9911796707
TMI Blog1988 (1) TMI 73X X X X Extracts X X X X X X X X Extracts X X X X ..... medical reimbursements received by the assessee from his employers did not constitute perquisites assessable in his hands in terms of the CBDTs' circular No. LXXVI-5 of 1955 dt 1st Aug., 1955. The ITO accepted the contention of the assessee which was in according with the aforesaid circular of the Board and made the assessment accordingly by his order dt. 20th Nov., 1984. 3. Subsequently, the CIT examined the record and came to hold the view that the assessee made on 20th Nov., 1984 as above was erroneous insofar as it was prejudicial to the interests of revenue. Hence, he started action under s. 263 of the Act. The stand of the learned CIT was that by circular No, 336 of the16th April, 1982 the Board has amended the circular dt. 1st Au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dt. 17th Nov., 1986 he directed the ITO to amend the assessment and recover the excess tax relating to the aforesaid excess amount. 4. Shri. A.K. Gupta, the learned representative for the assessee, urged before us that the learned CIT erred in his decision. He stated that the law applicable in a particular assessment year is that in force on the first day of April of that assessment year. In the instant case, for the asst. yr. 1982-83 the law which was in force on 1st April 1982 to be applied. On that date, the circular dt. 16th April, 1982 had not yet come into force and so the earlier circular dt. 1st Aug., 1955 had rightly been applied by the ITO so that the entire medical reimbursement was exempted from tax. There was no error in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the CIT along with the forwarding letter, dt 9th Dec., 1986 of the Board. In this report, he has stated that the correct position regarding the applicability of the Board's Circular dt. 16th April, 1982 was that it would apply from the date of issue and that pending assessments would be regulated by this circular. 7. A copy of the aforesaid remand report was made available to the learned representative for the assessee. He urged that even assuming that the Board's letter has to be preferred to the foot note appearing in Taxmann's Direct Taxes Circulars, the matter was not free from doubt. The clarification clearly states that the circular dt. 16th April, 1982 would apply from the date of issue which is not first of April but 16th April, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arned representative for the Department on the other hand, supported the order of the CIT. He relied on the clarification dt. 26th Aug., 1982 of the Board given to the Gujarat Chamber of Commerce Industry to the effect that pending assessment would be regulated by the circular dt. 16th April, 1982. He urged that the ITO should have applied the amended circular while completing the assessment and so the order of the CIT deserves to be upheld. 9. We have considered the contentions of both the parties as well as the facts on record. The issue raised in this appeal is as to whether the circular dt. 16th April, 1982 which amended the circular dt. 1st Aug., 1955 applied to the assessment year commencing on 1st April, 1982. The circular dt. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on, evidently implies that it applied to the expenses reimbursed after the date of its issue, i.e., 16th April, 1982 because there was no indication in that circular that it would apply retrospectively to the expenses already incurred or reimbursed prior to the date of its issue. If that be so, the ITO made no mistake in following the circular dt. 1st April, 1955 which was in force for the asst. yr. 1982-83 and consequently his order cannot be said to be erroneous. In this connection, we feel fortified by the decision of the Supreme Court in the case of State Bank of Travancore vs. CIT (1986) 50 CTR (SC) 290: (1986) 158 ITR 102(SC) wherein it has been held that circulars giving concession cannot be withdrawn retrospectively. 10. The asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the circular dt. 16th April, 1982 in the sense indicated by us above, he cannot be said to have committed any error. 11. Apart from the above, we find that there is an apparent contradiction in the said clarification. The first sentence says that the circular dt. 16th April, 1982 will apply from the date of issue. If that is so, then it applies to the reimbursements made after that date. The second sentence following the said sentence was unnecessary because it could not apply to the pending assessments unless the expenses are reimbursed after 16th April, 1982. On the contrary, if the circular is intended to regulate the pending assessments, then the first sentence was contradictory and misleading. The circular could have merely state ..... X X X X Extracts X X X X X X X X Extracts X X X X
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