Gujarat High Court
The Commissioner Of Income Tax vs M/S Cornerstone Brands ... on 3 August, 2016
Author: Ks Jhaveri
Bench: Ks Jhaveri, G.R.Udhwani
O/TAXAP/257/2007 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX APPEAL NO. 257 of 2007
With
TAX APPEAL NO. 195 of 2009
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE KS JHAVERI
and
HONOURABLE MR.JUSTICE G.R.UDHWANI
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1 Whether Reporters of Local Papers may be allowed
to see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy of
the judgment ?
4 Whether this case involves a substantial question of
law as to the interpretation of the Constitution of
India or any order made thereunder ?
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THE COMMISSIONER OF INCOME TAX....Appellant(s)
Versus
M/S CORNERSTONE BRANDS LTD.....Opponent(s)
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Appearance:
MRS MAUNA M BHATT, ADVOCATE for the Appellant(s) No. 1
MR. B.S. SOPARKAR, ADVOCATE WITH MRS SWATI SOPARKAR,
ADVOCATE for the Opponent(s) No. 1
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O/TAXAP/257/2007 JUDGMENT
CORAM: HONOURABLE MR.JUSTICE KS JHAVERI
and
HONOURABLE MR.JUSTICE G.R.UDHWANI
Date : 03/08/2016
ORAL JUDGMENT
(PER : HONOURABLE MR.JUSTICE KS JHAVERI) By way of these appeals under section 260A of the Income-tax Act, 1961, the appellant-revenue has challenged the order of the Income-tax Appellate Tribunal (hereinafter referred to as "the Tribunal") whereby the Tribunal has dismissed the appeal of the revenue by confirming the order of the Commissioner of Income-tax (Appeals).
2. These appeals were admitted by this court for consideration of the following substantial questions of law:
Tax Appeal No. 257 of 2007:
"(A) Whether the Appellate Tribunal is right in law and on facts in confirming the order passed by the CIT(A) directing to compute the book profit u/s.
115J based on separate profit and loss account furnished by the assessee?
(B) Whether the Appellate Tribunal is right in law and on facts in confirming the order passed by the CIT(A) deleting the interest charged u/s. 234B on the ground that computation of income u/s. 115J was not liable to payment of advance tax?"
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"Whether the Appellate Tribunal is right in law and on facts in confirming the order passed by the CIT(A) and thereby deleting the interest charged under section 234B on the ground that computation of income under section 115J was not liable to payment of advance tax?
3. The learned counsel for the appellant has contended that the issue regarding computation of book profit under section 115J of the Income-tax Act is referred to a Larger Bench in the case of Dynamic Orthopedics P. Ltd., reported in (2010) 321 ITR 300 (SC). Therefore, the same may be kept pending or decided subject to the decision of the Larger Bench Apex Court.
4. Learned counsel for the assessee Mr. Soparkar has contended that issue No. 1 is now concluded by the decision of the Apex Court in the case of Malayala Manorama Co. Ltd. v. Commissioner of Income-tax reported in (2008) 300 ITR 251 (SC) which has been adopted by this court in one of the Tax Appeals and issue No. 2 is covered by the decision of the Apex Court in the case of Commissioner of Income-tax v. Kwality Biscuits Ltd., reported in (2006) 284 ITR 434 (SC) where the Apex Court has held that where assessee's income was computed by invoking provisions of section 115J, interest under sections 234B and 234C of the Income-tax Act would not be leviable. In that view of the matter, the order of the Tribunal is not required to be disturbed.
5. We have heard learned counsel for the parties.
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Taking into account the fact that the assessee has claimed depreciation in the profit and loss account on the basis of Income-tax Rules and not as per the Companies Act, the contention raised by the assessee, which has been rightly accepted by the Commissioner of Income-tax (Appeals) and confirmed by the Tribunal, is required to be accepted. However, if it is found that the assessee has claimed depreciation in the profit and loss account under the provisions of the Companies Act, the decision which is sought to be relied on by the revenue will apply. In that view of the matter, in view of the decision of the Apex Court in the case of Malayala Manorama Co. Ltd. v. Commissioner of Income-tax (supra), we answer question No. 1 in favour of the assessee and against the revenue. So far as question No. 2 is concerned, in view of the decision of the Apex Court in the case of Commissioner of Income-tax v. Kwality Biscuits Ltd. (supra) no interest under section 234B and 234C would be leviable when income was computed by invoking provisions of section 115J of the Income-tax Act. We, therefore, answer question No. 2 in favour of the assessee and against the revenue.
6. As regards Tax Appeal No. 195 of 2009, the issue will be governed by the decision of this court in Tax Appeal No. 257 of 2007. Hence we answer the question in favour of the assessee and against the revenue.
7. In the result, both the appeals are dismissed.
(K.S.JHAVERI, J.)
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(G.R.UDHWANI, J.)
(pkn)
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