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R. M. LODHA, JAGDISH SINGH KHEHAR, J. CHELAMESWAR, A. K. SIKRI, ROHINTON FALI NARIMAN
COMMISSIONER OF INCOME TAX (CENTRAL)-I, NEW DELHI – Appellant
Versus
VATIKA TOWNSHIP – Respondent
What is the effect of the proviso to section 113 on block assessments: is it prospective or retrospective? What is the correct interpretation of section 4, 113, and the surcharge in block assessments under Chapter XIVB for undisclosed income? What is the legal basis for treating the proviso to section 113 as clarificatory or curative versus prospective, and what is its impact on pre-1 June 2002 block assessments?
Key Points: - The proviso to Section 113 is contested as to whether it operates prospectively or retrospectively, and whether it is clarificatory/curative or substantive. (!) (!) (!) - The case analyzes the charging section (Section 4) versus the block-assessment charging provision (Section 113/158BA(2)) and how surcharge applies to block income under Chapter XIVB. (!) (!) (!) (!) - The judgment discusses the scheme of Chapter XIVB, including block period, undisclosed income, and computation under sections 158BA, 158BB, 158BC, and 113. (!) (!) (!) (!) (!) - Prior to the amendment, there was uncertainty about whether surcharge could be levied on block assessments; the Court overrules prior interpretations and holds proviso is prospective. (!) (!) (!) - The Court references Suresh N. Gupta, CBDT circulars, and Finance Acts to determine the nature and effective date of the proviso. (!) (!) (!) - The final holding: appeals of the department dismissed; surcharge on block assessments prior to 1 June 2002 is deleted. (!)
JUDGMENT
A.K. Sikri, J.
Delay condoned.
2. Leave granted in all these matters.
3. In these batch of appeals, most of which are preferred by the Commissioner(s) of Income Tax (hereinafter referred to as 'the Department'), with the exception of few appeals filed by the assessees, the question of law which has fallen for consideration is as to whether the proviso appended to Section 113 of the Income Tax Act (hereinafter referred to as 'the Act') which was inserted in that Section by the Finance Act, 2002 is to operate prospectively or is clarificatory and curative in nature and, therefore, has retrospective operation. The Background Facts:
4. This question has been referred to the Constitution Bench in the Civil Appeal arising out of S.L.P. No.540/2009 and, therefore, to start with, we would be justified in referring to facts of that case. In fact the answer to the aforesaid question would lead to the sealing of the fate of all these appeals one way or the other. The facts in this appeal, which need recapitulation, are that there was a search and seizure operation under Section
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