IT Act amendment cannot be from retrospective date: Gujarat HC

AHMEDABAD: In a breather for exporters, Gujarat High Court has held that amendment to Section 80-HHC of Income Tax Act, 1961 cannot have retrospective effect.

The amendment made by Taxation Law (Amendment) Act, 2005 to section 80-HHC, sought to withdraw incentives granted to exporters, but was implemented retrospectively from April 1, 1998.

A division bench of acting Chief Justice Bhaskar Bhattarcharya and Justice J B Padriwala while pronouncing the judgement yesterday held that the amendment was valid, but it cannot be implemented from retrospective effect.

The HC gave the judgement while hearing a bunch of petitions (around 70) transferred to Gujarat High Court by Supreme Court in February this year, where petitioners, mainly exporters, challenged the implementation of amendments from retrospective effect to Section 80-HHC of I-T Act.

"The amendment is valid, but it cannot be implemented from retrospective effect. The court has held while pronouncing the judgement," a lawyer appearing for the petitioners said.

The court observed that amendment made by Taxation Law (Amendment) Act, 2005, cannot be applicable with retrospective effect i.e from 1998-99 as it was unconstitutional. It, however, stated that the amendment could be applicable prospectively if needed, he said.