Dr. Satish Kumar Midha Vs PCIT (ITAT Ranchi)
60% Tax Under 115BBE Not for AY 2017-18 & Applies Only from AY 2018-19 -115BBE Amendment Prospective- – ITAT Ranchi Quashes 263 Orders
A survey was conducted on 14.09.2016, wherein assessees admitted undisclosed income. AO completed assessments but did not apply the amended provisions of section 115BBE, which increased the tax rate from 30% to 60% w.e.f. 01.04.2017. PCIT invoked revisionary powers u/s 263, holding that AO erred in not applying the higher tax rate of 60% for AY 2017-18.
Tribunal, however, noted that the amendment to section 115BBE, introduced via Taxation Laws (Second Amendment) Act, 2016, became effective from 01.04.2017, i.e., applicable from AY 2018-19 onwards. For AY 2017-18, the law as on 01.04.2016 applied, i.e., the pre-amendment rate of 30%. Reliance was placed on SC in Reliance Jute Industries (120 ITR 912) & Madras HC in Smile Microfinance Ltd. (W.P.(MD) No.2078/2020, order dated 19.11.2024), holding that amendments effective from 01.04.2017 are prospective & cannot apply to AY 2017-18. Accordingly, tribunal held that PCIT’s exercise of revision u/s 263 was unsustainable, since AO’s assessment applying 30% tax rate was correct in law. Thus, both appeals were allowed & 263 orders quashed
