Retrospective withdrawal of beneficial tax circular rejected; procedural revision could not deny relief already available under the earlier regime.

CBDT circulars under section 119 bind departmental authorities, and a beneficial circular granting relief cannot be withdrawn so as to prejudice assessments already pending or concluded. The later circular in question only prescribed a revised procedure requiring consent under section 19(2) of the Sick Industrial Companies (Special Provisions) Act, 1985, which was procedural in nature and therefore prospective. The court held that Circular No. 683 dated 8 June 1994 could not operate retrospectively to deny the assessee the benefit available under the earlier circular. The answer was against the Revenue and in favour of the assessee.

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Issues: Whether Circular No. 683 dated 8 June 1994 could operate retrospectively so as to affect assessments already pending in appeal, and whether the earlier beneficial circular issued under section 119 of the Income-tax Act, 1961 could be withdrawn with retrospective effect.

Analysis: Circulars issued by the Central Board of Direct Taxes under section 119 of the Income-tax Act, 1961 are binding on the departmental authorities. Where such circulars confer a concession or relax the rigour of the law, they govern the administration of the Act so long as they remain in force, but their withdrawal cannot prejudice completed or pending matters by giving retrospective effect. The earlier circular extended benefit on the basis of sickness of the industrial company, while the later circular only prescribed a revised procedure requiring consent under section 19(2) of the Sick Industrial Companies (Special Provisions) Act, 1985. That change was procedural and could operate only for the future.

Conclusion: Circular No. 683 dated 8 June 1994 could not be applied retrospectively to deny the assessee the benefit already available under the earlier circular. The answer was against the Revenue and in favour of the assessee.

Final Conclusion: The appeal failed because the departmental circular could not retrospectively take away a beneficial treatment already extended under the earlier regime.

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