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Can ICDS override the express decisions of various courts

Background-:

1. I am sure, you would be aware of the Income Computation and Disclosure Standard. This article is about the applicability of the ICDS.

Issue-:

2. Can ICDS override the express decisions of honourable Supreme court and various high courts when there is no change in the basic ACT which defines meaning of income etc.

3. To give an example, income accrued but not due is not chargeable to tax because under income tax law, the status of right to receive has to be reached. Refer Supreme court judgement in the case of [2013] 38 taxmann.com 100 (SC) CIT v Excel Industries Ltd. by a larger bench dated 8 October 2013

Opinion-:

4. ICDS MAY NOT override the express decisions of honourable Supreme court and various high courts when there is no change in the basic ACT which defines meaning of income etc.

Basis of opinion

5. The underlying material perused for each of the point hereinbelow is given in Material Perused. For example, para (a) under Basis of opinion has underlying material as mentioned in para (a) in material perused.

a) Central Government gets power to prescribe Accounting standards for taxation purposes u/s 145(2). Current ICDS are prescribed on the basis of recommendation of a committee which has a history going back to 1996.

b) It will be prudent to read the Schedule III which is integral part of the Companies Act, 2013 which specifically says that in case of conflict, accounting standard will prevail.

c) Preamble to each of the ICDS makes it clear that in case of conflict with the Income Tax Act, 1961, the Act will prevail.

d) It is a Notification ​issued by CBDT which gets its powers which is a sub-ordinate law making authority.

e) Another notification is re-produced issued u/s 35 of the Act

f) There are law making limitations on the sub-ordinate body.

g) As per Article 141 of the Constitution of India, an order or judgement of Supreme Cout is law of land. Article 225 to 228 confer almost similar powers to High Courts to be exercised over its jurisdiction.

Material Perused

6. The material perused is re-produced in appendix hereinbelow for ready references.

 a)     Section 145 of the Act

b)     Schedule III to the Companies Act, 2013

c)      Preamble to each ICDS.

d)     Notification of ICDS

e)     Another Notification for comparison purposes.

f)       Discussion on law making power of Parliament and that of a sub-ordinate body.

g)     Powers of Supreme Court and high Courts

Download Appendix

Author-: CA. Yogesh S. Limaye can be reached at yogesh@salcoca.com

Read Other Articles of CA Yogesh S. Limaye

Categories: Income Tax
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