Law:

Section:

Clause 2 proviso II of the Taxation Laws (Extension to U nion Territories) (Removal of difficulties) Order No. 2 of 1970 - Whether second proviso to clause 2 of Taxation laws (Extension to Union Territories) (Removal of Difficulties) Order 2 of 1970, is ultra vires Central Government when exercising powers under clause (7) of Regulation III of 1963, and revenue authorities were not entitled to levy tax on basis of depreciation allowance computed in accordance with said proviso in Order - Held, yes FACTS Goa, Daman and Diu were erstwhile Portuguese territories which became a part of the Union of India on and from 19-12-1961. Thereupon, the President of India in exercise of powers under article 240 of the Constitution promulgated the Taxation Laws (Extension to Union Territories) Regulation III of 1963. By clause (3) of this regulation, amongst other laws, the India Income-tax Act, 1961 was extended to the Union Territory of Goa, Daman and Diu with effect from 1-4-1963, subject to certain modification, one of which was the insertion of section 294A gave power to the Central Government to make exemption, reduction or modification in respect of income-tax to avoid hardship or anomaly or to remove difficulty in the application of the Act to any assessee in the Union Territories of Dadra, Nagar Haveli, Goa, Daman and Diu, etc. The power granting the exemption, etc., was exercisable before 31-3-1967. Clause 7 of said regulation provided : 'If the difficulty arises in giving effect in any Union Territory to the provisions of any Act, or of any rule, notification or order made or issued thereunder, the Central Government may, by general or special order published in the Official Gazette, make such provisions or give such directions as appear to it to be expedient or necessary for the removal of the difficulty.' On 8-11-1970, the Central Government in purported exercise of its powers under clause (7) of the Regulation promulgated the Taxation Laws (Extension to Union Territories)(Removal of Difficulties Order No. 2 of 1970). Clause 3 of the said order provided that where in respect of any asset, depreciation has been allowed for any year both in the assessment under the…

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