- (1.) The following question has been referred:- "Whether, the Income-tax Appellate Tribunal was legally correct in holding that the amendment to Section 64(1) of the Income- tax Act, 1961 brought about w.e.f. 1.4.1976 by the Taxation Laws (Amendment) Act, 1975 was applicable to the assessment year 1976-77 ?"
(2.) It appears that by the amending Act known as Taxation Laws (Amendment) Act, 1975 (Central Act No. 41 of 1975), which received the assent of President of India on 7.8.1975, one of the changes brought about was in Section 64 of the Income Tax Act by virtue of Section 13 of the amendment Act. In substance the altered situation is as follows: Prior to this amendment if a minor child of the assessee was admitted to the benefit of a partnership, the income from such partnership accruing to the minor child was to be taxed in the hands of the minor as income of the minor and was not to be added or clubbed to the income of the assessee (guardian of the minor). Subsequent to the amendment such income was to be clubbed with the income of the assessee, and instead of being taxed in the hands of the minor, it was required to be taxed in the hands of assessee i.e. the guardian. In the case of Puspa Devi Vs. C.I.T. (1993) 203 ITR 42 a Division Bench of this Court considered the argument that the application of the amended Section 64 of the Income Tax Act required that the assessee to whose income, the minor's income was to be added, must have some income of his own i.e. of the assessee. This contention was rejected by the Division Bench. However, that decision of the Division Bench is not on the question whether the amendment brought about in the Income Tax Act, which has the effect of altering the charge or its rate or exemption,causing alteration in the tax liability will apply to the previous year of the assessee, which has already passed before the amendment comes into force or will apply only to the previous year of the assessee which is yet to come. Normally, we would think that the very nature of the liabilities imposed by the Income Tax Act requires advance notice to the assessee of the charge and its rate including exemptions, rebates etc., to enable him not only to plan out his taxation but also to discharge liabilities regarding deposit of the advance tax etc.
(3.) Every year when the Finance Act determines a new rate of tax or surcharge, it normally comes into effect w.e.f. 1st of April and it governs the previous year of the assessee which is to commence w.e.f. that 1st April.;