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TMI Blog2019 (8) TMI 1498X X X X Extracts X X X X X X X X Extracts X X X X ..... ature and has retrospective effect from 1st April 2005, merits acceptance. No substantial question of law arises - Decided in favour of the Assessee - ITA No. 100056 of 2014. - - - Dated:- 23-8-2019 - Mrs. S. Sujatha And N. K. Sudhindrarao JJ. For the Appellants : Sri Ameet Kumar Deshpande, Advocate For the Respondent : A. Shankar, Senior Counsel along with V. Narendra Shankar, Advocate JUDGMENT MRS. S. SUJATHA J. - 1. This income tax appeal is filed by the Revenue under section 260A of the Income-tax Act, 1961 ( the Act for short) assailing the order of the hon'ble Income-tax Appellate Tribunal, Bengaluru Bench B , Bengaluru in I. T. A No. 1831/Bang/2013 dated February 21, 2014 relating to the assessment year 2005-06. 2. The substantial question of law that arises for our consideration is : Whether the second proviso to section 40(a)(ia) of the Act inserted by the Finance Act, 2012 is clarificatory and retrospective in nature and disallowance under section 40(a)(ia) of the Act by the Tribunal is justifiable where the recipient of the amount has already dis charged his tax liability therein ? 3. Learned counsel for the appellant-Reven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18 (Karnataka High Court), in the case of Smt. Deeva Devi v. Pr. CIT [2019] 14 ITR-OL 692 (Karn). 6. Adverting to the arguments advanced by the learned counsel for the parties, in the light of the judgments referred to above, it would be beneficial to refer to section 40(a)(ia) of the Act and the proviso thereof which is as under : 40(a)(ia) thirty per cent. of any sum payable to a resident on which tax is deductible at source under Chapter XVII-B and such tax has not been deducted or, after deduction, has not been paid on or before the due date specified in sub-section (1) of section 139 : Provided that where in respect of any such sum, tax has been deducted in any subsequent year, or has been deducted during the previous year but paid after the due date specified in sub-section (1) of section 139, thirty per cent. of such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid : Provided further that where an assessee fails to deduct the whole or any part of the tax in accordance with the provisions of Chapter XVII-B on any such sum but is not deemed to be an assessee in default under the first proviso to sub-s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed due to tax withholding lapses by the assessee. It is not, in our considered view, a penalty for tax withholding lapse but it is a sort of compensatory deduction restriction for an income going untaxed due to tax with holding lapse. The penalty for tax withholding lapse per se is separately provided for in section 271C, and, section 40(a)(ia) does not add to the same. The provisions of section 40(a)(ia), as they existed prior to insertion of the second proviso thereto, went much beyond the obvious intentions of the lawmakers and created undue hardships even in cases in which the assessee's tax withholding lapses did not result in any loss to the exchequer. Now that the Legislature has been compassionate enough to cure these shortcomings of the provision, and thus obviate the unintended hardships, such an amendment in law, in view of the well settled legal position to the effect that a curative amendment to avoid unintended consequences is to be treated as retrospective in nature even though it may not state so specifically, the insertion of the second proviso must be given retrospective effect from the point of time when the related legal pro vision was introduced. In view of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... que required to draft a legislation as well as to understand a legislation. Former technique is known as legislative drafting and latter one is to be found in the various principles of 'interpretation of statutes'. Vis-a-vis ordinary prose, a legislation differs in its provenance, lay-out and features as also in the implication as to its meaning that arise by presumptions as to the intent of the maker thereof. Of the various rules guiding how a legislation has to be interpreted, one established rule is that unless a contrary intention appears, a legislation is presumed not to be intended to have a retrospective operation. The idea behind the rule is that a current law should govern current activities. Law passed today cannot apply to the events of the past. If we do something today, we do it keeping in view the law of today and in force and not tomorrow's backward adjustment of it. Our belief in the nature of the law is founded on the bed rock that every human being is entitled to arrange his affairs by relying on the existing law and should not find that his plans have been retrospectively upset. This principle of law is known as lexprospicit non respicit : law look ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here a law is enacted for the benefit of community as a whole, even in the absence of a provision the statute may be held to be retrospective in nature. However, we are confronted with any such situation here. In such cases, retrospectivity is attached to benefit the persons in contradistinction to the provision imposing some burden or liability where the presumption attaches towards prospectivity. In the instant case, the proviso added to section 113 of the Act is not beneficial to the assessee. On the contrary, it is a provision which is onerous to the assessee. Therefore, in a case like this, we have to proceed with the normal rule of presumption against retrospective operation. Thus, the rule against retrospective operation is a fundamental rule of law that no statute shall be construed to have a retrospective operation unless such a construction appears very clearly in the terms of the Act or arises by necessary and distinct implication. Dogmatically framed, the rule is no more than a presumption, and thus could be displaced by out weighing factors. 10. Thus the hon'ble Allahabad High Court has observed that the hon'ble Kerala High Court while deciding Thomas Ge ..... X X X X Extracts X X X X X X X X Extracts X X X X
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