Law: Income Tax Ordinance, 1979

Section: 13(1)(aa),65(a)(b)(c),15,9,2(24)(44),55, 56,65,13

(a) Income-tax Ordinance (XXXI of 1979)---S. 13(1)(aa) [as amended by Finance Ordinance (XXV of 1980)]-¬Retrospectivity of Finance Ordinance--Principle-- Addition--Assessment year 1979-80--Addition made under S. 13(1)(aa) [as added under Finance Ordinance, 1980] in the assessment year 1979-80, held, was illegal and was directed to be deleted. Inasmuch as the Finance Ordinance, 1980 by its very nature has retrospective operation because it applies on an income year. Though the Finance Ordinance clearly comes into operation with effect from 1st July of each year but it has always operation on an income year ending on or before 30th June of each year. Therefore, by its very nature it applies retrospectively to all dealings, transactions and income etc. undertaken or conducted in the income year which had closed before the coming into force of the Ordinance. The scheme of the Income-tax law is that tax is imposed after the earning of the income and not before the earning of the income. Therefore, the Income-tax Ordinance, though coming into force on 1st July, 1980, had its effect on the income earned by the assessee in the earlier income year. This therefore, follows that so far as the assessment years 1979-80 and 1980-81 are concerned, the amendment brought in by the Finance Ordinance, 1980 was applicable to the assessment year 1980-81 corresponding to the income year beginning from 1st July, 1979 ending on 30th June 1980. However, clause (as) aforesaid having been added by the Finance Ordinance, 1980 and no retrospective effect having been given by the legislature to the amendment, it could not be stretched to the earlier income year, and, therefore, has no application for the assessment year 1979-80. This is settled law that taxing statutes have to be strictly construed as they affect the rights of the citizens. Therefore, unless there is clear intention of the legislature, nothing can be assumed in favour of the department. Since for the assessment year 1979-80 clause (as) was not available, the subsequent amendment cannot affect that assessment year, the addition made under section 13(1)(aa) of the Income-tax Ordinance by the I . T.O. in the assessment year…

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