9911796707
TMI Blog2022 (9) TMI 98X X X X Extracts X X X X X X X X Extracts X X X X ..... sistance of ld. D.R., we have gone through the record carefully. A perusal of the assessment order would indicate that the assessee has filed its return of income on 22.03.2018 declaring total income of Rs. 14,940/-. The case of the assessee was selected for scrutiny assessment and a notice under section 143(2) was issued and served upon the assessee. The ld. Assessing Officer sought to disallow the expenditure relatable to earning of tax-free income. In response to the show-cause notice issued under section 142(1), it was contended by the assessee that it has not earned any dividend or exempted income during the year. Hence no disallowance of expenditure is warranted under section 14A. However, the ld. Assessing Officer did not accept this contention of the assessee and proceed to disallow the expenditure with the help of Rule 8D(2)(iii). He made a disallowance of Rs. 5,96,800/-. Appeal to the ld. CIT(Appeals) did not bring any relief to the assessee. 4. Before us, ld. CIT(DR) contended that recently ITAT, Kolkata has considered the amendments made by the Finance Bill, 2022 of the Income Tax Act in Section 14A and held that it is retrospective in nature and, therefore, even if no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 14A will take effect from 1st April, 2022 and will apply in relation to the assessment year 2022-23 and subsequent assessment years. The relevant extract of Clauses 4, 5, 6 & 7 of the Memorandum of Finance Bill, 2022 are reproduced hereinbelow: "4. In order to make the intention of the legislation clear and to make it free from any misinterpretation, it is proposed to insert an Explanation to section 14A of the Act to clarify that notwithstanding anything to the contrary contained in this Act, the provisions of this section shall apply and shall be deemed to have always applied in a case where exempt income has not accrued or arisen or has not been received during the previous year relevant to an assessment year and the expenditure has been incurred during the said previous year in relation to such exempt income. 5. This amendment will take effect from 1st April, 2022. 6. It is also proposed to amend sub-section (1) of the said section, so as to include a non-obstante clause in respect of other provisions of the Income-tax Act and provide that no deduction shall be allowed in relation to exempt income, notwithstanding anything to the contrary contained in this Act. 7. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s hereby declared that the income of the nature referred to in this clause payable for- (a) service rendered in India; and (b) the rest period or leave period which is preceded and succeeded by services rendered in India and forms part of the service contract of employment, shall be regarded as income earned in India." The Finance Act, 1999 which followed the Bill incorporated the substituted Explanation to Section 9(1)(ii) without any change. 13. The Explanation as introduced in 1983 was construed by the Kerala High Court in CIT v. S.R. Patton [ (1992) 193 ITR 49 (Ker)] while following the Gujarat High Court's decision in S.G. Pgnatale [ (1980) 124 ITR 391 (Guj)] to hold that the Explanation was not declaratory but widened the scope of Section 9(1)(ii). It was further held that even if it were assumed to be clarificatory or that it removed whatever ambiguity there was in Section 9(1)(ii) of the Act, it did not operate in respect of periods which were prior to 1-4-1979. It was held that since the Explanation came into force from 1-4-1979, it could not be relied on for any purpose for an anterior period. 14. In the appeal preferred from the decision by the Revenue befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... read into the main provision with effect from the time that the main provision came into force [See Shyam Sunder v. Ram Kumar, (2001) 8 SCC 24 (para 44); Brij Mohan Das Laxman Das v. CIT, (1997) 1 SCC 352, 354; CIT v. Podar Cement (P) Ltd., (1997) 5 SCC 482, 506]. But if it changes the law it is not presumed to be retrospective, irrespective of the fact that the phrases used are "it is declared" or "for the removal of doubts". (emphasis supplied) 7. The aforesaid proposition of law has been reiterated by the Supreme Court in M.M Aqua Technologies Ltd. V. Commissioner of Income Tax, Delhi-III. The relevant portion of the said judgment is reproduced hereinbelow:- "22. Second, a retrospective provision in a tax act which is "for the removal of doubts" cannot be presumed to be retrospective, even where such language is used, if it alters or changes the law as it earlier stood. This was stated in Sedco Forex International Drill. Inc. v. CIT, (2005) 12 SCC 717 as follows: 17. As was affirmed by this Court in Goslino Mario [ (2000) 10 SCC 165] a cardinal principle of the tax law is that the law to be applied is that which is in force in the relevant assessment year unless otherwi ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
