Procedural vs Substantive Proviions

Held by Supreme Court in Hitendra Vishnu Thakur vs State Of Maharashtra on 12 July, 1994

Equivalent citations: 1994 AIR 2623, 1994 SCC (4) 602

(i)A statute which affects substantive rights is presumed to be prospective in operation unless made retrospective, either expressly or by necessary intendment, whereas a statute which merely affects procedure, unless such a construction is textually impossible, is presumed to be retrospective in its application, should not be given an extended meaning and should be strictly confined to its clearly defined limits.

Interpretation beneficial to assessee to be followed where two interpretations exist

If an interpretation of taxing provision is ambiguous and is reasonably capable of more than one interpretation, that interpretation which is beneficial to the assessee has to be accepted. (i) CIT v. Gwalior Rayon Silk Mfg. Co. Ltd (1992) 196 ITR 149 (SC)

(ii) CIT v. Shahzada Nand & Sons and Ors. (1966) 60 ITR 392 (SC)

(iii) CIT v. Naga Hills Tea Co. Ltd. (1973) 89 ITR 236 (SC)

(iv) CED v. R. Kanakasabai and Ors. (1973) 89 ITR 251 (SC)

(v) Saroj Aggarwal v. CIT (1985) 156 ITR 497 (SC)

(vi) CIT v. Natu Hansraj (1976) 105 ITR 43 (Guj)

(vii) CIT v. J.H. Gotala (1985) 156 ITR 323 (SC)

(viii) Vegetable Products 88 ITR 192

If a law appears to be governed by either of two premises it is clearly the right of the assessee to claim that he should be assessed under that one which leaves him with a lighter burden.  CIT v. Bosotto 8 ITR 41(Mad)

ITAT remanding matter to AO-assessee cannot be worse off than what he was in the original assessment order

Kellogs India Private Limited ITA 6005/Mum/2010 dtd 10-8-2012

The AO passed a s. 143(3) assessment order in which he disallowed 50% of the expenditure on an ad-hoc basis. This was reduced to 25% by the CIT (A). On further appeal by the assessee, the Tribunal set aside the matter to the AO to examine the issue afresh. In the second round of appeal, the AO disallowed 100% of the expenditure on the ground that the assessee had already claimed the same expense under some other head and that there was a claim for double deduction. This was upheld by the CIT(A). Before the Tribunal, the assessee argued that once a matter has been set aside by the Tribunal, the assessee cannot be put into a worse situation than what it was at the time of original assessment. HELD by the Tribunal upholding the plea: