Court declares circular irrelevant and ultra vires Income Tax Act sections. Assessments to align with Supreme Court ruling.

The Court declared the challenged circular as irrelevant and ultra vires Sections 10(A) and 10(B) of the Income Tax Act. Assessing Officers were directed to conduct assessments in line with the Supreme Court's decision in Commissioner of Income Tax Vs Yokogawa India Limited, 2017 2 SCC 1. The Writ Petition was allowed with observations, and no costs were awarded, emphasizing judicial decisions' precedence over circulars in interpreting and applying tax laws.

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Issues:
Challenge to vires of Circular dated 16.07.2013 regarding aggregation of income under different heads for tax computation.

Analysis:
The petitioner challenged the vires of Circular dated 16.07.2013, which clarified the aggregation of income under various heads for tax computation. The Circular stated that income from different sources should be aggregated according to the provisions of Chapter IV and VI of the Income Tax Act. It further explained the treatment of losses and deductions under Sections 70, 71, and 72 of the Act. However, Circulars are not binding on the assessee or the Court, as clarified by the Supreme Court in previous judgments.

The impugned circular's validity was questioned in light of the Supreme Court's decision in Commissioner of Income Tax Vs Yokogawa India Limited, 2017 2 SCC 1. The Supreme Court clarified that its decision on Section 10(A) also applies to Section 10(B) of the Income Tax Act. The Court emphasized that deductions under Section 10(A) should be made independently for eligible undertakings, without considering other units of the assessee. The circular's relevance was further diminished by the Supreme Court's ruling, making it no longer binding on the Assessing Officer.

Consequently, the Court declared the impugned circular as irrelevant and ultra vires Sections 10(A) and 10(B) of the Income Tax Act. Assessing Officers were directed to conduct assessments in accordance with the Supreme Court's decision in Commissioner of Income Tax Vs Yokogawa India Limited, 2017 2 SCC 1. The Writ Petition was allowed with observations, and no costs were awarded. The judgment highlighted the precedence of judicial decisions over circulars in interpreting and applying tax laws.

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