Madras High Court
M/S.Titan Industries Limited vs The Joint Commissioner Of Income Tax on 8 August, 2012
Author: Chitra Venkataraman
Bench: Chitra Venkataraman, K.Ravichandrabaabu
IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 08.08.2012 CORAM: THE HONOURABLE MRS.JUSTICE CHITRA VENKATARAMAN and THE HONOURABLE MR.JUSTICE K.RAVICHANDRABAABU Tax Case Appeal Nos.2200 and 2201 of 2006 M/s.Titan Industries Limited (Formerly known as Titan Watches Ltd.) Golden Enclave, Tower A Airport Road Bangalore-560 017. .. Appellant versus The Joint Commissioner of Income Tax Special Range IV Chennai-600 034. .. Respondent ----- PRAYER: Tax Case Appeals filed under Section 260A of the Income Tax Act against the order of the Income Tax Appellate Tribunal "A" Bench dated 17.02.2006 made in ITA No.621/MDS/1999 and ITA No.230/MDS/2001 relating to the Assessment Year 1997-98. ----- For appellant : Mr.V.S.Jayaraman For respondent : Mr.Arun Kurian Joseph Standing Counsel for Income Tax ----- JUDGMENT
(Judgment of the Court was delivered by CHITRA VENKATARAMAN,J.) Tax Case No.2200 of 2006 is preferred by the assessee against the order of the Income Tax Appellate Tribunal dated 17.02.2006 relating to the Assessment Year 1997-98, raising the following substantial question of law:
Whether the Tribunal was right in holding that the levy of interest under Section 234B and C of the Income Tax Act, 1961 were legally valid while computing the total income under Section 115 JA?
2. The assessee herein is a public limited company engaged in the manufacture of watches and jewellery. For the assessment year 1997-98, the assessee filed a return of income admitting nil income, after claiming deduction under Chapter VIA. However, in the return of income filed, which showed an income of Rs.8,34,10,000/- under Section 115JA of the Income Tax Act, under the proceedings issued under Section 143(1)(a), the Assessing Officer determined the taxable income as per the particulars under Section 115JA and completed the assessment thereon; in the circumstances, charged interest under Sections 234B and 234C of the Act. The assessee went on appeal before the Commissioner of Income Tax (Appeals), contending that the income estimated under Section 115JA being notional income, the provisions under Section 207 to 212 of the Act are not applicable and hence, the assessee was not liable to pay advance tax and consequently, there was no liability for payment of tax under Section 234B and 234C of the Act. The Commissioner of Income Tax (Appeals) rejected this plea and also upheld the charging of interest. The assessee went on appeal before the Income Tax Appellate Tribunal, who confirmed the order of the Commissioner of Income Tax (Appeals), applying the decisions reported in [2003] 263 ITR 307 (Mad) (Commissioner of Income-tax v. Holiday Travels P. Ltd.) and [2006] 279 ITR 123 (P & H) (Commissioner of Income-tax v. Upper India Steel Mfg. and Engg. Co. Ltd.).
3. Learned counsel appearing for the assessee fairly stated before this Court that the issue as regards the levy of interest under Section 234B and 234C of the Income Tax Act while computing the total income under Section 115 JA is covered by the decision of the Apex Court reported in [2011] 330 ITR 470 (Joint Commissioner of Income Tax Vs. Rolta India Ltd.). Applying the said decision to the case herein, the order of the Tribunal stands confirmed and Tax Case (Appeal) No.2200 of 2006 stands dismissed.
4. Tax Case (Appeal) No.2201 of 2006 relates to the assessment year 1997-98, wherein the assessee has raised the following substantial questions of law:
(i) Whether the Tribunal was right in upholding the disallowance of Guest House expenditure under Sections 32, 37 and other provisions of the Income Tax Act, 1961?
(ii) Whether the Tribunal was right in law in holding that the deduction under Sections 80HH, 80I and 80IA are not allowable in view of Section 80AB of the Income Tax Act, 1961?
(iii) Whether the Tribunal was right in holding that the amount received from Timex Watches Limited are in the nature of commission and therefore, the deduction under Section 80HHC is not allowable?
(iv) Whether the Tribunal was right in law in holding that the interest under Section 234B is leviable on the income computed under Section 115JA of the Act.
5. As far as the first question is concerned, learned counsel appearing for the assessee fairly states before this Court that the issue is covered against the assessee by the decision reported in [2005] 278 ITR 546 (Britannia Industries Ltd. Vs. Commissioner of Income Tax) and hence, the question is decided against the assessee. As far as the third question is concerned, learned counsel appearing for the assessee fairly submits that the said question is not pressed and hence dismissed as not pressed. The fourth question, being similar to the issue decided in Tax Case Appeal No.2200 of 2006, stands rejected. Hence, the only question that survives for consideration in this Tax Case is the second substantial question of law as regards the deduction under Section 80HH, 80I and 80IA.
6. As far as the second substantial question of law is concerned, a perusal of the order of the Assessing Officer shows that the total business income of the assessee was calculated at Rs.1,02,89,059/- and the deduction under Chapter VIA was to the tune of Rs.12,81,76,101/- and in terms of Section 80AB, the deduction was restricted to Rs.1,02,89,059/-, being the business income of the assessee. Aggrieved by this, the assessee went on appeal unsuccessfully before the Commissioner of Income Tax (Appeals) and thereafter before the Tribunal, which confirmed the order of the authorities below, following the decision reported in [2004] 266 ITR 521 (IPCA Laboratory Ltd. Vs. Deputy Commissioner of Income Tax).
7. Learned counsel appearing for the assessee pointed out that without questioning the applicability of Section 80AB to limit the relief to the extent of income, the question as to whether, in respect of the claim under the various provisions, relief has to be considered independently had not been considered by the Assessing Officer and hence, the assessment calls for a remand from this Court. In this connection, he referred to the decision reported in [2012] 341 ITR 488 (Chamundi Textiles (Silk Mills) Ltd. Vs. Commissioner of Income Tax), wherein, this Court considered the question of relief under Section 80HHC in the case of an assessee carrying on domestic as well as export sale in the State and held that when the income relating to the Unit engaged in 100% export is identifiable by reason of separate books of accounts maintained, the question of applying the formula did not arise. Thus this Court pointed out that when separate books of accounts are maintained by these Units and there was no mixing up of accounts of one unit with the other and there was no inter-dependency, the income earned from export goods from the Bangalore Unit merited to be considered independently for 100% relief as one falling under Section 80HHC(3)(a) of the Income Tax Act. Learned counsel pointed out that considering the above-said decision, the assessment on the relief under Chapter VIA be set aside and the matter be remanded back for working out the relief, keeping however in the background that the relief under Chapter VIA cannot exceed the business income arrived at by the Officer.
8. Recording the said statement, satisfied of the claim of the assessee, in the absence of any facts relating to separate maintenance of accounts thus discussed in any of the orders of the authorities below, interest of justice requires that the assessment merits to be set aside and remanded back to the Assessing Officer on the issue relating to deduction under Chapter VIA, for passing orders, keeping in mind the law declared by this Court as well as the limit as available under Section 80AB of the Income Tax Act.
In the result, T.C.(A) No.2200 of 2006 stands dismissed and T.C.(A) No.2201 of 2006 stands partly allowed. No costs.
Index: Yes / No (C.V.,J.) (K.R.C.B.,J.)
Internet: Yes / No 08.08.2012
ksv
CHITRA VENKATARAMAN,J.
and
K.RAVICHANDRABAABU,J.
ksv
To
1. The Income Tax Appellate Tribunal "A" Bench, Chennai.
2. The Commissioner of Income Tax (Appeals) X, Chennai.
3. The Joint Commissioner of Income Tax, Special Range-IV
Chennai-34.
Tax Case (Appeal) Nos.2200 and
2201 of 2006
Dated: 08.08.2012