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TMI Blog2019 (8) TMI 458X X X X Extracts X X X X X X X X Extracts X X X X ..... t of April of the assessment year in which assessment for the previous year is being done as the same would only provide for ascertaining the rate, for existing liability under the Income Tax Act. But that is not the case here. Under the new provision, i.e. Section 64(1)(iii) a new liability has been prescribed and not the rate for ascertaining the liability. Such new liability under the Income Tax Act cannot be given a retrospective effect. Such liability can only be fastened on an individual if the same was existing at the time of accrual and not at the time of assessment. The observations of the Apex Court in paragraph 33 of the judgment in the case of Keshoram Industries and Cotton Mills (supra), clarifies this position. In view of the judgments of the Apex Court in the case of Keshoram Industries (supra) as well as Karimtharuvi Tea Estate Ltd (supra) this Court would have no hesitation in holding that for deciding the liability of a particular provision of the Income Tax Act, the date of accrual of income would be relevant. If the provision comes into force in a particular financial year, it would apply to the assessment for that year but cannot be made applicable in respect o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 ITR 262 (SC) and Maneklal Vallabhdas Parikh and Sons v. CIT [1969] 72 ITR 637 (Guj). In the instant case, the assessment year is 1976- 77. Therefore, the law in force on April 1, 1976, would govern the assessment for the assessment year in question. The Tribunal, in our opinion, was right in holding that the share income of the minor sons from the firm to which they were admitted as partners was assessable in the hands of their fathers by virtue of the provisions of Section 64(1)(iii) of the Act as amended from April 1, 1976 by the Taxation Law (Amendment) Act, 1975 Our answer to the question referred to this Court is, therefore, in the affirmative and against the assessees." 4. It is when the issue arose for consideration in these two cases before the Division Bench that the decision of the Apex Court in the case of Kesoram Industries and Cotton Mills Ltd, vs. Wealth Tax Commissioner (Central), Calcutta, reported in AIR 1966 SC 1370 was relied upon by Counsel for the assessee to contend that the liability to pay income tax hinges on accrual of income and has no concern with the time when computation is made by the taxing authority. It was the submission of learned Counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. 11. The issues in both the cases are one and the same. 12. Mr. Pathy appearing on behalf of the assessee in both the matters has submitted that the provisions of the Amending Act have come into force with effect from the date specified in the notification issued under Section 2 of the Amendment Act i.e. with effect from 1.4.1976. It is his submission that even if the share income of the minor accrued prior thereto, the same was liable to be added in the income of the parent, for the purpose of computing taxable income of the father in compliance with the provisions contained in Section 64(i)(iii) of the Amendment Act. 13. Learned Counsel have placed reliance on the judgment rendered in the case of Badri Prasad (supra), the relevant extract of which has been extracted hereinabove at paragraph 3. It is their submission that in view of the consideration and opinion expressed by the Division Bench in the case of Badri Prasad (supra), the issue now stands settled. It is canvassed that irrespective of the fact that the Taxation Law Amendment Act has come into force with effect from 1.4.1976 and irrespective of the fact that the accounting year of both the assessees had closed prio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment year 1977-78. This is the irresistible conclusion reached by applying the law laid down by the Apex Court in para 8 of the Constitution Bench judgment in the case of Karimtharuvi Tea Estate Ltd (supra). 16. The earlier judgment of the Apex Court in the case of Kesoram Industries (supra) decided on 24.11.1965 is in line with the Constitution Bench judgment of the Supreme Court in Karimtharuvi Tea Estate Ltd (supra) decided on 15.12.1965. The relevant extract of the judgment of the Apex Court in Kesoram Industries (supra) is as follows:- 26. Uninfluenced by judicial decisions let us at the out-set look at the relevant provisions of the two Acts. Under Section 3 of the Income Tax Act, where any Central Act enacts that income tax shall be charged for any year at any rate or rates, tax at that rate or those rates shall be charged for that year in accordance with, and subject to the provisions of, the said Act. The expression "charged" is used both in the case of the Central Act i.e. the Finance Act, and the Income Tax Act. It could not have been the intention of the Legislature to charge the income to income tax under two Acts. Necessarily, therefore, they are used in two ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 33. To summarize: A debt is a present obligation to pay an ascertainable sum of money, whether the amount is payable in praesenti or in futuro: debitum in praesenti, solvendum in futuro. But a sum payable upon a contingency does not become a debt until the said contingency has happened. A liability to pay income tax is a present liability though it becomes payable after it is quantified in accordance with ascertainable data. There is a perfected debt at any rate on the last day of the accounting year and not a contingent liability. The rate is always easily ascertainable. If the Finance Act is passed, it is the rate fixed by that Act; if the Finance Act has not yet been passed, it is the rate proposed in the Finance Bill pending before Parliament or the rate in force in the preceding year, whichever is more favourable to the assessee. All the ingredients of a "debt" are present. It is a present liability of an ascertainable amount. 36. For the reasons we have stated earlier, we agree with the conclusion arrived at by the Gujarat High Court. We, therefore, hold that the liability to pay income tax is a debt within the meaning of Section 2(m) of the Wealth Tax Act and it arises ..... X X X X Extracts X X X X X X X X Extracts X X X X
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