( 1 ) ALL these writ applications were heard together pursuant to the order of transfer passed by the Hon'ble Supreme Court of India as a pure question of law arises for determination in these applications.

( 2 ) THE question is whether the Accounting Standard 22 ("as-22"), particularly, the paragraphs 9 and 33 thereof, which have now being incorporated in the form of the Rules framed by the Central Government under section 642 (1) of the Companies Act, 1956 are ultra vires the Statute, viz. sections 209 (1), 209 (3) and 211 of the Companies Act and consequently, void, inoperative and in excess of the statutory provisions of the Companies Act or the constitution of India. Simplex Concrete Piles vs. Union of India (B. Bhattacharya,. , JJ.) (DB) 145

( 3 ) DR. Pal, the learned senior Advocate appearing on behalf of the Simplex concrete Piles (India) Limited and Ors. , the writ petitioners in W. P. No. 1459 of 2002 advanced the main argument on behalf of all the writ petitioners and those were supplemented by Mr. Arvind Datar and Mr. V. Ramchandran, Mr. J. P. Khaitan. the learned senior Counsel for the other writ petitioners.

( 4 ) DR. Pal, at the very outset, points out that paragraph 9 of AS-22 lays down, that the tax expense for the period comprising the current tax and deferred tax should be included in the determination of the net profit or loss for the period concerned. e. the relevant financial year. He then refers to the definition of the 'deferred tax' as provided in paragraph 4 to mean the tax effect of the timing differences. Deferred tax-liability due to timing differences can arise, according to Dr. Pal, if at all, only in the future years in respect of the transactions which had taken place in the earlier period and out of which, the difference between the accounting profit and the assessable profit for the purpose of Income-tax Act arises. Such difference, Dr. Pal continues, does not create a present legal liability to tax for the current financial year but may arise only, if at all, in the future years when the written down value of the assets according to Schedule of depreciation laid down under the Income-tax Rules, 1962 and the depreciation calculated under the Companies Act either on straight line method or according to Schedule XIV of the Companies Act may reverse. The liability arising as a result of the timing difference, according to Dr. Pal, is a notional or contingent liability, which may or may not arise in the future years and therefore, the said liability cannot accrue nor can the same be ascertained as a present legal liability. Such a contingent or a notional liability, which is not an accrued or ascertained liability for the current year, therefore, according to the petitioners, cannot be charged to the Profit and Loss Account for the current year, and if the contingent or notional liability is so directed to be charged to the Profit and Loss Account, it will be contrary to and inconsistent with the mandatory provisions of section 209 (3) of the Companies Act read with section 211 (2) of the Companies Act and therefore, such a direction embodied in paragraph 9 of AS-22 as incorporated in the prescribed Rules will be in excess of, contrary to, and inconsistent with, the said mandatory provisions of the Companies Act.

( 5 ) DR. Pal submits that the Central Government, in exercise of the powers conferred by clause (a) of sub-section (1) of section 642 of the Companies Act, 1956 read with sub-section (3c) of section 211 and sub-section (1) of section 210a of the said Act in consultation with the National Advisory Committee on accounting Standards, had framed the said Rules viz. Companies (Accounting standard) Rules, 2006 on 7th December, 2006 and accordingly, his clients, by filing supplementary affidavit, have challenged those rules with the leave of this Court.

( 6 ) CLAUSE (2) of the general instructions incorporated in the said prescribed rules lays down that the Accoun