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TMI Blog2016 (8) TMI 99X X X X Extracts X X X X X X X X Extracts X X X X ..... t, 2009 when the appeal was admitted reads as follows : "Whether the Tribunal below substantially erred in law in applying provision of Section 40(a)(ia) of the Income Tax Act, 1961 in the present case pertaining to Assessment Year 2005-06 when the provisions were substituted by the Finance Act, 2004 with effect from April 1,2005 ?" The Finance (No.2) Act,2004, No.23 of 2004 got Presidential assent on 10th September, 2004. Sub-section 2 of Section 1 of the aforesaid Act provides as follows : (2) Save as otherwise provided in this Act, sections 2 to 65 shall be deemed to have come into force on the 1st day of April, 2004." By section 11 of the aforesaid Act, Clause (ia) was added to Section 40 of the Income Tax Act. Section 40 provid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duction for the sum of Rs. 4,30,386/-, paid by the assessee to a contractor, due to omission on the part of the assessee to deduct tax. The omission to deduct tax became subject to the penal consequence under section 40 only with effect from 1st April, 2005. Therefore, any omission prior to 1st April, 2005 could not have visited the assessee with any penal consequences. He relied on a judgement in the case of CIT v. Hindustan Electro Graphites Ltd , reported in (2000) 243 ITR 48 (SC). What had happened in that case was that the return for the assessment year 1989-90 was filed by the assessee in December, 1989. The Finance Bill, 1990 got presidential assent on 31st May, 1990 and was made applicable retrospectively with effect from 1st April, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicable is the law on the date of filing of the return. He submitted that on the date of filing of the return, the law had already come into force. Therefore, as regards applicability of the law there can be no doubt. He also drew our attention to section 4 of the Income Tax Act which provides as follows : 4. (1) Where any Central Act enacts that income-tax shall be charged for any assessment year at any rate or rates, income-tax at that rate or those rates shall be charged for that year in accordance with, and [subject to the provisions (including provisions for the levy of additional income-tax) of, this Act ] in respect of the total income of the previous year [ *** ] of every person: Provided that where by virtue of any provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in any particular assessment year which has no application to the case before us. Section 11 of the Finance Act by which Clause (ia) was added to Section 40 of the Income Tax Act does not provide that the same was to become effective from the assessment year 2005-06. It merely says it shall become effective on 1st April, 2005 which for reasons already discussed should mean to refer to the financial year. There is, as such, no scope for any ambiguity nor is there any scope for confusion. Even in a case where there is any ambiguity, law in that regard was noticed by the Supreme court in the case of CIT (Central)-I vs. Vatika Township Pvt.Ltd., reported in (2014) 367 ITR 466 (SC), as follows : "Tax laws are clearly in derogation of persona ..... X X X X Extracts X X X X X X X X Extracts X X X X
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