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TMI Blog2023 (5) TMI 708X X X X Extracts X X X X X X X X Extracts X X X X ..... , 2017, with effect from 01.04.2018, apply retrospectively? - Provision inserted to eliminate an unintended consequence, visiting the assessee with a hardship, which was sought to be removed HELD THAT:- Since the amendment to Section 45 by insertion of a sub-section was expressly stated to be, with effect from the 1st day of April, 2018. There is no question of any discrimination between persons who entered into a JDA before and after the amendment, insofar as the JDA entered into by an individual or a Hindu undivided family, prior to 01.04.2018 being governed by the law on the subject as it existed at that point of time, i.e. on a conjoint reading of Section 2(47)(v) read with Sections 45 48. There is no discrimination among equals since the differentiation is made on the basis of date on which the JDA has been entered into, which is a natural consequence of an amendment brought into the Act by way of an insertion expressly stated to be prospective from a specific date i.e., 01.04.2018. Further, though there are different class of assessee under the Income Tax Act, they cannot be considered to be equal, merely for reason of their being assessed under that Act. In the prese ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urisdiction Case No. 2565 of 2020) For the Petitioner/s : Mr.D.V.Pathy, Advocate Mrs. Manju Jha, Advocate For the Respondent/s : Dr. K.N. Singh, A.S.G. Mrs. Archana Sinha @ Archana Shahi, Advocate Mr. Rishi Raj Sinha, Advocate Mr. Rajesh Kumar Verma, Advocate Mr. Shyam Bihari Singh, Advocate (In Civil Writ Jurisdiction Case No. 2662 of 2020) For the Petitioner/s : Mr. D.V. Pathy, Advocate Mrs. Manju Jha, Advocate For the Respondent/s : Dr. K.N. Singh, A.S.G. Mrs. Archana Sinha @ Archana Shahi, Advocate Mr. Rishi Raj Sinha, Advocate Mr. Rajesh Kumar Verma, Advocate Mr. Shyam Bihari Singh, Advocate (In Civil Writ Jurisdiction Case No. 2766 of 2020) For the Petitioner/s : Mr.Chiranjiva Ranjan, Advocate For the Respondent/s : Dr. K.N. Singh, A.S.G. Mrs.Archana Sinha @ Archana Shahi, Advocate Mr. Rishi Raj Sinha, Advocate Mr. Anshuman Singh, Advocate (In Civil Writ Jurisdiction Case No. 3005 of 2020) For the Petitioner/s : Mr.D.V.Pathy, Advocate Mrs. Manju Jha, Advocate For the Respondent/s : Dr. K.N. Singh, A.S.G. Mrs.Archana Sinha @ Archana Shahi, Advocate Mr. Rajesh Kumar Verma, Advocate Mr. Shyam Bihari Singh, Advocate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 5027 of 2020) For the Petitioner/s : Mr.Bimlesh Kumar Jha, Advocate For the Respondent/s : Dr. K.N.Singh, A.S.G. Mrs.Archana Sinha @ Archana Shahi, Advocate Mr. Rishi Raj Sinha, Advocate (In Civil Writ Jurisdiction Case No. 5065 of 2020) For the Petitioner/s : Mr.Bimlesh Kumar Jha, Advocate Mr. Sanjay Singh, Advocate For the Respondent/s : Dr. K.N.Singh, A.S.G. Mrs.Archana Sinha @ Archana Shahi, Advocate Mr. Rishi Raj Sinha, Advocate Mr. Rajesh Kumar Verma, Advocate (In Civil Writ Jurisdiction Case No. 5275 of 2020) For the Petitioner/s : Mr.D.V.Pathy, Advocate Mrs. Manju Jha, Advocate Mr. Chaitnya Krishna, Advocate For the Respondent/s : Dr. K.N.Singh, A.S.G. Mrs.Archana Sinha @ Archana Shahi, Advocate Mr. Rishi Raj Sinha, Advocate Mr. Anshuman Singh, Advocate (In Civil Writ Jurisdiction Case No. 5295 of 2020) For the Petitioner/s : Mr.D.V.Pathy, Advocate Mrs. Manju Jha, Advocate Mr. Chaitnya Krishna, Advocate For the Respondent/s : Dr. K.N.Singh, A.S.G. Mrs.Archana Sinha @ Archana Shahi, Advocate Mr. Rishi Raj Sinha, Advocate (In Civil Writ Jurisdiction Case No. 6041 of 2020) For the Petitioner/s : M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We heard Shri D.V.Pathy, learned counsel for the writ petitioners and Dr. K.N.Singh, learned Additional Solicitor General, instructed by Smt. Archana Sinha, learned senior standing counsel for the Income Tax Department. 4. In the case of Balbir Singh Maini (supra) at paragraph-3 the following questions of law were framed, which are extracted hereinbelow: i) Whether the transactions in hand envisage a transfer exigible to tax by reference to Section 2(47)(v) of the Income Tax Act, 1961 read with Section 53-A of the Transfer of Property Act, 1882? ii) Whether the Income Tax Appellate Tribunal, has ignored rights emanating from the JDA, legal effect of non-registration of JDA, its alleged repudiation, etc.? iii) Whether possession as envisaged by Section 2(47)(v) and Section 53-A of the Transfer of Property Act, 1982 was delivered, and if so, its nature and legal effect? iv) Whether there was any default on the part of the developers, and if so, its effect on the transactions and on exigibility of tax? v) Whether amount yet to be received can be taxed on a hypothetical assumption arising from the amount to be received? 5. The Hon ble Supreme Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch inserted sub-section (5A) under Section 45 after subsection (5) and the explanation thereto; which was specifically stated to be inserted with effect from 1st day of April, 2018, making the amendment prospective in operation. 8. In support of the challenge raised, the petitioners have relied on a decision of the Bombay High Court in Godrej Boyce MFG Co. Ltd v. Deputy Commissioner of Income Tax; (2010) 43 DTR 177 (Bombay), the principle in which stood affirmed by the Hon ble Supreme Court in Allied Motors(P) Ltd. Etc v. Commissioner of Income Tax; (1997) 224 ITR 0677. Commissioner of Income Tax v. M/s Alom Extrusions Limited; 2009 319 ITR 306 (SC) and Commissioner of Income Tax v. Essar Teleholdings Ltd.; (2018) 401 ITR 445(SC) were also relied on. 9. In Godrej Boyce MFG Co. Ltd (supra), the High Court of Bombay upheld both Section 14A and Rule 8B brought into the Act and the Rules respectively, but held the Rule to apply only prospectively while Section 14A was introduced by an amendment to the Finance Act, 2001 with restrospective effect from 1st April, 1962 and sub-sections (2) and (3) were effective from 01.04.2007. Rule 8D, which was the machinery provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the true effect of a statutory provision wherein legislature clarifies its intent, it is regarded as being declaratory of the law as it always stood and is therefore, construed to be retrospective; (iii) Where on the other hand, an amendment seeks to bring about a substantive change in legal rights and obligations, the Court would not readily accept an interpretation of the amendment that would render it retrospective in character. Clear words will be necessary in order to enable the Court to reach to such a conclusion; (iv) Where the amendment is curative or where it is intended to remedy unintended consequences or to render a statutory provision workable, the amendment may be construed to relate back to the provision in respect of which it supplies a remedial effect; (v) Where an amendment essentially provides a rule of evidence such as a method for the valuation of the property by adopting one among a set of well-known and well accepted methods of valuation with a view to achieve uniformity in valuation and avoiding disparate valuations resulting from the application of different methods in respect of properties of a similar nature and character, the Court wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en support from decisions of a number of High Courts before whom this question came up for consideration. The High Courts of Calcutta, Gujarat, Karnataka, Orissa, Gauhati, Rajasthan, Andhra Pradesh, Patna and Kerala appear to have taken the view that the proviso must be given retrospective effect. Some of these High Courts have held that 'sum payable under S. 43B(a) refers only to the sum payable in the same accounting year, thus excluding salestax payable in the next accounting year from the ambit of S.43B(a) The Delhi High Court has taken a contrary view holding that the first proviso to S. 43B operates only prospectively. We will refer only to some of these judgments . 12. The purport of the above declarations is that, in examining the question whether an amendment is prospective or retrospective, the Court should determine whether it is clarificatory or substantive. If it is clarificatory, it is an expression of intent which the legislature always intended to hold the field and if there is substantive change in legal rights and obligations, it would not be curative and hence not retrospective. 13. We are concerned with the specific question as to whether by bringing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to allow another person to develop a real estate project on such land or building or both, in consideration of a share, being land or building or both in such project, whether with or without payment of part of the consideration in cash; (iii) stamp duty value means the value adopted or assessed or assessable by any authority of the Government for the purpose of payment of stamp duty in respect of an immovable property being land or building or both. 15. The petitioners contention essentially is that Section 45(1) read with Section 2(47)(v) of the Income Tax Act enables inclusion of the capital gains in the total income of the assessee, in the previous year in which possession of an immovable property has been handed over, by the owners to the developer as envisaged under Section 53A of the Transfer of Property Act, under a JDA. Then, such income accruing from the JDA is deemed to be an income of the owner of the property accrued in the previous year in which the transfer is effected. 16. In Balbir Singh Maini(supra), it was held that by reason of the amendment to the Registration Act, 1908 by the Amendment Act of 2001, any JDA not registered in accordance with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DA and not confined to an individual or a joint Hindu family. The amendment, it is urged, was brought in, to mitigate unintended consequences of an assessee being obliged to compute in his total income, the capital gains on the basis of its accrual, merely for reason of a transfer having been effected as available under Section 53A of the Transfer of Property Act. 19. We are unable to countenance the said argument especially since the amendment to Section 45 by insertion of a sub-section was expressly stated to be, with effect from the 1st day of April, 2018. There is no question of any discrimination between persons who entered into a JDA before and after the amendment, insofar as the JDA entered into by an individual or a Hindu undivided family, prior to 01.04.2018 being governed by the law on the subject as it existed at that point of time, i.e. on a conjoint reading of Section 2(47)(v) read with Sections 45 48. There is no discrimination among equals since the differentiation is made on the basis of date on which the JDA has been entered into, which is a natural consequence of an amendment brought into the Act by way of an insertion expressly stated to be prospective from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cases the legislature brings in the amendment by way of a substitution and even when a provision is substituted, it would be retrospective only if it is so expressed or follows from necessary intendment, as is implicit from the language implied. In the present case, the amendment made effective from 01.04.2018 is expressly stated to be prospective from that date and there can be no intendment ferreted out since the above noted deficiencies are totally absent. We find no discrimination having been visited on individuals or Hindu undivided families, for whom there was a change made in the manner, or the previous year in which the computation of total income is made, which was effective only insofar as the agreements entered into after 01.04.2018. 23. Insofar as unintended consequences, it would be fruitful to refer to the Hon ble Supreme Court s decision in the case of Zile Singh v. State of Harayana Others, reported in (2004) 8 SCC 1, wherein an interpretation of an amendment providing an exception to a disqualification was considered. On April 5, 1994, an amendment was made to the Municipal Act in Haryana, bringing in a disqualification for being elected or continued as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pective operation than its language renders necessary, but an amending Act which affects the procedure is presumed to be retrospective, unless amending Act provides otherwise (sic). Going by the above precedents, we are of the opinion that sub-section (5A) inserted by way of an amendment in the Finance Act, 2017, expressly stated to be effective from 01.04.2018 cannot be treated as retrospective, for reason of the express words employed and there can be no intendment ferreted out, so as to deem it impliedly retrospective. The consequences as per Section 45, for a person who transfers a capital asset as contemplated under Section 2(47)(v) insofar as having to compute the total income by including the capital gains accrued in the previous year in which a transfer was affected, when the JDA was entered into prior to 01.04.2018 was not an unintended consequence. This was substantially changed insofar as an individual and a Hindu undivided family, thus, making the liability to include the capital gains only in the total income of the previous year in which completion certificate was issued by the competent authority was a substantive change brought in prospectively. We find no reason t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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