1998 (12) TMI 109 - AT - Income Tax

Issues Involved:
1. Tribunal fee deficiency.
2. Revision of assessment order under section 263.
3. Computation of book profit under section 115J.
4. Application and interpretation of section 205 of the Companies Act.
5. Justification of the Commissioner's invocation of section 263.

Detailed Analysis:

1. Tribunal Fee Deficiency:
The assessee paid a Tribunal fee of Rs. 250, but the Registry indicated a deficiency of Rs. 1250. The assessee argued that the fee paid was adequate since the total income determined by the Assessing Officer was 'nil' after setting off unabsorbed depreciation. The Tribunal agreed, stating that the fee payable was indeed Rs. 250, referencing the decision of the ITAT Hyderabad Bench in Andhra Pradesh State Electricity Board v. ITO.

2. Revision of Assessment Order under Section 263:
The Commissioner revised the assessment order because the profit under section 115J was not brought to tax. The Commissioner issued a show-cause notice and, after considering the assessee's submissions, concluded that the Assessing Officer had not applied his mind or made due enquiries regarding the applicability of section 115J. The Tribunal upheld the Commissioner's decision, noting that the assessment order lacked any mention of section 115J and that the Assessing Officer failed to examine the book profit computation submitted by the assessee.

3. Computation of Book Profit under Section 115J:
The assessee contended that after adjustments, there was no profit but a loss of Rs. 36,810. The Commissioner disagreed, arguing that the Assessing Officer accepted the assessee's computation without enquiry. The Tribunal noted that the Assessing Officer did not apply his mind to the provisions of section 115J, which was enacted to tax zero-tax prosperous companies. The Tribunal found that the Assessing Officer's failure to mention section 115J in the assessment order justified the Commissioner's revision under section 263.

4. Application and Interpretation of Section 205 of the Companies Act:
The assessee argued that the term 'loss' in section 205(1)(b) of the Companies Act should include depreciation and unabsorbed depreciation, referencing the Tribunal's decision in Brite Automotive & Plastics Ltd. The Commissioner and the Tribunal disagreed, noting conflicting interpretations by different Tribunals and the Andhra Pradesh High Court's decision in V.V. Trans Investments (P.) Ltd v. CIT, which supported the revenue's interpretation. The Tribunal emphasized that the correct interpretation of 'loss' excludes depreciation, aligning with the jurisdictional High Court's decision in Krishna Oil Extraction Ltd v. CIT.

5. Justification of the Commissioner's Invocation of Section 263:
The Tribunal upheld the Commissioner's invocation of section 263, noting that the assessment order was erroneous and prejudicial to the interests of the revenue. The Tribunal highlighted that the Assessing Officer's failure to apply section 115J resulted in an error, and the legitimate revenue was not realized. The Tribunal cited various judicial precedents affirming that non-application of mind and failure to make due enquiries justified the Commissioner's revisionary powers under section 263.

Conclusion:
The Tribunal dismissed the assessee's appeal, affirming the Commissioner's order to revise the assessment. The Tribunal found that the Assessing Officer's failure to apply section 115J and the incorrect interpretation of section 205 of the Companies Act justified the Commissioner's invocation of section 263. The Tribunal emphasized the importance of ensuring that the legitimate revenue due to the state is realized, supporting the Commissioner's decision to set aside the assessment order.

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