Commissioner of Income-tax, Bombay Vs. M/s Kanji Shivji & Co.
EmailAppeal: Civil Appeal No. 9777 of 1995
(From the Judgment and Order dated 8.9.88 of the Bombay High Court in I.T.A.No. 112 of 1988)
(From the Judgment and Order dated 8.9.88 of the Bombay High Court in I.T.A.No. 112 of 1988)
Petitioner: Commissioner of Income-tax, Bombay
Respondent: M/s Kanji Shivji & Co.
Apeal: Civil Appeal No. 9777 of 1995
(From the Judgment and Order dated 8.9.88 of the Bombay High Court in I.T.A.No. 112 of 1988)
(From the Judgment and Order dated 8.9.88 of the Bombay High Court in I.T.A.No. 112 of 1988)
Judges: S.P. BHARUCHA, A.P. MISRA & N. SANTOSH HEGDE, JJ.
Date of Judgment: Jan 25, 2000
Appearances:
Mr. H.N. Salve, Solicitor General, Mr. Harish Chandra, Mr. K.N. Shukla, (Mr. B. Sen, Senior Advocate (A.C.), Senior Advocates, Mr. S. Rajappa, Ms. Sushma Suri, Mr. Shail Kumar Dwivedi, Mr. A.V. Rangam, Mr. B. Krishna Prasad, Ms. Renu George, Mr. B. Gupta, Ms. Bina Gupta, Mrs. Rakhi Raym, Mrs. T. Sudha, Mr. Gan-pathi Iyer, Mr. Gopalkrishnan, Mr. Raghavendra Gopal Krishnan, Mr. M.B. Rao, Advocates with them for the appearing parties.
Head Note:
INCOME TAX LAW
Income Tax Act, 1961
Section 40(b), Exp. (2) Interpretation – Explanation – Whether declaratory or clarificatory. Held it is only declaratory. Rashik Lal Co. (229 ITR 458) not approved. Brij Mohan Das Laxman Das (223 ITR 825) and Suwa Lal Anandi Lal Jain (224 ITR 753) fol-lowed.(Paras 3,4)
Cases Reffered:
1.Rashik Lal & Co. v. Commissioner of Income Tax(229 I.T.R.458)
2.Suwalal Anandilal Jain v. Commissioner of Income Tax JT 1997(3)SC 441
3.Brij Mohan Das Laxman Das v. Commissioner of Income Tax JT 1997(1) SC 155
2.Suwalal Anandilal Jain v. Commissioner of Income Tax JT 1997(3)SC 441
3.Brij Mohan Das Laxman Das v. Commissioner of Income Tax JT 1997(1) SC 155
JUDGEMENT:
ORDER
1. This appeal stands referred to a Bench of three Judges because it was found that a Bench of two learned Judges had taken the view that the conclusion of an earlier Bench of three learned Judges was difficult to accept. The issue relates to whether Explanation (2) to Section 40(b) of the Income Tax Act, 1961, introduced with effect from 1st April, 1985, is prospective in operation or only declaratory.
2. In Brij Mohan Das Laxman Das v. Commissioner of Income Tax = JT 1997 (1) SC 155 = (223 I.T.R. 825) , two learned Judges concluded that the said Explanation was declaratory. This view was accepted by a Bench of three learned Judges in Suwalal Anandilal Jain v. Commissioner of Income Tax JT 1997 (3) SC 441 = 224 I.T.R. 753).
3. In the case of Rashik Lal & Co. v. Commissioner of Income Tax (229 I.T.R. 458), this view was doubted. A Bench of two learned Judges observed that it was difficult to accept the proposition that the said Explanation was only clarification for the reason that if what was contained in the said Explanation was already the law in force, then giving effect to the said Explanation from 1st April, 1985 did not make any sense. But the Bench immediately noted, “However, in the case before us, no question of payment of any interest is involved”. In other words, the application of Section 40(b) and the said Explanation was not really in issue in Rashik Lal,s case. The observations in Rashik Lal’s case rela-tive to the said Explanation must, therefore, be treated as obiter dicta.
4. The conclusion of the court in the earlier cases of Brij Mohan Das Laxman Das and Suwalal Anandilal Jain still represents the correct exposition of the law. Following these decisions, the civil appeal must be dismissed.
5. We are obliged to Mr. B. Sen, learned counsel, for his assis-tance at our request.
6. Appeal dismissed.
7. No order as to costs.
1. This appeal stands referred to a Bench of three Judges because it was found that a Bench of two learned Judges had taken the view that the conclusion of an earlier Bench of three learned Judges was difficult to accept. The issue relates to whether Explanation (2) to Section 40(b) of the Income Tax Act, 1961, introduced with effect from 1st April, 1985, is prospective in operation or only declaratory.
2. In Brij Mohan Das Laxman Das v. Commissioner of Income Tax = JT 1997 (1) SC 155 = (223 I.T.R. 825) , two learned Judges concluded that the said Explanation was declaratory. This view was accepted by a Bench of three learned Judges in Suwalal Anandilal Jain v. Commissioner of Income Tax JT 1997 (3) SC 441 = 224 I.T.R. 753).
3. In the case of Rashik Lal & Co. v. Commissioner of Income Tax (229 I.T.R. 458), this view was doubted. A Bench of two learned Judges observed that it was difficult to accept the proposition that the said Explanation was only clarification for the reason that if what was contained in the said Explanation was already the law in force, then giving effect to the said Explanation from 1st April, 1985 did not make any sense. But the Bench immediately noted, “However, in the case before us, no question of payment of any interest is involved”. In other words, the application of Section 40(b) and the said Explanation was not really in issue in Rashik Lal,s case. The observations in Rashik Lal’s case rela-tive to the said Explanation must, therefore, be treated as obiter dicta.
4. The conclusion of the court in the earlier cases of Brij Mohan Das Laxman Das and Suwalal Anandilal Jain still represents the correct exposition of the law. Following these decisions, the civil appeal must be dismissed.
5. We are obliged to Mr. B. Sen, learned counsel, for his assis-tance at our request.
6. Appeal dismissed.
7. No order as to costs.
