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1 - 10 of 21 (0.23 seconds)Section 115JA in The Income Tax Act, 1961 [Entire Act]
The Companies Act, 1956
Section 234C in The Income Tax Act, 1961 [Entire Act]
Section 234B in The Income Tax Act, 1961 [Entire Act]
The Income Tax Act, 1961
Section 208 in The Income Tax Act, 1961 [Entire Act]
Section 209 in The Income Tax Act, 1961 [Entire Act]
Kwality Biscuits Ltd. vs Commissioner Of Income-Tax on 30 November, 1999
As for the purpose of this section, the profit and loss account for the relevant previous year has to be prepared in accordance with the provisions of Part 11 and Part III of Schedule VI of Companies Act. The liability to pay tax in terms of Section 115J is based on legal fiction created by this section by way of which a percentage of book profits are deemed to be the income. After having computed the income under normal provisions of the Act, the liability for payment of tax under Section 115J will be attracted only if the income computed under the provisions of the Act is less than 30 per cent of its book profits computed in the manner laid down under Section 115J. The Honble Karnataka High Court in the case of Kwality Biscuits Ltd. v. CIT was seized with the similar dispute but in relation to the provisions of Section 115J. The provisions of sections 115JA and 115J do not have any material difference inasmuch as both the sections provide for legal fiction by way of which a specified percentage of the book profits, as computed under the Companies Act, 1956, is deemed as income of the assessee on certain events. The Honble Karnataka High Court held that having regard to the provisions of Section 115J, since the entire exercise of computing the income or in other words the book profit can be made only at the end of financial year, the provisions of Section 207, 208, 209 or 2 10 dealing with the liability to advance tax could not be made applicable. The reasoning which weighed with the Honble High Court to come to the aforesaid conclusion was that having regard to the operating mechanics of Section 115J, unless and until the accounts are audited and balance sheet prepared, the assessee would not be in a position to know the applicability of the provisions of Section 115J because the liability can only be ascertained in accordance with the Companies Act, 1956. The following observations of the Honble High Court are worthy of notice:
Cit vs Kwality Biscuits Ltd. on 26 April, 2006
19. It may be mentioned that the decision of Karnataka High Court in the case of Kwality Biscuits Ltd. (supra) has been affirmed by the Honble Supreme Court in the case of CIT v. Kwality Biscuits Ltd. (2006) 284 ITR 434. Thus, the question before us is whether the rationale enunciated by the Honble Karnataka High Court as has been affirmed by the Honble Supreme Court in the aforesaid case would also govern the provisions of Section 115JA read with relevant advance tax provisions under the Income Tax Act. We have also discussed in the foregoing paragraphs the scheme of Section 115JA. We do not find it different from the provisions of Section 115J inasmuch as both the sections referred to (A) the book profit under the Companies Act, (B) preparation of profit and loss account in accordance with Parts II and IV of the Schedule VI of the Companies Act; and (C) deeming a specified percentage of book profit as income subject to certain condition. However, the stand of the revenue is that insertion of Sub-section (4) in Section 115J makes a difference inasmuch as the said provisions were not contained in Section 115J. Thus, in terms of Sub-section (4) of Section 115J all other provisions of the Act have now been made applicable to an assessee suffering tax in terms of Section 115JA.