Gujarat High Court
Commissioner Of Income Tax vs Parle International ... on 4 August, 2016
Author: Ks Jhaveri
Bench: Ks Jhaveri, G.R.Udhwani
O/TAXAP/830/2007 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX APPEAL NO. 830 of 2007
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE KS JHAVERI SD/-
and
HONOURABLE MR.JUSTICE G.R.UDHWANI SD/-
==========================================================
1 Whether Reporters of Local Papers may be allowed YES
to see the judgment ?
2 To be referred to the Reporter or not ? NO
3 Whether their Lordships wish to see the fair copy of NO
the judgment ?
4 Whether this case involves a substantial question of NO
law as to the interpretation of the Constitution of
India or any order made thereunder ?
==========================================================
COMMISSIONER OF INCOME TAX....Appellant(s)
Versus
PARLE INTERNATIONAL LTD.....Opponent(s)
==========================================================
Appearance:
MR NITIN K MEHTA, ADVOCATE for the Appellant(s) No. 1
MR MANISH J SHAH, ADVOCATE for the Opponent(s) No. 1
==========================================================
CORAM: HONOURABLE MR.JUSTICE KS JHAVERI
and
HONOURABLE MR.JUSTICE G.R.UDHWANI
Date : 04/08/2016
ORAL JUDGMENT
(PER : HONOURABLE MR.JUSTICE KS JHAVERI) By way of this appeal, the department has challenged the order dated 30/11/2004 passed by the Page 1 of 6 HC-NIC Page 1 of 6 Created On Wed Aug 10 00:57:36 IST 2016 O/TAXAP/830/2007 JUDGMENT ITAT in ITA No.94/Ahd/2004 for the assessment year 200001 whereby the Tribunal has allowed the appeal of the assessee.
2. The short facts of the case are that assessee filed return of income for the year under consideration on 30/11/2000 declaring loss of Rs.66,73,095/. The assessment was finalized determining loss of Rs.57,72,652/ and book profit under Section 115JA of Rs.8,62,83,422/. The AO made addition of Rs.29,33,84,059/ on account of capital receipt being sale of "good will" treating it as profit of business.
2.1 The appeal was filed before the CIT (A) by the assessee which came to be dismissed and matter was thereafter carried before the Tribunal which had allowed the appeal in favour of the assessee which has given rise to this appeal.
3. While admitting this appeal, following question of law was posed for consideration:
"Whether the appellate tribunal is right in law and on facts in holding that for the purpose of computing book profit u/s.115J of the Incometax Act, the Assessing Officer does not have jurisdiction to go behind the net profit shown in the profit and loss account and thereby directing the Assessing Officer to compute the book profit as per the books prepared by the Chartered Accountant under the Companies Act and thereby directing not to take into consideration an amount of Rs.29,33,84,059/ being capital gains received by the assessee?"Page 2 of 6
HC-NIC Page 2 of 6 Created On Wed Aug 10 00:57:36 IST 2016 O/TAXAP/830/2007 JUDGMENT
4. Learned Counsel for the department appellant has contended that the Tribunal did not appreciate the fact that the AO made addition of Rs.29,33,84,059/ for the purpose of determining the book profit u/s. 115JA(2) of the IT Act and in accordance with Part II and III of the Schedule VI to the Companies Act, 1956. He has further contended that assessee is required to take into account income by way of capital gain under Section 45 of the IT Act which is also required to be considered to prepare P & L account according to Par II and III of the schedule Vi of the Companies Act, 1956. He, therefore, contended that the issue raised in this appeal may be answered in favour of the department.
5. On the other hand, learned Counsel for the assessee has contended that the Tribunal in its order at paragraph No.7 which reads as under has considered the issue in detail by considering the decision of the Hon'ble Apex Court in case of Apollo Tyres.
"7. These observations, in our opinion, are contrary to the decision of the Supreme Court referred to above and facts of the instant case do not give any different picture to decide the issue within the ratio of the decision of the supreme court in the case of Apollo Tyres (supra). In view of the legal position that the AO does not have jurisdiction to go behind the net profit shown in the profit and loss account as audited by the CA and not objected to by the authority under the Companies Act, we do not feel tit necessary to discuss the merit of the case as to whether the capital gain was a part of book profit or whether it can be directly taken to Page 3 of 6 HC-NIC Page 3 of 6 Created On Wed Aug 10 00:57:36 IST 2016 O/TAXAP/830/2007 JUDGMENT capital reserve account. The order of the CIT (A) as well as the AO is accordingly vacated and the AO is directed to corrupte the books profit as per the books prepared by the qualified Chartered Accountant under the Companies Act."
6. Learned Counsel for the assessee has also drawn attention of this Court to a decision in Tax Appeal No.47 of 2002 and submitted that the issue is squarely covered by that decision and placed reliance upon paragraph Nos.3 and 4 of the said decision which reads thus:
"3.Learned Counsel for the appellant Mr. Sudhir M. Mehta contended that the Issue No.2 is covered by the decision of the Hon'ble Supreme Court in the case of Joint Commissioner of Income-Tax v. Rolta India Ltd. reported in 330 Income Tax Reports 470.
In the above decision, the Court was of the view that (Head Note) :-
It is clear from reading sections 115JA and 115JB of the Income-tax Act, 1961, that the question whether a company which is liable to pay tax under either provision does not assume importance because specific provision is made in the section saying that all other provisions of the Act shall apply to a MAT company (section 115JA(4) and section 115JB(5)). Similarly, amendments have been made in the relevant Finance Acts providing for payment of advance tax under sections 115JA and 115JB. Section 234B is clear that it applies to all companies. The pre-requisite condition for applicability of section 234B is that the assessee is liable to pay tax under section 208 and the expression assessed tax is defined to mean the tax on the total income determined under section 143(1) or under section 143(3) as reduced by the amount of tax deducted or collected at source. Thus, there is no exclusion of section 115J/115JA in the levy of interest under section 234B. The expression assessed tax is defined to mean the tax assessed on regular assessment which means the tax determined on the application of section 115J/115JA in the regular assessment.
Interest under section 234B is payable on failure to pay advance tax in respect of tax payable under section 115JA.
4.Learned Senior Counsel for the respondent Mr. Saurabh N. Soparkar contended that the Issue No.1 is covered by the decision of this Court rendered in the case of Deputy Page 4 of 6 HC-NIC Page 4 of 6 Created On Wed Aug 10 00:57:36 IST 2016 O/TAXAP/830/2007 JUDGMENT Commissioner of Income-Tax (Assessment) v. Farmson Pharmaceuticals Guj. Ltd. reported in 347 Income Tax Reports 394.
In the above decision, the Court had referred to two decisions Apollo Tyres Ltd. v. CIT reported in [2002] 255 ITR 273 (SC) and CIT v. Kwality Biscuits Ltd. reported in [2006] 284 ITR 434 (SC) and while dismissing the appeal held as under :-
Following the decision of the Karnataka High court in the case of Kwality Biscuits Ltd. v. CIT [2000] 243 ITR 519 (Karn) affirmed by the Supreme Court in the case of CIT v.
Kwality Biscuits Ltd. [2006] 284 ITR 434 (SC), the question is answered in the affirmative, that is, the Income-tax Appellate Tribunal was right in law in upholding the order of the Commissioner of Income-tax (Appeals) directing not to charge interest under sections 234B and 234 of the Act since the total income was determined under section 115J of the Act."
7. Learned Counsel for the assessee therefore submitted that the issue may be answered in favour of the assessee and against the department.
8. Having heard the learned Counsel for the parties and having gone through the order impugned in this appeal and taking into consideration the decision as relied upon by the learned Counsel for the assessee, we are of the opinion that the issue is covered by the said decision and the Tribunal has rightly come to the conclusion by reversing the findings of the CIT (A) and AO. We, accordingly, answer the question raised in this appeal in favour of the assessee and against the Department.
(K.S.JHAVERI, J.)
(G.R.UDHWANI, J.)
Page 5 of 6
HC-NIC Page 5 of 6 Created On Wed Aug 10 00:57:36 IST 2016
O/TAXAP/830/2007 JUDGMENT
sompura
Page 6 of 6
HC-NIC Page 6 of 6 Created On Wed Aug 10 00:57:36 IST 2016