The Assessing Officer disallowed the value added tax expense claimed by the on the ground that it was an exclusive levy by the State Government and therefore squarely covered by section 40(a)(iib) of the Act . On a writ petition, the High Court set aside the assessment order to the extent of the disallowance in terms of section 40(a)(iib), on the ground of violation of principles of natural justice. While the matter was pending before the Assessing Officer the assessee filed a writ petition challenging the validity of section 40(a)(iib) as discriminatory and violative of article 14 of the Constitution of India. The High Court dismissed the petition without deciding the validity of section 40(a)(iib) observing that the vires of the provision need not be entertained as the matter was still sub judice before the Income-tax authority. On appeal allowing the appeal, that when the vires of section 40(a)(iib) of the Act were challenged, which could be decided by the High Court alone in exercise of powers under article 226 of the Constitution of India, the High Court ought to have decided the issue with regard to the vires of section 40(a)(iib) on the merits, irrespective of whether the matter was sub judice before the Income-tax authority. The vires of a provision go to the root of the matter. Once the show-cause notice was issued by the Assessing Officer calling upon the assessee to show cause why the value added tax expenditure should not be disallowed in accordance with section 40(a)(iib) , the cause of action arose for the assessee to challenge the vires of section 40(a)(iib) of the Act and the assessee might not have to wait till the assessment proceedings before the Income-tax authority were finalised. The stage at which the assessee approached the High Court and challenged the vires of section 40(a)(iib) of the Act could be said to be an appropriate moment. The High Court was to decide the writ petition on the merits and decide the question with respect to challenge to the vires of section 40(a)(iib) of the Act on the merits. Matter remanded. (AY.2017-18)