2019 (1) TMI 113 - HC - Income Tax

AO s power to levy surcharge - Effective date of proviso appended to Section 113 of the Income Tax Act vide Finance Act, 2002 - Amendment retrospective or prospective - Held that - Held that - The issue has been decided by the Hon ble Supreme Court in favour of the assessee and against the Revenue in the case of CIT (Central)-I Vs. Vatika Township Private Limited 2014 (9) TMI 576 - SUPREME COURT . As considered by the Hon ble Supreme Court, was as to whether levy of surcharge, which was introduced by insertion of Proviso to Section 113 of the Income Tax Act, 1961, could be made retrospective. If the Enactment is expressed in language, which is fairly capable of either interpretation, it ought to be construed as prospective only. Thus, following the above decision, the substantial questions of law, framed for consideration, are answered in favour of the assessee.

Summary

Issues:
1. Whether the Tribunal was right in holding that the Assessing Officer has no power to levy surcharge while giving effect to the order of the Commissioner of Income Tax (Appeals)?
2. Whether the Tribunal was right in holding that the assessee was right in questioning the levy of surcharge by a rectification petition (and not an appeal)?

Analysis:

1. The High Court addressed the first issue concerning the power of the Assessing Officer to levy surcharge in compliance with the Commissioner of Income Tax (Appeals) order. The Court referred to a Supreme Court decision in the case of CIT (Central)-I Vs. Vatika Township Private Limited, where it was held that the levy of surcharge, introduced through an amendment to the Income Tax Act, could not be applied retrospectively. The Court concluded that the issue had already been settled by the Supreme Court in favor of the assessee, leading to the dismissal of the appeal filed by the Revenue.

2. The second issue involved whether the assessee was correct in challenging the levy of surcharge through a rectification petition instead of an appeal. The Court's decision was based on the interpretation of the relevant legal provisions and the precedent set by the Supreme Court. By following the Supreme Court's ruling on the prospective application of the surcharge provision, the Court sided with the assessee and dismissed the appeal filed by the Revenue. The substantial questions of law were answered in favor of the assessee, leading to the rejection of the Revenue's appeal without any costs imposed.

In conclusion, the High Court's judgment was based on the interpretation of legal provisions and the application of precedent set by the Supreme Court in a similar case. The decision favored the assessee, leading to the dismissal of the Revenue's appeal regarding the levy of surcharge by the Assessing Officer.