High Court upholds relief under Income-tax Act despite non-compliance, emphasizes eligibility for benefits.

The High Court of Delhi ruled in a writ petition challenging the validity of section 80HHB of the Income-tax Act that the petitioners were entitled to relief under the provision despite non-compliance with section 80HHB(3) due to prior approvals under section 80-O. The Court emphasized the petitioner's eligibility for benefits under section 80HHB and urged the Income-tax Department to consider the genuine reasons for non-compliance. The Court affirmed the validity of section 80HHB and disposed of the writ petition without imposing costs.

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Issues involved: Challenge to the validity of section 80HHB of the Income-tax Act under articles 14 and 19(1) of the Constitution.

Summary:
The High Court of Delhi, in a writ petition challenging the validity of section 80HHB of the Income-tax Act, addressed the issue alongside Income-tax References Nos. 110 to 112 of 1987. The main question was whether the petitioner was entitled to benefits under section 80-O or not, with the Department contending that the agreements fell under section 80HHB instead.

In a separate judgment related to the same case, it was ruled that the petitioners were not entitled to the benefit of section 80-O. Despite the Department's assertion that the petitioner's case fell under section 80HHB, the benefit under that provision had not been granted due to non-compliance with section 80HHB(3). The petitioner argued that they did not meet the conditions of section 80HHB(3) as they were previously benefiting from section 80-O and had not created reserve accounts as required.

The Court found it unfair not to grant the benefit under section 80HHB to the petitioner, considering their eligible projects and genuine reasons for non-compliance with section 80HHB(3) due to prior approvals under section 80-O. Emphasizing that the petitioner was entitled to relief under section 80HHB, the Court urged the Income-tax Department not to focus solely on technicalities but to allow the petitioner time to fulfill the requirements of section 80HHB(3) for the benefit to be granted.

No significant challenge was raised regarding the validity of section 80HHB, and the Court affirmed the provision's validity. The writ petition was disposed of accordingly, with no costs imposed.

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