The Validity of Retrospective Amendments to the Income Tax Act: Section 9 of the Act and the Ishikawajima Harima Case

The Validity of Retrospective Amendments to the Income Tax Act: Section 9 of the Act and the Ishikawajima Harima Case

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Volume 4 Issue 2 ()

This article discusses the contemporary issues surrounding §9 of the Income Tax Act, 1961. The core issue is discussed, giving specific importance to the ambivalent nature of the law in this area since Ishikawajima’s case, such ambivalence lasting until the amendment in 2010, which has been bemoaned by lawyers across the country as a step too far in the exercise of Parliament’s legislative powers. Three aspects of the constitutional validity of the section as amended in 2010, namely, the validity of the retrospective character of the amendment, the validity of the amendment vis-à-vis Art. 14 of the Constitution and the extra-territorial operation of the substantive levy of charge, are discussed at length by the researcher. In elaborately laying out the grounds for constitutional challenge, I also address aspects such as the weighty presumption of constitutionality that operates in regard to fiscal legislation, going on to prove how the criteria of ‘palpable arbitrariness’ is satisfied by the overreaching nature of the amended section. In conclusion, I ponder upon the road ahead and chalk this out laying emphasis on the inherently dangerous nature of such an amendment, since similar provisions have
been incorporated in the proposed draft Direct Taxes Code.
Cite as: Prateek Andharia, The Validity of Retrospective Amendments to the Income Tax Act: Section 9 of the Act and the Ishikawajima Harima Case, 4 NUJS L. Rev. 269 (2011)