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Based on the aforesaid conclusion, the Delhi High Court struck down Notification Nos.87 and 88 of 2016 dated 29.09.2016 and Circular No.10 of 2017 issued by the Central Board of Direct Taxes as ultra vires the Act.

6. After the judgment of the Delhi High Court, the present provisions of Section 145A have been substituted vide Finance Act 2018 with retrospective effect from 01.04.2017 to give legitimacy to the ICDS, issued by Notification Nos. 87 and 88 of 2016 dated 29.09.2016. The substituted provision of Section 145A, on reproduction would read as under:

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6.1 Clause (i) of Section 145A of the Act, so substituted, provides that to determine the income chargeable to tax under the head "Profits and Gains of Business or Profession", the valuation of inventories shall be made at lower of actual cost or net realisable value computed in accordance with the Income Computation and Disclosure Standards (ICDS) notified under sub-section (2) of Section 145 of the Act.

6.2 The purpose of substituting Section 145A with retrospective effect from 01.04.2017, to apply the same in relation to Assessment Year 2017-18 and subsequent W.P.(C) Nos.30318/2019, 1529/2024, 17949/2020, 17828/2020, 17964/2020, 17972/2020, 28444/2021, 29846/2021, 30448/2021, 30354/2019, 30340/2019, 30373/2019, 32237/2019 assessment years, is provided in the Memorandum explaining the provisions in the Finance Bill 2018, as under:

6.3 The result of the substitution in Section 145A with retrospective effect from 01.04.2017 would be the regularly adopted method of accounting and valuation of stock/inventory of the petitioner, wherein the 'cost' of the inventory used to be arrived by applying LIFO, is now invalidated and the petitioner would be required to revalue its W.P.(C) Nos.30318/2019, 1529/2024, 17949/2020, 17828/2020, 17964/2020, 17972/2020, 28444/2021, 29846/2021, 30448/2021, 30354/2019, 30340/2019, 30373/2019, 32237/2019 closing stock for the Assessment Year 2017-18, applying FIFO based on the retrospective substitution of the provisions of Section 145A vide Finance Act 2018 after the date of the filing of the return of the income for the said year.

B. Declare that section 145A introduced by the Finance Act, 2018 w.e.f. 1.4.2017 and made applicable for the assessment year 2017-18 in substitutions of Section 145A as introduced by Finance (No.2) Act, 2018 with effect from 1.4.2017 is arbitrary, illegal, violative of Article 14, 19(1) (g) and 265 of the Constitution of India and is unconstitutional and is to be rendered unenforceable;

C. Declare that in case para 16 of the ICDS-II is held to be mandatory of application, the same has to be read down to the extent of directing that the opening stock of the year of first-time adoption of the said para 16 of ICDS-II should also be valued as per the same method used for valuing closing W.P.(C) Nos.30318/2019, 1529/2024, 17949/2020, 17828/2020, 17964/2020, 17972/2020, 28444/2021, 29846/2021, 30448/2021, 30354/2019, 30340/2019, 30373/2019, 32237/2019 stock of that year;