TMI Blog2010 (5) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... 24, 1976, referred to above, the position was clarified by the Central Board of direct Taxes (in short "the CBDT"). It is stated that in a case where on setting off the concealed income against any loss incurred by the Assessee under any other head of income or brought forward from earlier years, the total income is reduced to a figure lower than the concealed income or even to a minus figure the penalty would be imposable because in such a case 'the tax sought to be evaded" will be tax chargeable on concealed income as if it is "total income". Decision in the matter of CIT Vs. Gold Coin Health (P) Ltd. , 2008 -TMI - 30245 - SUPREME COURT] confirmed. SC further observed that: This Court (SC), time and again, reminded the courts performing judicial functions, the manner in which judgments/orders are to be written but, it is, indeed, unfortunate that those guidelines issued from time - to time are not being adhered to. - No doubt, it is true that brevity is an art but brevity without clarity likely to enter into the realm of absurdity, which is impermissible. This is what has been reflected in the impugned order which we would reproduce hereinafter. Supreme Court has reiterat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e draft, it is necessary to go through the same to find out, if anything, essential to be mentioned, has escaped discussion. c) The ultimate finished judgment/order should have sustained chronology, regard being had to the concept that it has readable, continued interest and one does not feel like parting or leaving it in the midway. To elaborate, it should have flow and perfect sequence of events, which would continue to generate interest in the reader. d) Appropriate care should be taken not to load it with all legal knowledge on the subject as citation of too many judgments creates more confusion rather than clarity. The foremost requirement is that leading judgments should be mentioned and the evolution that has taken place ever since the same were pronounced and thereafter, latest judgment, in which all previous judgments have been considered, should be mentioned. While writing judgment, psychology of the reader has also to be borne in mind, for the perception on that score is imperative. e) Language should not be rhetoric and should not reflect a contrived effort on the part of the author. f) After arguments are concluded, an endeavour should be made to pronounce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the course of assessment proceedings, it was noticed that Assessee had claimed depreciation, which was viewed to be incorrect. Thus, an amount of ₹ 24,22,531/- was disallowed out of depreciation. Penalty proceedings under Section 271 (1) (c) of the Act were initiated. In response to the show cause notice issued by the Revenue, Assessee filed its reply denying the allegations and contending that no penalty can be imposed on it, when returned income was NIL. 15. Penalty was sought to be imposed in respect of an item having an effect in reducing the loss. No appeal was filed against the item, added to the income on account of which the loss was reduced. Admittedly, Assessee, a leasing company had claimed depreciation on plant and machinery @ 100% on various items. The statement of depreciation filed along with the computation of income showed the claim at ₹ 1,05,08,824/-. On enquiries being made it was revealed that 100% depreciation was claimed along with Lease Agreements entered into with different parties. Even though, terms and conditions of the Lease Agreements entered into with different parties were the same, except the names of the parties had been changed. Even ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the High Court of Gujarat at Ahmedabad, which finds place at page 309, wherein before proceeding to decide the matter, the three learned judges of this Court thought it fit to reproduce the same. The question of law as projected in Gold Coin (supra) before the High Court and the question of law as projected in this appeal is identical but what is being deciphered by us is the manner in which the impugned judgment has been written and pronounced. After all, at the High Court level, when a matter is considered on merits by a Division Bench, not only factual but even legal aspect of the matters is required to be considered at some length. 22. The matter of Gold Coin (supra) was placed before three learned judges of this Court, as correctness and propriety of the order passed by two learned judges of this Court in Virtual Soft Systems (supra) was doubted. Thus, to clear the doubts, on the correct exposition of law, a three Judge Bench was constituted which decided the matter in Gold Coin (supra). 23. It is to be seen that purpose behind Section 271 (1)(c) of the Act is to penalise the Assessee for - a)concealing particulars of income and / or b)furnishing inadequate particul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resent negative profit or in other words minus income. 28. Considering this aspect of the matter in greater details, Gold Coin (supra) over-ruled the view expressed by two learned judges in Virtual Soft Systems (supra). 29. Relevant paras 11 and 12 of Gold Coin (supra) dealing with income and losses are reproduced herein below:- 11. When the word income is read to include losses as held in Harprasad's case it becomes crystal clear that even in a case where on account of addition of concealed income the returned loss stands reduced and even if the final assessed income is a loss, still penalty was leviable thereon even during the period April 1, 1976 to April1, 2003. Even in the Circular dated July 24, 1976, referred to above, the position was clarified by the Central Board of direct Taxes (in short the CBDT ). It is stated that in a case where on setting off the concealed income against any loss incurred by the Assessee under any other head of income or brought forward from earlier years, the total income is reduced to a figure lower than the concealed income or even to a minus figure the penalty would be imposable because in such a case 'the tax sought to be e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case in which there is no income or there is loss. The same is the case with the expression profits liable to tax . The last expression dividends payable out of such profits can only apply when there are profits and not when there are no profits. It is clear that the Legislature had in mind the case of persons paying dividends beyond a reasonable portion of their income. A rebate was intended to be given to those who kept within the limit and an enhanced rate was to be imposed on those who exceeded it. The law was calculated to reach those persons who did the latter even if they resorted to the device of keeping profits back in one year to earn rebate to pay out the same profits in the next. For this purpose, the profits of the earlier years were deemed to be profits of the succeeding years. So far so good. But the Legislature failed to fit in the law in the scheme of the Indian Income-tax Act under which and to effectuate which the Finance Act is passed. The Legislature used language appropriate to income, and applied the rate to the total income . Obviously, therefore, the law must fail in those cases where there is no total income at all, and the courts cannot be invited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at Assessee is first required to pay tax and then additional tax on the specified income. It was basically this issue which was examined in Elphinstone (supra) wherein Their Lordships considered the object for enacting first para of schedule. This object has nothing to do with penalty provisions. (vi) A particular word occurring in one Section of the Act, having a particular object cannot carry the same meaning when used in different Section of the same Act, which is enacted for different object. In other words, one word occurring in different Sections of the Act can have different meaning, if the object of the two Sections are different and when both operate in different fields. (vii) Question of law involved in this appeal is directly covered by the decision of Gold Coin (supra) and is to be answered accordingly. (viii) Elphinstone (supra), therefore, has no bearing over the view taken in Gold Coin (supra) case and even if it had been taken note of, the decision taken therein would have been the same due to aforementioned distinguishing feature. (ix) The issue involved in Gold Coin (supra) being entirely different than the one involved in Elphinstone (supra), the vi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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