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Messages - tusharhemani

#1
The assessee challenged the constitutional validity and vires of retrospective insertion of conditions in third proviso to Section 80HHC(3) of the Income Tax Act, 1961 by the amendment of Taxation Laws (Second Amendment) Act, 2005. It was stated that the amendment sought to retrospectively take away the benefit after the period of granting such benefit having expired on 31st March 2004. It was also contended that the impugned portion of the said amendment discriminates between the assessees falling in the same class which is prohibited by Article 14 of the Constitution. It was further contended that the impugned portion of the amendment also imposes conditions retrospectively for being eligible to deduction under Section 80 HHC which were not the preconditions at the relevant time. The assessee stated that the said amendment further denies retrospectively, the deduction u/s. 80 HHC to exporters having turnover of more than Rs.10 Crores although as evident from the history of deduction u/s. 80 HHC, the exporters were encouraged to increase the turnover as an incentive to avail the deduction u/s. 80 HHC. It was stated that the amendment grants deduction with respect to exporters having turnover of more than Rs.10 Crores whose products are notified/eligible for both duty drawback scheme and Duty Entitlement Pass Book Scheme and the rate of duty drawback is higher than DEPB while the rest of the exporters were singled out without their being any rational connection for making the aforesaid classification. It was also contended that such an amendment is against the principle of promissory estoppel. It was contended that the sole purpose of the said amendment was to settle the law laid down by the Tribunal.
Held:-
The amendment is held to be violative of Article 14 of the Constitution of India. Hon'ble the Court observed thus:
"13. After hearing the learned counsel for the parties, we are of the view that the benefit based on pendency of the proceedings of assessment and discrimination based thereon definitely violates Article 14 of the Constitution of India. In the matter of completion of assessment, the assessees have little role to pay. After the assessees have submitted their returns within the time fixed by law, if for any reason the respondent delays in making the assessment, taking advantage of their own delay, the Revenue cannot deprive a class of the assessees of the benefit whereas other assessees of the same class whose assessment have already been completed would get the benefit. We, therefore, find that discrimination based on two classes, first, whose assessments have become final and secondly, whose assessment are pending, definitely violates Article 14 of the Constitution of India as there is no rationale nexus with the object of the amendment, and, therefore, such classification fails the test of Article 14 of the Constitution, being a case of 'palpable arbitrariness'.
14. We fully agree with the submissions made by the learned counsel for the petitioners that the burden was upon the Revenue to prove that the restrictions imposed by the amending Act are reasonable. We find that the Revenue has failed to discharge that burden by pointing out the reason for making classification based on the above two aspects which have no reasonable connection with the object of amendment."

Hon'ble the Court further held that in order to overcome adverse decision of the any Court of Tribunal, the legislature cannot delete a valid piece of legislation and incorporate a totally new one with retrospective effect. Hon'ble Court further held that the amendment cannot have retrospective operation in so far as the same is operating against the assessee. In other words, the amendment in so far as it grants benefit to the assessees having export turnover below 10 crs would not be affected. The Court observed thus:
"20. After hearing the learned counsel for the parties and after going through the decisions cited at the bar, we are of the view that although in taxing statute laxity is permissible and after giving a benefit to the assessee based on some specific conditions, such benefit can definitely be curtailed but the same must be effective from a future date and not from an earlier point of time. If after inducing a citizen to arrange his business in a manner with a clear stipulation that if the existing statutory conditions are satisfied, in that event, he would get the benefit of taxation and thereafter, the Revenue withdraws such benefit and imposes a new condition which the citizen at that stage is incapable of complying whereas if such promise was not there, the citizen could arrange his affairs in a different way to get similar or at least some benefit, such amendment must be held to be arbitrary and if not, an ingenious artifice opposed to law. In the case before us, the object of the amendment, as it appears from the statements of the Finance Minister while moving the bill, is to get rid of the alleged wrong decision of the Tribunal interpreting the then provision of the Statute in a way beneficial to the assesses, which according to the Finance Minister, was never the intention of the legislature. If such be the position, the Revenue has definitely right to challenge the decision of the Tribunal as a wrong one before the higher forum; but on a plea of delay in disposal of appeal if filed, without challenging the decision of the Tribunal before High Court or Supreme Court, the Revenue cannot curtail such benefits by proposing amendment, incorporating a new provisions in the Statute from an anterior date. According to the existing law enacted by the Parliament itself, wrong orders passed by a Tribunal should be challenged by the aggrieved party before the appropriate High Court and if such party is still aggrieved by the order of the High Court, he should move the Supreme Court.
xxx...
21.1 In the case before us, there is no defect in the original legislation but the Tribunal has interpreted the language of the valid piece of legislation in a way, which benefits the assessee. In such a case, for overcoming the adverse decision of the Tribunal, the legislature cannot delete a valid piece of legislation and incorporate a totally new one with retrospective effect. The effect of this amendment is that it is bypassing the existing law enacted by the Parliament of preferring appeal against the order passed by the Tribunal, which is still the law of the land.
22. We, however, are, not for a moment, disputing the power of the legislature to curtail the benefit of a taxing statute conferred upon the assessee by prospective legislation but such curtailment with retrospective effect cannot be made for overcoming the effect of a judicial decision without taking recourse to the provision of appeal prescribed by law on the plea of delay. Moreover, we find that the present amendment has been made at a point of time when the application of section 80HHC has already been exhausted and the same was not even in the statute book. In such situation, it is not permissible to take away the benefit already granted through a concluded scheme by introducing fresh amendment by virtue of which an expired scheme has been revived with benefit conferred upon only a limited section and snatching the same from some other sections.
xxx...
In the present case, according to the Finance Minister presenting the Bill, a valid piece of legislation has been wrongly interpreted by the Tribunal. We have already pointed out that according to the existing law, if a valid piece of legislation is wrongly interpreted by the Tribunal, the aggrieved party should move higher judicial forum for correct interpretation. As pointed by the Apex Court in the case of Pritvi Cotton Mills Ltd (supra), the legislature does not possess or exercise power to reverse the decision in exercise of judicial power. Thus, we are of the view that the principles laid down in the case of R. C. Tobacco (P) Ltd. (supra) has no application to the facts of the present case. The impugned amendment granting benefit restricting it to a class of assessee whose turnover is less than Rs. 10 Crore is permissible prospectively but the way it has been enacted, it takes away an enjoyed right of a class of citizen who availed of the benefit by complying with the requirements of the then provisions of law.
26. On consideration of the entire materials on record, we, therefore, find substance in the contention of the learned counsel for the petitioners that the impugned amendment is violative for its retrospective operation in order to overcome the decision of the Tribunal, and at the same time, for depriving the benefit earlier granted to a class of the assessees whose assessments were still pending although such benefit will be available to the assessees whose assessments have already been concluded. In other words, in this type of substantive amendment, retrospective operation can be given only if it is for the benefit of the assessee but not in a case where it affects even a fewer section of the assesses.
27. We, accordingly, quash the impugned amendment only to this extent that the operation of the said section could be given effect from the date of amendment and not in respect of earlier assessment years of the assessees whose export turnover is above Rs. 10 Crore. In other words, the retrospective amendment should not be detrimental to any of the assesses."

http://www.lexpertsonline.com/home/Portals/0/HC/80HHC-2005.pdf




#2
All these matters are fixed for hearing on 12th March, 2012.
#3
Supreme Court vide its order dated 3/2/2012 directed that all the pending writ petitions   challenging retrospective amendment to S.80HHC before various high court are to be heard by the Gujarat High Court. It will be interesting to see how the present tax bench (B. Bhattacharya and J Pardiwala, JJ) would deal with the issue of challenge to the vires of tax statute.   

Tushar Hemani
#4
To increase knowledge, one must share knowledge. Therefore, at lexperts, we have created a database of all the orders delivered by all India Tribunals from January, 2011 onwards which can be accessed at a click of a mouse. You are invited to use our database through the search engine at:

http://www.lexpertsonline.com/home/DecisionArchives.aspx
#5
Discussion / New Supplement of Digest of Decisions
April 27, 2009, 02:32:52 PM

Dear All,

I, on behalf of ITAT Bar Association, Ahmedabad, am very pleased to announce the release of latest Supplement of our Bar's traditional Digests of decisions -  (i) Gujarat High Court & Supreme Court and (ii) Income Tax Appellate Tribunal, compiled by Shri K H Kaji from 2001/2002 to February, 2009 incorporating all the important decisions of Hon'ble Supreme Court / Gujarat High Court and ITAT, Ahmedabad / Rajkot  Benches.

Our Bar has decided to come out with spiral bound Set of Digests for the benefit of professionals at a very reasonable price of Rs.450/- for both the Digests. Those who wish to purchase the same may kindly get in touch with me on my email : tusharhemani@gmail.com or contact Mr. Arvind Khopkar at our Bar office.

Tushar Hemani
Hon. Secretary,
ITAT Bar Association, Ahmedabad. 
#6
Discussion / Change of Address
February 07, 2008, 08:08:17 PM
All the members are kindly requested to note that from Monday, 11th  February, 2008 onwards the Income Tax Appellate Tribunal, Ahmedabad shall function from the new premises, address whereof is given hereinbelow:



Income Tax Appellate Tribunal,

4th Floor,  Abhinav Arcade,

Opp. Minicipal School, Nr. Kothawala Flats,

Ashram Road, Pritamnagar,

Ellisbridge, Ahmedabad.



All the members are requested to attend the hearings at the new premises from 11/02/2008 onwards even if the notice of hearing states the old address. Members are also requested to inform their colleagues and other professionals about this change in the address of the Tribunal.



Ahmedabad                                                                                     Tushar P. Hemani

07/02/2008                                                                                         Hon. Secretary
#7
Discussion / special bench hearing at A'bad
December 21, 2007, 12:22:54 PM
SB hearing is scheduled on 28/12/2007 for the consideration of following question:

Whether, in view of the provisions of section 80IA(5) of the Income tax Act, 1961 the profit from the eligible business for the purpose of deduction u/s 80IA of the Act has to be computed after deduction of the notional brought forward losses and depreciation of eligible business even though they have been allowed set off against other income in earlier years?

If any body wants to intervene or make any submissions, pl reply or get in touch with me

tushar hemani
Hon. Sec. ITAT Bar A'bad.
#8
Discussion / Re: IS ROGINI GARMENTS GOOD LAW IN MUMBAI
November 19, 2007, 06:14:06 PM
Hon'ble the President has withdrawn the SB reference and the said matter (Atul Intermediates) has been heard and going to be decided against by the DB by following the SB Chennai.

regards

tushar hemani