Law: Income Tax Act, 1961

Section: 116,119,194C,298

(a) Income-tax------Income-tax Authorities---Have to function within the powers and duties assigned to them under Income-tax Act ---Cannot claim to exercise any inherent power---Power to issue clarifications of ambiguous statutory provisions can be exercised by delegate under specified conditions---In the absence of such delegation, such exercise of power will be a nullity and will not bind any one---Clarification of Deputy CIT that deductions to be made from payments to five star hotels for certain facilities---Liable to be quashed---Indian Income Tax Act, 1961, Ss. 116, 119, 194C & 298. (b) Income-tax--- ----Income-tax Authorities---Discharge of quasi judicial functions having bearing on rights and obligations of taxpayers under Income-tax Act---View taken in a particular case cannot partake of colour of law of general application so as to bind a class of taxpayers. It is basic that the authorities created under the Income Tax Act, 1961, have to function within the four corners of the powers and duties assigned to them under the Act. They cannot claim to themselves any inherent power, howsoever, benevolent or plausible the purpose it. is intended to serve. The power to issue clarifications of purportedly ambiguous statutory provisions lies only with the Legislature or its delegate under specified conditions. In the absence of any such delegation such a power cannot be exercised by any person and if it is so exercised then it will be nothing but a nullity. The Income-tax. Authorities while discharging their quasi judicial functions having bearing on the rights and obligations of the taxpayers under the provisions of the Act may take such, views on the interpretation of a particular statutory provision as may be permissible which will be always subject to the statutory remedies under the Act. But the view so taken in the particular case cannot partake of the colour of a law of general application, so as to bind a whole class of taxpayers and provide them a cause of action for coming before the Court seeking interference under the writ jurisdiction. The first petitioner owned and operated a chain of five star hotels. The petitioners offered a number of…

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