TMI Blog2019 (9) TMI 733X X X X Extracts X X X X X X X X Extracts X X X X ..... - Dated:- 23-8-2019 - MRS. S. SUJATHA AND MR. N.K. SUDHINDRARAO JJ. Appellants (By Sri Ameet Kumar Deshpande, Advocate) Respondents (By Sri A. Shankar, Senior Counsel A/w Sri V. Narendra Shankar, Advocate) JUDGMENT S. SUJATHA J., This income tax appeal is filed by the Revenue under Section 260A of the Income Tax Act, 1961 ( the Act for short) assailing the order of the Hon ble Income Tax Appellate Tribunal, Bengaluru Bench B , Bengaluru in ITA No.1831/Bang/2013 dated 21.02.2014 relating to the assessment year 2005-06. 2. The substantial question of law that arises for our consideration is ;- Whether the second proviso to Section 40(a)(ia) of the Act inserted by Finance Act, 2012 is clarificatory and retrospective in nature and disallowance under Section 40(a)(ia) of the Act by the Tribunal is justifiable where the recipient of the amount has already discharged his tax liability therein? 3. Learned counsel for the appellant-revenue would submit that in view of the specific date prescribed for giving effect to the second proviso of Section 40(a)(ia) of the Act from 01.04.2013, no other i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udhary; 4) Writ Petition No.3928/2018 (Karnataka High Court), in the case of Smt. Deeva Devi vs. The Principal Commissioner of Income Tax-5 and another. 6. Adverting to the arguments advanced by the learned counsel for the parties, in the light of the judgments referred to above, it would be beneficial to refer to Section 40(a)(ia) of the Act and the proviso thereof which is as under: 40(a)(ia)- thirty per cent of any such payable to a resident, on which tax is deductible at source under Chapter XVIIB and such tax has not been deducted or, after deduction, has not been paid on or before the due date specified in sub-section (1) of section 139: Provided that where in respect of any such sum, tax has been deducted in any subsequent year, or has been deducted during the previous year but paid after the due date specified in sub-section (1) of section 139, 1[thirty per cent of] such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid: Provided further that where an assessee fails to deduct the whole or any part of the tax in accordance with the provisions of Chapter XVI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the hands of an assessee in a situation in which income embedded in such expenditure has remained untaxed due to tax withholding lapses by the assessee. It is not, in our considered view, a penalty for tax withholding lapse but it is a sort of compensatory deduction restriction for an income going untaxed due to tax withholding lapse. The penalty for tax withholding lapse per se is separately provided for in section 271C, and, section 40(a)(ia) does not add to the same. The provisions of section 40(a)(ia), as they existed prior to insertion of second proviso thereto, when much beyond the obvious intentions of the lawmakers and created undue hardships even in cases in which the assessee s tax withholding lapses did not result in any loss to the exchequer. Now, that the Legislature has been compassionate enough to cure these shortcomings of provision, and thus obviate the unintended hardships, such an amendment in law, in view of the well-settled legal position to the effect that a curative amendment to avoid unintended consequences is to be treated as retrospective in nature even though it may not state so specifically, the insertion of second proviso must be given retrospective e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of statements, such as one finds in a work of fiction/non fiction or even in a judgment of a court of law. There is a technique required to draft a legislation as well as to understand a legislation. Former technique is known as legislative drafting and latter one is to be found in the various principles of Interpretation of Statutes . Vis- -vis ordinary prose, a legislation differs in its provenance, lay-out and features as also in the implication as to its meaning that arise by presumptions as to the intent of the maker thereof. 31. Of the various rules guiding how a legislation has to be interpreted, one established rule is that unless a contrary intention appears, a legislation is presumed not to be intended to have a retrospective operation. The idea behind the rule is that a current law should govern current activities. Law passed today cannot apply to the events of the past. If we do something today, we do it keeping in view the law of today and in force and not tomorrow s backward adjustment of it. Our belief in the nature of the law is founded on the bed rock that every human being is entitled to arrange his affairs by relying on the existing law a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... octrine of fairness, to hold that a statute was retrospective in nature, was applied in the case of Vijay v. State of Maharashtra Ors. ([2006] 6 SCC 289) It was held that where a law is enacted for the benefit of community as a whole, even in the absence of a provision the statute may be held to be retrospective in nature. However, we are confronted with any such situation here. 34. In such cases, retrospectively is attached to benefit the persons in contradistinction to the provision imposing some burden or liability where the presumption attaches towards prospectivity. In the instant case, the proviso added to Section 113 of the Act is not beneficial to the assessee. On the contrary, it is a provision which is onerous to the assessee. Therefore, in a case like this, we have to proceed with the normal rule of presumption against retrospective operation. Thus, the rule against retrospective operation is a fundamental rule of law that no statute shall be construed to have a retrospective operation unless such a construction appears very clearly in the terms of the Act, or arises by necessary and distinct implication. Dogmatically framed, the rule is no more than a pre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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