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TMI Blog1988 (8) TMI 134X X X X Extracts X X X X X X X X Extracts X X X X ..... se years were completed by the ITO on11-10-1983, in accordance with the directions of the IAC u/s. 144B. The ITO had made additions for both the years in respect of cash assistance and duty drawback and had added interest under sections 139(8) and 217(1A). So far as the claim of weighted deduction is concerned, for the A. Y. 1981-82, the ITO did not accept the claims in regard to hidden defect charges and expenses on the maintenance of facilities for quality control and inspection of goods. For the A. Y. 1982-83, the claims in respect of the hidden defect charges and export promotion expenses were held to be not qualified for allowance of weighted deduction. However, weighted deduction was allowed by the ITO on the following items : ----------------------------------------------------------------------- Sl. Claim Amount allowed Amount allowed No. for the A.Y. for the A.Y. 1981-82 1982-83 ----------------------------------------------------------------------- Rs. Rs. 1. Subsc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the directions of the IAC (Asst.) u/s. 144B, his orders could not be revised by the Commissioner u/s. 263. In support of this objection, Shri Pradeep Dinodia, the learned counsel for the assessee relied upon the Special Bench decisions of the Appellate Tribunal in the cases of Dwarkadas Co. (P.) Ltd. v. ITO [1982] 1 ITD 303 (Bom.) and East Coast Marine Products (P.) Ltd. v. ITO [1983] 4 ITD 73 (Hyd.). On the other hand, on behalf of the department, Shri O. S. Bajpai, the learned departmental representative pointed out that in terms of Explanation (a) to section 263(1) as inserted by the Taxation Laws (Amendment) Act, 1984 with effect from 1-10-1984 and later on substituted by Finance Act, 1988 with effect from 1-6-1988 "an order passed by the assessing officer" was to include an order of assessment made on the basis of directions issued by the IAC u/s. 144A or section 144B and that section 144B in its earlier form stood substituted. He laid particular emphasis on the fact that in the Explanation to section 263(1) the expression used being "For the removal of doubts, it is hereby declared...." the amendment was to be taken as of a clarificatory nature for the removal of doub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t a clarificatory provision had no retrospective effect but that it was always prospective in its operation. In the face of such a direct decision of the jurisdictional High Court of Bombay, we are afraid the contrary decision of the Bombay Bench relied upon by the department without noticing the said decision of the Bombay High Court cannot to be taken to be good law and it could not assist the department. At one time, we were unclaimed to the prima facie view that owing to the aforesaid decision of the Bombay Bench, we should request the President of the Appellate Tribunal for referring the matter to a Larger Bench on this point. However, in view of the direct authority of the Hon'ble Bombay High Court, which was binding on the Bombay Bench, we have on reconsideration thought that reference to the Larger Bench would be unnecessary. Any amendment to a statute affecting the legal rights of an individual must be presumed to be prospective unless it is made expressly or impliedly retrospective. Retrospective effect in a provision is not to be lightly or readily inferred. In the present case the Explanation to section 263(1) affects a provision which is substantive and not merely proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... --------------- Sl. Provision Remarks No. ----------------------------------------------------------------------------- 1. Explanation 2 to section 5. 2. Explanation to section 15. 3. Explanation 2 to section 23. 4. Explanation to section 32A(9). 5. Explanation 2 to section 36(1)(iia). 6. Explanation 2 to section 40A(7). 7. Explanation to section 43B. 8. Explanation to section 80CCA. 9. Explanation 2 to section 80G(5A). 10. Explanation 5 to section 80G(5A). 11. Explanation to section 263(1) . ----------------------------------------------------------------------------- This shows that the mere use of the expression was not indicative of the fact whether retrospective effect was to be given to it and that whenever the legislature in its wisdom thought fit to give it a retrospective effect, it said so specifically. Therefore, on account of the fact that in section 263(1) the Explanation does not specifically say that it will have retrospective effect, the only inference would be that it is prospective in effect, and not retrospective. To seek to be wiser than the law is the very thin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ganga Devi v. CWT [1986] 28 Taxman 254 (Raj.); (7) CIT v. K. L. Rajput [1987] 164 ITR 197 (MP)(FB); (8) CIT v. Simplex Metalica [1987] 164 ITR 202 (MP)(FB); (9) Sigma Paints Ltd. v. IAC [1987] 21 ITD 11 (Bom.) and (10) Kanhiram Ramgopal v. CIT [1988] 170 ITR 41 (MP). In reply, Shri Dinodia submitted that even if two views were possible on this point, the assessee was entitled to the benefit in view of the well known decision of the Supreme Court in the case of CIT v. Vegetable Products Ltd. [1973] 88 ITR 192. 8. We have considered the rival submissions on both the sides as also the decisions referred to above. The law on the point of merger has been examined in detail by the Hon'ble Calcutta High Court in the case of General Beopar Co. (P.) Ltd. and by the Hon'ble Bombay High Court in the case of P. Muncherji Co. where all the decision on the subject including the decision of the Supreme Court in the case of Madurai Mills Co. Ltd. were examined. The decision of the Hon'ble Allahabad High Court in the case of J. K. Synthetics Ltd. v. Addl. CIT [1976] 105 ITR 344 was also to the effect that there was a complete merger. There is no decision of the Hon'ble Delhi High Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X
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