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CS Professional · Advanced Direct Tax Laws and Practice · Income Tax Implication on Specified Transactions

In March 2028 the Board notifies a rule under section 533 of the Income-tax Act, 2025 giving it effect from 1 April 2027, which is after the Act's commencement. The rule withdraws a concession and so prejudices assessees. Nothing in the rule or by necessary implication permits retrospective prejudicial effect. What is the position under section 533(4)?

The rule cannot take retrospective effect to the prejudice of assessees. Section 533(4) allows retrospective rules from a date not earlier than commencement, but unless the contrary is permitted expressly or by necessary implication, no retrospective effect may prejudicially affect assessees. No such permission exists here.

  1. AThe rule is valid because retrospective effect is always allowed from the Act's commencement
  2. BThe rule cannot operate retrospectively to the prejudice of assessees, since no contrary permission existsCorrect
  3. CThe rule is valid only if the Assessing Officer consents in each case
  4. DThe rule is valid only for non-corporate assessees

Explanation

Section 533(4) lets the rule-making power include retrospective effect from a date not earlier than commencement. However, unless the contrary is permitted expressly or by necessary implication, no retrospective effect may prejudicially affect assessees' interests. Here no permission exists, so the retrospective prejudicial operation fails.

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