In Brief
Tamil Nadu State Marketing Corporation challenged Section 40(a)(iib) of the Income Tax Act, 1961, claiming it was discriminatory and violated constitutional rights, especially regarding VAT expense deductions. The High Court dismissed the petition without deciding the constitutional validity, citing that income tax assessment proceedings were pending. The Supreme Court allowed the appeal, holding that the High Court must decide constitutional challenges to statutory provisions on their merits under Article 226, regardless of pending administrative proceedings. The case was remanded to the High Court to determine whether the provision is constitutionally valid.
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