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TMI Blog2024 (7) TMI 1528X X X X Extracts X X X X X X X X Extracts X X X X ..... "5. However a perusal of the Memorandum Explaining the Provisions in the Finance Bill, 2022 ([2022] 440 ITR (St.) 226) reveals that it explicitly stipulates that the amendment made to section 14A will take effect from 1st April, 2022 and will apply in relation to the assessment year 2022-23 and subsequent assessment years. The relevant extract of clauses 4, 5, 6 and 7 of the Memorandum Explaining the Provisions in the Finance Bill, 2022 ([2022] 440 ITR (St.) 226) are reproduced hereinbelow (page 252 of 440 ITR (St.)) : "4. In order to make the intention of the legislation clear and to make it free from any misinterpretation, it is proposed to insert an Explanation to section 14A of the Act to clarify that notwithstanding anything to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the appellant. However the respondents have urged the point before us. In our view the 1999 Explanation could not apply to the assessment years for the simple reason that it had not come into effect then. Prior to introducing the 1999 Explanation, the decision in CIT v. S. G. Pgnatale [1980] 124 ITR 391 (Guj) was followed in 1989 by a Division Bench of the Gauhati High Court in CIT v. Goslino Mario [2000] 241 ITR 314 (Gauhati). It found that the 1983 Explanation had been given effect from April 1, 1979, whereas the year in question in that case was 1976-77 and said (page 318) : '.. . it is settled law that assessment has to be made with reference to the law which is in existence at the relevant time. The mere fact that the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T v. S. R. Patton [1992] 193 ITR 49 (Ker), while following the Gujarat High Court's decision in CIT v. S. G. Pgnatale [1980] 124 ITR 391 (Guj) to hold that the Explanation was not declaratory but widened the scope of section 9(1)(ii). It was further held that even if it were assumed to be clarificatory or that it removed whatever ambiguity there was in section 9(1)(ii) of the Act, it did not operate in respect of periods which were prior to April 1, 1979. It was held that since the Explanation came into force from April 1, 1979, it could not be relied on for any purpose for an anterior period. In the appeal preferred from the decision by the Revenue before this court, the Revenue did not question this reading of the Explanation by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the 1999 amendment even if it were assumed not to bind the respondents under section 119 of the Act, nevertheless affords a reasonable construction of it, and there is no reason why we should not adopt it. As was affirmed by this court in Goslino Mario [2000] 241 ITR 314 (SC), a cardinal principle of the tax law is that the law to be applied is that which is in force in the relevant assessment year unless otherwise provided expressly or by necessary implication (see also : Reliance Jute and Industries Ltd. v. CIT [1979] 120 ITR 921 (SC) ; (1980) 1 SCC 139). An Explanation to a statutory provision may fulfil the purpose of clearing up an ambiguity in the main provision or an Explanation can add to and widen the scope of the main section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therwise provided expressly or by necessary implication. (See also Reliance Jute and Industries Ltd. v. CIT [1979] 120 ITR 921 (SC) ; (1980) 1 SCC 139)). An Explanation to a statutory provision may fulfil the purpose of clearing up an ambiguity in the main provision or an Explanation can add to and widen the scope of the main section (see Ku. Sonia Bhatia v. State of U. P. (1981) 2 SCC 585, 598). If it is in its nature clarificatory then the Explanation must be read into the main provision with effect from the time that the main provision came into force (see Shyam Sunder v. Ram Kumar (2001) 8 SCC 24 (para 44) ;Brij Mohan Das Laxman Das v. CIT [1997] 223 ITR 825 (SC) ; (1997) 1 SCC 352, 354 ; CIT v. Podar Cement (P.) Ltd. [1997] 226 ITR 625 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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