Retaining Explanation to Section 245A of the Income Tax Act serves the purpose of explaining the scope of Section 245A, literal interpretation is sufficient: Delhi HC

In a recent judgment, the Delhi High Court ruled that the Retaining Explanation to Section 245A of the Income Tax Act serves the purpose of explaining the scope of Section 245A of the Income Tax Act and that the literal interpretation is sufficient.

The petitioners in the present matter is Sushil Kumar Goyal and others.

The Senior counsel appearing for the petitioners submitted that the provisions of Section 245A(b) of the Income Tax Act must not be construed literally and that this is a fit case where the Court is required to apply the rule of purposive interpretation and modify the language of Section 245A(b) of the Income Tax Act, as necessary.

Section 245A(b) of the Income Tax Act was amended by the Finance Act, 2010 and proviso (ii) and (iii) as well as Explanation (ii) to Clause (b) of Section 245A of the Income Tax Act were deleted. There were other amendments to the said clause, however, the same are not relevant for the purpose of the present petition. Proviso (i) to Clause (b) of Section 245A of the Income Tax Act as well as Explanation (i) to Clause (b) of Section 245A of the Income Tax Act remained unaltered.

By virtue of proviso (i) to Clause (b) of Section 245A of the Income Tax Act, the proceedings for reassessment or re-computation under Section 147 of the Income Tax Act were expressly excluded from the scope of proceedings for assessment under Clause (b) of Section 245A of the Income Tax Act. Thus, such proceedings would not fall within the meaning of the term ‘case’

The Two-Judge Bench of the Delhi High Court consisting of Justice Vibhu Bakhru and Justice Amit Mahajan noted that “The legislative history of Section 245A of the Income Tax Act clearly indicates that the proceedings for assessment, re-assessment and re-computation under section 148 of the Income Tax Act, prior to issuance of notice under Section 148 of the Income Tax Act, were excluded from the scope of the definition of the term ‘case’. Such proceedings have been included by virtue of the Finance Act, 2015 albeit on certain conditions being satisfied as noted hereinbefore.”

“We find no merit in the contention that the literal interpretation of the provision is contrary to the legislative intent. On the contrary, retaining the Explanation to Section 245A of the Income Tax Act (and subsequently amending it) serves the intended purpose of sufficiently explaining the scope of Section 245A of the Income Tax Act. There is no ambiguity in Section 245A of the Income Tax Act that makes it necessary or apposite for the court to discard the literal interpretation of the language of Section 245A of the Income Tax Act” the Bench concluded.

To Read the full text of the Order CLICK HERE

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