Sec. 71(3A) of Income Tax Act limits Set-off Amount, does not eliminate Deduction benefits Entirely: Delhi HC upholds Constitutional Validity of Sub-Section

The Delhi High Court upheld the constitutional validity of Section 71(3A) of the Income Tax Act, dismissing a writ petition challenging its amendment. The petitioner contested the retrospective application of the amendment, arguing it infringed on constitutional rights by restricting deduction benefits. \r

However, the court reasoned that the amendment didn't eliminate deductions entirely but limited the set-off amount, aiming to prevent abuse without depriving taxpayers entirely of their rights. It highlighted legislative prerogative in economic policy, concluding that the change aligned with broader considerations. \r

The court rejected claims of arbitrary classification or discrimination, emphasizing the amendment's applicability to all taxpayers without disrupting vested rights. Refuting the doctrine of promissory estoppel, the court deemed the amendment not violative of Article 14. The reliance on precedent from CIT v. Vatika Township Pvt. Ltd. was deemed irrelevant, as the circumstances differed. \r

Ultimately, the court dismissed the petition, affirming the constitutionality of the amendment.