TMI Blog1997 (9) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... nce at the instance of the Revenue and the question posed for consideration is as follows : "Whether, on the facts and in the circumstances of the case, the provisions of section 40A(8), effect from April 1, 1976, applied only to expenditure incurred after April 1, 1976, and not to computation of income for the assessment year 1976-77?" We will first take up the reference made at the instance of the Revenue comprised in T. C. No. 940 of 1983. Section 40A(8) was introduced by the Finance Bill, 1975, in February, 1975. It received the assent of the President on May 12, 1975. Sub-section (8) which was introduced is as follows : "(8) Where the assessee, being a company other than a banking company or a financial company, incurs any expend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... off the interest income was not accepted by the Tribunal and the Tribunal held that the expenditure by way of interest incurred by the assessee falls within the scope of section 40A(8) of the Act. In other words, the argument that only the net interest has to be taken into account was not accepted. It is under those circumstances that the above tax cases arise on the references made by the Tribunal. On behalf of the Revenue Mr. C. V. Rajan, learned counsel, refers to the Notes on Clauses relating to the Finance Bill that the amendment was in relation to the assessment year 1976-77 meaning thereby that the income from the previous accounting year has to be taken note of. The Notes on Clauses are as follows : "Sub-clause (b) seeks to ins ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rce on April 1, 1976. Thus the statute itself has specifically declared that the law as on April 1, 1976, will govern the income earned for the previous year and there is no question of the statute being given retrospective effect, because the Legislature felt that the law enacted on a particular day should have effect from a prior date..." In Srikakollu Subba Rao and Co. v. Union of India [1988] 173 ITR 708 (AP), the same view was taken by making a reference to the Notes on Clauses of the Finance Bill. To the same effect are the decisions in Dollar Co. Pvt. Ltd. v. Union of India [1993] 204 ITR 103 (Mad) and in Maneklal Vallabhdas Parikh and Sons v. CIT [1969] 72 ITR 637 (Guj). As against this argument, learned counsel for the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -77. We have already referred to the Notes on Clauses to buttress our view that the amendment is relatable to the assessment year 1976-77. If that is so, the income for the previous year ending April 30, 1975, alone has to be taken into account irrespective of the consequences. In this view of the matter, we agree with learned counsel for the Revenue that the income for the year ended on April 30, 1975, was rightly taken into account by the Income-tax Officer and the Commissioner of Income-tax (Appeals), while rejecting the claim of the assessee that the sum of Rs. 37,427 should not have been added to the income for the assessment year 1976-77. In other words, we reverse the judgment of the Tribunal and answer the point referred to us in th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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