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TMI Blog2024 (10) TMI 1002X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant counsel is incorrect. Subsequently after amendment the Central Board of direct Taxes have clarified by way of press release that the exemptions available under the provisions of secretion 10 (23G) ,prior to its amendment by the Act, will continue to govern the investments made prior to 1.6.1998. When doubts arise about whether long-term capital gains exempt u/s 10(23G) are available, the CBDT has clarified the issue through a press release, resolving the matter. Therefore, the question of exemption under section 10(23G) is no longer a concern, as correctly observed by the Income Tax Appellate Tribunal. An infrastructure facility is created by purchasing shares, but this will not be considered income. It is solely for the creation of infrastructure facilities. Once the shares are purchased on February 4, 1996, they are classified as a creation of an infrastructure facility, not as income. In the present case, as per Explanation 2, prior to its amendment, the capital expenditure for purchasing shares falls under the category of infrastructure facilities and shall not be included in total income. This is because merely purchasing shares does not contribute to the income of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 23G) of Section 10 of the Act, which says that income by way of long-term capital gains from investment made prior to 01.06.1998 by way of shares in any enterprise carrying on the business of developing, maintaining and operating any infrastructure facility, shall not be included in computing the total income and rightly held that the long term capital gains Investments made prior to 1.4.1998 is not eligible for exemption. 6. A perusal of the record goes to show that the respondent, during the financial year 2000-2001, sold the rights share purchased on 04-12-1996 numbering 26,80,000 to Hindustan Zinc Limited, Udaipur, for a consideration of Rs.40 crores. The date of sale was 03-11-2000. The respondent claimed that the cost of the shares was Rs.6,43,20,000/- at a value of Rs.24/- per share. The capital gain was Rs.31,56,80,000/-. After indexation, the long-term capital gain arrived at Rs.31,43,80,590/-. The respondent claimed to have invested the amount of sale consideration in Konaseema EPS Oakwell Power Limited, an industrial undertaking, with an infrastructure facility for power generation and was also notified under sec. 10(23G) by Central Government. The respondent claimed tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the trustees for investment by way of acquiring shares or providing long-term finance to an enterprise carrying on the business of developing, maintaining and operating infrastructure facility; (c) infrastructure facility shall have the meaning assigned to it in clause (ca) of sub-section (12) of section 80-IA. II. Sec. 10(23G) was again amended by Finance Act, 1997, as follows: (e) in clause (23G), (1) the words, brackets, figures and letters, which fulfils the conditions specified in sub-section (4A) of section 80-IA shall be omitted; (ii) in the Explanation, for clause (c), the following clause shall be substituted, namely:-- (c) infrastructure facility means (1) a road, highway, bridge, airport, port, rail system or any other public facility of a similar nature as may be notified by the Board in this behalf in the Official Gazette; which fulfils the conditions specified in sub-section (4A) of section 80-IA; (i) a water supply project, irrigation project, sanitation and sewerage system which fulfils the conditions specified in sub-section (4A) of section 80-IA; (iii) a project for generation or generation and distribution of electricity or any other form of power where such p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to it in clause(Viii) of sub-section (1) of section 36, IV. Finance Act 1999 introduced the following further Explanation: Explanation 2.- For the removal of doubts, it is hereby declared that any income by way of dividends, interest or long-term capital gains of an infrastructure capital fund or an infrastructure capital company from investments made before the 1st day of June, 1998 by way of shares or long-term finance in any enterprise carrying on the business of developing, maintaining and operating any infrastructure facility shall not be included and the provisions of this clause as it stood immediately before its amendments by the Finance (No. 2) Act, 1998 (21 of 1998) hall apply to such income 8. Learned counsel for the appellant submits that the investment date is important i.e. 04.12.1996. While dealing with the amendment, the Tribunal discussed with regard to investments, whether prospective Legislation or declaratory Legislation and, thus, has to be construed as retroactive. In this regard, the Tribunal has relied upon the Full Bench of Supreme Court of India , in the case of Shyam Sunder Vs. Ram Kumar (2001) 8 SCC 49 held has follows: 39. Lastly, it was contended on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spective operation is generally intended . 9. Learned counsel for the appellant relied upon the judgment of the Supreme Court in the case of Commissioner of Customs (Import), Mumbai Vs. M/s Dilip Kumar and Company Others AIR 2018 SC 3606 with regard to parameters of the exemptions . 10. Learned counsel for the appellant relied upon the judgment of the Supreme Court in the case of Principal Commissioner of Income-Tax and another V. Wipro Ltd., (2022) 446 ITR 1 (SC) wherein it is observed that mandatory of declaration for exemption . 11. Learned counsel for the appellant relied upon the judgment of the Supreme Court in the case of Sree Sankaracharya University of Sanskrit Others V. Dr. Manu Another 2023 LiveLaw (SC) 468 in this the Hon ble apex court observed that explanation/clarification may not expand or alter the scope of the original provision. 12. Learned counsel for the appellant submits that in view of the above observation, the Income Tax Tribunal wrongly considered the contentions of the respondent/assessee and allowed in part, which are against the principles laid down by the Income Tax Act and prayed to allow the appeal. 13. Per contra, learned counsel for the respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich is exempted under sec.10(23G), from the book profits of the Company under the special provisions of sec.115JB, the Tribunal opined that the revenue authorities have committed an error, as the disallowance is in violation of sub-sec.(2) of sec.115JB, Explanation (ii), which reads as follows: The amount of income to which any of the provisions of Section 10 of Section 10A or Section 10B or Section 11 or Section 12 apply, if any such amount is credited to the profit and loss account. 18. This court while gone through the judgments relied upon by both counsels. In Commissioner of Customs (Import), Mumbai Vs. M/s Dilip Kumar and Company Others (2nd supra) it is held as under : 52. to sum up, we answer the reference holding as under: (1) Exemption notification should be interpreted strictly; the burden of proving applicability would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification. (2) When there is ambiguity in exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the subject/assessee and it must be interpreted in favour of the revenue. The case on han ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng under the newly amended provision which was later incorporated in the section 10(23G) initially it was part of the section. The exemption relates to power generation under the long term capital gains, which include infrastructure facilities. In the said circumstances, if Assesment Officer exempted the assessee and no provision was altered. Hence, this is also not applicable to present case. 20. Learned counsel for the respondent relied upon case of Securities and Exchange Board of India Vs. Rajkumar Nagpal and others (5th supra) in this case 4. 99. We are of the opinion that the SEBI Circular has retroactive application. In Principles of Statutory Interpretation by Justice G.P. Singh (14th Edn., 2016 at p. 583), it is stated that: The rule against retrospective construction is not applicable to a statute merely because a part of the requisites for its action is drawn from a time antecedent to its passing . If that were not so, every statute will be presumed to apply only to persons born and things which come into existence after its operation and the rule may well result in virtual nullification of most of the statutes. 5. 61. The prospective statute operates from the date of it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of allowing exemption under sec. 10(23G)prior to 1.4.1997 does not arise. The contention of the appellant counsel is incorrect. Subsequently after amendment the Central Board of direct Taxes have clarified by way of press release that the exemptions available under the provisions of secretion 10 (23G) ,prior to its amendment by the Act, will continue to govern the investments made prior to 1.6.1998. 20. At this juncture, it is very essential to refer the clause 10.3 of circular NO.772- Income Tax, Dated 23.12.1998 is as follows: 10.3 The amended provisions would apply only in respect of investment made on or after 1-6-1998 . Doubts had been expressed in different quarters about the continuance of exemption available under section 10 (23G) in respect of investments made prior to 1-6-1998 for assessment year 1999-2000 and onwards. The Central Board of Direct Taxes have clarified by way of a press release that the exemption available under the provisions of section 10 (23G). Prior to its amendment by the Act, will continue to govern the investments made prior to 1-6-1998. The Rules and Forms ;in this regard have since been notified vide Notification No.S.O.897 (E) dated 12th October ..... X X X X Extracts X X X X X X X X Extracts X X X X
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