1982 (10) TMI 66 - AT - Income Tax

Summary

Issues:
1. Taxability of reward received by the assessee from Customs Department under section 10(17B) of the Income-tax Act, 1961.

The judgment by the Appellate Tribunal ITAT BOMBAY-E dealt with an appeal regarding the taxability of a reward received by the assessee from the Customs Department. The assessee received a sum of Rs. 56,500 as a reward from customs authorities and claimed it to be exempt from tax under section 10(17B) of the Income-tax Act, 1961. The provision exempted payments made as a reward by the Central Government for approved purposes. The provision was inserted with retrospective effect from 1-4-1973. However, the order approving the rewards was issued by the Central Government only on 19-9-1975. The assessee contended that the order should be effective from 1-4-1973, allowing for exemption. The Tribunal noted that exemption could only be claimed based on an order issued by the Central Government approving the award, which in this case was issued on 19-9-1975 without retrospective effect. The Tribunal rejected the assessee's claim that the order should be retrospective from 1-4-1973, citing relevant legal precedents that supported the effective date of the order. Therefore, the appeal was dismissed, upholding the decision of the lower authorities regarding the taxability of the reward received.

In conclusion, the judgment clarified that the assessee could not claim exemption for the reward received from the Customs Department solely based on the provision in section 10(17B) being on the statute book with retrospective effect. The Tribunal emphasized that exemption could only be claimed upon the issuance of an order by the Central Government approving the award, which was done on 19-9-1975 without retrospective effect. The Tribunal rejected the argument that subsequent orders or notifications automatically take effect from the date the provision came into effect, highlighting that the order must specify the effective date. The decision of the Tribunal was based on the legal principle that the effective date of an order or notification is crucial in determining eligibility for exemption under the Income-tax Act, 1961.