1987 (12) TMI 94 - AT - Income Tax

Summary

Issues Involved:
1. Applicability of Income-tax Act, 1961 to the Continental Shelf and Exclusive Economic Zone for the assessment year 1983-84.
2. Interpretation of the Notification No. 5147/F. No. 135(79) (ii) /82-83, TPL, dated 31-3-1981.
3. Jurisdiction of the CIT (Appeals), Madras.
4. Retrospective application of tax laws.

Detailed Analysis:

1. Applicability of Income-tax Act, 1961 to the Continental Shelf and Exclusive Economic Zone for the assessment year 1983-84:

The Department argued that the Notification No. GSR 304(E), dated 31-3-1983, extended the Income-tax Act, 1961 to the Continental Shelf and Exclusive Economic Zone of India with effect from 1-4-1983, making it applicable for the assessment year 1983-84. The assessees contended that the Notification was prospective and did not apply to income earned before 1-4-1983. The Tribunal concluded that the Continental Shelf and Exclusive Economic Zone were not part of India before 1-4-1983, and therefore, the income earned by the assessees prior to this date could not be taxed under the Income-tax Act, 1961 for the assessment year 1983-84.

2. Interpretation of the Notification No. 5147/F. No. 135(79) (ii) /82-83, TPL, dated 31-3-1981:

The assessees argued that the Notification dated 31-3-1983 applied only from the assessment year 1984-85 onwards and not retrospectively. The Tribunal agreed, stating that the Notification did not explicitly state it was retrospective. The Tribunal emphasized that a notification or amendment cannot have retrospective application unless specifically stated. The Tribunal referenced various legal precedents to support this view, including the Supreme Court's decision in ITO v. M. C. Ponnoose [1970] 75 ITR 174.

3. Jurisdiction of the CIT (Appeals), Madras:

The Department argued that the CIT (Appeals), Madras, did not have jurisdiction over the case as the jurisdiction had been transferred to the CIT (Appeals), Meerut, under sec. 121A of the Income-tax Act, 1961. However, this jurisdictional issue was not pressed by the Departmental Representative during the hearing before the Tribunal. Consequently, the Tribunal did not address this issue in detail.

4. Retrospective application of tax laws:

The Department argued that the Notification dated 31-3-1983, applicable from 1-4-1983, made the Income-tax Act, 1961 applicable to the income for the assessment year 1983-84. The Tribunal disagreed, stating that applying the Notification to income earned before 1-4-1983 would give it retrospective effect, which is not permissible unless explicitly stated. The Tribunal referenced several legal precedents, including the Supreme Court's decision in Karimtharuvi Tea Estate Ltd. v. State of Kerala [1966] 60 ITR 262, to support the view that tax laws cannot be applied retrospectively unless clearly stated.

Conclusion:

The Tribunal upheld the CIT (Appeals)'s decision, confirming that the income earned by the assessees prior to 1-4-1983 could not be taxed under the Income-tax Act, 1961 for the assessment year 1983-84. The appeals filed by the Department were dismissed.