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Income Tax Act, 1961:s.42 - Deduction - If Production Sharing Contract(PSC) between the government and the assessee does notcontain any stipulation providing for allowance uls.42 thenassessee is not entitled to benefit under the said section -By virtue of this section, it is the PSC which governs thefield, as without it, such deductions are not permissible underthe Act - When benefit of deduction u/s.42 was wronglygranted in initial years of commencement of commercialproduction in the oil fields, it would not amount to a wrongact on part of income tax authorities and would not enure tothe benefit of assessee in subsequent assessment years.s.42 - Whether Model Production Sharing Contract(MPSC) can be read as part of and incorporated in the PSCs- Held: It is not permissible for assessee to take aid of MPSCor the clauses contained therein while construing the termsof PSCs.s.42 - Whether there was any intention between thecontracting parties, namely, the MoPNG and the appellantfor giving benefit of deductions u/s. 42 of the Act - Held: Inthe instant case, PSC between the parties categoricallyprovided that the contract shall not be amended, modifiedvaried or supplemented in any respect except by an instrument in writing signed by all parties, which shall statethe date upon which the amendment or modification shall become effective - MoPNG had requested MoF to give itsnod for amending the contract by incorporating provision ofs.42 which was allegedly left out inadvertently - However,no authorisation came from MoF - Therefore, question ofany intention to give benefit of deduction uls.42 between the parties would not arise.s.42 - Non-inclusion of provision in the contract -Held: Cannot be treated. as accidental and intentionalomission - A contracting party cannot claim to be oblivious of the provisions of the law or the contents of the contract atthe time of signing.s.42- Non-inclusion of provision of s. 42 in the contract- Whether mandamus can be issued by the Court to theparties to amend the contract and incorporate provisions tothis effect - On the facts of the present case, it is not a fitcase where the High Court should have exerciseddiscretionary jurisdiction u/Article 226 of the Constitution -First, the matter is in the realm of pure contract - It is, not acase where any statutory contract is awarded- The contractin question was signed after the approval of Cabinet wasobtained- In the said contract, there was no clause pertainingto s.42 of the Act - The appellant is presumed to haveknowledge of the legal provision, namely, in the absence ofsuch a clause, special allowances uls.42 would beimpermissible - Still it signed the contract without such aclause, with open eyes - No doubt, the appellant claimedthese deductions in its income tax returns which were allowedby the Income Tax Authorities - Further, no doubt, on thispremise, it shared the profits with the Government as well -However, this conduct of the appellant or even therespondents, was outside the scope of the contract and thatby itself may not give any right to the appellant to claim arelief in the nature of Mandamus to direct the Governmentto incorporate such a clause in the contract, in the face ofthe specific provisions in the contract to the contrary as notedabove, particularly, Article 32 thereof - It was purely acontractual matter with no element of public law involvedthereunder.Constitution of India, 1950:Art.226- Writ jurisdiction - Contractual obligation -Contracts entered into by State/Public Authority with privateparties - Legal position in different situations relating to suchcontracts - Enumerated.Art.226 - Invocation of - Held: In pure contractualmatters extraordinary remedy of writ under Article 226 orArticle 32 of the Constitution cannot be invoked - However.in a limited sphere such remedies are available only whenthe non-Government contracting party is able to demonstratethat its a public law remedy which such party seeks to invoke, in contradistinction to the private law remedy simplicitor underthe contract- If the rights are purely of private character, nomandamus can be issued - Thus, even if the respondent isa 'State', other condition which has to be satisfied for issuanceof a writ of mandamus is the public duty - In a matter ofprivate character or purely contractual field, no such publicduty element is involved and, thus, mandamus will not lie -Income Tax Act, 1961. |
