High Court Of Bombay
Mahalakshmi Glass Works Ltd. & Anr. vs. Sunil Gupta, Assistant Commissioner Of Income Tax & Anr
Sections 143(1)(a), 143(1A)
Asst. Year 1989-90
Mrs. Sujata Manohar & Srikrishna, JJ.
WP No. 532 of 1991
24th August, 1992
N.A. Dalvi i/b M/s Dhru & Company, for the Petitioners : G.S. Jetly with P.S. Jetly & Manjula Singh, for the Respondent
MRS. SUJATA MANOHAR, J. :
The 1st petitioner is a limited company incorporated under the provisions of the Companies Act, 1956 and is engaged in the business of manufacture and sale of glass and glassware. In this petition the petitioners have challenged the validity of an intimation sent by respondent No. 1 under s. 143(1)(a) of the IT Act increasing the 1st petitioner’s returned total income for the asst. yr. 1989-90 by Rs. 11,35,690 and calling upon the 1st petitioner- company to pay a total income-tax of Rs. 25,88,717.
The previous year of the 1st petitioner for asst. yr. 1989-90 was the period of 21 months starting from 1st July, 1987 and ending on 31st March, 1989. This was in view of the amendment made to s. 3 of the said Act.
As per the accounts of the 1st petitioner-company for the year ended 30th June, 1987 the depreciation debited to the accounts for that year amounted to Rs. 52,31,168. The loss for that year after providing for depreciation was Rs. 53,85,585.
For the purpose of the Companies Act the 1st petitioner prepares its accounts for the accounting year July to June of the next year. It has accordingly prepared its accounts for the year ended 30th June, 1988. For the period, 1st of July, 1988 to 31st March, 1989 the account is prepared separately. Since the previous year relevant to the asst. yr. 1989-90 covered both these periods, the 1st petitioner-company computed its income by taking into consideration the accounts for both these periods. The book profits of the petitioners for the said period computed in accordance with s. 115J amounted to Rs. 86,82,178. Under s. 115J, 30% of this amount came to Rs. 26,04,653. Since this was less than the petitioners’ total income of Rs. 31,19,800, as computed under the Act, the petitioner returned the total income of Rs. 31,19,800 as its chargeable income for the asst. yr. 1989- 90.
5. The intimation dt. 3rd Aug., 1990 which is issued by respondent No. 1, however, has adjusted the petitioners’ total income at Rs. 42,55,489 as against the returned income of Rs. 31,19,800. This is because in computing the 1st petitioner’s book profits under s. 115J the 1st respondent has not allowed any amount under the provisions of cl. (b) of the first proviso to s. 205(1) of the Companies Act. Accordingly he has computed tax on the total income at Rs. 23,40,511, surcharge at Rs. 1,17,026 and additional tax under s. 143(1A) at Rs. 1,31,192. This has been adjusted against the refunds due to the 1st petitioner.
6. The intimation which is required to be given under s. 143(1)(a) must determine the tax found due on the basis of the return and if any refund is due on the basis of such return it shall be granted to the assessee. The scope of an intimation under s. 143(1)(a) has been considered by a Division Bench of this Court, to which one of us (Mrs. Sujata Manohar, J.) was a party, in the case of Khatau Junkar Ltd. & Anr. vs. K.S. Pathania & Anr. reported in (1992) 102 CTR (Bom) 194 : (1992) 196 ITR 55 (Bom). In view of the ratio which is laid down in that judgment the 1st respondent had no jurisdiction under s. 143(1)(a) of the Act to reopen the account of the assessee and to recalculate the quantum of income of the assessee by allowing or disallowing certain deductions as set out hereinabove. The intimation dt. 3rd Aug., 1990 is, therefore, set aside.
7. Since the impugned intimation under s. 143(1)(a) is set aside, the additional tax levied under s. 143(1A) is also set aside. The respondents are directed to issue a fresh intimation under s. 143(1) (a) of the IT Act in accordance with law and in the light of the ratio laid down by the above judgment and to grant to the petitioners refund, if any, is due to them under the fresh intimation to be issued as aforesaid. Rule is made absolute accordingly.
No order as to costs.
[Citation : 203 ITR 658]