TaxTMI 
TaxTMI 
2011 (2) TMI 372
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....sp; Whether section 27(iiib) of the Income-tax Act, 1961 relates back to past transaction, particularly when section 27(iiib) refers to transactions as contained in section 269UA(f) of the Income-tax Act, 1961, which itself has come into force with effect from 1st April, 1986?" 3. During pendency of the instant appeal an application was made by the assessee urging additional two grounds to be formulated as being substantial point of law for hearing. Those two grounds are stated hereunder :- "(i) Whether rent from house property should be treated as income from business or as income from house property, particularly in case where the main business of the assessee is to acquire building on lease and let them out in rent? (ii) Whether the proceedings under section 148/147 of the Income-tax Act has been validly initiated?" This Court by order dated 29-8-2005 adjourned the hearing of the said application till the hearing of the appeal is taken up. In the said order it was decided that in future the aforesaid points suggested should be considered by the Court for formulation. 4. Since the matter was urged by the learned counsel for both the parties ....
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.... acquired in between 1967 and 1970 and the language mentioned in the said amended provision indicate the same will not have any retrospective operation. This will be clear from the definition (transfer) as mentioned in section 2(47) which was also amended for the purpose of capital gains. 6. He further submits that Memorandum explaining the provisions of Finance Bill, 1987 which has been noted by the Supreme Court in case of CIT v. Podar Cement (P.) Ltd. [1997] 226 ITR 625 at page 650-654/92 Taxman 541 would evidently establish that the said section 27 was amended for the following purposes :- "(i) to rope in situations where transfer of property had been effected but there was no registered instrument, (ii) to enlarge the meaning of "owner of house property" to include a person "who acquires any rights" by virtue of any transaction referred to in section 269UA(f) vide clause (iiib), (iii) to enlarge the applicability of the clause to a member of a company or other association of persons in addition to a member of a Cooperative Society previously covered." Prior to this amendment the lease for a term of 12 years or more was treated as tr....
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.... the subsequent years also. 10. He submits that in the Memorandum explaining the provisions in the Finance Bill, 1987 reported in 1987 (165 ITR) (ST) 161, it contemplates the simplification and rationalization of provisions enlarging the meaning of owner of house property as enshrined in section 27 of the said Act. 11. He further contends that main purpose of amending the provisions however, is to resolve the pending disputes of the legal as well as the beneficial owners who are assessed to tax in respect of the same income therefrom. As a measure of rationalization the amendment seeks to enlarge further meaning of the expression "owner of house property" in clause (iii) of section 27 by providing that a person who comes to have control over the property by virtue of such transaction as referred to clause (f) of section 269UA will also be deemed to be the owner of the property. 12. On careful reading of the memorandum explaining the Finance Bill it would be crystal clear that the amendment was intended to supply an obvious omission or to clear up doubts as to the meaning of the word "owner" in section 22 of the said Act. The language of clause (iii)(b) of section 27 of the....
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....me Court found the provision of section 271(1)(c) is not substantive provision of law rather a procedural. The Supreme Court in that case has recognized the cannon of interpretation of statutes as opined by the various authors of various text books. In "Principle of Statutory Interpretation, 11th Edition, 2008", Justice G.P. Singh has elucidated the position regarding retrospective operation of statutes as follows : "The presumption against retrospective operation is not applicable to declaratory statutes. As stated in Craies and approved by the Supreme Court : 'For modern purposes a declaratory Act may be defined as an Act to remove doubts existing as to the common law, or the meaning or effect of any statute. Such Acts are usually held to be retrospective. The usual reason for passing a declaratory Act is to set aside what Parliament deems to have been a judicial error, whether in the statement of the common law or in the interpretation of statutes. Usually, if not invariably, such an Act contains a preamble, and also the word "declared" as well as the word "enacted". But the use of the words 'it is declared' is not conclusive that the Act is declaratory for these words may, a....
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....ication especially in a case where the new law is made to cure an acknowledged evil for the benefit of the community as a whole (ibid., p. 440). 14. The presumption against retrospective operation is not applicable to declaratory statutes...In determining, therefore, the nature of the Act, regard must be had to the substance rather than to the form. If a new Act is 'to explain' an earlier Act, it would be without object unless construed retrospectively. An explanatory Act is generally passed to supply an obvious omission or to clear up doubts as to the meaning of the previous Act. It is well settled that if a statute is curative or merely declaratory of the previous law retrospective operation is generally intended...An amending Act may be purely declaratory to clear a meaning of a provision of the principal Act which was already implicit. A clarificatory amendment of this nature will have retrospective effect (ibid., pp. 468-69). Though retrospectivity is not to be presumed and rather there is presumption against retrospectivity, according to Craies (Statute Law, 7th Edn.), it is open for the legislature to enact laws having retrospective operation. This can be achieved by e....
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....o define owner of house with an intention to levy tax on income from house property. It will appear that originally one class of person was deemed to be owner. Subsequently by way of amendment ownership of various classes has been explained and/or clarified. When it is clarificatory in nature, it cannot change the basic character of the said section for one of the objects of classification is to keep basic purpose of original statutory provision untouched. Hence following the established principle of law relating to interpretation of statutes, we hold that the said provision with amendment has retrospective operation though it has been inserted on 1-4-1988. Moreover, as rightly pointed out by the learned Counsel for the revenue that in the case of Podar Cement (P.) Ltd. (supra) the Supreme Court while considering the Memorandum explaining the provision in the Finance Bill, 1987 at page 653 of the report as follows : "From the circumstances narrated above and from the Memorandum explaining the Finance Bill, 1987 [See (1987) 165 ITR (St.) 161], by which the amendment is brought about, it is crystal clear that the amendment was intended to supply an obvious omission or to clear up ....
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....th the specific object of acquiring properties not with the view to leasing them as property but to selling them or turning them to account even by way of leasing them out as an integral part of its business, cannot be said to treat them as landowner but as trader." 25. Again in case of S.G. Mercantile Corpn. (P.) Ltd. (supra) the Supreme Court reiterated the aforesaid principle. At page 708 of the report the Supreme Court observed while taking note of the observation of Karanpura Development Co. Ltd.'s case (supra) as follows : "The above observations have a direct bearing. It is not necessary for the purpose of this case to say anything, beyond what has already been said while dealing with section 9 of the Act, about the view expressed in the above passage regarding the rental income of an owner being treated as business income in case it is received as part of trading activity, because we are concerned in the instant case with an assessee who is a lessee and not the owner of the property in question. The assessee, in the cited case of Karanpura Development Co. Ltd., too was lessee of the coal-fields. So far as such assessees are concerned who as part of their essential tra....