2010 (3) TMI 1281 - HC - Income Tax

Summary

Issues involved: Whether the Income Tax Appellate Tribunal was justified in holding that retrospective amendment to the statute does not entitle the assessing officer to invoke the powers of rectification under Section 154 of the I.T. Act.

Summary:
1. Background: Two cashew exporters claimed deduction of income from export of cashew kernels under Section 80HHC of the Act. The Taxation Law Amendment Act, 2005 introduced retrospective amendments to Section 80HHC from 1.4.1992. The assessing officer rectified the assessments under Section 154 to align with the retrospective amendments, which were contested by the assessees.

2. Appellate Tribunal's Decision: The Tribunal, following Supreme Court precedents, allowed the appeals by holding that assessments could not be rectified based on retrospective amendments. The revenue filed appeals against these orders.

3. Revenue's Argument: The revenue contended that retrospective amendment to the statute justifies rectification under Section 154, citing Supreme Court decisions in support.

4. High Court's Decision: The High Court held that once a retrospective amendment is made, it is deemed to have been in the statute during the relevant years. Assessments completed without considering the retrospective amendments were deemed mistaken orders. Therefore, the assessing officer was justified in revising the assessments under Section 154. The Court reversed the Tribunal's orders and restored the orders of the CIT (Appeals) confirming the assessments.

5. Remand: The Court remanded the cases to the Tribunal for reconsideration of other grounds not considered, such as the computation of eligible deduction under Section 80HHC and liability for interest.

Conclusion: The High Court allowed the appeals by the revenue, holding that retrospective amendments justified rectification under Section 154, and remanded the cases for reconsideration on other grounds.