Supreme Court limits tax circular retroactive effect. Appeals allowed, matters remitted for re-adjudication.

The Supreme Court ruled that instructions/circulars issued by the Central Board of Direct Taxes on 9.2.2011 do not have retrospective operation and apply only to cases filed after 2011. The Court held that a circular from December 2015 could not have retrospective effect. Consequently, the Appeals were allowed, the High Court's order from 2.11.2011 was set aside, and the matters were remitted back to the High Court for re-adjudication based on merit and in accordance with the law.

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Issues:
1. Retrospective operation of instructions/circular issued by the Central Board of Direct Taxes on 9.2.2011.

Analysis:
The Supreme Court addressed the issue of whether the instructions/circular issued by the Central Board of Direct Taxes on 9.2.2011 would have retrospective operation. In a previous case, the Court had ruled that the said instructions were not retrospective and would only apply to cases filed after 2011. The respondents in the present case relied on a circular from December 2015, but the Court held that the Central Board of Direct Taxes cannot issue a circular with retrospective operation. Therefore, the Court allowed the Appeals, set aside the High Court's order from 2.11.2011, and remitted the matter(s) back to the High Court for re-adjudication based on merit and in accordance with the law. The Civil Appeals were allowed accordingly.

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