Summary of Delhi HC Judgement in Chamber of tax Consultants Vs. UOI

THE CHAMBER OF TAX CONSULTANTS & ANR. V. UOI & ANR. (Delhi High Court)

Brief Facts of the Case

• Vide notification No. 87/ 2016 dated September 29, 2016 Central Board of Direct Taxes (“CBDT”) (“Respondents”) had notified ten Income Computation and Disclosure Standards (“ICDS”) to be adopted by the taxpayers having income under the head “Profits and Gain from Business or Profession” and “Other Sources” and following mercantile system of accounting.
• Vide Notification No. 88/ 2016 of same dated, CBDT also notified certain changes Tax Audit Report in Form 3CD. Circular no. 10/ 2017 dated March 23, 2017 was also issued wherein CBDT issued clarifications to the ICDS.
• Recently, on a writ petition was filed by Chamber of Tax Consultants (“Petitioners”), Hon’ble Delhi High Court (“DHC”) struck down certain ICDS and wherever necessary, only certain paragraphs contained in the ICDS and held the notification 87/ 2016 & 88/ 2016, circular 10/ 2017 are ultra vires the provisions of Income Tax Act, 1961 (‘Act’) to that extent.
  

Contentions of Petitioners:

The petitioners put forward following contentions: –

1. Unfettered Powers to Central Govt.

• The Central Govt. (“CG”), being just a delegate of the Parliament, cannot have unfettered powers to notify ICDS modifying the basis of taxation which otherwise, if at all, can be done only by the Parliament by making amendments to the provisions of the Act. Delegation to CG and further sub-delegation to CBDT would lead to abdication of legislative powers and excessive delegation by the Parliament. Reliance was placed on Avinder Singh v. State of Punjab AIR 199 SC 321.
• It is well settled that no tax, fee or compulsory charge can be imposed by any subordinate legislation unless the statute under which it is made specifically authorizes such imposition.

2. ICDS in conflict with Judicial Precedents