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Issues involved: Interpretation of tax law regarding cash compensatory support treated as capital receipt u/s 28(iiib) of Income-tax Act, 1961, and levy of additional tax and interest u/s 234B.
Judgment Summary: The assessee filed the return of income for the assessment year 1989-90, treating cash compensatory support as a capital receipt based on a Tribunal decision. Subsequently, a retrospective amendment made it chargeable to income tax u/s 28(iiib). The Assessing Officer adjusted the amount, levied additional tax and interest u/s 234B. The Tribunal held that penalizing the assessee for the amendment would be unjust, citing a similar case precedent. The Commissioner requested a reference to the High Court on the correctness of the Tribunal's decision. The High Court, considering the Tribunal's earlier judgment in a similar case, held that when an assessee files a return under existing law, they cannot be held liable for retrospective amendments and additional tax. The Court agreed with the previous Division Bench ruling in a similar case, emphasizing that justice should prevail in such situations. The Revenue's request for deferment based on a pending Supreme Court case was denied. The High Court concluded that the issue had been decisively addressed in the previous case, ruling in favor of the assessee based on principles of justice and legal interpretation. Overall, the High Court upheld the Tribunal's decision, emphasizing that an assessee should not be penalized for filing a return in accordance with the law at the time, especially when faced with retrospective amendments. The judgment highlighted the importance of fairness and justice in tax assessments.
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