1992 (2) TMI 78 - HC - Income Tax

Summary

Issues Involved:
1. Adjustment of losses u/s 143(1)(a) of the Income-tax Act.
2. Levy of additional income-tax u/s 143(1A) of the Income-tax Act.
3. Maintainability of the writ petition due to the availability of an alternative remedy.

Summary:

1. Adjustment of losses u/s 143(1)(a) of the Income-tax Act:
The petitioner showed losses of Rs. 62,69,00,000 for the assessment year 1990-91. Upon adjustment u/s 143(1)(a), the assessing authority disallowed Rs. 4,67,10,306 claimed under section 32A, reducing the losses to Rs. 58,02,60,207.

2. Levy of additional income-tax u/s 143(1A) of the Income-tax Act:
The petitioner was required to pay Rs. 50,44,713 as additional tax u/s 143(1A). The petitioner argued that no additional income-tax is chargeable on losses, as the reduction in losses does not amount to income. The court noted that section 143(1A) applies only when the total income exceeds the declared income in the return. Since the return showed losses even after adjustment, no additional income-tax could be levied. The court referenced Modi Cement Ltd. v. Union of India [1992] 193 ITR 91 (Delhi), which quashed a similar order under analogous circumstances.

3. Maintainability of the writ petition due to the availability of an alternative remedy:
The opposite party argued that the writ petition is not maintainable due to the availability of an alternative remedy. The court, however, held that the alternative remedy would be no bar in this case, as no appeal lies against an order passed u/s 143(1A). The court also noted that the petitioner's appeal pending before the Deputy Commissioner, Income-tax, pertains only to the admissibility of the investment allowance u/s 32A, not the levy of additional tax.

Conclusion:
The court allowed the writ petition, setting aside the order demanding additional income-tax due to the disallowance of investment allowance. The court refused the prayer for a certificate of fitness for filing an appeal before the Hon'ble Supreme Court, stating that no substantial question of public importance was involved.