EID Parry (India) Ltd., CHENNAI V. DCIT, CHENNAI

ITA 720/CHNY/1998

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 57989 (ITAT-CHENNAI)
• Duration Of Justice: 13 year(s) 10 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-02-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 22-02-2012
• Assessment Year: 1993-1994
• Appeal Filed On: 24-04-1998
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Capital asset
• Section: 43B; 263; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH A CHENNAI BEFORE SHRI N. S. SAINI, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER .. I.T.A. NO. 720/MDS/1998 ASSESSMENT YEAR : 1993-94 M/S. E.I.D. PARRY (INDIA) LTD., DARE HOUSE, PARRYS CORNER, 234, N.S.C. BOSE ROAD, CHENNAI-600 001. V. THE DEPUTY COMMISSIONER OF INCOME-TAX, SPECIAL RANGE-VI, CHENNAI. (PAN/GI NO. 5-E/93-94: ) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PHILIP GEORGE, ADVOCATE RESPONDENT BY : SHRI SHAJI P. JACOB, ADDL. CIT DATE OF HEARING : 22-02-2012 DATE OF PRONOUNCEMENT : 2 4/02/2012 O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED COMMI SSIONER OF INCOME TAX PASSED UNDER SECTION 263 OF THE INCOME TAX ACT, 196 1 IN C.NO.218-I(6)/97-98 DATED 02-03-1998 FOR THE ASSESSMENT YEAR 1993-94. 2. SHRI PHILIP GEORGE, ADVOCATE REPRESENTED ON BEHA LF OF THE ASSESSEE AND SHRI SHAJI P. JACOB, LEARNED SR. DR REPRESENTE ON B EHALF OF THE ASSESSEE. 3. IT WAS SUBMITTED BY THE LEARNED AUTHORISED REPRE SENTATIVE THAT ORIGINALLY THE APPEAL OF THE ASSESSEE HAD BEEN ALLOWED BY THE TRIBUNAL VIDE AN ORDER DATED 29-09-2004 WHICH WAS SUBJECT MATTER OF APPEAL BEFOR E THE HON'BLE JURISDICTIONAL I.T.A. NO. 720/MDS/1998 2 HIGH COURT OF MADRAS IN TAX CASE (APPEAL) NO. 156 O F 2005. IT WAS THE SUBMISSION THAT THE HON'BLE HIGH COURT VIDE ITS ORD ER DATED 08-06-2011 HAD REVERSED THE ORDER OF THIS TRIBUNAL AND HAD RESTORE D THE APPEAL TO THE FILE OF THE TRIBUNAL FOR ADJUDICATION ON MERITS. 4. IT WAS THE SUBMISSION THAT ON MERITS THE ISSUE WAS WHETHER THE PROVISO TO SECTION 2(42A) OF THE INCOME TAX ACT, 1961 (THE ACT FOR SHORT) WHICH WAS INTRODUCED W.E.F. 01-04-1995 WAS RETROSPECTIVE IN O PERATION OR NOT. IT WAS THE SUBMISSION THAT THE PROVISO TO SEC. 2(42A) WAS INTR ODUCED TO BRING UNDER THE CATEGORY OF LONG-TERM CAPITAL ASSETS EVEN THE UNITS OF THE UNIT TRUST OF INDIA. IT WAS THE SUBMISSION THAT THE PROVISO WAS CLARIFICATO RY IN NATURE AND WAS LIABLE TO BE HELD TO BE RETROSPECTIVE IN VIEW OF THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF ALLIED MOTORS (P) LTD. REPORTED IN 2 24 ITR 677. 5. IN REPLY, THE LEARNED DR SUBMITTED THAT A PROCED URAL ISSUE CAN BE CONSIDERED FOR BEING HELD TO BE RETROSPECTIVE. THE PROVISO TO SECTION 2(42A) OF THE ACT IS NOT PROCEDURAL BUT IS SUBSTANTIVE. IT W AS THE SUBMISSION THAT THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE O F ALLIED MOTORS (P) LTD., REFERRED TO SUPRA, COULD NOT BE APPLIED INSOFAR IT WAS ON ACCOUNT OF THE FACT THAT THE PROVISIONS OF SEC. 43B PROVIDED FOR THE ALLOWAN CE OF AN EXPENDITURE IF THE PAYMENTS HAVE BEEN MADE BEFORE THE FILING OF THE RE TURN. IT WAS THE SUBMISSION THAT THIS WAS CLEARLY PROCEDURAL. IT WAS THE FURTH ER SUBMISSION THAT IT WAS BECAUSE THERE WAS NO OTHER WAY THE ASSESSEE COULD C LAIM THE DEDUCTION WHEN I.T.A. NO. 720/MDS/1998 3 THE ASSESSEE PAYS THE LIABILITY AS PROVIDED IN SECT ION 43B IF IT IS NOT PAID WITHIN THE PERIOD ORIGINALLY PROVIDED U/S 43B. IT WAS TO MITIGATE THE SAID HARDSHIP THAT THE PROVISO WAS INTRODUCED IN SEC. 43B. IT WAS THE FURTHER SUBMISSION THAT THE HON'BLE SUPREME COURT HAD CONSIDERED THE FACT THAT THE EXPLANATION 1 TO SECTION 43B WAS ALSO SHOWN TO BE RETROSPECTIVE IN NATURE AN D SO THE PROVISO WAS ALSO HELD TO BE RETROSPECTIVE IN NATURE. IT WAS THE SUB MISSION THAT THE EXPLANATION EXPLAINS THE PROVISIONS WHILE THE PROVISO PUTS COND ITIONS TO THE SECTION. IT WAS THE SUBMISSION THAT THE PROVISO TO SECTION 2(42A) O F THE ACT COULD NOT BE HELD TO BE PROCEDURAL IN NATURE FOR BEING TREATED AS RETROS PECTIVE. HE RELIED UPON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE O F GEM GRANITES V. CIT REPORTED IN 271 ITR 322. IT WAS THE SUBMISSION THA T THE HON'BLE SUPREME COURT HAD CATEGORICALLY HELD THAT AS LONG AS THE LEGISLAT URE DOES NOT SPECIFICALLY HOLD THE PROVISION TO BE RETROSPECTIVE, THE SAME CANNOT BE READ TO BE RETROSPECTIVE IN NATURE. HE VEHEMENTLY SUPPORTED THE ORDER OF THE L EARNED COMMISSIONER. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PER USAL OF THE PROVISO TO SEC. 2(42A) OF THE ACT CLEARLY SHOWS THAT W.E.F. 01 -04-1995 THE WORDS OR ANY OTHER SECURITY LISTED IN A RECOGNIZED STOCK EXCHANG E IN INDIA OR A UNIT OF THE UNIT TRUST OF INDIA ESTABLISHED UNDER THE UNIT TRUST OF INDIA ACT, 1963 (52 OF 1963) OR A UNIT OF A MUTUAL FUND SPECIFIED UNDER CLAUSE (23D ) OF SECTION 10 HAD BEEN INTRODUCED. HERE IT IS CLEARLY NOTICED THAT THE IN SERTION IS BY THE FINANCE ACT, 1994 AND IT IS SPECIFICALLY MENTIONED THAT THE SAID INSERTION IS WITH EFFECT FROM I.T.A. NO. 720/MDS/1998 4 01-04-1995. A PERUSAL OF THE DECISION OF THE HON'B LE SUPREME COURT IN THE CASE OF GEM GRANITES, REFERRED TO SUPRA, CLEARLY SHOWS T HAT AN APPELLATE AUTHORITY CANNOT READ INTO THE PROVISION TO TREAT IT AS RETRO SPECTIVE IN NATURE UNLESS IT IS SPECIFICALLY MENTIONED AS RETROSPECTIVE IN NATURE. THE PROVISO TO SEC. 2(42A) OF THE ACT CLEARLY IS NOT A PROCEDURAL SECTION. IT IS A SUBSTANTIVE PROVISION BY WHICH THE LEGISLATURE IN ITS WISDOM HAS HELD THAT THE SEC URITIES LISTED IN A RECOGNIZED STOCK EXCHANGE IN INDIA, UNITS OF THE UNIT TRUST OF INDIA, UNITS OF THE MUTUAL FUNDS OF THE SPECIFIC MUTUAL FUNDS ARE TO BE TREATE D AS THE CAPITAL ASSET AND THE PROVISIONS OF SECTION 2(24A) WOULD APPLY. A PERUSA L OF THE NOTES TO THE CLAUSES AS ALSO THE MEMO EXPLAINING INTRODUCTION OF THE INSE RTION TO THE PROVISO ALSO CLEARLY SHOWS THAT THE INTENTION OF THE LEGISLATURE ITSELF WAS TO MAKE IT PROSPECTIVE. IN THE CIRCUMSTANCES, WE ARE OF THE V IEW THAT THE INSERTION TO THE PROVISO OF SECTION 2(42A) OF THE ACT IS PROSPECTIVE IN NATURE. IN THE CIRCUMSTANCES, THE APPEAL OF THE ASSESSEE IS DISMIS SED. 7. THE ORDER WAS PRONOUNCED IN THE COURT ON 24/02/2 012. SD/- SD/- (N. S. SAINI) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED THE 24 TH FEBRUARY, 2012. H. OPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE