A. Raghuvir, C.J.
1. The Assam Frontier Tea Ltd. is an incorporated company under the Companies Act, 1956. The company owns eight tea estates or tea gardens wherein 14,500 workers are employed for growing green tea leaves and for manufacturing black tea. The company expends Rs. 70 lakhs in welfare activities each year for running schools and hospitals in the estates. The company, in this regard, on March 28, 1984, deposited Rs. 2 crores with an association called Apeejay Educational Association Limited and another sum of Rs. 2 crores with Apeejay Medical Research and Welfare Association. The two amounts were deposited to be spent for the benefit of workmen and for other welfare activities in the eight estates.
2. The company, in its income-tax return for the assessment year 1984-85, claimed deduction of Rs. 4 crores in its profit and loss account. The Income-tax Officer, on March 30, 1987, rejected the claim. The Commissioner of Income-tax (Appeals), on June 12, 1987, directed the Income-tax Officer to reframe the assessment order. Thereafter, in the assessment order passed on March 30, 1990, the Income-tax Officer held that the amount of Rs. 4 crores cannot be deducted as 'section 40A(9) brought in by the Finance Act, 1984, with retrospective effect from April 1, 1980, specifically provides that such contributions are not to be allowed as deductions'. The company perhaps is pursuing its remedy before the appellate authority.
3. The instant writ petition was filed by the company on August 17, 1984, against the Union of India, the Commissioner of Income-tax, North Eastern Region, Shillong, and the Inspecting Assistant Commissioner of Income-tax, Assessment Range-II, Gauhati, to declare Sub-sections (9), (10) and (11) of Section 40A of the Income-tax Act, 1961, ultra vires Articles 14, 265 and 300A of the Constitution of India. In this case, the Union of India has not filed any return and is also not represented, though the issues raised affect the vires of the three sub-sections of Section 40A of the Income-tax Act, 1961. The Revenue authorities, however, resist the petition and have averred that Rs. 4 crores cannot be allowed to be deducted under the extant provisions of the Income-tax Act, 1961. Since the
amounts are not permitted to be deducted under Sub-sections (9) to (11) of Section 40A, the company asserts that it has been discriminated against under the above three sub-sections. The company further asserts that asses-sees who have had paid like amounts before March 1, 1984, are allowed deduction or recovery under the above sub-sections and for no ostensible reason, payments made after that date are not allowed to be deducted. Learned counsel appearing for the company in this regard referred to Sections 28, 29, 36(1)(iv), (v), (vi), 37(1), 40(a) and Section 43B and Section 40A of the Act and contended that the impugned provisions are ultra vires the Constitution. Alternatively, counsel argued, the date, February 28, 1984, contained in Sub-sections (10) and (11) of Section 40A be altered to March 31, 1984, to wipe out the discrimination and for doing justice to the petitioner-company.
4. This writ petition is resisted by the Revenue, inter alia, on the ground that Rs. 4 crores were paid to the two associations without any statutory liability to pay the same. There was no legal obligation for the company to have paid the amounts to the two associations and, therefore, the company cannot claim deduction. Payments that are made to satisfy the requirements under Clauses (iv), (v) or (vi) of Section 36(1) of the Act or contributions made in discharge of any legal obligation alone are liable to be deducted. As regards Sub-sections (10) and (11), it is seen that only 'unspent' money paid in bona fide circumstances before March 1, 1984, are allowed to be recovered. In the alternative, it is averred that the two associations are not recognised associations and, therefore, the deduction cannot be permitted. The issue as to recognition of the two associations with whom the money was deposited, though raised, we are not to consider, as the amounts, it is argued, cannot be deducted even if the associations are recognised. The Revenue, as a further alternative, averred that the unspent money cannot be recovered as the two amounts were paid after February 28, 1984, a date inserted by Parliament and, therefore, no relief can be granted to the petitioner-company.
5. The Revenue explained that the three Sub-sections (in Section 40A) were inserted to check evasion of taxes and, therefore, payments made after March 1, 1984, can neither be deducted as expenditure nor recovered as 'unspent' amounts. Whether any other date can be substituted in the impugned sub Sections (10) and (11), the Revenue explained that it was for Parliament to decide the feasibility of insertion of a date and it was not for the court to probe or discover justification for substitution of another date or to dislodge the inserted date. The impugned provisions, it is averred by the Revenue, are enforced against all assessees in the country uniformly and, therefore, the Assam Frontier Tea Company is in no way discriminated against.
6. The principal contention that is raised thus in the petition is the issue of discrimination under Article 14 of the Constitution. For considering violation of Article 14, no other material is relied on to support the assertion except what is set out above in the pleadings. From the above facts, we are unable to hold that the petitioner has succeeded in establishing any violation of Article 14 of the Constitution. All assessees who paid contributions before March 1, 1984, are allowed to recover unspent monies. The instant company does not fall in that group of assessees as the amounts were paid on March 28, 1984.
7. Learned counsel for the petitioner next contended that, before the insertion of Sub-sections (10) and (11) there was no information laid before Parliament. Only as to Clause 9, it was explained that some employers created irrevocable trusts ostensibly for the welfare of the employees with discretion to the trustees to utilise huge amounts in the manner as the trustees desired without any particular scheme whatever. The company asserts they are not such assessees who have adopted any devices to evade taxes. In this regard, Sections 26, 29, Clause (iv) or (v) of Sub-section (1) of Section 36 and Sections 37, 40(a) and 43B were highlighted. Learned counsel for the company argued that these sub-sections do not affect all assessees uniformly. For those who deposited amounts before March 1, 1984, 'unspent' money is allowed to be recovered, In the case of the assessees who deposited similar contributions after February 28, 1984, unspent amounts, for no particular reason, are not allowed to be recovered. This contention is advanced by the company to alter the date of March 1, 1984, to read down to March 31, 1984, so that the instant company may prove that Rs. 4 crores was expended in bona fide circumstances and, on such a proof, the company may recover at least unspent amounts from the two associations.
8. While considering the above plea of the company, we, perforce of historical reasons, have to refer to the speeches of the Finance Minister when the Finance Bill of 1980 and the Finance Bill of 1984 were introduced. As to the reference of speeches made in Parliament, there was a controversy in the past in the Commonwealth courts including the courts in the United Kingdom whether speeches made in Parliament can be referred to to gather the intention of statutory enactments. Such a controversy is no more res Integra as the Supreme Court is relying liberally on the speeches made in Parliament. As an instance, in Petron Engineering Construction P. Ltd. v. CBDT : [1989]175ITR523(SC) a speech made before Parliament was referred to in the case to resolve the dispute.
9. The Finance Minister, in Parliament, on February 28, 1983, stated that numerous instances of defaults by employers were noticed where statutory contributions were not made. The Government intended to plug the loopholes and see that the Exchequer collected the dues from the assessees.
10. The Finance Minister estimated that one hundred crores of rupees by way of taxes were lost to the Revenue by the erring employers. The Finance Minister stated 'several cases have come to notice where taxpayers do not discharge their statutory liability such as in respect of excise duty, employer's contribution to provident fund, Employees' State Insurance Scheme, for long periods of time. For the purpose of their income-tax assessments, they none the less claim the liability as deduction even as they resort to legal action, thus depriving the Government of its dues while enjoying the benefit of non-payment. To curb such practices I propose to provide that irrespective of the method of accounting followed by the taxpayer, a statutory liability will be allowed as a deduction in computing the taxable profits only in the year and to the extent it is actually paid. This would result in a revenue gain of Rs. 100 crores in a full year and Rs. 80 crores in 1983-84.' This passage is found in [1983] 140 ITR 31. In the above speech, it was shown that some sort of fraud was practised by some employers to avoid contributions td provident fund and State Insurance Schemes.
11. The Government's policy was again reiterated on February 29, 1984, when the Finance Bill, 1984, was introduced. Adverting to some devices adopted by the erring employers, the Finance Minister reiterated : 'While on this subject, I would like to refer to a tendency noticed to create private trusts which carry on business. To curb such practice, I propose to provide that where such trusts have profits and gains of business, the entire income of the trust will be charged to tax at the maximum marginal rate, an exception being made only in the cases where the trust is created by will for dependent relatives. Another undesirable practice noticed is the tendency of some corporate bodies to make large contributions to so-called welfare funds. I further understand that utilisation of these funds is discretionary and subject to no discipline. I am, therefore, providing that deductions will be available only in respect of contributions to such funds as are established under statute or an approved provident fund, superannuation fund or gratuity fund. I am making this change with retrospective effect to avoid unnecessary litigation.' This speech is found reported in [1984] 146 ITR 68
12. The three impugned provisions are enforced from April 1, 1980, retrospectively. Clause (10) of the Finance Bill, 1984, which inserted Sub-section (9) to Section 40A was done to subserve Clause (iv) or Clause (v) of Sub-section (1) of Section 36. In the notes, regarding Sub-section (9), it is recited : 'The proposed provision will take effect retrospectively from April 1, 1980, and will, accordingly, apply in relation to the assessment year 1980-81 and subsequent years' (see [1984] 146 ITR 139).
13. In the instant petition, no question is raised as to the validity of the retroactive character of the impugned provisions and, therefore, the validity aspect is not considered. The speeches and, in particular, the speech
of the Finance Minister introducing the Finance Bill, 1984, do point out that all assessees in this regard were sufficiently warned. Whether the date can be altered to March 31, 1984, requires next to be considered in the background of these facts. The instant company with such an enormous business is imputed with notice of fiscal policies that are adumbrated in the country from time to time and in spite of knowledge of the prohibitions that were in the air if the instant company had deposited Rs. 4 crores with two associations, one is only led to believe that the company intended to donate the amounts to the two associations and not intended to claim the amounts as expenditure incurred by them.
14. In this case, we make it clear that we are not considering the bona fides of the payments made by the company. May be the company has eight tea gardens, employs 14,500 workers and expends Rs. 70 lakhs every year for welfare measures. These facts, if they are true, may form an excellent background and lend a large measure of credence to the assertion made by the petitioner-company. But that is not the question at issue raised in the instant petition,
15. Learned counsel for the petitioner heavily relied on the case in D.S. Nakara v. Union of India, : (1983)ILLJ104SC to read down the date March 1, 1984, in Sub-sections (10) and (11) to March 31, of that year, and cited a case in which the vires of the Liberalised Pension Scheme under the 1972 Pension Rules was assailed. Civil servants who retired before and after March 31, 1979, were found not treated alike in that case and, therefore, the Supreme Court held that though the scheme was valid, yet there was no justification for the classification of the pensioners. A person retiring on a date earlier to March 31, 1979, was shown as having touched the ceiling of Rs. 8,100 per annum and the average emoluments were to be worked out in the case of such a person for only 36 months' salary, while another person retiring after that date will have a higher ceiling of Rs. 12,000. The classification of pensioners, therefore, was held to be artificial and had no nexus to the object sought to be achieved. The words in the scheme 'who were in service on March 31, 1979, and retiring from service on or after that date' offended the equality principle enshrined in Article 14 of the Constitution. The Supreme Court, therefore, wiped out the classification. Though it was shown that Rs. 233 crores resulted in additional expenditure to the Government of India with an average increase of Rs. 51 crores every year, yet, for doing justice, the provisions in the scheme were read down by the court. That decision was reached to do justice to the pensioners. Learned counsel for the company argued, as in Nakara's case, : (1983)ILLJ104SC that the facts in the instant case demands the date of March 1, 1984, inserted in Sub-sections (10) and (11) to be altered to March 31, 1984.
16. We have earlier held that the writ-petitioner-company is not discriminated against and we are not persuaded to alter the date as suggested by
the company. A number of cases were cited as instances to show that whenever justice demanded, courts have read down the statutory provisions. Having regard to the conclusion reached on the question of discrimination, it is not necessary to consider the cases cited in this regard.
17. For all the aforesaid reasons, the writ petition fails and is dismissed. There will be no order as to costs.
Smt. M. Sharma, J.
18. I agree.