9911796707
TMI Blog1995 (10) TMI 78X X X X Extracts X X X X X X X X Extracts X X X X ..... Nil --------- Minimum taxable income under sec. 115J of the I.T. Act, 1961 Rs. Net profit as per P L Account : 20,30,013 30% of the book profit : 6,09,004 or, say 6,09,000 --------- Income-tax thereon @ 55% 3,34,950 Surcharge @ 8% thereon 26,796 -------- Total : 3,61,746 3. The Assessing Officer issued an intimation under sec. 143(1)(a) of the Act, dated 31-3-1991, wherein the income returned was shown at Rs. 6,09,004 and the income without recourse to the provisions of the sec. 115J and after adjustments made under sec. 143(1)(a) was determined at Rs. 26,53,617. In the Explanation sheet appended to the intimation, the Assessing Officer stated as under :- Returned total income Rs. 15,22,803 Adjus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he total income ...... shall be deemed ......." ) and its completeness in determination of tax liability, make it clear that having invoked its provisions, the provisions of sec. 143 of the Act cannot be referred to for pitching tax liability. 6.2 The ' adjustments ' purported to have been made under sec. 143(1)(a) of the Act have, therefore, to be deemed as an exercise u/s 115J(2) of the Act. As has been rightly pointed out by the learned A.R., from out of the ' current liabilities ' amounting to Rs. 7,86,766, a sum of Rs. 39,735 can only be disallowed as per the provisions of sec. 43B of the Act. Electricity charges of the earlier years amounting to Rs. 1,30,542 having not been debited to the Profit Loss A/c, the question of its disallowance does not arise. So far as the bank charges (Rs. 8,681) and the strike period wages, etc. (Rs. 2,04,853) are concerned, the details in respect of these items required to be looked into. That can conveniently be done at the Assessing Officer's level. 7. Subject to the observations made hereinabove, the amounts to be carried forward may be determined as per the provisions of sec. 115J(3) of the Act. The appeal partly succeeds." The Reven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ok profit. The adjustments provided in the first proviso to section 143(1)(a) can be either in computing the real total income under the usual procedure or the deemed total income under section 115J of the Act. Thus, though it may not be wholly incorrect to say that section 115J is a separate code in itself, it is not separate from section 143(1)(a) or the other provisions providing for computation of total income in the usual course. If any arithmetical mistake is detected in computing the total income under section 115J or prima facie adjustment is required to be made in the loss to be carried forward, deduction, allowance or relief for determining such deemed total income, the provisions of section 143(1)(a) apply to such determination ; the determination of book profit being for purposes of arriving at the total income of the assessee, though for the limited purpose of collecting tax for that year. If carry-forward benefits are available to the assessee, they are not to be affected by virtue of the provisions of sub-section (2) of section 115J of the Act. In that case, two determinations have their separate identity -- one for levy of tax in the current year and the other for a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y has paid Bonus to Staff and Workers amounting to Rs. 87,168.40 ps. and Salaries and Wages amounting to Rs. 1,17,684.20 ps. relating to the year 1980-81, as per the Court Award. (c) Arrears of Cumulative redeemable preference dividend of Rs. 3,00,321 provided in Balance-Sheet relating to the years 1981-82 to 1988-89. (d) An amount of Rs. 1,30,541.77 ps. towards 50% of the increase rate of electricity charges has been provided in the Balance Sheet, relating to the years 1987-88 and 1988-89." The CIT (Appeals) says that the last amount was not debited in the profit and loss account of this year. This, in our opinion, is contrary to what the aforesaid Note 10 states. He directed the Assessing Officer to consider the other two items under section 115J(2). We do not find ourselves in agreement with what the CIT (Appeals) says or the assessee contends. It is prima facie a disallowable item if seen with reference to the Notes appearing in the balance-sheet as, while computing the income of a year, last year's expenses cannot be allowed or deducted, the assessee admittedly following mercantile system of accounting. The amount of Rs. 3,44,048 was, therefore, in our opinion, subject t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hall be refunded." On a close reading of these provisions, it is evident that additional tax is levied in two situations, viz., (i) when the income declared by the assessee is increased and (ii) when the loss returned by the assessee is reduced or converted into income. The additional tax in the first case is chargeable when the increase in the income increases the amount of total income of the assessee and it is 2096 of the difference between the increased total income and the total income as reduced by the adjustment. In the second case, additional tax is chargeable at 20% of the amount of adjustment as if that were the total income of the assessee. Evidently, the present is not a case of loss return. The assessee filed return declaring an income of Rs. 6,09,000, being the deemed total income under section 115J. Even after adjustments, the income of the assessee remained at Rs. 6,09,000. The adjustments made, therefore, did not increase the total income of the assessee. The income computed in the usual manner was nil as per the return and it was nil after the adjustments were made. The assessee's income for the year as per the return was Rs. 15,22,803. The assessee had carried ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n appeal only against the order passed under section 154 in respect of the application for rectification, no order of appeal being available against such intimation. In order to expedite the disposal of such applications and to provide a right of appeal within a fixed-time frame, sub-section (2) of section 154 of the Income-tax Act has been amended. Under the amended provisions, the Assessing Officer is required to take action on the application for rectification within a period of 3 months from the end of the month in which the application is filed. Where no order is made within the said period, the assessee will have a right to appeal to the Deputy Commissioner (Appeals) or as the case may be, to the Commissioner (Appeals). 47.3 This amendment takes effect from 14th May, 1992, i.e., the date on which the Finance Bill, 1992, received the assent of the President. [Sections 60 and 61]." The amount on which the additional tax was held payable by the assessee by virtue of adjustment under section 143(1)(a) was with respect to two items, viz., current liabilities Rs. 7,86,766 and expenditure of earlier years Rs. 3,44,048. Neither of these two amounts was found disallowable in the f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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