2012 (9) TMI 263 - HC - Income Tax

Challenge against insertion of clause (iiid) and (iiie) to Section 28 and third and fourth provisos to Section 80HHC - Held that - The impugned amendment is violative for its retrospective operation as in this type of substantive amendment retrospective operation can be given only if it is for the benefit of the assessee but not in a case where it affects even a fewer section of the assessee - order to quash the impugned amendment only to this extent that the operation of the said section could be given effect from the date of the amendment and not in respect of earlier assessment years of the assessees whose export turnover is above Rs. 10 Crore. Decision in AVANI EXPORTS & OTHERS Versus COMMISSIONER OF INCOME TAX RAJKOT & ORS. 2012 (7) TMI 190 - GUJARAT HIGH COURT followed.

Summary

Issues involved:
Challenge to Taxation Laws (Amendment) Act, 2005 regarding specific amendments in the Income Tax Act, 1961.

Analysis:

1. Challenge to Specific Amendments: The petitions challenged the Taxation Laws (Amendment) Act, 2005, focusing on the insertion of clause (iiid) and (iiie) to Section 28 and the insertion of the third and fourth provisos to Section 80HHC of the Income Tax Act, 1961. This challenge was based on the retrospective operation of the amendments and the impact on different classes of assessees.

2. Transfer of Writ Petitions: Various similar matters were filed before different High Courts, leading to a Transfer Petition to consolidate these cases. The Supreme Court transferred these matters to the High Court of Gujarat to avoid conflicting judgments and ensure uniformity in decisions across different jurisdictions.

3. Judgment of Gujarat High Court: The Division Bench of the Gujarat High Court, after considering the arguments, found that the impugned amendment had retrospective implications that could adversely affect certain assessees. The Court ruled that retrospective amendments should not be detrimental to any assessee and quashed the amendment to the extent that it affected the assessments of assessees with export turnover above a specified amount.

4. Application of Gujarat High Court Judgment: In light of the transfer of all related matters to the Gujarat High Court by the Supreme Court to prevent confusion and enforcement difficulties arising from conflicting judgments, the Bombay High Court decided to follow the judgment of the Gujarat High Court in disposing of the petitions. Consequently, the petitions, except the first four, were disposed of in line with the Gujarat High Court's ruling, ensuring consistency in the application of the law.

5. Conclusion: The Bombay High Court aligned its decision with the Gujarat High Court's judgment to maintain uniformity and avoid conflicting outcomes. By following the Gujarat High Court's ruling, the Bombay High Court ensured clarity and consistency in the interpretation and application of the law, particularly concerning the challenged amendments to the Income Tax Act, 1961.