Thursday, July 26, 2012

Subsequent decision of SC, overruling its earlier decision, will be law of land with retrospective effect.

Subsequent decision of SC, overruling its earlier decision, will be law of land with retrospective effect.
   
The Tribunal, on the basis of Supreme Court's judgment in the case of Virtual Soft Systems Ltd. v. CIT [2007] 159 Taxman 155, held that no penalty for concealment can be imposed under section 271(1)(c) if there is no tax payable by assessee. Subsequently, said judgment was overruled by the higher bench of the Supreme Court in CIT v. Gold Coin Health Food (P.) Ltd. [2008] 172 Taxman 386 (SC).
Revenue sought for successful rectification of the order of the Tribunal on the basis of the later decision of the Supreme Court. The assessee preferred writ petition against such rectification order of the Tribunal and contended that the later decision of Supreme Court doesn't make the earlier decision of tribunal erroneous.
The High Court held that where a decision of the Supreme Court overruled its earlier decision, the views expressed in the later decision would have to be regarded as having always been the law of land and that too with retrospective effect. Therefore, it held that the order of tribunal rectifying its earlier order was valid - LAKSHMI SUGAR MILLS CO. LTD. v. CIT [2012] 22 Taxman 300 (Delhi)

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