Law: Income Tax Act, 1922

Section: 34

Law: Finance Act, 1957

Section: 12,5,7

Law: Business Profits Tax Act, 1947

Section: 14,11

(a) Business Profits Tax Act (XXI of 1947)----Ss. 14 & 11 read with Finance Act (I of 1957), S. 12, subsections (5) & (7) and Income-tax Act (XI of 1922), S. 34-Expression "shall apply with such modifications, if any, as may be prescribed" in S. 12(7) of Finance Act of 1957-Meaning-Repeal of S. 14 of Business Profits Tax Act, 1947 and application of S. 34 of Income-tax Act, 1922 could not be said to have been postponed until modifications were made­ Section 14, Business Profits Tax Act repealed with immediate effect and simultaneously S. 34, Income-tax Act became part of Business Profits Tax Act, 1947. The question was whether by virtue of section 12(7) of the Finance _ Act, 1957 the provisions of section 34 applied of their own force without modifications or became applicable only after the modification. The High -Court had held that the provisions of section 34 of the Income-tax Act could not become operative until the Central Board of Revenue had carried out -the necessary modifications in the section. The Supreme Court in appeal ..disagreed with the High Court. Held: The words "shall apply with such modifications if any, as may be ;prescribed" in section 12(7) of the Finance Act, 1957, did not mean "that the repeal of section 14 of the Business Profits Tax Act and the application of section 34 of the Income-tax Act was postponed until modifications were made". Section 14 of the Business Profits Tax Act, was repealed "with immediate effect" and "simultaneously section 34 of the Income-tax Act .became part of the Business Profits Tax Act". Even so this, by itself, would not have affected pending proceedings if this was not an amendment of a purely procedural or machinery provision but the amendment was procedural in nature. Thus if the provisions of section 34 became substituted in the Business Profits Tax Act with effect from the date the Finance Act of 1957 came into force, and if they apper­tained to only the machinery provisions relating to the recovery of the tax then they also took effect retroactively and affected pending proceedings. The applicability of statutory amendments could not possibly have been made to depend upon modifications to be…

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