Income Tax Appellate Tribunal - Chandigarh
Roadmaster Cycles Ltd. vs Deputy Commissioner Of Income Tax on 11 July, 2003
Equivalent citations: (2003)81TTJ(CHD)1033
ORDER
Joginder Pal, A.M.
1. By this order we shall dispose of this appeal of the assesses filed against the order of the CIT(A), Patiala for the asst. yr, 1994-95,
2. The only effective issue raised in this appeal is that CIT(A) was not justified in sustaining the demand of Rs. 1,44,838 on account of additional tax charged by the AO under Section 143(1)(a). The facts of the case are that the return received was processed by the AO under Section 143(1)(a) of the IT Act, In the return of income, the assessee had claimed deduction under Section 80HHC amounting to Rs. 5,04,02,000, It appears that deduction had been allowed to the assessee at the time of processing the return. The AO observed that assessee had claimed excess deduction by showing lesser cost of traded export goods and as per the amended certificate of the auditors, the assessee was entitled to deduction of Rs. 4,76,56,000 under Section 80HHC, The AO subsequently rectified the intimation allowing deduction under Section 80HHC at Rs. 4,91,56,000. Thereafter, the assessee moved an application stating therein that there was a mistake in allowing deduction under Sections 80M and 80G. The AO rectified the said mistake by order dt. 14th May, 1996, and allowed deduction under Section 80HHC on total income of Rs. 4,78,76,037, The AO also revised the additional tax to Rs. 1,44,838 in respect of excess deduction claimed under Section 80HHC.
3. Aggrieved, the assessee impugned the additional tax charged in appeal before the CIT(A), It was contended before the CIT(A) that as per Sub-clauses (A) & (B) of Section 143(1A), additional tax is chargeable in a case where total income as declared by an assessee is increased or where the loss declared by an assessee is reduced by way of adjustments under Section 143(1)(a). It was submitted that in this case, the assessee had declared the income at 'nil' and even after making adjustments and reducing the amount of deduction under Section 80HHC, the total income has remained at nil. Therefore, no additional tax was leviable in this case. However, learned CIT(A) was not impressed with the submissions of the assessee and upheld the order of the AO by recording following finding in para 2 of his appellate order :
"2. I have considered the facts of the case. Sub-clause (A) and (B) of Section 143(1A) refer to 'income' and not total income as contended. The income thus has to be taken before allowance of deductions under Chapter VI for the purpose of levy of additional tax. The AO, therefore, was right in charging additional tax even though net result after deductions under Chapter VI results in nil income."
Assessee is aggrieved by the order of the CIT(A). Hence, this appeal before us.
4. The learned counsel for the assessee filed written submissions by a letter dt. 9th Sept., 2003, reiterating the submissions made before the learned first appellate authority. He further relied on the judgment of Rajasthan High Court in the case of Rajasthan Electricity Board v. Dy. CIT (1993) 200 ITR 434 (Raj), where the High Court has held that after making adjustments under Section 143(1)(a), income should exceed total income declared in the return and additional tax can be levied only in respect of the income so increased, Thus, it has been contended that learned CIT(A) was not justified in sustaining the order of the CIT(A),
5. The learned Departmental Representative relied on the orders of the authorities below.
6. We have heard both the parties and carefully considered the rival submissions. We have also perused the written submissions filed by the assessee, From the facts discussed above, it is obvious that the assessee had filed the return declaring nil income. Even after making adjustment under Section 143(1)(a), the total income was determined at nil. The only variation in the income declared and returned was due to excess claim under Section 80HHC, Now the issue that requires to be considered by this Bench is whether additional tax is leviable in a case where total income computed as per provisions of the Act remains at nil. Sub-section (1A) of Section 143 provides for levy of additional tax in a case where as a result of adjustments made under the 1st proviso to Sub-clause (A) of Sub-section (1A), the income declared by any person in the return is increased or the loss declared by such person in the return is reduced or is converted into income, The section does not provide for levy of additional tax in a case where the claim made under any of the sections is reduced but the same does not result in either increase in income or reduction in loss, Section 143(1A) refers only to the income or loss declared in the return. It does not refer to the income as computed in accordance with provisions of the Act before allowing deduction under Chapter VI of the IT Act Considering the fact that the total income remained still at nil, we are of the opinion that no additional tax was leviable in this case. The judgment of Rajasthan High Court in the case of Rajasthan Electricity Board v. Dy. CIT (supra), also supports this view. Thus, we set aside the order of the CIT(A) and delete the impugned additional tax charged by the AO. All the grounds of appeal are allowed.
7. In the result, appeal of the assessee is allowed.