The Bombay High Court dismissed the writ petition filed by the petitioner claiming parity with similarly situated classes of persons covered by the provisions of Section 80-IAC of the Income Tax Act, 1961 (hereinafter referred to as “the Act”). The Court opines that the petition is grossly lacking in sufficient pleadings as would be required from making out a case of discrimination between members of the Petitioner and persons stated to be covered by the provisions of section 80-IAC of the Act.
Brief Facts
The Petitioner had filed a writ petition under Article 226 to seek a writ of Mandamus directing the respondent:
- To extend the date of availing deductions by assessees under section 80-IBA of the Income Tax Act, 1961 (‘the Act) from 31.03.2022 to 31.03.2023, by taking necessary executive legislative steps as may be required.
- To extend the time period for completion of construction projects from five years to seven years under section 90-IBA(2)(b) of the Act.
Contentions of the Petitioner:
The Petitioner’s case was that provisions of section 80-IBA of the Act were enacted vide Finance Act, 2016, for providing- a tax holiday to the Real Estate Developers and incentives to start-up companies for availing deductions provided they were set up on or after 01.10.2019 and had commenced operations. The Petitioner claimed that the Union of India had failed to grant extensions in timelines incorporated under section 80-IBA beyond 31.03.2022, thus depriving the members of the Petitioner parity with similarly situated classes of persons covered by the provisions of section 80-IAC of the Act, 1961. In other words, the petitioners claimed that non-extension of the timelines of eligibility beyond 31.03.2022 operated as discrimination against them, and consequently, rights enshrined in Article 14 of the Constitution of India of the Petitioner were violated.
Observation of the Court
The Court noticed that in order to prove the element of discrimination, the Petitioner would be required to plead specific facts to demonstrate that its members as a class and those covered by the provisions of Section 80- IAC of the Act are similarly situated. Apart from this factor, the Petitioner would be required to make out a case for issuing a writ of Mandamus in the exercise of powers vested to the Court under Article 226. The Court had relied on a plethora of judgments such as V.S.Rice and Oil Mills and others v. State of A.P. etc. AIR 1964 SC 1781, State of Orissa And Others vs. Balaram Sahu & Ors (2003) 1 SCC 250 and State of U.P. & Anr. vs. Kamla Palace (2000) 1 SCC 557 to further analyze how Courts apply the test of Article 14 in the matter of giving incentives in a taxing statute and how the classification of persons, objects and transactions are considered by the legislature.
By applying the ratio of the above-cited judgments, the Court finds that petition is grossly lacking in sufficient pleadings as would be required from making out a case of discrimination. The petition lacks 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 of the Act. The Court noticed that to claim relief based on equality, it is for the claimants to substantiate a clear-cut basis of equivalence and resultant hostile discrimination. In the absence of the same, the legislature is permitted to draw a reasonable classification of persons to attain specific ends.
The decision of the Court:
The Bombay High Court dismissed the writ petition on the above-mentioned grounds and declined to issue a writ of Mandamus directing the legislature to take action.
Case Title: CREDAI-BANM vs Union of India
Coram: Hon’ble Dhiraj Singh Thakur and Valmiki SA Menezes
Case no.: WRIT PETITION NO.9830 OF 2022
Advocate for the Petitioner: Ms. Ritika Agarwal
Advocate for the Respondent: Mr. Suresh Kumar
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