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Parmatma Saran (Huf) Vs. Wealth-tax Officer - Court Judgment

LegalCrystal Citation
CourtIncome Tax Appellate Tribunal ITAT Delhi
Decided On
Judge
Reported in(1984)7ITD630(Delhi)
AppellantParmatma Saran (Huf)
RespondentWealth-tax Officer
Excerpt:
.....to the assessment year 1979-80.2. the facts of the case are that the assessee, a huf, effected a partial partition of the huf property on 25-1-1979 effective from 1-1-1979. at the time of filing of the return for the assessment year 1979-80, the assessee excluded the properties partitioned in the said partial partition dated 25-1-1979. the wto, however, ignored the claim of the assessee on the ground that according to the new provisions of section 171(9) of the income-tax act, 1961 ('the 1961 act') inserted by the finance (no. 2) act, 1980, with effect from 1-4-1980, the immovable property belonging to the huf will be assessed as it was assessed in the wealth-tax assessment of the assessee for the assessment year 1978-79. this is because similar amendment was made in the act. the.....
Judgment:
1. This appeal by the assessee against the order of the AAC is relevant for the assessment year 1979-80. The narrow issue before us is whether Section 20A of the Wealth-tax Act, 1957 ('the Act'), which had been inserted by the Finance (No. 2) Act, 1980, with effect from 1-4-1980 would be applicable to the assessment year 1979-80.

2. The facts of the case are that the assessee, a HUF, effected a partial partition of the HUF property on 25-1-1979 effective from 1-1-1979. At the time of filing of the return for the assessment year 1979-80, the assessee excluded the properties partitioned in the said partial partition dated 25-1-1979. The WTO, however, ignored the claim of the assessee on the ground that according to the new provisions of Section 171(9) of the Income-tax Act, 1961 ('the 1961 Act') inserted by the Finance (No. 2) Act, 1980, with effect from 1-4-1980, the immovable property belonging to the HUF will be assessed as it was assessed in the wealth-tax assessment of the assessee for the assessment year 1978-79. This is because similar amendment was made in the Act. The assessee was aggrieved and went in appeal before the AAC who, however, rejected the claim of the assessee as follows : This clause also envisages that any finding recorded under sub-Section (3) to that effect (regarding partial partition) whether before or after 18-6-1980, being the date of introduction of the Finance (No. 2) Bill, 1980, shall be null and void. This means that if a partial partition stands effected by a HUF after 31-12-1978, it will not have recognition under the Income-tax Act for the assessment purposes. In view of the new provisions of the Income-tax Act/Wealth-tax Act in this regard, contention of the learned counsel that by amendment of Section 28 these new provisions have been given effect from 1-4-1980 and, therefore, are applicable to the assessment year 1980-81 and onwards and, thus, not applicable for the assessment year 1979-80, is not correct. Because the Legislature, in my opinion, did not put assessment year 1979-80 in such clarificatory notes only as, partial partition effected by any HUF up to 31-12-1978 were to fall in the year relevant to the assessment year 1979-80. Thus, I agree with the WTO that the partial partition of the immovable properties effected by the appellant after 31-12-1978 was, therefore, not to be recognised for income-tax and wealth-tax purposes. This being the case I, therefore, hold that under such circumstances, the WTO was justified in including the value of immovable properties belonging to the appellant-HUF in respect of which it effected partial partition as on 25-1-1979, in the hands of the appellant-HUF for assessment purposes for the assessment year under consideration.

3. Shri O.P. Sapra, the learned counsel for the assessee, repeated the same arguments as advanced before the lower authorities. Shri S.Ramaswamy, the learned departmental representative, supported the orders of the lower authorities.

4. After careful consideration of the rival submissions, we are of the view that the amended Section 20A inserted by the Finance (No. 2) Act, 1980, with effect from 1-4-1980 would not be applicable to the assessment year 1979-80. Section 20A reads as follows : Where a partial partition has taken place after the 31st day of December, 1978, among the members of a Hindu undivided family hitherto assessed as undivided- (a) such family shall continue to be liable to be assessed under this Act as if no such partial partition had taken place ; (b) each member or group of members of such family immediately before such partial partition and the family shall be jointly and severally liable for any tax, penalty, interest, fine or other sum payable under this Act by the family in respect of any period, whether before or after such partial partition ; (c) the several liability of any member or group of members aforesaid shall be computed according to the portion of the joint family property allotted to him or it at such partial partition, Explanation : For the purposes of this Section, 'partial partition' shall have the meaning assigned to it in Clause (b) of the Explanation to Section 171 of the Income-tax Act.

5. This amendment which had been inserted by the Finance (No. 2) Act, 1980, in the Act was brought in the statute book with a specific purpose as enumerated in the memorandum explaining the provisions in the Finance (No. 2) Bill, 1980. Vide paragraphs 126 to 129 of the said memorandum, the aims and objects of the said amendment were explained as follows : 126. Modification of the tax treatment of Hindu undivided family.- Under the existing provisions, where at the time of making an assessment, it is brought to the notice of the Wealth-tax Officer that a partition has taken place among the members of the Hindu undivided family and the Wealth-tax Officer, after enquiry, is satisfied that the joint family property has been totally partitioned amongst the various members or groups of members in definite portions, he makes an order to that effect and makes assessment on the net wealth of the undivided family for the assessment year or years for which the family remained undivided.

Where such partition has taken place on the last day of the previous year, the assessment for the relevant assessment year is also made on the Hindu undivided family. Each member or group of members is jointly and severally liable for the tax assessed on the net wealth of the joint family. Where the Wealth-tax Officer is not satisfied that the whole of the property of the Hindu undivided family has been partitioned, he makes an order declaring that the family will be deemed to continue as a Hindu undivided family and assessed in that status.

127. It is proposed to de-recognise the partial partition of Hindu undivided families taking place after 31st December, 1978. Where any claim is made before the Wealth-tax Officer that a partial partition of the Hindu undivided family which has hitherto been assessed as undivided has taken place after 31st December, 1978, such family will continue to be liable to be assessed under the Wealth-tax Act as if no such partial partition has taken place. Each member or group of members of such family immediately before such partial partition and the family will be jointly and severally liable for the tax, penalty, interest or any other sum payable under this Act by the family in respect of any period, whether before or after the partial partition. The liability attributable to any member or group of members will be computed according to the portion of the joint family property which has been allotted to him at the time of partial partition. For this purpose, the expression 'partial partition' will have the same meaning as in Clause (b) of the Explanation below Section 171 of the Income-tax Act, that is to say, 'partial partition', will mean a partition which is partial as regards the persons constituting the Hindu undivided family or the properties belonging to the Hindu undivided family, or both.

129. This amendment will take effect from 1st April, 1980 and will accordingly apply in relation to the assessment year 1980-81 and subsequent years." [1980] 123 ITR (St.) 176.

From the above memorandum, it is explicitly made clear that this amendment will take effect from 1-4-1980 and will, accordingly, apply in relation to the assessment year 1980-81 and subsequent years. Their Lordships of the Supreme Court in the case of K.P. Varghese v. ITO [1981] 131 ITR 597 held: ... It is true that the speeches made by the Members of the Legislature on the floor of the House when a Bill for enacting a statutory provision is being debated are inadmissible for the purpose of interpreting the statutory provision but the speech made by the mover of the Bill explaining the reason for the introduction of the Bill can certainly be referred to for the purpose of ascertaining the mischief sought to be remedied by the legislation and the object and purpose for which the legislation was enacted.

This is in accord with the recent trend in juristic thought not only in Western countries but also in India that interpretation of a statute being an exercise in the ascertainment of meaning, everything which is logically relevant should be admissible.... (p.

608) 6. The Bill was passed as the Finance (No. 2) Act, 1980 and received the assent of the President on 21-8-1980. Sub-section (2) of Section 1 of the said Act provides that Sections 2 to 43 and Sections 52 and 53 of the said Act shall be deemed to have come into force on 1-4-1980 unless otherwise provided in this Act.

7. In this respect the claim of Shri O.P. Sapra, the learned counsel of the assessee, has got force. The amendment which was specifically brought into effect from 1-4-1980 with effect from the assessment year 1980-81 cannot be made applicable to the assessment year 1979-80 against the specific intent and purpose of the amendment even though the partial partition might have been effected after the crucial date of 31-12-1978. If the intention was to include all such arrangements effected after 31-12-1978, the amendment would not have been made specifically applicable for the assessment year 1980-81 that means with effect from 1-4-1980. Since the said amendment is specifically made to be operative with effect from 1-4-1980, the lower authorities were not justified in giving retrospective effect and applying the said amendment to the assessment year 1979-80. Reliance is also well placed on the decision of the Supreme Court in the case of Karimtharuvi Tea Estate Ltd. v. State of Kerala [1966] 60 ITR 262 for the proposition that the 1961 Act which stands amended on the 1st day of April of any financial year must apply to the assessment of that year. Any amendments in the said Act which come into force after the 1st day of April of any financial year would not apply to the assessment for that year even if the assessment is actually made after the amendments come into force.

8. The general rule of construction of statute is that where an Act is expressed to come into operation on a particular day, then it shall come into operation on that day. The present amendment by the Finance (No. 2) Act, 1980, was inserted as Section 20A, with effect from 1-4-1980. Following the general rule of construction also, it will be applicable only to all assessments relevant to the assessment year 1980-81 and the subsequent years. In that case, the WTO cannot take into account a provision which has not come into operation while making assessment for the assessment year 1979-80 and he has to restrict the application of the Section as it existed before this amendment and apply Section 20 of the Act. In this regard the often quoted observation of Rowlatt, J. attained judicial sanction in India. Their Lordships of the Supreme Court in the case of CIT v. Shahzada Nand & Sons [1966] 60 ITR 392 held : . . .In a taxing Act one has to look merely at what is clearly said.

There is no room for any intendment. There is no equity about a tax.

There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used.' . . . But even so, the fundamental rule of construction is the same for all statutes, whether fiscal or otherwise. 'The underlying principle is that the meaning and intention of a statute must be collected from the plain and unambiguous expression used therein rather than from any notions which may be entertained by the Court as to what is just or expedient.' The expressed intention must guide the Court. (p. 400) In this view of the matter, we hold that the assessment of the assessee for the assessment year 1979-80 has to be completed on the basis of Section 20 without taking into account the amended Section 20A which came into operation only from 1-4-1980.

9. The position, however, will be entirely different for the assessment year 1980-81 onwards. Whatev er finding that has been recorded by the ITO regarding this partial partition shall be treated as null and void in view of the amended Section of the Act read with Section 171(9) of the 1961 Act.

10. By taking this view we treat the postponement of the commencement of the amended provision as a special concession granted to the assessee by the Parliament deliberately and consciously. Even if it is a lacuna, the same cannot be plugged by the WTO by retrospectively applying the amendment which came into operation with effect from 1-4-1980 to the assessment year 1979-80.

11. The orders of the lower authorities are, accordingly, set aside and the WTO is directed to consider the claim of the assessee in the light of the law as it stood on 1-4-1979.

12. With regard to the other ground of appeal on merits, we are of the view that no separate consideration is necessary in view of the direction given by us. The WTO after considering the effect of the partial partition of the assessee will consider the claim of the assessee regarding the assets claimed to have been partitioned and exclude such items as are found to be not includible in the hands of the assessee-HUF.


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