TaxTMI 
TaxTMI 
2021 (1) TMI 481
X X X X Extracts X X X X
X X X X Extracts X X X X
....e amendment to Section 115BBE was specified to be effective from 01.04.2017. The amendment enhancing the rate of tax was incorporated in the I T Act and that of surcharge in the Finance Act. On declaration, consequential relief is sought against Ext.P2 assessment order levying tax at the enhanced rate of 60% and surcharge @25% on the 'advance tax'. The learned Single Judge rejected the writ petition by a cryptic judgment relying on Commissioner of Income Tax v. S.A.Wahab.((1990) 182 ITR 464 (KER)). 2. The learned Counsel Sri.Vishnu S Arikkattil appearing for the appellant would contend that even going by the decision in Karimtharuvi Tea Estate ltd. v. State of Kerala (AIR (1966) SC 1385) an amendment made on the 1st day of April of any financial year would apply to the assessments of that year. That is, if an amendment is brought into force on 01.04.2017, as is the case here, it can only apply to the assessment made in 2018-2019 (Assessment Year) of the income accrued for the previous financial year; which is 2017-2018. The learned Counsel would seek to draw a distinction insofar as a modification of the rate as brought out in the Finance Act and a substantive provision ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ab in the assessment year 1980-81 claimed 40% depreciation on motor vehicles as per the amendment which came into effect on 24.07.1980. Prior to the amendment such depreciation was allowable only at 30%. The Division Bench found that the depreciation allowable in the subject assessment year relating to the assessments of the previous year was that allowable as on 01.04.1980. 5. The other decisions relied on by the learned Counsel for the appellant is to urge that a substantive provision coming into effect on 01.04.2007 stands distinguished from a mere reduction or enhancement of rate prescribed by a Finance Act as on the 1st of April. Kesoram Industries considered three questions, one of which is relevant for our purpose. That relevant question was as to whether, in computing the net wealth of an assessee under the Wealth Tax Act 1957, the provision for payment of income tax and super tax in respect of the year of account, was a debt owed within the meaning of Section 2(m). The Wealth Tax assessment which was the subject matter of the above case was of the Financial Year 1956-57 and the valuation day as per the Wealth Tax Act was 31.03.1957. The Revenue argued that Finance Act, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sions since there was no consideration as to whether in an assessment of the previous year, ie: of the financial year 2002-03 carried out in the year 2003-04, whether a capital receipt received in that financial year could have been taxed. 7. Sarkar Builders was concerned with the deduction of 100% of profits allowable in the case of housing projects as permissible under Section 80IB(10). Section 80IB was introduced with effect from 01.04.2000, the benefit of which was available to the builders/assessees. By Finance Act, 2004 w.e.f. 01.04.2005 there was a condition laid down, for the first time, which if applied to the previous year would deny the benefit to the builders. The Revenue contended on the basis of Karimtharuvi Tea Estate that the amendment having come in to effect on 01.04.2005, it applies to the assessments made in the assessment year 2005-06. The assessees before Court had commenced their projects prior to 01.04.2005 as sanctioned by the authorities; the date of completion of which projects were after 01.04.2005. The amendment brought into Section 80IB(10) as on 01.04.2005 reduced the permissible extent of commercial space in the housing projects. The Hon'ble S....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ncorporate the entire procedural and substantive law relating to tax. In the circumstances, we do not find merit in the contention advanced on behalf of the appellant-State that the object of the Finance Act, 18 of 1987 was only to revise the rates of plantation tax." [underlining by us for emphazis] 9. The Full Bench of the Patna High Court was concerned with a provision introduced in the Income Tax Act with effect from 01.04.1976. The issue was as to whether the share income of minor sons, from a firm in which they were admitted as partners, was assessable in the hands of their fathers by virtue of S.64(1)(iii) brought into the IT Act on 01.04.1976. Karimtharuvi Tea Estate was relied on by the Revenue where as Kesoram Industries was urged by the assessee. The assessee argued that the liability to pay income tax hinges on accrual of income and is not concerned with the time when computation is made by the taxing authority. Karimtharuvi Tea Estate was specifically referred to especially paragraph 10 which is extracted hereunder : "10. Now, it is well-settled that the Income-tax Act, as it stands amended on the first day off April of any financial year must apply to t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ho carries on trading in gold bullion. The appellant not having produced any books of accounts or cash flow statements failed to establish the source of the money seized; which was included in the total income under Section 69A of the IT Act. The writ petition or the appeal does not challenge such inclusion. On the said amounts tax was imposed @60% under Section 115BBE and surcharge @25%. The amendments to the Finance Act were by the 2nd Amendment Act dated 15.12.2016. The enhancement of tax under Section 115BBE was made effective only from 01.04.2017; the commencement of the assessment year 2017-2018, in which the assessments of the previous year are carried out. 12. The assessee contends that the seizures were made prior to the amendment. The affidavits admitting the ownership of amounts seized were also submitted prior to the amendment. The assessee was not aware of the enhanced tax liability when the admissions were made before the authorities. The assessee has also made an attempt to relate the amendments to the demonetization of the specified currencies announced on 08.11.2016 which contention we reject at the outset. The subject amendments which are relevant for our consi....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... In the financial year 2016-17 itself the tax as provided under section 115BBE and the surcharge on advance tax was available as discernible from the IT Act and Finance Act, 2016 as it stood on 1.4.2016 itself. A major misdemeanor leading to assessment of income as accrued under Section 69A invites the consequences of Section 115BBE and surcharge provided under Section 2(9) of the Finance Act, 2016. When it stands enhanced from 01.04.2017, for every assessment carried out in that year, related to the previous year, the rates as applicable on 01.04.2017 has to be applied. There being no new liability created or obligation imposed, the arguments raised by the appellant's counsel fails. The appellant cannot have a contention that he committed the misconduct on the expectation that if he were caught he would have to shell out only lesser amounts as tax and surcharge. There is no right accrued on the assessee to commit an offence on the expectation of a lesser penalty. 16. It was also argued that Income Tax at the rate or rates specified, as prescribed in any Central Act to be charged for any assessment year, shall be so charged in respect of the total income of the previous yea....