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2019 (8) TMI 458 - HC - Income TaxScope and applicability of Section 64(1)(iii) w.e.f. 1.4.1976 - whether cardinal principle of tax laws that the law to be applied is that which is in force at the commencement of the assessment year is correct for new liability - from the date of amendment/insertion OR from date of accrual - from the date mention of that Financial year OR Assessment year - income of individual to include income of spouse, minor child, etc. - HELD THAT:- Reading the judgment of the Apex Court in the case of Kesoram Industries and Cotton Mills Ltd. [1965 (11) TMI 41 - SUPREME COURT] in case of Karimtharuvi Tea Estate Ltd [1965 (12) TMI 35 - SUPREME COURT] this Court would observe that the argument advanced by Counsel for the assessee (Amicus Curriae) as well as the Department can be made only in respect of a rate prescribed under a Finance Act or an Act providing a surcharge if the same is brought into force on the lst of April of the assessment year in which assessment for the previous year is being done as the same would only provide for ascertaining the rate, for existing liability under the Income Tax Act. But that is not the case here. Under the new provision, i.e. Section 64(1)(iii) a new liability has been prescribed and not the rate for ascertaining the liability. Such new liability under the Income Tax Act cannot be given a retrospective effect. Such liability can only be fastened on an individual if the same was existing at the time of accrual and not at the time of assessment. The observations of the Apex Court in paragraph 33 of the judgment in the case of Keshoram Industries and Cotton Mills (supra), clarifies this position. In view of the judgments of the Apex Court in the case of Keshoram Industries (supra) as well as Karimtharuvi Tea Estate Ltd (supra) this Court would have no hesitation in holding that for deciding the liability of a particular provision of the Income Tax Act, the date of accrual of income would be relevant. If the provision comes into force in a particular financial year, it would apply to the assessment for that year but cannot be made applicable in respect of assessment for a previous year. The Amending Act introduced a new Section 64(1) (iii) in the Income Tax Act with effect from 1.4.1976. The tax liability under the said provision could therefore be charged on the assessee, in the assessment which was to be made for that accounting year i.e. 1976-77, which would be done in the assessment year 1977-78. The Amending Act introducing a new tax liability which came into force with effect from 1.4.1976 could not be given a retrospectivity and be made applicable to the previous accounting year i.e. 1975-76 corresponding to the assessment year i.e. 1976-77. In view of the foregoing discussions and conclusions arrived at by us, that the judgment rendered in the case of Badri Prasad [1990 (2) TMI 29 - PATNA HIGH COURT] does not lay down the correct law.
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