S.C : The appellants have sought to raise the question of the constitutional validity of s. 80HHB(5) of the IT Act, 1961.

Supreme Court Of India

Continental Construction Ltd. & Anr. vs. Union Of India & Ors.

Sections 80HHB(5)

Mrs. Ruma Pal & Ashok Bhan, JJ.

Civil Appeal No. 10423 of 1995

4th September, 2003

Counsel Appeared

S. Ganesh with Mrs. Geetanjali Mohan & Kamlendra Mishra, for the Appellants : Soli J. Sorabjee & Raju Ramachandran with K.C. Kaushik, Pritesh Kapoor, B.V. Balram Das & Ms. Sushma Suri, for the Respondents


By the court :

The appellants have sought to raise the question of the constitutional validity of s. 80HHB(5) of the IT Act, 1961. The sub-section provides that if any deduction is permitted under the provisions of s. 80HHB(1) from any consideration receivable by the assessee within the description in that subsection, the same income would not qualify for deduction under any other provision of the Act. Learned counsel appearing on behalf of the appellants fairly conceded that if the only object of the section was to deny double deduction on the same income, it could not be said that the sub-section was unconstitutional. However, the submission according to the appellant, the unconstitutionality of the sub-section is as a result of the decision of this Court in the appellant’s own case in Continental Construction Ltd. vs. CIT (1992) 101 CTR (SC) 386 : (1992) 195 ITR 81 (SC) : 1992 Supp (2) SCC 567. It is submitted that as a result of this decision, sub-s. (5) would operate not only to deny double deduction but also to deny deduction which is otherwise available to an assessee under the other provisions of that chapter including s. 80-O.

2. We have perused the judgment of this Court and have found that it did not hold that income which was not wholly relatable to s. 80HHB would not be available for deduction under any other provision in respect of such unrelatable income. This Court construed the provisions of s. 80HHB and section 80-O and came to the conclusion that there could be different forms of foreign contracts the consideration whereunder was available for deduction either under s. 80-O or s. 80HHB. The Court held that where the relief was clearly referable only to s. 80-O, the assessee would continue to receive deduction available thereunder. But in the case of the appellants, as the consideration received was relatable only to s. 80HHB, the only deduction available was under s. 80HHB. Given this, the challenge to the, constitutionality of s. 80HHB(5) must fail. Perhaps this is the reason why the appellant’s counsel did not seriously argue the question of constitutionality before the High Court. No submission also appears to have been made before this Court in the course of the earlier proceedings that the interpretation of ss. 80-O and 80HHB given by the Court would have the result of rendering section 80HHB(5) unconstitutional.

3. In the circumstances we see no reason to interfere with the decision of the High Court. The appeal is accordingly dismissed. There shall be no order as to costs.

[Citation : 264 ITR 470]

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