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2014 (10) TMI 785 - HC - Income TaxEffect of amendment to section 2(47)(v) - Scope of term transfer - Whether the Tribunal is right in its interpretation that the amendment made with effect from 1.4.1988 by the Finance Act, 1987 enlarging the scope of the word transfer used in section 2(47)(v) was retrospective in nature and would apply for the A.Y 1977-78 also or not Held that - The interpretation of the Tribunal is erroneous assessee rightly contended that the Tribunal has erred in law in concluding that the amendment made by the Finance Act, 1987 enlarging the scope of the word transfer in section 2(47) (v) has to be treated as retrospective in nature and would therefore apply to AY 1977-78 without considering the fact that the amendment is applicable with effect from 01.04.1988 and cannot be applied retrospectively the order of the Tribunal is to be set aside Decided in favour of assessee.
Issues: Interpretation of the word "transfer" under section 2(47)(v) of the Income Tax Act, 1961 for the assessment year 1977-78.
In this case, the appellant, a construction company, followed the mercantile system of accounting for the year ending on 30.09.1976. The assessing officer disapproved the accounting method and estimated a 10% profit for the assessment year 1977-78 due to flats being given on hire purchase with ownership conditions. The CIT(A) upheld the addition, leading to an appeal before the ITAT. The Tribunal dismissed the appeal, prompting the appellant to challenge the interpretation of the Finance Act, 1987 amendment regarding the word "transfer" under section 2(47)(v) for the A.Y 1977-78. The appellant argued that the amendment cannot be applied retrospectively to their case. The High Court analyzed the statutory provisions and held that no law can be given retrospective effect, emphasizing that the amendments would apply from 1-4-1988 onwards. The Court found the Tribunal's interpretation erroneous, disagreed with the reliance on a Supreme Court decision, and ruled in favor of the appellant, quashing the Tribunal's order and allowing the appeal.
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