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TMI Blog2004 (9) TMI 322X X X X Extracts X X X X X X X X Extracts X X X X ..... nd and building. Total income computed as per the provisions of the Act amounted to Rs. 74,884. Since this was less than 30% of the book profits shown by the assessee, the assessee's income was computed under section 115-JA of the Income-tax Act, 1961 (the Act). The book profit as per profit and loss account was Rs. 2,54,491 and 30% thereof being Rs. 88,347, the same was taken as the total income of the assessee for the year. Tax was levied at 40% on Rs. 88,350 and the demand was accordingly raised. 3. The assessee made an application under section 154 of the Act contending that its entire book profit comprised of long term capital gains and hence the same should be taxed at 20% as provided in section 112 of the Act. The Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... teristics of a particular head of income can be attributed. Moreover, if at all there was a case for attribution, it was highly debatable and hence beyond the scope of section 154. 7. We have duly considered the rival contentions and the material on record. The Income-tax Act, 1961 seeks to levy tax on the total income of the assessee as computed under the provisions of the Act. It may so happen, and in fact it happens quite often, that the assessee may have actually earned profits in a business, yet, due to certain provisions in the Act, the taxable income as per the provisions of the Act may turn out to be nil or a negative figure. As a result of this, certain companies, though having earned good profits, ended up not contributing anyth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) to (f) of the Explanation if they are debited to the profit and loss account. On scrutiny of the profit and loss account we do not find any such amount debited and hence the amount of Rs. 2,94,491 remains as it is. Now, this amount is to be reduced by the amounts referred to in clauses (i) to (ix) if they are credited to the profit and loss account. None of the amounts mentioned in clauses (i) to (ix) are credited to the profit and loss account and hence no reduction has to be effected. Thus, the book profit as envisaged by section 115-JA remains at Rs. 2,94,491 and 30% thereof amounts to Rs. 88,347. The net profit is arrived at after taking into consideration the income by way of sales of manufactured products, insurance claim received b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We are unable to agree with this proposition for the reasons that follow. 10. When the income is computed under the normal provisions of the Act, then, as per the provisions of section 14, income has to be classified into five different heads. However, when the income is computed in a manner other than the normal provisions, then income has to be computed as per those specific provisions. In that event, if the specific provisions do not so provide, then the income has not to be classified into the five heads. This is evident from the opening words of section 14 which starts with the expression "save as otherwise provided by this Act,...........". Section 115-JA is one such provision which deems 30% of the book profits to be the total inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is allowed to be carried forward for five succeeding assessment years and the same is allowed to be set off in a year when tax becomes payable on the total income computed as per the provisions of the Act other than section 115-JA. Thus, the Act itself has taken care of the situation like the one faced by the assessee in the present case. The assessee may, if so advised, claim the carry forward of tax difference, but certainly is not allowed to classify the book profit as long-term capital gain and claim concessional rate of tax as per section 112 of the Act. 12. In the present case, the assessee had made an application under section 154 of the Act to claim the concessional rate of tax, which was rejected. Before us, the ld. Counsel ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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