2011 (7) TMI 346 - HC - Income Tax

Block Assessment - Surcharge u/s 113 - the proviso inserted in section 113 merely clarifies that out of the above four dates the relevant date for applicability of the Finance Act would be the year in which the search stood initiated under section 158C.

Summary

Issues:
Interpretation of proviso to Section 113 of the Income Tax Act, 1961 for block period of 1991-92 to 2001-02.

Detailed Analysis:

Issue 1: Interpretation of Proviso to Section 113
The appeals in question revolve around the interpretation of the proviso to Section 113 of the Income Tax Act, 1961 for the block period of 1991-92 to 2001-02. The main contention was whether the proviso was clarificatory or retrospective in nature. The Revenue argued that the Finance Act provisions for surcharge were applicable retrospectively, while the assessee contended that the proviso could not operate retrospectively. The court referred to the decision of the Apex Court in Commissioner of Income-Tax vs. Suresh N. Gupta, where it was held that the proviso was clarificatory and not retrospective. The court emphasized that the proviso clarified the applicability of the Finance Act based on the year in which the search was initiated.

Issue 2: Applicability of Surcharge on Tax Determined
Another key issue was the applicability of surcharge on the tax determined under Section 113 of the Act. The Revenue argued that surcharge was leviable on the assessed tax amount, independent of the income tax liability of the assessee. The court upheld the Revenue's stance, stating that the surcharge was a distinct charge not contingent on the income tax liability but on the assessed tax amount. The court referred to the Finance Acts of 2000 and 2001, which prescribed surcharge rates, emphasizing that the surcharge was leviable on the assessed tax amount.

Judgment:
The court found that the issues raised in the appeals were in line with the decision of the Apex Court in Commissioner of Income-Tax vs. Suresh N. Gupta. Consequently, the court ruled in favor of the Revenue, stating that the questions posed in the appeals were to be answered in favor of the Revenue. The court allowed all Tax Appeals, reversing the impugned orders of the Tribunal, as the central issue remained the same across the appeals, despite minor modifications due to changes in block years.