2016 (8) TMI 1355 - HC - Income Tax

Amendment to section 40(a)(ia) - retrospectivity or prospectivity - Held that - The controversy involved in the present case stands concluded in favour of the assessee and against the revenue by the decision of this court in the case of Commissioner of Income Tax Ahmedabad-IV v. Omprakash R Chaudhary 2015 (2) TMI 150 - GUJARAT HIGH COURT wherein it was held that the amendment made in section 40(a)(ia) is retrospective in nature - Decided in favor of assessee.

Summary

Issues:
Challenge to order of Income-tax Appellate Tribunal on cross-objection by appellant-assessee under section 260A of the Income-tax Act, 1961. Interpretation of the amended proviso to section 40(a)(ia) of the Act as retrospective or prospective.

Analysis:

1. The appellant-assessee challenged the order of the Income-tax Appellate Tribunal, specifically the dismissal of the cross-objection, through an appeal under section 260A of the Income-tax Act, 1961. The central issue revolved around the interpretation of the amended proviso to section 40(a)(ia) of the Act, questioning its retrospective or prospective application.

2. The court framed the substantial question of law as to whether the amended proviso to section 40(a)(ia) of the Act, substituted by the Finance Act, 2010, should be considered remedial and curative, thereby operating retrospectively. The learned counsel for the assessee argued that a prior decision of the court had established the retrospective nature of the amendment, citing a specific case and paragraph from a previous order as precedent.

3. Notably, the court referred to a previous decision by the court in a related case where it was held that the amendment made in section 40(a)(ia) of the Income-tax Act, 1961, by the Finance Act, 2010, was retrospective from the date of insertion of the section. The counsel for the revenue did not contest this position put forth by the assessee.

4. After hearing arguments from both sides and considering the precedents, including the earlier decisions of the court, the judges concluded that the amendment in question was indeed retrospective and not prospective. Relying on the previous court decisions, the judges ruled in favor of the assessee and against the revenue, allowing the appeal accordingly.

In summary, the judgment by the Gujarat High Court in this case addressed the challenge raised by the appellant-assessee against the order of the Income-tax Appellate Tribunal regarding the interpretation of the amended proviso to section 40(a)(ia) of the Income-tax Act, 1961. The court, after considering past decisions and arguments presented, determined that the amendment was retrospective in nature, leading to a favorable outcome for the assessee in the appeal.