Judgment:
N. Kumar, J.
1. The assessee has preferred this appeal against the order passed by the Tribunal holding that the income of Rs. 1,10,902/- derived by the assessee from sale of shares as the income under the head of Business or Profession and also holding that the amendment brought to Income Tax Act by way of 40A(3) which came into effect on 1.4.2009 as retrospective in-operation.
2. The assessee is an individual dealing in ayurvedic medicines. He filed his return for the assessment year 2005-2006 declaring total income at Rs. 11,27,447/-. The assessing authority disallowed a sum of Rs.3,08,296/- as contravening Section 40A(3) of the Income Tax Act, 1961 (for short hereinafter referred to as 'the Act'). Further, he held the Income derived by sale of shares as income from business. Aggrieved by the said order, the assessee preferred an appeal before the Commissioner of Income Tax Appeal who gave a partial relief under Section 40A(3) by reducing a sum of Rs. 52,430/-. Aggrieved by the said order, the assessee preferred an appeal before the Tribunal. The Tribunal gave partial relief in respect of share transaction in as much as treating only a sum of Rs. 1,10,902/-. Being the income from business or profession and granted a relief of Rs. 16,655/-. Aggrieved by this order, the assessee is before this Court in an appeal. On 12.4.2010, the appeal came to be admitted to consider the following substantial question of law:â
"1. Whether the Tribunal was justified in law in confirming the disallowance under Section 40A(3) on the facts and circumstances of the case, and further erred in not appreciating the decision of Apex Court in Attar Singh Gurumukh Singh v. ITO reported in 191 ITR 667 on the facts and circumstances of the case?
2. Whether the Tribunal was justified in law in holding the income offered under the head short term capital gains is to be assessed as business income on the facts and circumstances of the case?"
3. We have heard the learned Counsel for the parties.
4. Insofar as the first substantial question of law is concerned, it revolves round the interpretation be placed on the amendment i.e., whether it is retrospective in-operation or prospective in-operation. The additional words aggregate of payment made to a person in a day which came into effect from 1.4.2009 is not beneficial to the assessee. On the contrary, it is onerous to the assessee. In such circumstances and Constitution Bench of the Apex Court in the case of CIT v. Vatika Township (P.) Ltd. [2014] 367 ITR 466/227 Taxman 121/49 taxmann.com 249 has held an amendment made to a taxing statute can be said to be intended to remove "hardships" only of the assessee, not of the Department. Imposing a retrospective levy on the assessee would have caused undue hardship and for that reason Parliament normally make this amended provision effective from the particular date.
Where a benefit is conferred by a legislation, the rule against a retrospective construction is different. If a legislation confers a benefit on some persons but without inflicting a corresponding detriment on some other person or on the public generally, and to confer such benefit appears to have been the legislators object, then the presumption would be that such a legislation, giving it a purposive construction, would warrant it to be given a retrospective effect. This exactly is the justification to treat procedural provisions as retrospective. Where a law is enacted for the benefit of community as a whole, even in the absence of a provision the statute may be held to be retrospective in nature.
5. In the instant case, the proviso 40A(3) prior to amendment only prohibited incurring of expenditure in respect of which a payment is made in a sum exceeding twenty thousand rupees otherwise than by an account payee cheque drawn on a bank or account payee bank draft was not allowed of the deduction, when the law was amended on 1.4.2009 by Finance Act, 2008, when the word 'aggregate of payments' made to a person in a day was incerted. It means till the date even if such payment is made by virtue of the earlier provision, the assessee would not denied the benefit of deduction. When the assessee was enjoying the benefit till the date of amendment, by this amendment tax cannot be levied retrospectively, it would cause great hardship. Therefore, the authority were not justified in holding that the said provision is restrospective and levying taxes on the basis of the said amended provision. In that view, certainly it was not clarificatory in nature. Therefore, the first substantial question of law is answered in favour of the assessee and against the revenue.
6. Insofar as the second substantial question of law is concerned, it is an undisputed fact that the assessee is an ayurvedic Doctor and he is in the business of purchase and sale of ayurvedic preparations. He has in all invested about 2.2 lakhs rupees in purchase of shares. The evidence on record shows the said investment is not paid from the borrowed capital. When the Tribunal holds a sum of Rs. 16,665/- is to be treated as LTCG and do not fall under the heading of Income from business or profession, we do not find any justification to bring the remaining income under the said head. We do not see any logic or reason for making the distinction. In the facts of this case, we are satisfied that the Income derived by the assessee from sale of shares would not fall within the head of Income from business or profession and therefore, the impugned order passed by the Tribunal is hereby set aside. The second substantial question of law is answered in favour of the assessee and against the Revenue Hence, we pass the following: â
ORDER
Appeal is allowed. The impugned order is hereby set aside.
Parties to bear their own costs.