THE COMMISSIONER OF INCOME TAX GULBARGA V. SRI SHIVAYYA BASAYYA GUTTEDAR

ITA/1122/2006

AI Insights

The case involves an appeal by the Income Tax Department against Sri Shivayya Basayva Guttedhar concerning the levy of surcharge on income tax following a block assessment for the years 1990-91 to 1999-2000. The primary legal issue was the appropriate year for applying the surcharge rates following a search operation under Section 158BC of the Income Tax Act, 1961. The appellant argued for the application of the surcharge based on the rates of the year in which the search was concluded, while the respondent contended that the rates applicable should be those of the year in which the search was initiated. The court examined the amendments to Section 113 and the legislative intent behind these changes, ultimately deciding in favor of the retrospective application of the surcharge as per the rates applicable in the year the search was initiated.

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 730182 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 11-02-2012
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Assessee Lawyers: AMEET DESHPANDE
• Keywords: Block assessment; Income Tax; Retrospective effect; Surcharge
• Section: 113; 158BC; 260-A

Judgement Text

"iN TIlE HiGH COURT OF KARNATAKA cicurr F3ENCE I AT GLtI.L3ARG: DATED ‘FL 115 THE IT’’ DAY OF FEBRUARY. 2012 PRESENT ThE I I()N’E3I..E MItVIKRAMAJI1’ SEN. UI 11EV .J1’S’IlCE AND ThE L-LONELK MIL 1 JUSTICE S.N.S. IYANARAYANA ITA No.1122/2006 I3E1WEEN: 1) THE CoMMISSIONER OF’ INCOME 1’AX. CULI3ARGA. 2) TIlE L)Y.COMMISSIONER OF INCOME TAX. CIRCLE-i GULBARGA. AIPEILWI’S (BY SRI. AMEET Kt:MAR 1)ESHPANDE ADV.) AND: SRI .SHIVAYYA BASAYVA GU’fl’EDAR. PVD C )NTRAC’I Nt NO.2-283. VETERiNARY 1 IOSPITAL ROAI). NEAR JAGAT. Cl.:I.BR0A. RESPONDENT (RESPONI )EN1’ SERVEI N 11118 ITA is FiLED U/5.260-A OF i.1’.ACT. 1961 ARISING OUT OF ORDER DATED I 6-02-2006 PASSEI) ri: NO. I 35/BANG/2002. FOR THE BLOCK ASSESSMEN1’ YEAR 1990-91 10 1999 20o0 AND FOR ThE PERIOD FROM 01.04.1999 ‘10 :k).08. 19g9. TillS APPEAL COMING ON FOR I IEARING TIllS DAY. CHIEF JUSTICE DELIVERED THE FOLLOWING: JUDGMENT VIKRAMAJITSEN,CJ(9raU: B order dJQd 10220U 1110 lO1l(HV1H2 suLsiiiio1 ions ot low o ii 0’ in m 0: (0 VIther the iiobuio1 V0: (01*01 lii 11010mb 11101 ii ‘I tie 005 1101 1e i1I1)1e oil the Ort)(iIld that 31b)Vi5 to Soc’lioii 13 has boa il)5(’(l[10011V cidod OH 11 ie 31 (1110 11101 e’h (1 voiid cic’ted prior to Ineiic1ia’Iii’! 10 V1ic’tiier lilt: ib Ci1I0 i out iled to levI’ the 5U1’ClllT(’ 111 iO5})00i (11 0001110 euiii 1 iuci 011(101’ Section 1 a33 auici tax is lv’ tc’d0 S per Sm’tioii 1 13’! 2 Al tel it 101 1 lo I o ci 0011 1 1; It’ (100151011 (11 i1 (Tuunisioiier 01 11 owe Lix. Ceiiiia. 11 Vs. SiiiesIi %.Cota report ccl in 2005 AlL SOW 1 066. I boO i ivin our earo1 ul rOIISidelbfliOII oil tile IllolteL We are oi tIle 1IOW 11101 the THai 101’ stouids luilv eovv’e0 In ha: 0eoiso: 0 bit’ releow 1tr1’JW5 :1 the nideinent ore repn000(O Ira’ recerel tee: 24. in view o[ our 1inclia3s 01 tIm lOst 30111 oiletiv 51)0(11’(100, 00 (tIc’ 001 1eot it It) 0 OiliIii(’ this cluestioll. I lao ever. h 1is ioi. VehleiIki1I1V ur300 Oil behall 0 the OSSO ssee ihat 1110 said 30 ’150 (‘(1111101 upel’Ile ret 1’003e(i1 ely. This 3 .3 argument is Ibunded on the basis that until the amendment in Section 113 w.e.f. 1.6.2002. there was Inconsistency with regard to levy of surcharge. According to the assessee. the question which usually bothered both the assessee and the Deparunent was whether surcharge was leviable with reièrence to the rates provided ibr in the F: of the year in which the search was initiated or (he year in which the search was concluded or the year in whLeh the block assessment proceedings under Section 158BC were initiated or the year in which block assessment order was passed. According to the assessee, there was a conference of Chief Commissioners which had suggested to the Central Government to amend Section 113 wIth retrospective effect. However, despite such recommendations, the Central Government inserted the proviso In Section 1 1 3 only’ with effect from 1.6.2002. Therefore, according to the assessee, the proviso cannot be interpreted as retrospective. 25. We iInci no merit in the above arguments. Both, the Finance Acts of 2000 and 2001. Indicated that a substantive charge was created in respect of the income-tax to be levied. Both these Acts Prescribed the rates ol’ surcharge. The said surcharge did 1101 depend lbr its IeVi&l)IlItV Oil the ;tsC%%e.’% Ii.ilslluiv U’ pay ItH Oh1aC 1a2% l)Lli ‘it :iw t%V%%I ‘. • a i I’ • ;%%t %% has relict! ttpoii iit’ €it; i C cli) )11. iii’ :1) %LIppOri ol their contention that such an nhJies made the CliLLfln.’ inciiëc’ivt’. lii oilY ICV. ‘, i ii %iit)li)I%%it)Ii ;iinC’nhts It) lktti4!llt the (jII1’1(.I. .. t •r(!ti:Lt ‘(‘ the ilC%%CV. U’ 1 •i .2012. tlic• P(a%h it’!a V•t’— amblittinus as it tint le.r even to the 1)epart men I Is ic ltic! I ear’ F. woi ih 1 1w tpplicaibIe Tc 1 ar 11)1’— d ii pi ‘i’1( Is the I)ro’isc) has int’l iiisertt’d hi Sect I •: i I 13 1y wi ilil: iii’, inciic’tued ilicti ilt’ F. €I ilk’ S as Ill WlIi”li (lie %iYIU’tii Vfl iiail .tc.l vutilt! ,:‘ • ilirreirt’. Iii our Iev. liii I pi’’Is • . .;..iI’’,ti I’. ! nature. In icixciti;n the LCL’Isi 1 n at the is pe indk’aied In the provisc lia’ to he read sirIctI3. There Is tics q . ‘— . ,n ,I retr,s 1 ,r ‘lIi c t’IieCt. TI ac provis’ c’n13 • 1 •.rh% hat ‘‘Lit • c:.’’ ‘‘ •Id Parilainc’nt il:I ,tecI hr t!.e :!..‘i-. iiansl; ha’ year in which the search is hiitialt’d. wliic’h date vouIcl he rUe .i i jflAi(til’l ‘ I • I cll’tl’ ii r Fs . ll 1 er’’a i.. . t ‘a , I ‘ stUnt 1’. 2G. fl.e. ‘ — ,li’ I.’ ..“ r. —‘ •:. . •! i’tl( • I the cibWt %j 1 .i,i’dc,, 5 . Pci i 6.20 )2. ii, Ic. several cases. ta uis priNt dbe ‘ )me times in the 19(51 Ac’ at hi ‘mlethne Iii tat’’ R auth often h hntli. h1.. t..., a’ II; 1 bIi:t .. Iii !ac c present case. however, the rate of tax in cast’ of block assessment at. 60% was prescribed by Section 113 but the year of the FA Imposing surcharge was not stipulated. ‘Ibis resulted hi the above four anti lgultics. lhereibrc. clarification was needed. The iwovlso was curative hi nature. Hence, the l)rOVIsO inserted in SectIon 113 merely clarifies that out of the above thur dates. the relevant date for applicability of tIlt’ Fi would be the ‘ear in which the search stoud initiated under Section 1 5813C. 3. In the present case. search has been carried out on 2.8. 1999 and the proviso was Introduced with effect from 1.6.2002. l’herelbre. any doubt that may have arisen stands dispelled. Ordered accordingly. Memo of appearance to be tiled within two weeks. Sd/ Chief Justice sat’ AP* "