Case Law Details
Pankaj Kumar Vs CIT (Patna High Court)
Patna High Court held that sub-section (5A) of section 45 inserted by way of an amendment in the Finance Act, 2017, expressly stated to be effective from 01.04.2018 cannot be treated as retrospective.
Facts- The question of law raised in the writ petitions, filed under Article 226 of the Constitution of India, is as to whether sub-section (5A) of Section 45 of the Act; inserted by the Finance Act, 2017, with effect from 01.04.2018, apply retrospectively.
The petitioners also contended that if it is held to be prospective, as is the consequence of the express words employed in the Finance Act, then it would violate Article 14 of the Constitution of India on the ground of invidious discrimination between the same class of persons. It is also argued that sub-section (5A) has been brought into the Income Tax Act to remove unintended consequences of the earlier provision for computation of capital gains on a conjoint reading of Sections 2(47)(v), 45 & 48.
Conclusion- We are of the opinion that sub-section (5A) inserted by way of an amendment in the Finance Act, 2017, expressly stated to be effective from 01.04.2018 cannot be treated as retrospective, for reason of the express words employed and there can be no intendment ferreted out, so as to deem it impliedly retrospective. The consequences as per Section 45, for a person who transfers a capital asset as contemplated under Section 2(47)(v) of the Income Tax Act insofar as having to compute the total income by including the capital gains accrued in the previous year in which a transfer was affected, when the JDA was entered into prior to 01.04.2018 was not an unintended consequence.
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