Commissioner Of Income Tax vs Bhagat And Co.
2004 Latest Caselaw 488 Del

JUDGMENT

1. By these applications, on behalf of the Revenue, it is prayed that the Tribunal be directed to refer the following purported question of law to this Hon'ble Court. The question reads as under :

"Whether, on the facts and in the circumstances of the case, the Tribunal is correct in law in allowing the assessed's appeal against the order of the AAC dismissing the assessed's quantum appeal, when there were no dispute on the quantum of income as admitted by the assessed in its return ?"

2. The Tribunal rejected the application for making a reference and hence these applications are filed before this Court. The said question was referred on the basis of submissions in para 13 of the application that the Tribunal has held that the provisions of Section 166A (sic) are applicable for the asst. yr. 1976-77 and onwards. It was also contended that the section is merely clarificatory and confirms the position as it existed regarding the taxability of receipts of a firm even after dissolution. This very question has been examined by a Division Bench of this Court in IT Case No. 230 of 1983, reported in CIT v. Bhagat & Co. (1990) 182 ITR 212 (Del). At page No. 214 (of 182 ITR), in the last paragraph of the said report, the Court has pointed out as under :

"There was this lacuna in the Act which has since been rectified with the insertion of Sub-section (3A) in Section 176 of the Act. It is submitted that Section 176(3A) should be given retrospective effect or should be regarded as clarificatory. The amendment is w.e.f. 1st April, 1976, and the provision being substantive in character, the question of its being given retrospective effect cannot arise. The said provision, namely, Section 176(3A), cannot also be said to be clarificatory in nature because it is a substantive provision which has been brought in with a view to plug a loophole which existed in the Act. The fact that income had arisen after the dissolution of the firm is not denied. This being so and as there was in that year no provision which provided that the firm could be assessed in respect of profits arising after its dissolution, the answer to the aforesaid question is self-evident and, therefore, no question need be called for. The petition is dismissed. There will be no order as to Costs."

In view of the aforesaid, these applications are required to be rejected.