals) deserved to be treated as unadmitted. It is also axiomatic that so far as the situation contemplated in clause (a) of section249(4) of the Act is concerned, the Commissioner (Appeals) is not vested with any power to waive payment of the admitted tax and entertain the appeal in contrast to the situation contemplated in clause (b) to section 249(4) of the Act. However, the defense put up by the assessee is that the non-payment of admitted tax on returned income is a curable defect and once such a defect has been cured, there is enough justification for the appeal being admitted by the Commissioner (Appeals).

The co-ordinate Bench in the case of Smt. Banu Begum, v. DCIT (2012) 22 taxmann.com 235 (ITAT Hyderabad) has observed that non-payment of admitted tax is a defect which can be cured by payment of tax. In fact, the Karnataka High Court in the case of CIT v. K. Satish Kumar Singh (2012) 209 Taxman 502 : 19 taxmann.com 154 (Karn.) opined that even after the dismissal of appeal by the Commissioner (Appeals) for non-payment of admitted tax, if assessee pays the admitted tax, even then the Commissioner (Appeals) may recall the order dismissing the appeal and consider the appeal on its merits. In view of the aforesaid proposition, in the present case too, since the assessee has claimed that it has paid tax on the returned income before passing of order by the Commissioner (Appeals), it will be in the fitness of things that the matter is remitted back to the file of Commissioner (Appeals) to be considered afresh on merits. In the result, assessee's appeal is allowed for statistical purposes. – [Mohammed Farooque Sarang v. DCIT(C) [2017] 164 ITD 573 : 81 taxmann.com 374 (ITAT Mumbai)]

Upholds seized cash with Revenue as tax payment for Commissioner (Appeals) admission under section 249(4) - Commissioner (Appeals) denied hearing of appeal on plea that assessee had failed to pay due tax on returned income and had defaulted in terms of provisions of section 249(4)(a), since amount that had been seized by revenue from assessee was far in excess of amount of tax payable on returned income, assessee could not have been denied hearing

Authorised officer conducted a search under section 132 upon assessee and seized an amount of Rs. 4.60 lakhs from his possession. Thereafter assessee filed return of income showing due tax payable on returned income as Rs. 1.61 lakhs. He stated that amount seized during search at Rs. 4.60 lakhs should be treated as paid. Assessing Officer processed under section 143(1) return of income filed by assessee and issued intimation creating a demand of Rs. 2.15 lakhs. He did not adjust amount of tax payable on returned income against amount that had been seized from assessee. Commissioner (Appeals) denied hearing of appeal on plea that assessee had failed to pay due tax on returned income and had defaulted in terms of provisions of section 249(4)(a). In instant case, amount of Rs. 4.60 lakh which was available with revenue was far in excess of amount of tax payable in terms of returned income. Assessee had duly complied with requirements of section 249(4)(a) and he could not have been denied hearing. [In favour of assessee] (Related Assessment year : 1996-97) – [CIT v. Pramod Kumar Dang (2014) 361 ITR 137 : 265 CTR 1 : 42 taxmann.com 301 : [TS-58-HC-2014(DEL)] (Del.)]

 

Defect arising due to non-compliance of section 249(4) is a curable one

Commissioner (Appeals) having noticed that assessee had not paid admitted tax, invoked provisions of sub-section (4) of section 249 and dismissed appeal in limine as non-maintainable. Later on, assessee filed a petition before Commissioner (Appeals) informing that admitted tax for block period had been paid and prayed for restoration of appeal and for disposing of same on merits. Commissioner (Appeals) rejected petition holding that there is no provision under Act to restore appeal which was dismissed for violation of provisions of section 249(4). Defect arising due to non-compliance of section 249(4) is a curable one. Since assessee was not having sufficient funds at relevant time for compliance of section 249(4), there existed sufficient reasons for not filing a valid appeal before Commissioner (Appeals) and, therefore, matter required to be restored for adjudication on merits. [In favour of assessee] (Block period 1996-97 to 2002-03) – [T. Kishan v. ACIT(C) (2013) 56 SOT 114 : (2012) 23 taxmann.com 383 (ITAT Hyderabad)]

 

If the appeal is filed without the payment of tax on returned income but subsequently the required amount of tax is paid, the appeal shall be admitted on payment of tax and appeal has to be decided on merit

Objective behind section 249(4) is to ensure payment of tax on income returned before admission of appeal and if such payment after filing of appeal but before it is taken up for disposal validates defective appeal, then there is no reason as to why doors of justice be closed on a poor assessee who, could manage to make payment of tax at a later date. Whereas payment of such tax is mandatory but requirement of paying such tax before filing appeal is only directory. When defect in appeal, being non-payment of such tax, is removed, earlier defective appeal becomes valid. Once one calls an appeal as valid, it implicit that it is not time barred and it implies that all consequences which follow on removal of defect are that validity is attached to appeal from date when it was originally filed and not when defect is removed. (Related Assessment year : 2006-07) - [Bhumiraj Constructions v. Addl. CIT (2011) 135 TTJ 357 : 131 ITD 406 : 49 DTR 195 : 11 taxmann.com 333 (ITAT Mumbai)]

Each heading in Chapter XX deals with a different subject-matter and one cannot read words in Chapter XX-A into words used in Chapter XX-B - Therefore, provision of section 249(4)(a), which insists on assessee satisfying a condition of paying admitted tax as condition precedent to his filing of appeal, cannot be read into section 253(1)(b) as it stood prior to 01.10.1998

Chapter XX deals with ‘Appeals and revisions’. Chapter XX is divided into headings ‘A’ to ‘F’. Section 246 enumerates a list of orders of the Assessing Officer against which appeals(s) would lie. In that list of orders, an appeal to the Tribunal under section 253(1) is not mentioned. This is a very important indicia to show that each heading in Chapter XX deals with a different subject-matter and one cannot read the words in Chapter XX-A into the words used in Chapter XX-B. Chapter XX-A deals with appeals to the Deputy Commissioner and the Commissioner (Appeals), whereas Chapter XX-B deals with appeals to the Tribunal. Similarly, reference to the High Court lies under Chapter XX-C. Thus, each heading is a standalone item and, therefore, one cannot read the provision of section 249(4)(a ) into section 253(1)(b). If the argument of the department was to be accepted, then, in that event, no appeal or reference could lie even to the High Court without complying with the provisions of section 249(4)(a). This cannot be the scheme of Chapter XX. Section 253(1)(b) refers to an assessee filing an appeal to the Tribunal against an order passed by an Assessing Officer under section 158BC(c). Clause (b) came to be inserted into section 253(1) by the Finance Act, 1995 and that too with effect from 01.07.1995. The very concept of the block assessment came to be inserted in the Act vide the Finance Act, 1995, with effect from 01.07.1995, whereas the words ‘this Chapter’ in section 249(4) came to be inserted vide Taxation Laws (Amendment) Act, 1975, with effect from 01.10.1975. This is one more reason to confine the expression ‘this Chapter’ in section 249(4) to Chapter XX-A without it being extended to section 253(1)(b) which is there in Chapter XX-B. Further, under the scheme of Chapter XX, no appeal under section 249(4)(a) in Chapter XX-A was admissible without the assessee having paid the admitted tax due on the income returned by him. Once section 249(4)(a) is treated as a mandatory condition for filing an appeal before the Commissioner (Appeals) and once that condition stands satisfied at the time of filing an appeal to the Commissioner (Appeals), then there is no necessity for the assessee to once again pay the admitted tax due as a condition precedent to his filing the appeal before the Appellate Tribunal under section 253(1)(b). Lastly, one must keep in mind the principle that the doctrine of incorporation cannot be invoked by implication. A provision which insists on the assessee satisfying a condition of paying the admitted tax as a condition precedent to his filing of the appeal under section 253(1)(b) is a disenabling provision. Such disenabling provisions must be clearly spelt out by the Legislature while enacting the Statute. The Courts have to be careful in reading into the Act such disenabling provisions, as that would tantamount to judicial legislation which the Courts must eschew. It is for the Parliament to specifically say that no appeal shall be filed or admitted or would be maintainable without the assessee(s) paying the admitted tax due. That has been done only in the case of an appeal under section 249(4)(a). One cannot read such a disenabling provision into section 253(1)(b). Therefore, there was no merit in the revenue’s appeal and the same was to be dismissed. [In favour of assessee] (Block period 1986-87 to 14.09.1995) –[CIT, Indore v. Pawan Kumar Laddha (2010) 324 ITR 324 : 231 CTR 219 : 190 Taxman 169 (SC)]

“Scope of Tax” -  Expression ‘Tax’ does not include interest for purpose of section 249(4)

On the literal reading of section 249(4), the language used by the legislature is has paid tax dues. As per the definition in section 2(43), tax does not include interest which is independently referred to in section 2(28A). - When the legislature itself has used two different expressions and defined them separately, then whilst considering the language of a section, the court is bound to look at the definitions in the legislation for the purpose of interpreting and construing the expressions and words under the Act. - The object being to avoid conflict and have a harmonious interpretation, unless the context otherwise requires. (4). Therefore, the expression “tax” does not include interest for the purpose of section 249(4). - [CIT v. Manoj Kumar Beriwal (2009) 316 ITR 218 : 217 CTR 407 (Bom.)]

Tax includes only “Admitted/Undisputed” Tax, Section 249(4) not applicable when liability to pay tax was disputed

Where petitioner assessee disputed liability on ground that he could not have been assessed as HUF as on date of filing return and on date of assessment there was no HUF in existence, right guaranteed to petitioner to prefer an appeal could not be taken away under section 249(4) by taking view that petitioner had failed to pay tax due on income shown in return filed.

What is contemplated by clause (a) of sub-section (4) of section 249 is that when there is an undisputed liability, the appeal filed by the assessee in respect of the disputed liability cannot be admitted unless the assessee pays the admitted liability. The object of clause (a) of sub-section (4) of section 249 is not to entertain the appeal where the assessee fails to pay the undisputed tax liability. In the instant case, it was the case of the petitioner that the intimations issued were wholly illegal and on that basis the petitioner sought for rectification of the intimations issued by filing applications under section 154 and since the first respondent failed to allow the applications filed by the petitioner or rectify the intimations issued, the petitioner had preferred appeals against the intimations issued and the orders passed under section 154. Therefore, it was clear that though the petitioner had filed the returns, the petitioner had disputed his liability to be assessed as HUF and pay the tax liability imposed on him. Under these circumstances, the view taken by the second respondent that the appeals filed by the petitioner could not be admitted since the petitioner had failed to pay the tax due on income shown by him in the return filed by him was erroneous in law. Sub-section (4) of section 249 has to be construed in the backdrop of the right to appeal provided to an assessee under section 246 . Under these circumstances, while interpreting sub-section (4) of section 249 the court will have to keep in mind the object of sub-section (4) of section 249 and also the right to prefer an appeal guaranteed to an assessee. In that view of the matter, sub-section (4) has to be liberally construed to serve the object of the right provided to an assessee, and not with a view to deprive the right provided to an assessee to prefer an appeal. When the very liability was disputed by the petitioner on the ground that the petitioner could not have been assessed as an HUF as on the date of filing of the return and on the date of the assessment there was no HUF in existence, the right guaranteed to the petitioner to prefer an appeal could not be deprived by taking the view that the petitioner had failed to pay the tax due on the income shown in the return filed. Therefore, the order passed by the second respondent was liable to be quashed. (Related Assessment years : 1991-92 and 1992-93) - [T. Govindappa Shetty & Others v. ITO (1998) 231 ITR 892 (Karn.)]

Assessee’s appeal was held not to be maintainable where assessee failed to pay tax due on returned income by the date of filing appeal for the CIT(A) had not the power to condone that lapse in view of applicability of section 249(4) (a) on facts of assessee’s case

A search of the assessee’s premises was conducted on 24.09.1987. The assessee filed his return of income for the assessment year 1988-89 on 21.03.1991. The Assessing Officer completed the assessment under section 143 on 31.12.1991 by making certain additions. The assessee filed appeal before Commissioner on 30.11.1992, objecting to the various additions. The Commissioner (Appeals) noted that the assessee had not paid the tax due on returned income at the time of filing the appeal and that under section 249(4)(a) as amended with effect from 01.04.1989, the appeal could not be admitted because of that lapse. The assessee contended that assessee’s lapse in not paying the tax on the returned income was bona fide and it should be condoned. The Commissioner (Appeals), rejecting the assessee’s contention, declined to entertain the appeal, holding that with effect from 01.04.1989, the Commissioner (Appeals) had no power to condone that lapse.

On second appeal, the assessee contended that the Commissioner (Appeals) ought to have condoned the lapse on the ground that assessment proceedings could be presumed to have started with the search conducted on 24.09.1987, i.e., much before the amended provisions of section 249(4)(a) came into effect on 01.04.1989.

Held : There was no dispute that the assessee had not paid tax on the returned income before filing of the appeal on 03.02.1992, nor any advance tax or tax on account of self-assessment had been paid by the assessee. As such the provisions of section 249(4)(a) were clearly attracted in the case of the assessee. Being a creature of the Act, the Commissioner (Appeals) has to function within the parameters of the statute and as such has no inherent powers in the matter of entertaining an appeal. He does not have power to transgress the limits placed by the statute. Under the circumstance the Commissioner (Appeals) was justified in not entertaining the appeal filed by the assessee. In the instant case, the return of income was filed on 21.03.1991 and the assessment proceedings started with the issue of notice under section 143(2) thereafter, that is much after 01.04.1989, when the amended provisions of section 249(4)(a) came into effect. The assessee contention that the assessment proceedings started with the search of the assessee’s premises on 24.09.1987 could not be accepted because such an interpretation would produce a manifestly absurd and unjust result which could never have been intended by the Legislature. The Commissioner (Appeals) was, therefore, justified in not entertaining this appeal. [In favour of revenue] - [Khushmanlal Hiralal v. CIT (1996) 57 ITD 531 : 56 TTJ 62 (ITAT Ahmedabad)]

 


 

 

Tuesday, 5 March 2024

Application of Income - Important points to remember

§  Assessing Officer to verify the genuineness of the application of income

§  Every trust or institution should apply at least 85% of its income during the year for charitable or religious purposes for which it is registered.

§  If a trust or institution has applied any income for any purpose other than the purpose for which the trust or institution is registered, it shall be a specified violation and a reference is required to be sent to the PCIT/CIT for the cancellation of the registration of the Trust/Institution as per provisions of section 12AB(4) or the 15th proviso to section 10(23C).

Application of income means

Application of income means utilisation of income for the charitable or religious purposes as enumerated in the instrument of the trust.

In other words, Application of income means “expenditure solely attributable to charitable or religious activities

Entire application has necessarily be towards the objects of the trust or institution for charitable or religious activities in India.

Effect : If not applied any income for any purpose other than the purpose for which the trust or institution is registered:

If a trust or institution has applied any income for any purpose other than the purpose for which the trust or institution is registered, it shall be a specified violation and a reference is required to be sent to the PCIT/CIT for the cancellation of the registration of the Trust/Institution as per provisions of section 12AB(4) or the 15th proviso to section 10(23C).

Points to remember

[1] Expenses should be genuine and is supported by appropriate documentary evidence

Assessing Officer may examine whether the claim of application on account of different expenses is genuine and is supported by appropriate documentary evidence.

Here, the focus of Assessing Officer  should be on the identification of cases of diversion of funds through bogus or inflated expenses

Ø  Otherwise, the entire exemption may be denied and a reference is required to be sent to the PCIT/CIT for specified violence

For example, in some cases, the company to whom bogus payments have been made is owned by one of the specified persons.

[2]  Application claimed should be towards an object specifically stated in the deed of registration

The provisions of section 12AB stipulate the following conditions for registration under section  12A of the Income Tax Act, 1961:-

(i)               The objects of the society should be of charitable in nature;

(ii)             The activities of the Trust should be genuine

Whether the assessee incurred expenses on such activity or not can be verified by the assessing authority and

if it is found that the assessee is not carrying any charitable activity and the expenditure is incurred for promotion of business of other entity,

the Assessing Officer is empowered to disallow the expenditure and request for cancellation of registration.

[3]  Concession does not form part of the income

The Assessing Officer may examine whether any fee concession, etc, has been shown both in the income and application side of the Income & Expenditure account.

It will result in an allowance of an extra 15% application on such concession since such concession does not form part of the income.

[4]   Application shall be allowed only when the sum is actually paid by the trust or institution

[i.e. Only on ‘payment’ basis]

[Explanation 3 to clause (23) of section 10 and Explanation to section 11]

         Method of accounting may be cash or mercantile but application on payment basis only

§  With effect from Assessment year 2022-23, any sum payable by any trust or specified institutions as application of income shall be considered as an application of income in the year in which such sum is actually paid by it irrespective of the method of accounting regularly employed by it.

§  Thereby incomes may be recognized on an accrual basis whereas the application shall be on a cash basis.

§  And in short, the trusts/institutions may ensure that expenses pertaining to/accrued in the current year be paid latest by 31 March of the relevant year for such expense to be treated as application of income in the current year

[5]   Expenses should be out of Current year’s Income

As per the proviso to these Explanations, the sum paid shall not be allowed as an application during the previous year, if the same has been claimed as an application during any previous year prior to the current previous year.

[6]   Acquisition of an Asset - Double deduction of depreciation and cost of acquisition not available [Section 11(6)]

Income of a trust used for acquisition of a capital asset is deemed as application of income.

WHERE COST OF ACQUISITION CLAIMED AS APPLICATION OF INCOME, NO DEDUCTION BY WAY OF DEPRECIATION IN COMPUTING INCOME 

Depreciation claim not allowed if cost of acquisition of asset was already claimed as application of income [Section 11(6)]

With effect from assessment year 2015-16, once the capital expenditure has been treated as application of income, the trust is not eligible to claim depreciation on such capital expenditure, in the current year or in the subsequent years.

Therefore, the Assessing Officer needs to verify that if capital expenditure has been claimed by the trust or institution as application, depreciation thereon shall not be claimed in any subsequent year with respect to the same asset.

[7]   Amount spend out of Loans or borrowed funds will not be treated as application -   Only Repayment of loan will be treated as APPLICATION (because Loans or borrowed funds is not a income)

 

       Application from proceeds of loans or borrowings shall not be considered as application for charitable or religious purposes [For the purposes of third proviso of clause (23C) and clauses (a) and (b) of Section 11].

§  Only Repayment of loan will be treated as application of income [Explanation 4(ii) to Section 11(1)]

When loan or borrowing is repaid from the income of the previous year, such repayment shall be allowed as application in the previous year in which it is repaid to the extent of such repayment. [From Assessment year 2022-23]

Assessing Officer to Examine whether any capital asset was acquired out of borrowed funds

The Assessing Officer may examine whether any capital asset was acquired out of borrowed funds and the cost of acquisition as well as the repayment of loan has been claimed as application.

Both the claims may also be made by the trust or institution in different years. This will result in a double deduction of the same application.

[8]  Donating to another trust/ institution with similar objectives and claimed them as applications, other than by way of corpus

§  If the trust or institution Donating to another trust/ institution with similar objectives and claimed them as applications, other than by way of corpus

§  Corpus donation to other charitable trust  out of current income is  not allowed  as application ,and   donation to other trust out of accumulated fund is violation .

Assessing Officer should verify :

§  Assessing Officer should verify whether the donee trust is also registered as a charitable institution with Income Tax Department and;

§  Donation is not in the nature of the corpus donation

[9]  Application of Income outside India under section 11(1)(c)

Income Tax Act does not provide exemption on application of income outside India otherwise valid approval from CBDT for application outside India is available with the trust or institution’

Assessing Officer may examine :

(i)      Whether a valid approval from CBDT for application outside India is available with the trust or institution and

(ii)     Whether the same is valid for the previous year under consideration or not. Such notifications are issued based on the following consideration :

(a)     Whether the trust or institution is allowed to carry out activities outside India as per the deed of registration.

(b)     Whether the activities carried out outside India are in the nature of charitable activities as defined in section 2(15).

(c)   Whether the activities carried out outside India tend to promote International Welfare in which India is interested.

[10]   Payment of taxes (including Income Tax)

The expenditure incurred by way of payment of tax out of the current year’s income has to be considered as application for charitable purposes.

This is because payment has been made to preserve the corpus, the existence whereof is essential for the trust itself.

[11]  Expenditure of Earlier year - No set off or deduction or allowance of any excess application, of any of the year preceding the previous year shall be allowed [Explanation 2 to twentieth proviso to Section 10(23C) & Explanation 5 to Section 11]

W.e.f. Assessment year 2022-23 - Excess application in an earlier year may not be set off against next year’s income

Where a trust or institution expends or applied more than its income, it can only mean that such excess amount is from corpus or future income.

§  The intention whether it is from corpus or future income should be manifest from the accounts.

§  If such deficit is debited to corpus, it should ordinarily mean that the corpus is used or applied for the purpose of the trust so that there can be no objection to such use.

§  On the other hand, if the deficit is merely carried forward, it would be clear, that the intention is to absorb such deficit against future income.

[12] Application for charitable or religious purpose out of corpus fund will not be treated as application

§  As corpus donation is not income, hence no application allowed

(a)         applies such corpus only for the purpose for which the voluntary contribution was made;

(b)         does not apply such corpus for making contribution or donation to any person;

(c)         maintains such corpus as separately identifiable

(d)         invests or deposits such corpus in the forms and modes specified under sub-section (5) of section 11.

If violation than it will be deemed to income

          NOTE

If amount spend from corpus fund in one year , and next year trust deposit back the amount on corpus fund out of regular income, it will be treated as income in that year .

  

Tuesday, 13 February 2024

Deductions in respect of profits and gains from housing projects [Section 80IBA]

Section 80-IBA provides for 100% deduction in respect of the profits and gains derived from developing and building certain housing projects subject to specified conditions.

Section 80-IBA of the Income Tax Act, 1961 as amendment by the Finance Act, 2016. This section is on similar lines to the erstwhile section 80-IB (10).

Text of Section 80-IBA

[1][80-IBA. Deductions in respect of profits and gains from housing projects.

 (1) Where the gross total income of an assessee includes any profits and gains derived from the business of developing and building housing projects, there shall, subject to the provisions of this section, be allowed, a deduction of an amount equal to hundred per cent of the profits and gains derived from such business.

[2][(1A) Where the gross total income of an assessee includes any profits and gains derived from the business of developing and building rental housing project, there shall be allowed a deduction of an amount equal to hundred per cent of the profits and gains derived from such business.]

(2) For the purposes of sub-section (1), a housing project shall be a project which fulfils the following conditions, namely: -

(a)   the project is approved by the competent authority after the 1st day of June, 2016, but on or before the 31st day of March, [3][2022];

(b)   the project is completed within a period of [4][five] years from the date of approval by the competent authority:

            PROVIDED that, -

(i)    where the approval in respect of a housing project is obtained more than once, the project shall be deemed to have been approved on the date on which the building plan of such housing project was first approved by the competent authority; and

(ii)   the project shall be deemed to have been completed when a certificate of completion of project as a whole is obtained in writing from the competent authority;

(c)   the [5][carpet] area of the shops and other commercial establishments included in the housing project does not exceed three per cent of the aggregate [6][carpet] area;

(d)   the project is on a plot of land measuring not less than -

(i)    one thousand square metres, where the project is located within the cities of Chennai, Delhi, Kolkata or Mumbai [7][***]; or

(ii)   two thousand square metres, where the project is located in any other place;

(e)   the project is the only housing project on the plot of land as specified in clause (d);

(f)    the [8][carpet] area of the residential unit comprised in the housing project does not exceed—

(i)    thirty square metres, where the project is located within the cities of Chennai, Delhi, Kolkata or Mumbai [9][***]; or

(ii)   sixty square metres, where the project is located in any other place;

(g)   where a residential unit in the housing project is allotted to an individual, no other residential unit in the housing project shall be allotted to the individual or the spouse or the minor children of such individual;

(h)   the project utilises -

(i)    not less than ninety per cent of the floor area ratio permissible in respect of the plot of land under the rules to be made by the Central Government or the State Government or the local authority, as the case may be, where the project is located within the cities of Chennai, Delhi, Kolkata or Mumbai [10][***], or

(ii)   not less than eighty per cent of such floor area ratio where such project is located in any place other than the place referred to in sub-clause (i); and

(i)    the assessee maintains separate books of account in respect of the housing project:

[11][PROVIDED that for the projects approved on or after the 1st day of September, 2019, the provisions of this sub-section shall have effect as if for clauses (d) to (i), the following clauses had been substituted, namely: -

(d)   the project is on a plot of land measuring not less than -

(i)    one thousand square metres, where such project is located within the metropolitan cities of Bengaluru, Chennai, Delhi National Capital Region (limited to Delhi, Noida, Greater Noida, Ghaziabad, Gurugram, Faridabad), Hyderabad, Kolkata and Mumbai (whole of Mumbai Metropolitan Region); or

(ii)   two thousand square metres, where such project is located in any other place;

(e)   the project is the only housing project on the plot of land as specified in clause (d);

(f)    the carpet area of the residential unit comprised in the housing project does not exceed -

(i)    sixty square metres, where such project is located within the metropolitan cities of Bengaluru, Chennai, Delhi National Capital Region (limited to Delhi, Noida, Greater Noida, Ghaziabad, Gurugram, Faridabad), Hyderabad, Kolkata and Mumbai (whole of Mumbai Metropolitan Region); or

(ii)   ninety square metres, where such project is located in any other place;

(g)   the stamp duty value of a residential unit in the housing project does not exceed forty-five lakh rupees;

(h)   where a residential unit in the housing project is allotted to an individual, no other residential unit in the housing project shall be allotted to the individual or the spouse or the minor children of such individual;

(i)    the project utilises -

(I)   not less than ninety per cent of the floor area ratio permissible in respect of the plot of land under the rules to be made by the Central Government or the State Government or the local authority, as the case may be, where such project is located within the metropolitan cities of Bengaluru, Chennai, Delhi National Capital Region (limited to Delhi, Noida, Greater Noida, Ghaziabad, Gurugram, Faridabad), Hyderabad, Kolkata and Mumbai (whole of Mumbai Metropolitan Region); or

(II)  not less than eighty per cent of such floor area ratio where such project is located in any place other than the place referred to in sub-clause (I); and

(j)    the assessee maintains separate books of account in respect of the housing project.]

(3) Nothing contained in this section shall apply to any assessee who executes the housing project as a works-contract awarded by any person (including the Central Government or the State Government).

(4) Where the housing project is not completed within the period specified under clause (b) of sub-section (2) and in respect of which a deduction has been claimed and allowed under this section, the total amount of deduction so claimed and allowed in one or more previous years, shall be deemed to be the income of the assessee chargeable under the head "Profits and gains of business or profession" of the previous year in which the period for completion so expires.

(5) Where any amount of profits and gains derived from the business of developing and building housing projects is claimed and allowed under this section for any assessment year, deduction to the extent of such profit and gains shall not be allowed under any other provisions of this Act.

(6) For the purposes of this section, -

[12][(a)  “carpet area” shall have the same meaning as assigned to it in clause (k) of section 23 of the Real Estate (Regulation and Development) Act, 2016 (16 of 2016);]

(b)   “competent authority” means the authority empowered to approve the building plan by or under any law for the time being in force;

(c)   {floor area ratio" means the quotient obtained by dividing the total covered area of plinth area on all the floors by the area of the plot of land;

(d)   “housing project” means a project consisting predominantly of residential units with such other facilities and amenities as the competent authority may approve subject to the provisions of this section;

[13][(da) “rental housing project” means a project which is notified by the Central Government in the Official Gazette under this clause on or before the 31st day of March, 2022 and fulfils such conditions as may be specified in the said notification;]

(e)   “residential unit” means an independent housing unit with separate facilities for living, cooking and sanitary requirements, distinctly separated from other residential units within the building, which is directly accessible from an outer door or through an interior door in a shared hallway and not by walking through the living space of another household;]

[14][(f)   “stamp duty value” means the value adopted or assessed or assessable by any authority of the Central Government or a State Government for the purpose of payment of stamp duty in respect of an immovable property.]

 KEY NOTE

1.    Inserted by the Finance Act, 2016, with effect from 01.04.2017.

2.    Inserted by the Finance Act, 2021, with effect from 01.04.2022.

3.    Substituted for “2021” by the Finance Act, 2021, with effect from 01.04.2022. Earlier “2020” was substituted for “2019” by the Finance Act, 2019, with effect from 01.04.2020 and “2021” was substituted for “2020” by the Finance Act, 2020, with effect from 01.04.2021.

4.    Substituted for “three” by the Finance Act, 2017, with effect from 01.04.2018.

5.    Substituted for “built-up” by the Finance Act, 2017, with effect from 01.04.2018.

6.    Substituted for “built-up” by the Finance Act, 2017, with effect from 01.04.2018.

7.    Words "or within the distance, measured aerially, of twenty-five kilometres from the municipal limits of these cities" omitted by the Finance Act, 2017, with effect from 01.04.2018.

8.    Substituted for “built-up” by the Finance Act, 2017, with effect from 01.04.2018.

9.    Words “or within the distance, measured aerially, of twenty-five kilometres from the municipal limits of these cities” omitted by the Finance Act, 2017, with effect from 01.04.2018.

10.   Words “or within the distance, measured aerially, of twenty-five kilometres from the municipal limits of these cities” omitted by the Finance Act, 2017, with effect from 01.04.2018.

11.   Inserted by the Finance (No. 2) Act, 2019, with effect from 01.04.2020.

12.   Substituted by the Finance Act, 2017, with effect from 01.04.2018. Prior to its substitution, clause (a) read as under :

'(a)      “built-up area” means the inner measurements of the residential unit at the floor level, including projections and balconies, as increased by the thickness of the walls, but does not include the common areas shared with other residential units, including any open terrace so shared;'

13.   Inserted by the Finance Act, 2021, with effect from 01.04.2022.

14.   Inserted by the Finance (No. 2) Act, 2019, with effect from 01.04.2020.

Eligible Entities

The entities in the business of developing and building housing projects.

Deduction Available:

If all the conditions are fulfilled, 100% of Profits and Gains derived from such business.

Maintain Separate Books of Accounts

The assessee shall maintain separate books of accounts to avail the benefits of this provision.

100% Deduction of Profit from Housing Projects [Section 80-IBA(1)]

Where the gross total income of an assessee includes any profits and gains derived from the business of developing and building housing projects, there shall, subject to the provisions of this section, be allowed, a deduction of an amount equal to 100% of the profits and gains derived from such business provided the project fulfils the conditions mentioned in section 80-IBA(2).

To help migrant labourers and to promote affordable rental, the Finance Act, 2021 has allowed deduction by inserting sub-section (1A) under section 80-IBA also to such rental housing project which is notified by the Central Government in the Official Gazette and fulfils such conditions as specified in the said notification.

100% Deduction of Profit the Business of Developing and Building Rental Housing Project [Section 80-IBA(IA)]

Where the gross total income of an assessee includes any profits and gains derived from the business of developing and building rental housing project, there shall be allowed a deduction of an amount equal to 100%. of the profits and gains derived from such business.

“Rental housing project” means a project which is notified by the Central Government in the Official Gazette under this clause on or before 31.03.2022 and fulfills such conditions as may be specified in the said notification;’

Conditions for Availing Deduction under Section 80-IBA

There are certain conditions that need to be fulfilled:

§  The project should be completed within the specified time frame.

§  The project should be sold to individual buyers and not to companies or firms.

§  The project should not be transferred to any other person before the expiry of the specified time frame.

Conditions to be Fulfilled [Section 80-IBA(2)]

For the purposes of section 80-IBA(1), a housing project shall be a project which fulfils the following conditions, namely:-

The taxpayer should complete the project within a period of three years from the date of first approval by the competent authority. Therefore, the project would be considered as completed only when a certificate of project completion as a whole is required in writing from the concerned authority

(a)   The project should be approved by the competent authority after 01.06.2016, but on or before 31.03.2022;

(b)   The taxpayer should complete the project is completed within a period of 5 years from the date of approval by the competent authority:

(i)    where the approval in respect of a housing project is obtained more than once, the project shall be deemed to have been approved on the date on which the building plan of such housing project was first approved by the competent authority; and

(ii)   the project shall be deemed to have been completed when a certificate of completion of project as a whole is obtained in writing from the competent authority.

(c)    The carpet area of the shops and other commercial establishments included in the housing project does not exceed 3% of the aggregate carpet area;

(d)   the project is on a plot of land measuring not less than -

(i) 1000 square metres where such project is located within the cities of Chennai, Delhi, Kolkata or Mumbai, or

(ii) 2000 square metres where the project is located in any other place;

(e)   the project is the only housing project on the plot of land as specified in clause (d) above;

(f)   the carpet area of the residential unit comprised in the housing project does not exceed -

(i) 30 square metres where such project is located within the cities of Chennai, Delhi, Kolkata or Mumbai; or

(ii) 60 square metres, where the project is located in any other place;

(g)   where a residential unit in the housing project is allotted to an individual, no other residential unit in the housing project shall be allotted to the individual or the spouse or the minor children of such individual;

(h)   the project utilises -

(i)    not less than 90% of the floor area ratio permissible in respect of the plot of land under the rules to be made by the Central Government or the State Government or the local authority, as the case may be, where the project is located within the cities of Chennai, Delhi, Kolkata or Mumbai, or

(ii)  not less than 80% of such floor area ratio where such project is located in any place other than the place referred to in sub-clause (i); and

(i)    the assessee should maintain separate books of account in respect of the housing project.

Conditions mentioned in clauses (d) to (i) of Section 80-IBA(2) have been substituted by the following conditions in respect of projects approved on or after 01.09.2019 [Proviso to Section 80-IBA(2)]

The Finance (No. 2) Act, 2019, with effect from 01.04.2020 has substituted the conditions mentioned in clauses (d) to (i) of Section 80-IBA(2) by the following conditions given in clauses (d) to (j) below in respect of projects approved on or after 01.09.2019:

(d)   the project is on a plot of land measuring not less than -

(i)   1000 square metres, where such project is located within the metropolitan cities of Bengaluru, Chennai, Delhi National Capital Region (limited to Delhi, Noida, Greater Noida, Ghaziabad, Gurugram, Faridabad), Hyderabad, Kolkata and Mumbai (whole of Mumbai Metropolitan Region); or

(ii)  2000 square metres, where such project is located in any other place;

(e)   the project is the only housing project on the plot of land as specified in clause (d);

(f)    the carpet area of the residential unit comprised in the housing project does not exceed—

(i)   60 square metres, where such project is located within the metropolitan cities of Bengaluru., Chennai, Delhi National Capital Region (limited to Delhi, Noida, Greater Noida, Ghaziabad, Gurugram, Faridabad), Hyderabad, Kolkata and Mumbai (whole of Mumbai Metropolitan Region); or

(ii)  90 square metres, where such project is located in any other place;

(g)    the stamp duty value of a residential unit in the housing project does not exceed Rs.45,00,000;

(h)    where a residential unit in the housing project is allotted to an individual, no other residential unit in the housing project shall be allotted to the individual or the spouse or the minor children of such individual;

(i)     the project utilises -

(I)  not less than 90% of the floor area ratio permissible in respect of the plot of land under the rules to be made by the Central Government or the State Government or the local authority, as the case may be, where such project is located within the metropolitan cities of Bengaluru., Chennai, Delhi National Capital Region (limited to Delhi, Noida, Greater Noida, Ghaziabad, Gurugram, Faridabad), Hyderabad, Kolkata and Mumbai (whole of Mumbai Metropolitan Region); or

(II)  not less than 0% of such floor area ratio where such project is located in any place other than the place referred to in sub-clause (i); and

(j)    the assessee maintains separate books of account in respect of the housing project.

Restrictions : Section 80-IBA is not applicable in respect of an assessee who executes work contract awarded by any person including Central or State government [Section 80-IBA(3)]

Housing Project as a works contract : No deduction under section 80-IBA shall be allowed to an assessee who executes the housing project as a works-contract awarded by any person (including the Central Government, or the State Government).

Consequences if the project is not completed within a period of 5 years from the date of approval [Section 80-IBA(4)]

Where the housing project is not completed within the period specified under section 80-IBA(2)(b) (i.e., 5 years) and in respect of which a deduction has been claimed and allowed under this section, the total amount of deduction so claimed and allowed in one or more previous years, shall be deemed to be the income of the assessee chargeable under the head “Profits and gains of business or profession” of the previous year in which the period for completion so expires.

Deduction under any other Provisions of the Act Not Allowed if the same is claimed under this section [Section 80-IBA(5)]

While Section 80-IBA(5) provides a generous deduction for affordable housing projects, it also restricts the taxpayers from claiming the same deduction under any other provisions of the Act. This means that if a developer chooses to claim the deduction under Section 80-IBA(5), they cannot claim any other deductions that may be available for the same project under other sections of the Act.

For example, if a developer qualifies for a deduction under both Section 80-IBA(5) and Section 80-IB, they will have to choose only one of the deductions. They cannot claim both deductions for the same project.

This restriction is aimed at preventing taxpayers from double-dipping and claiming excessive deductions for the same project. It ensures that the tax benefits provided under the Act are balanced and fair.

MAT

MAT will be applicable.

Dismisses writ for cut-off date extension under Section 80-IBA; Finds pleadings grossly insufficient

Bombay High Court dismisses writ petition preferred by CREDAI-BANM for extending the cut-off date for availing benefits under Section 80-IBA from 31.03.2022 to 31.03.2023 on the grounds of discrimination; High Court opines that “the present petition is grossly lacking in sufficient pleadings as would be required from making out a case of discrimination as claimed by the Petitioner.”; The Petitioner, filed the present writ petition seeking extension of last date of availing deductions under Section 80-IBA from 31.03.2022 to 31.03.2023 by taking necessary legislative steps and also extension of time period of completion of construction projects from 5 years to 7 years; The Petitioner submitted that although, both Section 80-IBA and Section 80-IAC were enacted under Finance Act, 2016, the date of incorporation for start-up companies was extended from 31.03.2022 to 31.03.2023 by Finance Act, 2022, however no such extension was granted under Section 80-IBA; The Petitioner also pointed out that by the Finance Act, 2022 the last date for availing deductions by manufacturing and production companies under section 115BAB was extended from 31.03.2023 to 31.03.2024; Further, the Petitioner submitted that the Union of India, being aware of the impact of the pandemic on the Real Estate Industry, as evident from the advisory issued by Ministry of Home Affairs, has acted in a discriminatory manner by refusing to extend the timelines contained in the provisions of section 80-IBA and has thus infringed upon the fundamental rights of members of the Petitioner under Article 14 of the Constitution; High Court explains that in order to prove the element of discrimination, the Petitioner would have to: (i) plead specific facts to demonstrate that its members as a class and those covered by the provisions of section 80-IAC are similarly situated, and (ii) make out a case for the issuance of a writ of Mandamus in exercise of powers vested in this Court under Article 226 of the Constitution, for directing the Government to legislate and extend the timelines in the provisions of Section 80-IBA, as requested; Refers to Supreme Court ruling in V.S. Rice and Oil Mills and others v. State of A.P. etc. AIR 1964 SC 1781 wherein Supreme Court elucidated in a challenge to the validity of any statute for violation of Article 14, the grounds should be specific, clear and unambiguous and it must be shown that the impugned statute is based on discrimination i.e., any classification which is not rational and which has no nexus with the object intended to be achieved by the said statute; Further relies on Supreme Court ruling in State of Orissa And Others v. Balaram Sahu & Ors (2003) 1 SCC 250 and State of U.P. & Anr. v. Kamla Palace (2000) 1 SCC 557; Holds that the petition lacks sufficient pleadings all material particulars required to be stated in the pleadings, to draw some parity or similarity between members of the Petitioner and persons stated to be covered by the provisions of section 80-IAC; Also relies on Supreme Court ruling in Supreme Court Employees’ Welfare v. Union of India (1989) 4 SCC 187 to hold that High Court could not exercise its jurisdiction under Article 226 of the Constitution of India, to issue a writ of Mandamus to the Government, much less to the legislature, directing the legislation in the nature sought by the Petitioner in the reliefs claimed in the petition. [In favour of revenue] – [CREDAI-BANM v. Union of India [TS-995-HC-2022(BOM)] – Date of Judgement : 23.12.2022 (Bom.)]