Amendment to Income Tax Act, 1961 is curative and applies retrospectively.

(per the Hon’ble Sri Justice P.Sam Koshy)

Heard Mr. Dundu Manmohan, learned counsel, representing Mr. G.V.N.

Hari, learned counsel for the appellant, and Ms. Bokaro Sapna Reddy, learned Senior Standing Counsel for Income Tax Department for the respondent.

2. The instant appeal was admitted on the following substantial questions of law, viz., “(A) Whether on the facts and in the circumstances of the case, the Appellate Tribunal is justified in holding that the amendment made by Finance Act, 2010 to S.40(a)(ia) of the Income Tax Act, 1961 is neither remedial nor curative in nature and is, therefore, prospective in its operation?

(B) Whether on the facts and in the circumstances of the case, the Appellate Tribunal erred in not adhering to the principles of Judicial Discipline by not following the later judgment of hon’ble Calcutta High Court which is a higher forum and following the decision rendered by the Special Bench of the Appellate Tribunal that was rendered prior to the judgment of the hon’ble Calcutta High Court?”

3. The dispute raised in the instant appeal is whether the amendment brought by way of the Finance Act, 2010 to Section 40 (a)(ia) of the Income Tax Act, 1961 , would have a retrospective effect or it would have a prospective effect.

4. Today, when the matter is taken up for hearing, the learned counsel for the appellant submits that the issue has already been decided by the Hon’ble Supreme Court in the case of Commissioner of Income-tax, Kolkata vs. Calcutta Export Company , [[2018] 404 ITR 654 (SC)] wherein this very substantial question of law has been answered by the Hon’ble Supreme Court holding that the said amendment is curative in nature and it would have a retrospective effect. For ready reference, paragraph No.30 of the said judgment is being reproduced hereunder, viz., “30. Hence, in light of the forgoing discussion and the binding effect of the judgment given in Allied Moters (P.) Ltd. case (supra), we are of the view that the amended provision of Sec 40(a)(ia) of the IT Act should be interpreted liberally and equitable and applies retrospectively from the date when Sec 40(a)(ia) was inserted i.e., with effect from the Assessment Year 2005-2006 so that an assessee should not suffer unintended and deleterious consequences beyond what the object and purpose of the provision mandates. As the developments with regard to the Section recorded above shows that the amendment was curative in nature, it should be given retrospective operation as if the amended provision existed even at the time of its insertion. Since the assessee has filed its returns on 01.08.2005 i.e., in accordance with the due date under the provisions of Section 139 IT Act, hence is allowed to claim the benefit of the amendment made by Finance Act, 2010 to the provisions of Section

40(a)(ia) of the IT Act.”

5. In view of the aforesaid authoritative decision rendered by the Hon’ble Supreme Court quoted above, the question of law framed by the appellant in the instant case stands decided in their favour holding that the said amendment to Section 40 (A)(ia) would have a retrospective effect.

6. The instant appeal therefore deserves to be and is accordingly allowed. The impugned order dated 31.12.2012, in ITA .No.1122/HYD/2012, passed by the Income Tax Appellate Tribunal, Hyderabad Bench ‘A’, Hyderabad, is set aside holding that the amendment to Section 40 (A)(ia) has a retrospective effect.

7. As a sequel, miscellaneous petitions pending if any, shall stand closed.

However, there shall be no order as to costs.