Case Law Details
PCIT Vs Crescent Construction Co (Bombay High Court)
The purpose of the amendment made by the Finance Act, 2010 is to solve the anomalies that the insertion of section 40(a)(ia) was causing to the bonafide tax payer. The amendment, even if not given operation retrospectively, may not materially be of consequence to the Revenue when the tax rates are stable and uniform or in cases of big assessees having substantial turnover and equally huge expenses and necessary cushion to absorb the effect. However, marginal and medium taxpayers, who work at low gross product rate and when expenditure which becomes subject matter of an order under Section 40(a)(ia) is substantial, can suffer severe adverse consequences if the amendment made in 2010 is not given retrospective operation i.e., from the date of substitution of the provision. Transferring or shifting expenses to a subsequent year, in such cases, will not wipe off the adverse effect and the financial stress. Such could not be the intention of the legislature. Hence, the amendment made by the Finance Act, 2010 being curative in nature required to be given retrospective operation i.e., from the date of insertion of the said provision.
FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT
1. This is an appeal relating to assessment year 2005-06 filed by the revenue under section 260A of the Income Tax Act, 1961 (“the Act”) seeking to challenge the order of the Tribunal dated 26th May, 2017 and proposing the following questions as substantial questions of law:-
“a. Whether on the facts and circumstances of the case and in law, the Hon’ble Tribunal was correct in holding that the assessee disclosed true and correct facts in the return of income whereas the facts related to further disallowance u/s 40(a)(ia) of the Income Tax Act, 1961 was not available in the return of income and therefore, there was failure on the part of the assessee within the meaning of proviso to section 147 of the Income Tax Act, 1961?
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