Decided on October 23,1982



T.R. Thiruvengadam, Accountant Member - (1.) THIS appeal by the assessee is against the order of the AAC, Calicut, dated 31-1-1981. In passing this order, the AAC was disposing of an appeal filed by the assessee against an order passed by the ITO under Section 154/155(10A) of the Income-tax Act, 1961 ('the Act,), dated 14-6-1979.
(2.) The assessee had sold certain immovable properties. This consisted of two pieces of lands and one residential house. We are not concerned in this appeal with the sale of the residential house. The total consideration for the sale of the lands was Rs. 67,000. The assessment year is 1977-78. The assessment itself was completed on 16-2-1979. The assessee had returned the capital gains on the sale of these properties. She had adopted the market value as on 1-1-1954 as the cost of acquisition. The ITO made the assessment making certain modifications in the cost of acquisition. There appears to have been no appeal filed against that order of the ITO. The assessee had invested the sale proceeds in two banks, namely, Calicut Co-operative Bank and the Calicut branch of the Syndicate Bank. The deposits were for a period of 61 months. The assessment order and the demand notice were served on the assessee on 12-3-1979. By a letter dated 20-3-1979, the assessee made a request for revision of the assessment. The revision asked for was two in number. The first request was that under Section 55(2)(i) of the Act, the fair market value of the asset as on 1-1-1964 may be taken, as the cost of acquisition and not the fair market value as on 1-1-1954. The second request was that since the assessee had invested the sale proceeds in specified assets within six months of the transfer of the capital asset, the capital gains should be totally excluded from the assessment in view of the provisions of Section 54E of the Act and the request was for the amendment of the assessment under Section 155(10A). The ITO rejected both the requests on the ground that the amendment of Section 55(2)(i) whereby the day 1-1-1954 was substituted by the date 1-1-1964 and the introduction of Section 54E was made by the Finance Act of 1977 with effect from 1-4-1978 and, therefore, these provisions would not be applicable for the assessment year 1977-78. The assessee filed an appeal to the AAC. The AAC without pronouncing anything on the legal issue raised by the assessee that the amended Section 55(2)(i) and the newly introduced Section 54E would apply to any assessment pending after such amendments/introduction came into force, held that these cannot be considered to be mistakes apparent from the records so as to bring into play Section 154 and Section 155(10A). It is submitted, on behalf of the assessee, that these two provisions, viz., the amended Section 55(2)(i) and the newly introduced Section 54E, are measures intended to benefit the assessees and, therefore, should be considered to be retrospective in operation, so that all assessments made subsequent to these two provisions coming into force should be governed by these provisions. Reliance is placed in this regard on two decisions of the Madras High Court in the case of Addl. CIT v. Madura South India Corporation (P.) Ltd. [1977] 110 ITR 322 and Addl. CIT v. Rajah Sir M.A. Muthiah Chettiar [1978] 112 ITR 731 and one decision of the Jammu and Kashmir High Court in the case of Fairdeal Motors v. CIT [1975] 101 ITR 687. It is further pointed out that Section 155(10A) employs the words 'any year' and, therefore, there is no restriction as to the assessment year to which this provision would apply. A comparison is made with the provisions of Section 80CC introduced in the same Finance Act. It is also submitted that the clear language of a provision in a taxation statute should be given its meaning without any other restrictions and if such an interpretation is given the assessee is entitled to have the market value as on 1-1-1964 taken as the cost of acquisition and for the total exclusion of the capital gains by the application of Section 155(10A), read with Section 54E.
(3.) ON behalf of the department, it is submitted that it is clear that these provisions are not retrospective but only prospective. They had been introduced by the Finance Act, 1977 only with effect from 1-4-1978 and, therefore, would not be applicable to any assessment year commencing before 1-4-1978.;

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