The Finance Ministry has defended the recent trend towards increased retrospective amendments to the income-tax law handed down in successive Budgets. The Revenue Secretary, Mr P.V. Bhide, said that such amendments were required to correct the “aberrations” that had come in by decisions of the quasi-judicial bodies, which went against the legislative intent. He was speaking at a post-Budget meeting here. “The aberrations already generated have to be corrected. We create aberrations to correct aberrations. But we do it with an intention of making the legislative intent clear. There is nothing wrong in making retrospective amendments in that spirit,” Mr Bhide said.

TAX AND PROCEDURE

In Finance Bill (No 2) 2009, the Centre has come up with a number of retrospective amendments. These relate to both tax provisions as well as procedural issues. On the taxation side, the Finance Bill seeks to change the manner of computation of “book profit” for minimum alternative tax (MAT) purpose. The law will stand changed from April 1, 2001. On the procedural side, the retrospective amendments related to rationalisation of provision relating to provisional attachment of assets (to be applicable from April 1, 1988) and clarification on reassessment proceeding under Section 147 (from April 1, 1989). “Amendments that are retrospective in nature do not encourage the confidence of taxpayers. “Amendments that are done to overcome pronouncements of quasi-judicial authorities also undermine the appellate remedy,” Mr Aseem Chawla, Partner, Amarchand & Mangaldas, told Business Line. Corporate taxpayers are unhappy that the trend of retrospective amendments has been on the rise, with some of them going back to 1964, 1998 and 1999. They lamented that this was not in keeping with the principles of equity and fairness.