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Case Law Details

Case Name : DCIT Vs Spaze Tower Pvt. Ltd (ITAT Delhi)
Appeal Number : I.T.A .No.-2557/Del/2012
Date of Judgement/Order : 17/10/2014
Related Assessment Year :
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As per provisions of section 132B of the Act the assets seized u/s 132 or requisitioned u/s 132A may be adjusted towards the amount of any “existing liability”. The Explanation 2 attach to section 132B of the Act clarifies that for removal of doubts it is hereby declared that the “existing liability” does not include “advance tax” payable in accordance with the provisions of part C of Chapter XVII of the Act.

The ld. Counsel for the assessee submitted that Explanation 2 to section 132B is of prospective effect because it was inserted by the Finance Act, 2013 w.e.f. 1.6.2013.

The ld. DR contended that the provision of Explanation 2 is a clarificatory which was inserted to clarify the provision of section 132B and its legislative intention and  to remove doubts therefore, the same is having retrospective effect even if, the same is stated to be applicable from a particular date. Ld. DR contended that Explanation 2 to section 132B is applicable with retrospective effect from 1.6.2002 which cannot be given prospective effect.

On careful consideration of above contention of both the sides on the applicability of provision Explanation 2 to section 132B of the Act. We take respectful guidance from the decision of Hon’ble Apex Court in the case of CIT vs. Shelly Products and Ors. (Supra) and CIT vs. Kanji Shivji and Co. (Supra) wherein it was held that the clarificatory and declaratory provisions which were inserted to clarify the law so as to remove doubts are of retrospective effect even if, the same provisions are stated to be applicable from a particular assessment year or date.

Turning to the facts and circumstances of the present case, we observe that in a Memorandum of Explanation the provisions of Finance Act, 2013 it has been stated that the amendment for insertion of Explanation-1 and Explantion-2 to the provisions of section 132B of the Act are propose to amend the aforesaid section was as to clarify the existing liability does not include advance tax payable in accordance with the provisions of part ‘C’ of Chapter XVII of the Act. Therefore, the Explanation 2 to section 132B of the Act is a clarificatory provision which was inserted to clarify the  intention of the legislature that the “existing liability” does not include advance tax payable in accordance with the provisions of Part ‘C’ of Chapter XVII of the Act.

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