Commissioner of Income Tax vs Aero Shine Plaza

These references u/s 256(1) of the income tax Act, 1961 raise the following question of law: (1) Whether on the facts and in the circumstances of the case, the Appellate Tribunal erred in law in holding that the amount of cash compensatory support (CCS) received by the assessee for the years under reference were not revenue receipts and not liable to tax?

The counsel for the parties state at the outset that the said question has to be decided in favour of the revenue and against the assessee in view of the amendments introduced by the Finance Act, 1990. Although the present references relate to the assessment years 1981-82, 1982-83 and 1983-84 the amendments introduced by the Finance Act, 1990 would apply because they have been introduced with retrospective effect from 1-4-1967. The relevant amendment are the introduction of clause (iiib) in section 28 and clause (vb) in section 2(24) of the income tax Act, 1961.

Consequently, this Court has no option but to decide the question in favour of the revenue and against the assessee in view of the retrospective amendments introduced through the Finance Act, 1990. It may be pointed out that the authorities below, while processing the case further may note the observations of this Court in Aero Leather (P) Ltd. Vs. Union of India and Others, wherein it was noted that a sympathetic view should be adopted when there is a retrospective piece of legislation. 2. The references stand answered accordingly.