9911796707
TMI Blog2011 (7) TMI 86X X X X Extracts X X X X X X X X Extracts X X X X ..... ancial year ended on 31-3-1997. (b) The appellant carries on business of manufacture of alloy free cuttings and special sheets, black and bright bars, electrical stampings, laminations, strip wound cores, bolts and nuts, rivets and spikes for special purpose machinery etc. (c) One M/s. Powmex Steel Limited was merged with the appellant with effect from 1-10-1995 and become a division of the appellant. (d) Exports were made by the said division under the Advance Licence Scheme of the Government in terms of which raw materials required for the export of high-speed steels could be imported duty-free. Under the said scheme, it was permissible to procure the raw materials for the export product from the local market and subsequently, import the raw materials duty-free on the basis of Advance License granted by the Government. (e) The benefit of making import without payment of customs duty accrues, according to the appellant, only at the time of actual import and if the domestic price of the raw materials is lower than that of the landed cost of the imported materials, it would not be sensible to import the raw materials under the Adva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he profits as per profit and loss account. (k) In the computation of book profit under section 115JA of the Act, the appellant claimed that the profit of Rs. 6,02,91,024 credited to the profit and loss account on account of disposal of fixed assets did not form part of the book profits for the purposes of the said section. (l) In the order dated 31-3-2000 passed under section 143(3) of the Act, the Assessing Officer treated the sum of Rs. 228.34 lakh as the appellant's income on the ground that the appellant had itself shown the same as such in its books of account. The Assessing Officer in computing the book profits under section 115JA did not exclude the sum of Rs. 6,02,91,024 on account of profit on sale of fixed assets on the ground that the Department had preferred an appeal before this Hon'ble Court against the order dated 14-7-1999 of the Tribunal. In the said order, the Assessing Officer also considered rent of Rs. 1.32 lakh and repairs and maintenance of Rs. 2,43,131 in respect of guest house for the purpose of disallowance under section 37(4) of the Act. (m) Being aggrieved, the appellant preferred an appeal before the Commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lf of the appellant, at the very outset, has fairly conceded before us that so far the point No. (i) is concerned, in view of the decision of the Supreme Court in the case Britannia Industries Ltd. v. CIT [2005] 278 ITR 546/148 Taxman 468, the said point should be decided against his client by answering the same in the affirmative. Similarly, according to Mr. Khaitan, so far the point No. (iv) is concerned, in view of the Supreme Court decision in the case Jt. CIT v. Rolta India Ltd. [2011] 330 ITR 470/196 Taxman 549/9 Taxman.com 36 (SC), the aforesaid point should also be answered against his client in the affirmative. 7. Mr. Khaitan has, therefore, restricted his submissions to the point Nos. (ii) and (iii) as indicated above. 8. As regards the point No. (ii) is concerned, Mr. Khaitan contended that as provided in section 28 (iiia) of the Act, it is the profits on sale of a licence granted under the Imports (Control) Order, 1955, made under the Imports and Exports (Control) Act, 1947 (18 of 1947) which is chargeable to Income-tax but not a notional figure given in the accounts which the assessee may ultimately decide not to utilize or sell. Thus, according to Mr. Khaitan, the T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the Customs and Central Excise Duties Drawback Rules, 1971; (iiid) any profit on the transfer of the Duty Entitlement Pass Book Scheme, being the Duty Remission Scheme under the export and import policy formulated and announced under section 5 of the Foreign Trade (Development and Regulation) Act, 1992 (22 of 1992); (iiie) any profit on the transfer of the Duty Free Replenishment Certificate, being the Duty Remission Scheme under the export and import policy formulated and announced under section 5 of the Foreign Trade (Development and Regulation) Act, 1992 (22 of 1992); (iv) the value of any benefit or perquisite, whether convertible into money or not, arising from business or the exercise of a profession; (v) any interest, salary, bonus, commission or remuneration, by whatever name called, due to, or received by, a partner of a firm from such firm: Provided that where any interest, salary, bonus, commission or remuneration, by whatever name called, or any part thereof has not been allowed to be deducted under clause (b) of section 40, the income under this clause shall be adjusted to the extent of the amount not so allowed to be deducted. (va) any sum, whether received or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other than land or goodwill or financial instrument) being demolished, destroyed, discarded or transferred, if the whole of the expenditure on such capital asset has been allowed as a deduction under section 35-AD;] Explanation 1.--[Omitted by the Direct Tax Laws (Amendment) Act, 1987 (4 of 1988) with effect from 1-4-1989. Explanation 2.--Where speculative transactions carried on by an assessee are of such a nature as to constitute a business, the business (hereinafter referred to as "speculation business") shall be deemed to be distinct and separate from any other business." [Emphasis supplied]. 10A. If we compare the language employed in sub-section (iiia) with which we are concerned in the present case with the next two sub-sections, i.e., (iiib) and (iiic) as indicated above, it will appear that while in case of sub-section (iiia), it is the profit on actual sale of licence that will be chargeable to tax but in the cases covered by sub-sections (iiib) or (iiic), cash assistance (by whatever name called) received or receivable by any person against exports or any duty of customs or excise repaid or repayable as drawback to any person against exports are chargeable to tax. Thu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... answer the point No. (ii) in favour of the assessee and in the affirmative. 15. As regards the point No. (iii) formulated by the Division Bench, in order to appreciate the said question, it would be profitable to refer to the provisions contained in section 115JA of the Act which is quoted below: "115JA. Deemed income relating to certain companies.--(1) Notwithstanding anything contained in any other provisions of this Act, where in the case of an assessee, being a company, the total income, as computed under this Act in respect of any previous year relevant to the assessment year commencing on or after the 1st day of April, 1997 [but before the 1st day of April, 2001] (hereafter in this section referred to as the relevant previous year) is less than thirty per cent of its book profit, the total income of such assessee chargeable to tax for the relevant previous year shall be deemed to be an amount equal to thirty per cent of such book profit. (2) Every assessee, being a company, shall, for the purposes of this section prepare its profit and loss account for the relevant previous year in accordance with the provisions of Parts II and III of Schedule VI to the Companies Act, 1956 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d amount was withdrawn) under this Explanation; or (ii) the amount of income to which any of the provisions of Chapter III applies, if any such amount is credited to the profit and loss account; or (iii) the amount of loss brought forward or unabsorbed depreciation, whichever is less as per books of account. Explanation.--For the purposes of this clause,-- (a) the loss shall not include depreciation; (b) the provisions of this clause shall not apply if the amount of loss brought forward or unabsorbed depreciation, is nil; or (iv) the amount of profits derived by an industrial undertaking from the business of generation or generation and distribution of power; or (v) the amount of profits derived by an industrial undertaking located in an industrially backward State or district as referred to in sub-section (4) and sub-section (5) of section 80-IB, for the assessment years such industrial undertaking is eligible to claim a deduction of hundred per cent of the profits and gains under sub-section (4) or sub-section (5) of secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be an amount equal to thirty per cent of such book profit and in such a case, such assessee shall prepare its profit and loss account for the relevant previous year in accordance with the provisions of Parts II and III of Schedule VI to the Companies Act, 1956. Under Clause 2 of Part II of Schedule VI to the Companies Act, where a company receives an amount on account of surrender of leasehold rights, it is bound to disclose in the profit and loss account the said amounts as non-recurring transaction or a transaction of an exceptional nature irrespective of its nature whether it is capital or revenue. Even under Clause 2(b) of Part II of Schedule VI of the Companies Act, the profit and loss accounts shall disclose every material feature including credits or receipts and debits or expenses in respect of non-recurring transaction or transactions of an exceptional nature which includes profits on sale of fixed assets. 17. Thus, it is absurd to suggest that the profit on sale of fixed assets amounting to Rs. 6,02,91,024 did not form part of the book profit under section 115JA of the Income-tax Act, 1961. We, therefore, find that the Tribunal below rightly decided the aforesaid point ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
