TaxTMI 
TaxTMI 
2019 (2) TMI 40
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....ch is sustainable in law and can at the most be. one of the two possible views, in relation to allowability of CSR expenditure. 2. The learned CIT erred in observing that explanation to section 37(1) of the Act disallowing deduction of CSR expenditure nowhere specifically state that the same would be effective prospectively, neither is there any judgment specifically this issue holding it as "not retrospective. The learned CIT in the order passed under section 263 has referred to the notes to the provision of the Finance Act 2014 as well as decision of Raipur Tribunal in the case of ACIT vs. Jindal Power Ltd. (179 ITR 736), which clearly states that explanation 2 to section 37(1) is effective prospectively from AY 2015-16." 3. Briefly stated facts are that the assessee is a public sector underrating engaged in the business of generation of electricity from nuclear power and sale of electricity to various entities. The assessment was completed by the ACIT (LTU) Mumbai under section 143(3) of the Act vide order dated 21.03.2016 allowing the assessee an amount of Rs. 15.70crores under the head of administrative and other expenses on corporate social responsibility (CSR).2016. Sub....
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....ection 135 of the Companies Act and as such, it cannot have any application for the period not covered by this statutory provision which itself came into existence w e.f. 1st April 2014 the above section is not applicable to the Company for the year under consideration. 7. The company has also referred to the CBDT circular No.1/2015 dated 21st January. 2015, which refers to the explanatory notes to the provisions of the Finance Act 2014 wherein it isclearly mentioned about the applicability of amendment to section 37(1) is clearly discussed which reads as under. "Applicability: - This amendment takes effect from 1st April, 2015 and will, accordingly, apply in relation to the assessment year 2015-16 and subsequent years" The above CBDT circular is clarificatory and binding in nature. Section 119(1) of the Income-tax Act, 1961 reads as under "The Board may, from time to time, issue such orders, instructions and directions to other income-tax authorities as it may deem fit for the proper administration of this Act, and such authorities and all other persons employed in the execution of this Act shall observe and follow such orders, instructions and directions of the Board." ....
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....of income) is not incurred for the purposes of carrying on business, such expenditures cannot be allowed under the provisions of section 37 of the Act. Therefore, in order to provide certainty on this issue, said section 37 has been amended to clarify that for the purposes of sub-section (1) of section 37 any expenditure incurred by an assessee on the activities relating to corporate social responsibility referred to in section 135 of the Companies Act, 2013 shall not be deemed to have been incurred for the purpose of business and hence shall not be allowed as deduction under said section 37. However, the CSR expenditure which is of the nature described in section 30 to section 36 of the Act shall be allowed as deduction under those sections subject to fulfillment of conditions, if any, specified therein. But this amendment takes effect from 1st April, 2015 and will, accordingly, apply in relation to the assessment year 2015-16 and subsequent years. The relevant assessment year before us is 2013-14 and hence this amendment will not apply to this case of assessee's case. 5. This issue is covered by the decision of Hon'ble Supreme Court in the case of CIT vs. Vatika Township (P.) ....
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.... against a retrospective construction is different. If a legislation confers a benefit on some persons but without inflicting a corresponding detriment on some other person or on the public generally, and where to confer such benefit appears to have been the legislators object, then the presumption would be that such a legislation, giving it a purposive construction, would warrant it to be given a retrospective effect. This exactly is the justification to treat procedural provisions as retrospective. In Government of India v. Indian Tobacco Association [2005] 7 SCC 396, the doctrine of fairness was held to be relevant factor to construe a statute conferring a benefit, in the context of it to be given a retrospective operation. The same doctrine of fairness, to hold that a statute was retrospective in nature, was applied in the case of Vijay v. State of Maharashtra [2006] 6 SCC 286. It was held that where a law is enacted for the benefit ofcommunity as a whole, even in the absence of a provision the statute may be held to be retrospective in nature. However, we are confronted with any such situation here. 34. In such cases, retrospectively is attached to benefit the persons in c....
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....39;to explain' an earlier Act, it would be without object unless construed retrospective. 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 settledthat if a statute is curative or merely declaratory of the previous law retrospective operation is generally intended. The language 'shall be deemed always to have meant' is declaratory, and is in plain terms retrospective. In the absence of clear words indicating that the amending Act is declaratory, it would not be so construed when the pre-amended provision was clear and unambiguous. An amending Act may be purely clarificatory 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 and, therefore, if the principal Act was existing law which the Constitution came into force, the amending Act also will be part of the existing law." The above summing up is factually based on the judgments of this Court as well as English decisions. A Constitution Bench of this Court in Keshavlal Jethalal Shah v. Mohanlal Bhagwandas [1968] 3 SCR 623 , w....