Prospective operation of surtax recomputation power bars reopening of Tribunal orders passed before the amendment took effect

Amended section 14 of the Companies (Profits) Surtax Act, 1964, could not be used to recompute chargeable profits on the basis of an Income-tax Act section 254 order passed before 1 April 1971. The amendment created a new power of recomputation and consequential amendment only from that date, and it did not operate retrospectively merely because the limitation period under the earlier order had not expired when the amendment began. The provision was therefore confined to Tribunal orders passed after the power came into force, and pre-1 April 1971 orders could not be reopened or revised under it.

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Issues: Whether section 14 of the Companies (Profits) Surtax Act, 1964, as amended with effect from 1 April 1971, could be invoked to recompute chargeable profits where the relevant order under section 254 of the Income-tax Act, 1961, was passed before that date.

Analysis: The amended provision conferred, for the first time from 1 April 1971, the power to recompute chargeable profits on the basis of an order passed under section 254 of the Income-tax Act, 1961, and to make consequential amendment under section 13 of the Surtax Act. The Court held that the new power could not be applied backward merely because four years from the date of the Tribunal's order had not expired when the amendment came into force. The legislative intent was confined to orders passed after the power itself was brought into existence, and the section could not be used to reopen or recompute Tribunal orders made before 1 April 1971.

Conclusion: The question was answered in the affirmative, in favour of the assessee and against the Revenue.

Ratio Decidendi: A statutory power of recomputation or rectification conferred for the first time by amendment operates only prospectively on orders passed after the power comes into force, unless the statute clearly indicates retrospective reach.

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