TMI Blog2006 (5) TMI 127X X X X Extracts X X X X X X X X Extracts X X X X ..... e as under:- "143(1)(a) Where a return has been made under section 139, or in response to a notice under sub-section (1) of section 142- (i) if any tax or interest is found due on the basis of such return, after adjustment of any tax deducted at source, any advance-tax paid and any amount paid otherwise by way of tax or interest, then, without prejudice to the provisions of sub-section (2), an intimation shall be sent to the assessee specifying the sum so payable, and such intimation shall be deemed to be a notice of demand issued under section 156 and all the provisions of this Act shall apply accordingly; and (ii) if any refund is due on the basis of such return, it shall be granted to the assessee: Provided that in computing the tax or interest payable by, or refundable to, the assessee, the following adjustments shall be made in the income or loss declared in the return, namely:- (i) any arithmetical errors in the return, accounts or documents accompanying it shall be rectified; (ii) any loss carried forward, deduction, allowance or relief, which, on the basis of the information available in such return, accounts or documents, is prima facie admissible but which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... could not make any such adjustment and in the instant case the learned Assessing Officer has clearly exceeded his powers under section 143(1)(a). 5. The learned AR of the assessee referred to the judgment of Hon'ble Delhi High Court in the case of Salwan Construction Co. v. Union of India [2000] 245 ITR 175. He argued that following the ratio of that judgment, we should hold that the provisions of section 143(1)(a), as they exist today, should be applied to find out whether or not the adjustment of the kind made by the learned Assessing Officer is permissible. 6. The learned AR of the assessee argued that there were direct High Courts judgments that if an assessee did not work out tax liability under section 115 J, no tax under section 115J could be charged by way of intimation under section 143(1)(a). He relied in this respect on the following judgments:- Mahalakshmi Glass Works v. Sunil Gupta, Asstt. CIT [1993] 203 ITR 658 (Bom.); CIT v. Super Roller Flour Mills Ltd. [1999] 238 ITR 931 (AP); and Parikh Engg. Body Building Co. Ltd v.UnionofIndia[1999] 238 ITR 554 (Pat). The learned counsel read elaborately from the judgment of Hon'ble Supreme Court in the case of Ka ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of income itself. While doing so the Assessing Officer has made no adjustment at all even if in the return of income filed the assessee had omitted or failed to make computation of tax liability under the provisions of section 115JA of the Act. Provisions of section 143(1)(a) enjoin upon the Assessing Officer to determine the tax or interest payable by an assessee on the basis of return of income filed by the assessee himself and if after credit of any tax deducted at source and any advance-tax paid, any tax or interest is found due, to issue an intimation to the assessee specifying the sum so payable, or to grant if any refund is found due to the assessee after giving credit of tax deducted at source and advance-tax paid along with the intimation issued under section 143(1)(a). However, provisions of section 143(1)(a) permit the Assessing Officer to make certain adjustments to the income or loss declared in the return of income by the assessee, which are in the nature of prima facie adjustments as specified in the provisions of section 143(1)(a) itself. Thus, provisions of section 143(1)(a) have two operatives. Primary operative relates to determining of tax payable and credit of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of a company the income tax payable on the total income computed under the provisions of the Act is less than 7.5 per cent of its book profit, such book profit shall be deemed to be the total income of the company and the tax payable by the company on such total income shall be the amount of income-tax at the rate of 7.5 per cent. The Explanation below the section defines "book profit" as the net profit shown in the profit and loss account prepared as per the provisions of the Companies Act, 1956 and increased or decreased by certain amounts mentioned therein, with which we are not concerned. Section 139(1) obliges every company to file a return of income on or before a particular date if its total income during the previous year exceeded the maximum amount not chargeable to income-tax. Section 2(45) defines "total income" to mean the total amount of income referred to in section 5, computed in the manner laid down in the Act. Section 4 says that tax shall be charged at the rates prescribed in the relevant Finance Act in accordance with and subject to the provisions of the Act in respect of the total income of the previous year of every person. In the light of these provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intimation under section 143(1)(a) or as they exist today during the course of proceedings before us, should be applied. The judgment of Hon'ble Delhi High Court in the case of Salwan Construction Co. relates to the prosecution provisions on failure to deduct tax at source. The position in relation to the tax liability provisions of Income-tax Act is fairly well-settled that if the amendment is of substantive nature so as to effect/affect tax payable by an assessee, the amended provision would apply prospectively. Where, however, a new provision relates to machinery provision or procedural provision of the Act, the amended provision would apply to all proceedings pending as on the date of amendment. In our opinion the provisions of section 143(1)(a) directly affect the tax payable by an assessee and, therefore, any amendment in that provision has to be treated as substantive and applicable prospectively. 12. We may also mention that none of the three judgments, viz., Mahalakshmi Glass Works' case, Parikh Engg. Body Building Co. Ltd.'s case and Super Roller Flour Mills Ltd.'s case relate to the facts of the case before us. In none of the three aforesaid court judgments there was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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