An extensive examination of ITA No. 1368/Del/2021, wherein ICMC Projects Pvt. Ltd. challenges the imposition of late fees by ITD, CPC, Bengaluru for the second quarter of the fiscal year 2014-15 for non-salary returns.
This case involves a dispute over the retroactive application of late fees under Section 234E prior to its official enactment by the Finance Act 2015 effective from June 1, 2015.
ICMC Projects contended that the application of Section 234E to periods before its legislative approval was not legally justifiable, asserting that this retrospective application was contrary to the principles of fair taxation.
The tribunal considered various high court decisions on the retrospective application of tax amendments, ultimately aligning with the Supreme Court’s stance that in cases of ambiguity, the interpretation favoring the taxpayer should prevail.
The tribunal’s decision on February 25, 2022, which favored ICMC Projects, highlighted the judiciary’s role in protecting taxpayers against retroactive tax impositions and underscored the need for clarity in legislative changes that impose fiscal duties.
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