Madras High Court
M.R.F. Ted vs Deputy Commissioner Of Income Tax on 27 March, 1998
Equivalent citations: (1999)152CTR(MAD)242
ORDER V.S. SERPURRAR, J.
The present petition arises out of a notice issued under s. 13 of the Companies (Profits) Surtax Act, 1964. The notice has been sent by the Dy. CIT (Spl. Range).
2. On the basis of the returns filed by the company, an order came to be passed by the 1AC (Asstt.) Range-II, Madras-34, dt. 16th April, 1987, wherein, the deduction of Rs. 1, 16,16,134 was shown relying on r. 1(iii) of Second Schedule of the present Act. In that, the concerned officer had relied on a ruling of the Bombay High Court in the case of CIT vs. Zenith Pipes Ltd, 1977 CTR (Bom) 119 : (1978) 112 ITR 215 (Bom). In the said order, this figure of Rs. 1, 16,16,134 was arrived at on the basis of the difference between book depreciation and the depreciation allowed by the Department for the years from 1976-77 to 1983-84. It seems that the excess values were added up both in case of the values reflected from the account books and values reflected from the assessment orders. The difference in these totals was arrived at Rs. 1,16,16,134 and that figure was used for applying r. 1(iii) of the Second Schedule of the Act. The said authority, thereafter, however, realised that the figure was not correct and issued the above-mentioned notice, whereby, it is suggested that the written down value as per the books as on 1st Oct., 1982, was Rs. 10,00,33,000, while the written down value of the assets as on 1st Oct., 1982, was Rs. 6,21,85,351, the difference being Rs. 3,78,47,649. This amount should have been deducted from the capital base instead of Rs. 1,16,16,134 which was deducted in the assessment. The authority concerned treated it as a mistake apparent from the records and called up the explanation of the petitioner. The petitioner challenge the said notice on the ground that the concerned authority had no jurisdiction to issue such a notice.
3. According to the learned counsel, the provision under which this notice is given i.e. s. 18 would be applicable only where the authority concerned has to rectify any mistake which is apparent from the record and not otherwise. According to learned counsel, there is nothing in the notice to suggest that there was any apparent mistake in the assessment order passed. According to learned counsel, though that order by itself was not correct in law, the present notice also was not passed on the sound footing as the formula shown by the authority concerned itself would not apply on a correct interpretation of r. 1(iii) of Second Schedule of the Act.
4. Learned counsel appearing on behalf of the Department, however, strenuously contends that the formula shown is on the basis of the books of accounts of the company and its balance sheet. According to learned counsel, even if a full effect is to be given to the aforementioned Bombay High Court ruling, the same result would follow.
5. Learned counsel for the petitioner strenuously contends that in applying the provision of r. 1(iii) of the Second Schedule, the difference in the amount of depreciation provided by the books and the amount of depreciation allowed by the Department for that particular year alone will have to be considered. According to the learned counsel, the notice proceeds on a completely unsustainable interpretation.
6. It is apparent that the concerned authority has issued the notice basing it on the aforementioned reported ruling. Instead of approaching the said authority by way of proper reply and pointing out that the notice was or was not correct, the petitioner has chosen to rush before this Court and in the process, nine long years have elapsed. There would be no point in going into the correctness or otherwise of the notice at this stage, because, that would be the task of the concerned authority. However, it is clarified that it is open for the petitioner to approach the said authority and canvass the contention that the difference in the depreciation values which would be referable to r. 1 sub-r. (iii) of the Second Schedule of the Act would be for that particular year only. Since the notice is obviously based on a mistake, which the concerned authority feels has been committed in the assessment order, it was perfectly, legal for the authority to issue the notice. The petitioner would no approach the concerned authority with his reply and canvass the question on merits there. The authority would be well advised to dispose of the matter as early as possible. With these observations, the writ petition is disposed of without any costs.