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TMI Blog1990 (5) TMI 87X X X X Extracts X X X X X X X X Extracts X X X X ..... ax Act, which permitted the parent-company to require the assessee-trust, which was meant for welfare of its employees, to return its contribution and which requirement if made the assessee had to comply with, there would be no wealth, which was assessable in the hands of the assessee. The Commissioner (A) negatived this plea on the ground that on the valuation dates the trust had with it amounts donated by the company and the retrospective amendment under sec. 40A(11) came into force only on a subsequent date and, therefore, did not advance the contention of the assessee. Invoking of the provisions of sec. 17 for the assessment year 1983-84 was also upheld and the appeals of the assessee were dismissed. 2. In the appeals before us one contention urged is that the framing of assessments in the status of A.O.P. was erroneous. The second set of contentions urged was that in view of the retrospective amendment of sec. 40A(11), when the parent-company having called back its contribution from the assessee, there could be no wealth assessable in the hands of the assessee. At the hearing certain additional grounds were also sought to be urged, namely, that since the revocation of the tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tube Investment of India Ltd. (the company which made the contributions) asked the assessee-trust to refund the unutilised amount from out of the contributions made by it right from the inception of the trust together with the accretions thereon. Such demand was made by the letter dated 25-6-1984. A copy of the said letter was furnished ... In the said letter, it is stated that the aggregate of the contributions made by the company to the assessee-trust during 1978-79 to 1982-83 is stated to be Rs. 30.50 lakhs and a demand to refund the said amount and to account for the actual expenditure incurred by the assessee-trust is made in the said letter. In pursuance of the letter issued by the assessee-trust, it has passed a resolution dated 5-7-1984 stating that the contributions made by the Tube Investment of India Ltd. from 1979 to 1983 and the accretions thereon would be refunded to them as per their request in their letter dated 25-6-1984. It is also stated in the second resolution that from out of the contributions made by the company, the assessee had lent some of the monies to the exployees towards loans and refund of the amounts constituting the loans would be made as and when t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te. The question which we have to examine is what is the impact of this provision which had retrospective effect from 1-4-1980. Fortunately for us, we have guidance in this regard from the ratio of the decision of the Supreme Court in the case of S.A.L. Narayan Row v. Ishwarlal Bhagwandas [1965] 57 ITR 149. Originally if the estimate of advance tax fell below the prescribed limit, the ITO was obliged to direct payment of interest. The position thereafter is quoted from the majority judgment of the Supreme Court as under :--- " But by Act 25 of 1953 which was enacted with retrospective operation from April 1, 1952, the following proviso was added as the fifth proviso to section 18A(6) : Provided further that in such cases and under such circumstances as may be prescribed, the Income-tax Officer may reduce or waive the interest payable by the assessee. " The amendment authorised the Income-tax Officer to reduce or waive the interest payable by the assessee in such cases and under such circumstances as may be prescribed. It was given retrospective operation from April 1, 1952, and the discretion conferred upon the Income-tax Officer because, by fiction of law, exercisable as fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reduce or waive interest except in cases and in circumstances prescribed. But once the rules are framed, they by reason of the retrospective operation of Act 25 of 1953, become operative as from the date on which the Act has become operative. " " The Attorney-General contended that in any event there was nothing to show that the Income-tax Officer had purported to exercise his discretion when he passed the order of assessment and did not impose any liability for payment of interest under section 18A(6). That may be so. But the case of the assessee did fall within the terms of rule 48(1) and the Income-tax Officer must in law be bound to consider whether he was entitled to reduction or waiver of interest under the fifth proviso. The amendment and the rules which came into operation later must in view of the retrospective operation be deemed to be then extent, and the fact that the Income-tax Officer could not in making the assessment have adjusted his approach to the problem before him in the light of those provisions is irrelevant in considering the legality of his order. The order of the Income-tax Officer which did not take note of the law deemed to be in force must be regarde ..... X X X X Extracts X X X X X X X X Extracts X X X X
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