Facts of the Case

The petitioner, Vodafone Essar Mobile Services Limited, filed a writ petition challenging the vires of the proviso to Section 201(3) of the Income Tax Act, 1961, as inserted by the Finance (No.2) Act, 2009, effective from 1st April 2010. The petition sought to contest the constitutional validity of the proviso, citing precedents such as:

  • Commissioner of Income Tax vs. NHK Japan Broadcasting Corporation [2008] 305 ITR 137 (Delhi)
  • Commissioner of Income Tax vs. Hutchison Essar Telecom Ltd., [2010] 323 ITR 230 (Delhi)

The petitioner requested permission to withdraw the writ petition with liberty to file a fresh one, preserving the grounds already raised. Interim relief was also sought to restrain coercive action by the Income Tax authorities.

Issues Involved

  1. Whether the proviso to Section 201(3) of the Income Tax Act, 1961, as amended by Finance (No.2) Act, 2009, is constitutionally valid.
  2. Whether the petitioner can seek withdrawal of the writ petition with liberty to challenge the provision afresh without losing interim relief.
  3. Whether the interim order restraining coercive recovery by authorities should continue.

Petitioner’s Arguments

  • Challenged the constitutional validity of the proviso to Section 201(3).
  • Requested liberty to file a fresh writ petition to raise all grounds already presented.
  • Sought continuation of interim protection from coercive steps by the respondents for 15 days to allow filing of the fresh petition.

Respondent’s Arguments

  • Represented by the Assistant Commissioner of Income Tax & Anr.
  • No counter-submissions were recorded in the order, as the case primarily concerned procedural withdrawal and interim relief.

Court Findings / Order

  • The petition for withdrawal was accepted with liberty to file a fresh writ petition.
  • The writ petition was dismissed as withdrawn, preserving the petitioner’s right to raise all previously stated contentions.
  • The respondents were directed not to take coercive steps to recover the impugned demand, if any, for a period of 15 days from the date of the order.

Important Clarifications

  • The order confirms that procedural withdrawal does not prejudice substantive rights to challenge the constitutional validity of Section 201(3) proviso.
  • Interim protection was granted for a specific period to ensure petitioner’s ability to file fresh litigation.

Sections Involved

  • Section 201(3), Income Tax Act, 1961

Link to download the order https://delhihighcourt.nic.in/app/case_number_pdf/2011:DHC:17305-DB/SKN28112011CW18792011_143415.pd

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