TMI Blog1998 (6) TMI 109X X X X Extracts X X X X X X X X Extracts X X X X ..... proviso to clause (a) of section 143(1), total income remained a loss. He relied on the case of Modi Cement Ltd. V. Union of India[1992] 193 ITR 91 (Delhi). CIT(A) relying upon the said decision held that Assessing Officer was not justified in charging additional tax and rejecting the application under section 154. He, therefore, directed Assessing Officer to accept the application. He also deleted additional tax of Rs. 3,575. 4. Ld D.R. submitted that the provisions of section 143(1A) were amended by the Finance Act, 1993, w.e.f. 1-4-1989 and that under the amended provisions even where loss is reduced as a result of adjustment made under section 143(1)(a), additional tax would be attracted. He, therefore, urged that order of CIT(A), which is based on the case of Modi Cement Ltd which was rendered before the retrospective amendment, may be set aside. 5. Ld Counsel, however, relied on order of CIT(A) and referred to the following cases in support of the proposition that no additional tax could be levied with reference to aforesaid adjustment carried out under section 143(1)(a):-- (i) CIT v. Premier Industries (P.) Ltd. [1997] 227 ITR 282/93 Taxman 214 (MP) wherein it was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... did not relate to reduction of loss. He submitted that the decision in Hindustan Electrographite Ltd's case was relatable to cash compensatory support and not relevant to the issue under consideration. 6. We have carefully considered the submissions made by both the parties and have also perused orders of the departmental authorities. We have also seen the case law relied upon by ld. counsel. It is observed that in the case of Premier Industries (P.) Ltd, Assessing Officer made disallowance of Rs. 1,69,87,115 claimed by the assessee on account of cash compensatory support and computed total income in accordance with section 115J at Rs. 53,69,186 being 30 per cent of the total amount of Rs. 1,78,79,288. With reference to computation of loss in accordance with sections 28 to 44D, an addition of Rs. 2,93,767 on account of adjustment under section 143(1)(a) was made. The tax on the adjusted amount was levied as additional tax under section 143(1A) at Rs. 30,850. The assessee filed an application under section 154 for rectification and pointed out that the amount of CCS was, though treated by the assessee as capital receipt, credited to the sales account and, therefore, was already in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 from the Government and it claimed in its return for assessment year 1989-90 that the said amount received was not taxable. The company also stated in the return that in case the amount was considered taxable, it may be assessed subject to the company's right of appeal or other remedy available under the law. Subsequent to filing of return by the assessee-company, the Finance Act, 1990, amended section 28 w.e.f. 1-4-1967 making CCS taxable. Assessing Officer issued notice under section 143(2) on 22-6-1990 and on 31-7-1990 Assessing Officer issued an intimation to the company under section 143(1)(a) recomputing loss suffered by the company on the basis of amended provisions of section 28. Although total income for assessment year 1989-90 continued to remain a loss figure, additional tax was levied. The company filed applications under sections 154 and 264, which were rejected. On a writ petition against the said orders, High Court held as above and concluded that the impugned adjustment and intimation were ultra vires the section and were liable to be set aside. It is also observed from the decision in the case of Sri Gopala Krishna Jute Mills Ltd that the amount of Rs. 7,86,766 r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... retrospective effect. It may be mentioned that in the said case also, the assessee filed return but did not include CCS received from Government, as the same was found not taxable. Latter, by retrospective amendment in section 28, cash assistance was made subject to tax and Assessing Officer passed order under section 143(1)(a) and made additions of the impugned amounts as an adjustment and also imposed additional tax under section 143(1A). The above decision was rendered in this context. 6.1 It would be clear from the above decisions that the same are based primarily on the fact as to whether adjustment could be made under section 143(1)(a) with reference to the state of law as then prevailing or in the context of the amended law whereby fresh items of income are included and made liable to tax as in the case of cash compensatory support. The underlying principle evolved by the said decisions is that adjustments to be made under section 143(1)(a)have to be examined with reference to law as prevailing on the date of filing of the return and, if the claim was supported by law as then prevailing, including the decisions of the High Courts (though reversed subsequently by the Apex C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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