The main legal point established in the judgment is that while the State has the right to bring in amendments retrospectively to bridge a lacuna or a defect, such amendments brought retrospectively must not be only for the purpose of nullifying a judgment where there was no lacuna or defect pointed out in the parent Act.

Kumar Rajaratnam, J.—In all these appeals the constitutional validity of the Explanation to Section 26(4) of the Karnataka Agricultural Income Tax Act, 1957, introduced retrospectively with effect from April 1, 1975, by the Karnataka Taxation Laws (Second Amendment) Act, 1997 (Act No. 18 of 1997), falls for determination.

2. The provisions of Section 26(4) and the Explanation thereto of the Karnataka Agricultural Income Tax Act, 1957, as amended by Act 18 of 1997 (hereinafter referred to as the Act), read as follows :

"26. (4) Where any business through which agricultural income is received by a company, firm or association of persons is discontinued or any such firm or association is dissolved in any year, any sum received after the discontinuance or dissolution shall be deemed to be income of the recipient and charged to tax accordingly in the year of receipt, if such sum would have been included in the total income of the person who carried on the business had such sum been received before such discontinuance or dissolution.

Explanation.--For the removal of doubts, it is hereby declared that where before the discontinuance of such business or dissolution of a firm or association hitherto assessed as a firm or association, or, as the case may be, on the company, the crop is harvested and disposed of, but full payment has not been received for such crop, or the crop is harvested and not disposed of, the income from such crop shall, notwithstanding the discontinuance or dissolution be deemed to be the income of the company, firm or association for the year or years in which it is received or receivable and the firm or association shall be deemed to be in existence, for such year or years and such income shall be assessed as the income of the company, firm or association according to the method of accounting regularly employed by it immediately before such discontinuance or dissolution."

3. As stated earlier this was introduced as an amendment by Act No. 18 of 1997 with retrospective effect from April 1, 1975.

4. When Sections 26 and 27 of the Karnataka agricultural Income Tax Act, 1957 (hereinafter referred to as "the Act"), were originally incorporated in the Act these two sections provided only for assessment or reassessment of pre-dissolution or pre-discontinuance of a firm. In other words if a firm was dissolved during the middle of the assessment year, there was no provision for assessment in the post-dissolution period of the assessment year. Section 26 as it originally stood in the Act before the amendment reads as follows :

"26. Assessment in case of discontinued company, firm or association.--(1) Where agricultural income is received by a company, firm or association of persons and the business through which such income is received is discontinued in, any year, an assessment may be made in that year on the basis of the agricultural income received during the period between the end of the previous year and the date of such discontinuance, in addition to the assessment, if any, made on the basis of the agricultural income received in the previous year.

(2) Any person discontinuing any such business shall give to the agricultural Income Tax Officer notice of such discontinuance within thirty days thereof and where any person fails to give the notice required by this subsection, such officer may direct that a sum shall be recovered from him by way of penalty not exceeding the amount of agricultural Income Tax subsequently assessed on him in respect of any agricultural income of the company, firm or association of persons up to the date of the discontinuance of the business.

(3) Where an assessment is to be made under Sub-section (1), the agricultural Income Tax Officer may serve on the person whose agricultural income is to be assessed or, in the case of a firm on any person who was a member of such firm at the time of the discontinuance or, in the case of a company, on the principal officer thereof, a notice containing