TaxTMI 
TaxTMI 
2019 (3) TMI 1265
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....the Civil Prison for non payment of tax, penalty and interest. The submissions are made that Tax is already paid by the petitioners, but the penalty and the interest are not paid and only to that extent, the petitioners are challenging the order. 2. The aforesaid Company was in the business of dealing in shares and securities and it was assessed to income tax since inception. Assistant Commissioner passed order under Section 179(1) of the Income-Tax Act,1961, on 16.08.2010 for recovery of income tax, interest and penalty and the total amount was Rs. 336.84 lakh. The amount was assessed for the years 1995-96, 1996-97 and 2002-2003 and this order was against both the Company and the Directors. In the petitions, it is contention of the directors that word "tax" used in Section 179 of the Income-Tax Act, 1961, does not include penalty and interest and so these amounts cannot be recovered from them. Argument was advanced only on that point. Learned counsel for the Income Tax Department supported the order made against the directors. 3. The respondent-authority has given finding that the word 'tax' used in Section 179 of the Income-Tax Act, 1961 includes both the penalty an....
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....ing Officer/Tax Recovery Officer and the matter was remanded back. The director had resigned on 14.10.1989 and the demand of tax was raised on the company for the assessment years, 1990-91 to 1995-96. Basically, the order of remand was made to give an opportunity to the said director to substantiate his aforesaid contention. However, the Division Bench of this Court quoted some provisions like Sections 2(43), 170, 177, 179, 188A, 189, 220, 221(1) etc and also placed reliance on the observations made by the Apex Court in the case of Harshad Shantilal Mehta Vs. Custodian reported a t (1998) 231 ITR 871 Supreme Court. 6. In the case of Dinesh Tailor cited (supra), the Division Bench used the observations made by the Apex Court, which are as under : "33. Tax, penalty and interest are different concepts under the Act. The definition of 'tax' under section 2(43) does not include penalty or interest. Similarly, under section 156, it is provided that when any tax, interest, penalty, fine or any other sum is payable in consequence of any order passed under this Act, the Assessing Officer shall serve upon the assessee a notice of demand as prescribed. The provisions for impo....
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....llows : 15. The proviso to Sub-clause (vi) has been reproduced above. It has the effect of cutting down the exemption contained in the sub-clause to some extent. It commences with the words "Provided that in the case of a policy of insurance the premium or other payment whereon is payable during a period of less than 10 years and the argument is that the italicized words suggest that the expression" any policy of insurance" in the main sub-clause must mean a policy based on human life and that too where periodical premia are payable and as such annuity on life which consists of lump sum investment followed by deferred annual or monthly payments is excluded. It is impossible to read the italicized words in the proviso in this manner which has the effect of unduly narrowing down the expression "any policy of insurance" used in the main sub-clause, which as indicated earlier, is of very wide import covering all types of insurance policies like life, marine, fire etc. In the first place the main provisions [Sub-clause (vi)] was enacted in 1957 and continued to operate for 17/18 years till March 31, 1975, without any qualification and as such it will be absurd to attribute to t....
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....he Bill. On this account, therefore, there is no warrant to put a narrow construction on the expression" any policy of insurance" occurring in Sub-clause (vi) of Section 5(1)". 14. As noted by this Court in Commissioner of Income Tax, Bombay etc. Vs. M/s Podar Cement Pvt. Ltd, [(1997)]5 SCC 482 the circumstances under which the amendment was brought in existence and the consequences of the amendment will have to be taken care of while deciding the issue as to whether the amendment was clarificatory or substantive in nature and, whether it will have retrospective effect or it was not so. 15. In Principles of Statutory Interpretation, 11th Edn. 2008, Justice G.P. Singh has stated the position regarding retrospective operation of Statues as follows: The presumption against retrospective operation is not applicable to declaratory statues. As stated in Craies and approved by the Supreme Court: For modern purpose 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 Parliamen....
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.... of Statutory Interpretation by Justice G.P. Singh, 9th Edition, 2004 at Page 438). It is not necessary that an express provision be made to make a statute retrospective and the presumption against retrospectivity may be rebutted by necessary implication especially in a case where the new law is made to cure an acknowledged evil for the benefit of the community as a whole. 14. The presumption against retrospective operations 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 wellsettled 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. 15. Though retrospectivity i....
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....aid cases are different. Whether only additional liability was created by the amendment in such circumstances needs to be ascertained by the Court. 12. In view of the aforesaid position of law, if we have to go with the presumption that the Parliament had intended to provide that the liability of the Company and the directors would be joint and several to pay the tax and the Parliament also intended that the word 'Tax' includes penalty and interest and as the burden of proof is shown on the directors to prove that they were not negligent etc., then it follows that the directors can be held responsible to pay penalty and interest when the company was liable to pay the penalty and interest. The non-obstante clause with which Section 179 starts shows that the provisions of Company Act 1956 will not come in the way of fastening the liability created by Section 179 on the directors and it also shows that right from the beginning, there was such intention of the Parliament. 13. The Court is expected to keep in mind some principles of interpretation when such point comes for interpretation. The language of each provision may be restricted to its own object. Many a times when the....