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M.K. Mohamed Ebrahim Vs. Eleventh Income-tax Officer - Court Judgment

LegalCrystal Citation
CourtIncome Tax Appellate Tribunal ITAT Mumbai
Decided On
Judge
Reported in(1983)3ITD461(Mum.)
AppellantM.K. Mohamed Ebrahim
RespondentEleventh Income-tax Officer
Excerpt:
.....1961 ('the act'). under the same, any payment made, whether in cash or in kind, as a reward by the central government or any state government for such purposes as may be approved by the central government in this behalf in the public interest shall be exempt from tax. this provision was inserted by the direct taxes (amendment) act, 1974, but with retrospective effect from 1-4-1973. it cannot, therefore, be disputed that the provision would be available for the assessment year 1973-74. but the assessee in the present case cannot claim exemption merely because the provision is on the statute book. he can claime exemption only when the awards are approved by the central government as provided in the sub-section. the order in this behalf was issued by the central government only on.....
Judgment:
1. This appeal by the assessee relates to the assessment year 1973-74, for which the relevant previous year ended on 31-3-1973.

2. The only ground taken in the appeal is that the AAC erred in holding that a sum of Rs. 56,500 received by the assessee by way of reward from Customs Department is taxable.

3. The assessee received a sum of Rs. 22,500 on 20-7-1972 and Rs. 34,000 on 30-6-1972, totalling Rs. 56,500, as reward from customs authorities. The assessee claimed that the amounts are exempt from tax under Section 10(17B) of the Income-tax Act, 1961 ('the Act'). Under the same, any payment made, whether in cash or in kind, as a reward by the Central Government or any State Government for such purposes as may be approved by the Central Government in this behalf in the public interest shall be exempt from tax. This provision was inserted by the Direct Taxes (Amendment) Act, 1974, but with retrospective effect from 1-4-1973. It cannot, therefore, be disputed that the provision would be available for the assessment year 1973-74. But the assessee in the present case cannot claim exemption merely because the provision is on the statute book. He can claime exemption only when the awards are approved by the Central Government as provided in the sub-section. The order in this behalf was issued by the Central Government only on 19-9-1975. It was stated in the order that the Central Government approves for the purpose of Clause (17B) of Section 10, the grant of awards in cash bytheCentral Government to persons who furnish to the Income-tax Department or the Central Excise and Customs Department information of tax evasion. The assessee now claims that this order approving the rewards granted by the Customs Department for the purpose of exemption will operate with effect from 1-4-1973 and that the assessee is, therefore, entitled to claim exemption. This contention was negatived both by the ITO and the AAC for the reason that the order takes effect only from 10-9-1975, the date on which it was issued. The assessee has, therefore, come up in appeal.

4. It was contended by the learned counsel for the assessee that Clause (17B) of Section 10, though introduced by the Direct Taxes (Amendment) Act, 1974, was given retrospective effect from 1-4-1973, that this discloses an intention on the part of the Government to grant exemptions with effect from the assessment year commencing on 1-4-1973, that the fact that the order approving the rewards granted by the Customs Department was issued only on 19-9-1975 is immaterial and that the order will also have retrospective effect with effect from 1-4-1973.

5. We are unable to accept contention. The assessee cannot claim exemption merely because Clause (17B) was placed on the statute book with effect from 1-4-1973. Exemption can be claimed only on the basis of an order issued by the Central Government under the clause approving the award for the purpose of the clause. This order was issued only on 19-9-1975. It has not been given any retrospective effect. In support of the contention that the order will have retrospective effect from 1-4-1973, the learned counsel for the assessee relied upon the ruling in CST v. Cooper & Co. [1968] 22 STC 111 (Bom.). This ruling and also the ruling of the Supreme Court in the case of Mathra Parshad & Sons v.State of Punjab [1962] 13 STC 180, referred to therein, only lay down that a notification granting a deduction in respect of sales tax, which is issued during the course of particular year, must be given effect to as from the beginning of that assessment year. On this basis the assessee can successfully claim that the order in the present case, which was issued on 19-9-1975, should be treated as effective from 1-4-1975. The rulings do not support the claim of the learned counsel for the assessee that the order would be effective from the date on which the clause came into effect. It is not also possible to accept the contention of the learned counsel for the assessee that when a provision is introduced in a statute with retrospective effect, all subsequent orders or notifications issued under the provision will also automatically take effect from the date on which the provision came into effect. We, therefore, find no reason to interfere with the order of the AAC.


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