TaxTMI 
TaxTMI 
2006 (5) TMI 118
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Later on, Assessing Officer issued notice to rectify the said order to disallow a sum of Rs. 10,99,552 on account of provision for bad and doubtful debts and loans and advances which was claimed by the assessee while filing the return and allowed by the Assessing Officer in the proceedings under section 143(3) by its orders dated 29-3-1996. For this notice, the assessee gave a reply inter alia contending that the provision for doubtful debts claimed by the assessee is allowable deduction and accordingly it was allowed and the attempt of the Assessing Officer to disallow the same by invoking powers under section 154 of the Act, is not sustainable in as much as the scope of section 154 does not comprehend such an action proposed by the Assessing Officer. But, the learned Assessing Officer after hearing the assessee and considering the material on record, passed the order rectifying the assessment by making an addition of Rs. 10,99,552, which was allowed as deduction claimed by the assessee. 4. Aggrieved by this order, the assessee went in appeal before the CIT(A) and the learned CIT(A) after hearing the assessee has passed the impugned order wherein it was held that the provision f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....parent from the record. The same proposition' was laid down by the jurisdictional High Court of Bombay also rendered in the case of Sidhramappa Andannappa Manvi v. CIT [1952] 21 ITR 333 wherein it was held that the power of the Officers mentioned under section 154 of the Income-tax Act, 1961 is only to correct "any mistake apparent from the record". Similarly, the Hon'ble Madras High Court in the case of CIT v. O. Rm. M. Sm. Sv. Sevugan [1948] 16 ITR 59 has considered the scope of section 35 of the Income-tax Act 1922, which is nothing, but, section 154 in 1961 Income-tax Act, wherein it was observed by the Hon'ble Madras High Court that the powers of the authorities under the said section does not enable an order to be reversed, revised or reviewed, but, permits only such an error which is on the face of the record to be corrected. This position of the Law was held by the Hon'ble jurisdictional High Court of Bombay as undisputable. In the said decision, the Hon'ble jurisdictional High Court of Bombay, stated supra, has considered the facts that a date was stated to have been taken as falling within the period under consideration by the authorities, whereas, it was not actually so.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nation (inserted by the Finance Act, 2001 though with retrospective effect from 1-4-1989. Thus, it is evident that this Explanation is not available for the period under consideration as well as on the date of passing of order under section 154. It was held by the Hon'ble Supreme Court that the assessment is to be completed in accordance with the law available on the date of filing of the return. This proposition was laid down by the Hon'ble Apex Court in the case of CIT v. Hindustan Electro Graphites Ltd [2000] 243 ITR 481. Applying these two principles of the Hon'ble Jurisdictional High Court as well as Hon'ble Supreme Court, we find that the original assessment order passed by the Assessing Officer on 29-3-1996 allowing the claim of provision for bad and doubtful debt made by the assessee is not in accordance with the law available on the date of filing of the return. However, the order dated 17-6-1996 of the Assessing Officer passed under section 154 basing on the explanation attached to section 36, sub-section (1), Clause (7) of the Income-tax Act is not in accordance with the principle laid down by the Hon'ble High Court and Hon'ble Supreme Court stated supra, in as much as t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o humbly place on record my views in the matter. 2. At the outset, I shall first point out certain observations, both factual and legal, made by my learned Brother with which I am not in agreement. These observations go to the root of the matter and hence they deserve to be highlighted for proper appreciation of the case. They are as under: "(i) The learned Judicial Member has proceeded (para 3 of his order) on the assumption that the notice under section 154 was issued by the Assessing Officer to rectify the assessment order by disallowing "... a sum of Rs. 10,99,552 on account of provision for bad and doubtful debts and loans and advances....". The learned Judicial Member has carried that assumption further and observed in para 4 of his order that the "... learned CIT(A) after hearing the assessee passed the impugned order wherein it was held that the provision for bad and doubtful debts is not allowable deduction ....". In para 6 of his order, the learned Judicial Member has further observed: "...it is clear that the provision for bad and doubtful debts/loans and advances is allowable or not is to be decided....". It was not even submitted by the assessee at any stage of the p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssee was a scheduled bank, a bank or a public financial institution. The learned CIT(A) has made a pointed reference to this aspect in para 6 of his order. He has observed: "... Provision for bad and doubtful debts are admissible only in the case of banking companies as per section 36(1)(viia). It is true that the appellant company is not a banking company. Since as per the claim made in the profit and loss account the amount has been shown as 'Provision for doubtful debts' the question of considering it as 'bad debts' does not arise...." The aforesaid distinction made by law and pointedly referred to by the learned CIT(A), which was not even controverted by the assessee at the time of hearing before us, has somehow gone unnoticed in the order proposed by the learned Judicial Member. (iii) The learned Brother has proceeded on the assumption that the issue under consideration was not a mistake apparent from record within the meaning of section 154 and hence was not amenable to the rectificatory jurisdiction of the Assessing Officer under section 154 without due evaluation of the facts available on record and the provisions of section 36(1)(vii) as amended from 1-4-1989. This is amp....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of the observations made in Hindustan Electro Graphites Ltd.'s case has since been doubted by a larger Bench of the Supreme Court in Asstt. CIT v. J.K. Synthetics Ltd. [2001] 251 ITR 2002. Thus, the order proposed by the learned Judicial Member proceeds on the basis of a few observations made in Hindustan Electro Graphites Ltd.'s case without considering the context in which they were made as also the fact that the correctness of those observations has since been doubted by a larger Bench of the Hon'ble Supreme Court. He has also ignored the binding decisions of the larger Benches of the Supreme Court. (v) Reference to Explanation inserted in clause (vii) of sub-section (1) of section 36 by the Finance Act, 2001 with retrospective effect from 1-4-1989 has been made in the order proposed by the learned Judicial Member for the proposition that the said Explanation was not available at the relevant point of time as also on the date of passing the order under section 154 and hence the Revenue could not press the same to provide validity to the rectification order. In other words, the exercise of jurisdiction under section 154 by the Assessing Officer cannot be considered, according t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....must be judged on the basis of retrospective legislation as if it was in existence otherwise the underlying purpose of enacting retrospective legislation would be completely frustrated." 3. It is because of non-consideration of the relevant factual and legal aspects of the case in the order proposed by the learned Judicial Member that I now proceed to record my views. Starting with a positive note, I am in complete agreement with my learned Brother that the jurisdiction of the Assessing Officer under section 154 is restricted to rectifying the mistakes which are apparent from the record. In other words, the Assessing Officer has no jurisdiction to rectify the mistakes which are of debatable nature or which require to be established by a long drawn process of reasoning or which require investigation into facts. Contentious or debatable issues are thus plainly outside the scope of section 154 of the Income-tax Act. What is however required to be seen, on the facts and in the circumstances of the case before us, is whether there is any genuine debate or controversy either with regard to the facts or with regard to law being applied to those facts. A matter does not become debatable o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f the Income-tax Act, 1961 can be passed to disallow the Provision for Doubtful Debts amounting to Rs. 10,99,552 for assessment year 1993-94 because there is no apparent mistake which can be rectified and hence section 154 has no application. This issue is controversial in the sense that the matter has gone to the High Courts in other cases and three High Courts have decided in favour of the assessee in the following cases:- (i) Jwala Prasad Tiwari's case 24 ITR 537 (Bom.) (ii) Vithaldas Jayant 130 ITR 95 (Guj.) (iii) Sarangpur Cotton Mfg. Co. Ltd. 143 ITR 166 (Guj.) (iv) Sriniyaga Pictures 161 ITR 65 (Mad.) Since our client-company has debited an amount of Rs. 10,99,552 as Provision for Doubtful Debts in the Profit & Loss Account, it constitutes write off of debt and this satisfies the requirements laid down in section 36(2). The courts have taken the view in the above cases that the debt can be said to be written off if the amount thereof is debited to Profit & Loss Account and credited to Provision for Doubtful Debts Account. Since the jurisdictional High Court has held in favour of the assessee, it is binding on you and you cannot resort to section 154 as there is no mista....
X X X X Extracts X X X X
X X X X Extracts X X X X
....merge on perusal of the order passed by the Assessing Officer under section 154. (i) The assessee was seeking allowance of Rs. 10,99,552 under section 36(1)(vii), being provision for doubtful debts, over and above the allowance for bad debt which it had written off as irrecoverable in its accounts for the relevant previous year. During the year, the assessee showed addition of Rs. 11,21,751 to doubtful debts/advances out of which the amount actually written off as irrecoverable was shown at Rs. 22,200 only. It is quite apparent from the assessee's own details that a sum of Rs. 22,200 alone was written off as irrecoverable in the accounts of the assessee. Thus, the assessee itself treated the amount of bad debts written off as irrecoverable as separate and distinct from the provision for doubtful debts/advances amounting to Rs. 10,99,552. (ii) The objection raised by the assessee before the Assessing Officer to the rectification proposed by him was with reference to the pre-amended provisions of section 36(2) and not with reference to the amended provisions of section 36(1)(vii) which required the Assessing Officer to grant allowance only if a bad debt was actually written off as ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ime, i.e., assessment year 1993-94 reads as under: "36. Other deductions.-(1) The deductions provided for in the following clauses shall be allowed in respect of the matters dealt with therein, in computing the income referred to in section 28- (vii) subject to the provisions of sub-section (2), the amount of any bad debt or part thereof which is written off as irrecoverable in the accounts of the assessee for the previous year: Provided that in the case of an assessee to which clause (viia) applies, the amount of the deduction relating to any such debt or part thereof shall be limited to the amount by which such debt or part thereof exceeds the credit balance in the provision for bad and doubtful debts account made under that clause. "Explanation: For the purposes of this clause, any bad debt or part thereof written off as irrecoverable in the accounts of the assessee shall not include any provision for bad and doubtful debts made in the accounts of the assessee;" "Explanation was inserted by the Finance Act, 2001 with retrospective effect from 1-4-1989. 11. At the time of hearing, the learned counsel for the assessee pointed out that the order under section 143(3) was passe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n addition to the bad debt written off as irrecoverable in his accounts. The assessee itself has made a distinction between a bad debt which it had actually written off as irrecoverable in its accounts and the provision for doubtful debts which it had not written off as irrecoverable in its accounts. In such a situation, the assessee is not entitled to claim allowance under section 36(1)(vii) for any other amount in addition to the amount of bad debt which it has written off as irrecoverable in its accounts. Since the assessee has separately written off bad debt amounting to Rs. 22,200 as irrecoverable in its accounts for the relevant previous year, the allowance under section 36(1)(vii) is required to be restrict amount alone. The assessee cannot seek allowance of two distinct amounts, one for bad debts actually written off as irrecoverable in the accounts of the previous year and the other for 'provision for doubtful debts' which it has not written off as irrecoverable in its accounts. On the face of it, clause (vii) does not extend the allowance both for the bad debts actually written of as irrecoverable in the accounts for the previous year as also for the provision for doubtfu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....owance for bad debt shown by the assessee to have been written off as irrecoverable in its accounts. Having availed the allowance for bad debt written off as irrecoverable in the accounts, the assessee cannot seek additional allowance in respect of 'provision for doubtful debts' over and above the one for bad debt written off as irrecoverable in the accounts. The decisions cited by the assessee are clearly distinguishable on facts. 16. Section 36(1)(vii) requires the bad debt to be written off as irrecoverable in the accounts of the assessee. It is the irrecoverability of the debt that is decisive as section 36(1)(vii) grants allowance for a bad debt written off as 'irrecoverable' in the accounts of the assessee. The mere fact that a provision has been made does not by itself mean that the provision so made has been written off as irrecoverable. What is required by section 36(1)(vii) is not a provision or mere write off of a debt. It requires the assessee to satisfy that what is being claimed is nothing but a bad debt which has been written off as irrecoverable in the accounts. Thus, mere provision or write off is not sufficient for claiming allowance under section 36(1)(vii). In ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt statutory provisions, as they originally stood, is capable of being rectified under section 154. It is now settled by the decision of the Hon'ble Supreme Court in Karamchand Premchand (P.) Ltd. v. CIT [1993] 200 ITR 268, 273 and several decisions that a decision rendered without taking note of a statutory provision can support ground for rectification. Decisions in CIT v. Quilon Marine Produce Co. [1986] 157 ITR 448 (Ker.) and CIT v. Kesaria Tea Co. Ltd. [1998] 233 ITR 700 (Ker.) are also quite apposite. The Kerala High Court has held in Quilon Marine Produce Co.'s case, following the decisions of the Supreme Court as referred to in Quilon Marine Produce Co.'s case, that overlooking of a mandatory provision of law which allows no discretion to the taxing authorities is a mistake apparent from the record. In the present case, there is no doubt that the provisions of section 36(1)(vii) gave no discretion to the Assessing Officer to allow 'provision for doubtful debts' in addition to the bad debts written off as irrecoverable in the accounts of the assessee. The mistake in allowing the said claim at the assessment stage was self evident on the facts submitted by the assessee and on....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ve is well known and hence needs no reiteration. This is more so when the Explanation is inserted with retrospective effect. The Explanation has simply clarified what the law was even before the Explanation was inserted. Before the insertion of Explanation also, the assessee was entitled to only one allowance under clause (vii), i.e., allowance for bad debt written off as irrecoverable in the accounts of the previous year of the assessee and not to two allowances, i.e., allowance for bad debt as also allowance in respect of provision for doubtful debt. The aforesaid legal position has not been altered by the Explanation. The Explanation has simply clarified and confirmed the aforesaid legal position and not that it has altered the statutory basis or conditions for allowance under section 36(1)(vii). The case of the assessee was hit by section 36(1)(vii) as it existed at the material point of time when rectification was carried out. And it is now hit by the Explanation also which has since been inserted in section 36(1)(vii). 20. However, the learned Judicial Member is of the view that the Explanation should not be considered by the Tribunal at this stage as it was not originally a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....vely amended with effect from the date when the said provisions had come into force. On these facts, the Hon'ble Supreme Court held: "The substituted sub-sections (1A), therefore, made it clear that even where the loss declared by an assessee had been reduced by reason of adjustments made under sub-section (1)(a), the provisions of sub-section (1A) would apply. This being a retrospective amendment, it covers the controversy in this appeal and, therefore, the appeal would have to be decided in favour of the Revenue." 22. The facts of the case in the present appeal are quite comparable with those in J.K. Synthetics Ltd.'s case. In J.K. Synthetics Ltd.'s case, additional tax was charged under the provisions which were not as specific as the retrospective amendment of sub-section (1A) of section 143 made them to be. The retrospective legislation was not available when the order was passed levying the additional tax. Retrospective legislation was inserted when the matter had already been decided by the High Court in favour of the assessee and had reached the Supreme Court. Nevertheless, the Hon'ble Supreme Court took note of the retrospective legislation and held the levy of additiona....
X X X X Extracts X X X X
X X X X Extracts X X X X
....assessments is the law in force on the first day of the assessment year and not on the date of filing the original return. Be whatever it may, the present appeal does not relate to the levy of penalty or additional tax under section 143(1A) as was the case in Hindustan Electro Graphites Ltd. It has, however, not been held by the Hon'ble Supreme Court in Hindustan Electro Graphites Ltd.'s that retrospective legislation would not be applicable to the assessment year to which it is expressly made retrospectively applicable merely by reason of its being enacted later. It is difficult to read any such proposition in the said judgment. No such proposition of law as is attributed to the said judgment emerges on its careful perusal. 24. In order to properly appreciate the judgment of the Hon'ble Supreme Court in Hindustan Electro Graphites Ltd.'s case, a brief reference to the facts involved in that case would be useful. In Hindustan Electro Graphites Ltd.'s case, the assessee had filed its return of income for assessment year 198990 on 29-12-1989. Clause (iiib) was inserted in section 28 of the Income-tax Act by the Finance Bill of 1990 which became the Finance Act on receiving the assen....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sh assistance was not taxable when the return of income was filed. Retrospective legislation in the said case was also enacted much after the return of income had been filed but full effect to the retrospective legislation was given from the date from which it was made operative and not from the date it was enacted. The aforesaid position is quite clear on perusal of the aforesaid position. There is nothing in the decision in Hindustan Elertro Graphites Ltd.'s case to suggest that retrospective legislation should not be given effect from the date from which it is made operative. Thus the decision in the said case, instead of assisting the assessee in the case before us, supports the case of the Revenue that retrospective legislation operates from the date from which it is made operative and not from the date on which it is enacted. Two, as regards levy of additional tax, the Hon'ble Court observed that additional tax had the imprint of penalty and hence the Revenue could not be heard to say that the levy of additional tax was automatic under section 143(1A). It is in this background that the Hon'ble Supreme Court held that the return was correct on the date on which the return was ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....-1990 under section 148, as it stood at the material point of time, was given by the Assessing Officer to the assessee asking the assessee to file a return of his income within thirty days. It was submitted before the Tribunal that initiation of re-assessment proceedings was bad in law and void as the notice dated 7-11-1990 issued by the Assessing Officer was contrary to section 148 as it stood at the relevant time. The Tribunal accepted the aforesaid plea and passed order accordingly on 26-6-1996. After the Tribunal had passed the order the law was amended retrospectively with effect from 1-4-1989 by which the term "not being less than thirty days" in section 148' stood deleted. The Department moved an application under section 254(2) seeking amendment of the order passed by the Tribunalon 26-6-1996 on the ground that with the change in law retrospectively from 1-4-1989, the order dated 26-6-1989 needed rectification. Application filed by the Department was dismissed by the Tribunal on the ground that there was no apparent error on record as the Amending Act received the assent of the President nearly three months after the Tribunal had passed the order. Appeal against the order o....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the law has been amended with retrospective operation, it would be the duty of the High Court to apply the law so amended if it applies. By taking notice of the law which has been substituted for the original provision, the High Court is giving effect to legislative intent and does no more than what must be deemed to be necessarily implicit in the question referred by the Tribunal...." 28. In CIT v. M.C. Jacob [1993] 203 ITR 972, the Hon'ble Kerala High Court has held: "...At a time when the appeals came up before the Appellate Tribunal, section 80J of the Act has been amended, according to the Tribunal, in support of the view taken by the Revenue. The Tribunal was duty bound to give effect to the law as amended. By failing to do it, it abdicated its duty...." 29. In view of the foregoing, I record my conclusions as under: (i) On the factual side of the case, the position admitted by the assessee was that the assessee was seeking allowance for "provision of doubtful debts, loans and advances" without any evidence on record to show that it was irrecoverable and hence written off as such in the accounts of the assessee for the relevant previous year. It was not even argued by the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r had no discretion except to disallow the claim being outside the scope of section 36(1)(vii). However, he overlooked the provisions of section 36(1)(vii) and thus wrongly allowed the claim which was plainly inadmissible, there is thus a mistake on the part of the Assessing Officer in overlooking the provisions of section 36(1)(vii) as they existed at the relevant time and thereby wrongly allowing the claim to the assessee. In my view, the aforesaid mistake on the part of the assessee was a mistake apparent from record and hence capable of being rectified under section 154. The order of the Assessing Officer as upheld by the CIT(A) does not suffer from any infirmity. (v) In view of the insertion of Explanation by the Finance Act 2001 with retrospective effect from 1-4-2001, the 'provision for doubtful debts' is not admissible for allowance with effect from 1-4-1989. The Tribunal is obliged to give full effect to the aforesaid retrospective legislation on the ground that it was always the law right from the date it was made retrospectively effective. I therefore hold the action of the Assessing Officer to be valid in view of the said Explanation also. 30. Having considered the ma....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the aforesaid case. I am bound to follow the said order of the co-ordinate Bench of the Tribunal. 31. In view of the above, the appeal filed by the assessee is dismissed. ORDER UNDER SECTION 255(4) OF THE INCOME-TAX ACT, 1961 Since there is a difference of opinion between the learned Judicial Member and the Learned Accountant Member on the ground of appeal raised by the assessee, we hereby frame the point of difference under section 255(4) of the Income-tax Act, 1961, as under, for resolving the controversy by a Third Member to be nominated by the Hon'ble President. "Whether, under the facts and circumstances of the case, the provisions for bad and doubtful debt of Rs. 10,99,552 claimed by the assessee and allowed under section 143(3) proceedings by the Assessing Officer, can be disallowed by invoking the provisions contained under section 154 of the Income-tax Act, 1961, and basing on the amendment made to section 36(1), clause (7), which was amended by Finance Act, 2001?" THIRD MEMBER ORDER Per G.E. Veerabhadrappa, Vice President. - There being a difference of opinion between the Members constituting the Division Bench, the Hon'ble President has referred, under section 255(....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f the Act was not physically there on the statute book. The amendment brought out in the year 2001 by way of insertion of the Explanation in the said section with effect from 1-4-1989 cannot be looked at to support the earlier order passed under section 154 of the Act. This, according to the learned counsel for the assessee is the view-expressed by the jurisdictional High Court in CIT v. Sudhir S. Mehta [2004] 265 ITR 548 (Bom.). (ii) As on 17-6-1996 i.e., the date of the order of the Assessing Officer passed under section 154 of the Act, the legal position as laid down by several High Courts including the jurisdictional High Court; was that the debiting of the profit and loss account and the crediting of the reserve for bad debts/provision for bad debts account, constituted sufficient compliance with the requirements of section 36(1)(vii) of the Act. According to the learned counsel for the assessee the following decisions support the above contention: CIT v. Jwala Prasad Tiwari [1953] 24 ITR 537 (Bom.), Vithaldas H Dhanjibhai Bardanwala v. CIT [1981] 130 ITR 95 (Guj.), Sarangpur Cotton Mfg. Co. Ltd. v. CIT [1983] 143 ITR 166 (Guj.), CIT v. Srivinayaga Pictures [1986] 161 ITR....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he Act, in the facts and circumstances of this case, has brought the issue before me. 4. The learned counsel for the assessee vehemently supported the proposed order of the learned Judicial Member in the light of the discussions therein. He submitted that the order under section 143(3) of the Act was passed on 29-3-1996 and the impugned order under section 154 was passed on 17-6-1996. On both these dates, there was no Explanation to section 36(1)(vii) of the Act in the Statute. The Finance Act, 2001 has inserted an Explanation to section 36(1)(vii) with retrospective effect from 1-4-1989. The action of the Assessing Officer under section 154 has to be judged in the light of the law as it existed in the statute book on the date of the impugned order. As on 17-6-1996, the Explanation itself was not physically present in the statute book and, therefore, the order of the Assessing Officer passed on that date is clearly beyond his powers conferred under section 154 of the Act. This has been laid down by the jurisdictional High Court in CIT v. Sudhir S. Mehta [2004] 265 ITR 548 (Bom.). He pointed out that several orders in favour of the assessee were available on 29-3-1996 and on 17-6-1....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on for doubtful debts, which debt was not written off as irrecoverable, in its accounts. Now the short question before me is what is the exact impact of the retrospective amendment of this provision. The Hon'ble Bombay High Court in Mrs. Kamla S. Asrani's case held that when the law is amended with retrospective effect, when it decides any proceeding, has to apply such retrospectively amended law as if it were in force at all material times. In that case the question related to exemption of capital gain arising out of transfer of land situated within the municipal limit. The Tribunal in that case relying upon the decision of the Bombay High Court in the case of Manubhai A. Sheth v. N.D. Nirgudkar, Second ITO [1981] 128 ITR 87 that capital gains were not taxable under the Income-tax Act as they constituted agricultural income. There were amendments to section 2(14) clarifying that revenue derived from land shall not include and shall be deemed never to have included any income from the transfer of any land referred to item (a) or item (b) of sub-clause (iii) of clause (14) of section 2. The amendment was made by the Finance Act, 1989 with retrospective effect from 1-4-1970 when the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....na High Court in Sheo Karan Dass Bhoj Raj v. State of Haryana [1974] 34 STC 94 (FB). The Supreme Court, in the case of State of U.P. v. Modi Industries Ltd. [1977] 40 STC 73, was required to consider a case where, after the reference was decided by the High Court and before the Tribunal could act upon it, the law was amended retrospectively. The Tribunal, thereupon, did not act on the basis of the decision of the High Court under the reference. On the assessee moving the High Court under article 226 of the Constitution of India, the High Court took the view that the revising authority was not free to take a different view from the one expressed by the High Court on any ground whatsoever, including any subsequent amendment in the law, and that it was bound to decide the case in conformity with the judgment of the High Court. The Supreme Court set aside the decision of the High Court, holding that the retrospective amendment clearly indicated the intention of the Legislature of restoring the assessments and orders made earlier and hence the Tribunal was entitled to take such retrospective amendment into account. The Supreme Court observed that, under the amending Act, assessments at ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....) of the Act. Again the Madhya Pradesh High Court in CIT v. Madhya Pradesh Electricity Board [1994] 210 ITR 425 held that when the law is amended with retrospective effect the fiction is that all must proceed on the basis that the law at the relevant time was the law as amended subsequently. That being so the legal fiction is apparently capable of being carried forward to hold, that when the earlier order was passed, it was passed in contravention of the amended law which by fiction is deemed to be in force at that time. The Hon'ble Madhya Pradesh High Court held that it is clearly an error apparent on the face of the record. The Guwahati High Court in CIT v. Smt. Eva Raha [1980] 121 ITR 293 opined that the resultant effect of the amendment giving a particular provision a retrospective operation is to authorize or to make it obligatory on the authorities to revise their orders in the light of the retrospective amendment. Again the Hon'ble Supreme Court in M.K. Venkatachalam, ITO v. Bombay Dyeing & Mfg. Co. Ltd. [1958] 34 ITR 143 held that for finding out whether there is a mistake apparent on the record, the authority has to look at the amended law and not the law that existed at t....