Enhanced tax rate of 60% u/s. 115BBE not Applicable to cash deposits during demonetisation?
Recently got an occasion to represent an assessee before Hon’ble ITAT Ahmedabad where cash deposits made in bank account during demonetization were taxed at enhanced rate of 60% u/s. 115BBE (effectively 77.25% with surcharge & cess).
It was submitted that the amendment u/s. 115BBE enhancing tax rate from 30% to 60% was made vide Taxation Laws (Second Amendment) Act, 2016 which came into force on 15.12.2016 post demonetization and hence, such amendment cannot be applied to cash deposits made during demonetization period.
It was further submitted that such amendment was made applicable w.e.f. 01.04.2017 and hence, the same is applicable prospectively for transactions on or after 01.04.2017. After hearing the matter at length, the Hon’ble ITAT concurred with the submissions made and allowed the appeal in favour of the assessee w.r.t. the issue of S. 115BBE.
Additions are made by the department in multiple assessees for A.Y. 2017-18 w.r.t. cash deposits during demonetization and the same are taxed by the department at enhanced rate of 60%. This decision will be helpful for all such cases.
The Copy of the order is as under:
