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PETITIONER: COMMISSIONER OF INCOME TAX, BOMBAY

       Vs.

RESPONDENT: M/S KANJI SHIVJI & CO.

DATE OF JUDGMENT:       25/01/2000

BENCH: S.P.Bharucha, A.P.Misra, N.Santosh Hegde

JUDGMENT:

     Order       This appeal stands referred to a Bench of three Judges because  it was found that a Bench of two learned Judges had taken  the  view that the conclusion of an earlier Bench  of three  learned  Judges was difficult to accept.   The  issue relates  to whether Explanation (2) to Section 40(b) of  the Income Tax Act, 1961, introduced with effect from 1st April, 1985, is prospective in operation or only declaratory.

     In  Brij  Mohan  Das Laxman Das vs.   Commissioner  of Income  Tax  (223 I.T.R./825) two learned  judges  concluded that  the  said Explanation was declaratory.  This view  was accepted  by  a  Bench of three learned  judges  in  Suwalal Anandilal  Jain vs.  Commissioner of Income Tax (224  I.T.R. 753).

     In  the case of Rashik Lal & Co.  vs.  Commissioner of Income  Tax (229 I.T.R.458) this view was doubted.  A  Bench of  two  learned  Judges observed that it was  difficult  to accept  the  proposition that the said Explanation was  only clarificatory  for the reason that if what was contained  in the  said  Explanation  was already the law in  force,  then giving  effect to the said Explanation from 1st April,  1985 did  not  make any sense.  But the Bench immediately  noted, "Hkowever,  in the case before us, no question of payment of any  interest in involved".  In other words, the application of  Section 40(b) and the said Explanation was not really in issue  in Rashik Lal’s case relative to the said Explanation must, therefore, betreated as obiter dicta.

     The  conclusion  of the court in the earlier cases  of Brij  Mohan Das Laxman Das and Suwalal Anandilal jain  still represents  the  correct exposition of the law.   Fkollowing these decisions, the civil appeal must be dismissed./

     We are abliged to Mr.  B.Sen, learned counsel, for his assistance at our request.

     Appeal dismissed.

     No order as to costs.