TMI Blog2010 (1) TMI 665X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of book profit in terms of section 115JA of the Act - in the present case that the appellant had really incurred losses during the period in question, it was never liable to deposit advance Income-tax - Decided in favout of the assessee - 179 OF 2002 - - - Dated:- 18-1-2010 - SUDHIR KUMAR KATRIAR AND KISHORE KUMAR MANDAL, JJ. Ajay Rastogi, Harshwardhan Prasad for the Appellant. Ms. Archana Sinha for the Respondent. JUDGMENT Sudhir Kumar Katriar, J. The assessee has preferred this appeal under section 260A of the Income-tax Act, 1961 (hereinafter referred to as the Act), and is aggrieved by the order dated 7-11-2001, passed by the Income-tax Appellate Tribunal, Patna Bench, Patna, in ITA No. 334 (Pat.)/2001 (Bihar State Forest Development Corporation Ltd., Patna v. Joint Commissioner of Income-tax, Special Range-I, Patna), whereby its appeal has been dismissed. It has been held by the Tribunal that the assessee was liable to deposit advance tax in terms of section 207 of the Act, even though determination of book profit in terms of section 115JA is deemed as book profit. The advance tax has, therefore, been directed to be recovered with interest. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e tax in the present context was for the first time introduced by the Finance Act, 2000, and continued in the successor Acts. The Finance Act, 1998, is applicable to the present case and such a provision is conspicuous by its absence. He relies on the following reported judgments: (i) Division Bench's judgment of the Karnataka High Court in Kwality Biscuits Ltd. v. CIT [2000] 243 ITR 519/110 Taxman 47, and upheld by the Supreme Court by its order in CIT v. Kwality Biscuits Ltd. [2006] 284 ITR 434/155 Taxman 658; (ii) Division Bench's judgment of the Bombay High Court in Snowcem India Ltd. v. Dy. CIT [2009] 313 ITR 170/178 Taxman 478; (iii) Division Bench's judgment of the Gujarat High Court in Dy. CIT v. Associated Crown Closures (P.) Ltd. [2009] 315 ITR 291; (iv) Division Bench's judgment of the Kerala High Court in CIT v. Nilgiri Tea Estate Ltd. [2009] 312 ITR 161/183 Taxman 194. 5. Learned counsel for the respondents has supported the impugned order. She submits that section 115JA, read with section 207 of the Act enjoins such companies to deposit the advance tax computed on the basis of returns of the previous year. In her submission, any effort to read the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at a company's balance-sheet showing losses is subject to scrutiny of the authorities under the Act. It further follows that in case of such balance-sheet showing losses, the provision relating to determination of book profit in terms of section 115JA of the Act is automatically attracted. 6.1 This can lead to two situations in the alternative. Such determination of book profit may lead to the conclusion that the company had deemed book profit, then it is liable to payment of tax in which case it was liable to deposit advance tax as per the provisions of section 207 of the Act. Failure to deposit advance tax in accordance with law will incur the penalty or penalties contemplated by the Act. 6.2 Such determination of book profit in the alternative may in other cases lead to the conclusion that the company has suffered losses during that period in which case there cannot be the liability to deposit advance tax. Any insistence on deposit of advance tax in such a situation would tantamount to realisation of Income-tax on losses which militates against the concept of taxation and would be wholly impermissible in law. 7. The next aspect of the matter is that the advance tax has to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns, grave though some of them may be. But we do hold that an order which is void may be directly and collaterally challenged in legal proceedings. An order is null and void if the statute clothing the administrative Tribunal with power conditions it with the obligation to hear, expressly or by implication. Beyond doubt, an order which infringes a fundamental freedom passed in violation of the audi alteram partem rule is a nullity. When a competent court holds such official act or order invalid, or sets it aside, it operates from nativity, i.e. the impugned act or orders was never valid. The French jurists call it Linexistence or outlawed order (Brown and Garner: French Administrative Law, p. 127) and could not found the ground for a prosecution. On this limited ratio the appellant is entitled to an acquittal. We allow his appeal." [Emphasis supplied] We are mindful of the position that the case was with respect to infringement of "a fundamental freedom...", whereas the instant case on facts is of a different nature. As is evident from the under-lined portion, the Supreme Court has struck a note of caution, and did not express its final opinion with respect to problems in public l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant. Law is well-settled that refusal to grant leave to appeal does not in law mean that the order impugned therein was upheld by the Supreme Court. Leave to appeal may be declined on various grounds, for example, limitation, non-payment of Court-fee, the case in hand may not be a fit case on facts to decide the legal issues and may have to await an appropriate case. The judgments on this point have been summarised by one of us (S.K. Katriar, J.), in the judgment dated 23-7-2004, in the case of Pabittar Singh alias Ram Pabittar Singh v. State of Bihar [2004 (4) PLJR 229]. The relevant portions of the judgment are reproduced hereinbelow: "4. The House of Lords in its judgment reported in (1985) 2 All E.R. 97 (Wilson v. Colchester Justices) held that grant or refusal of leave to appeal by a superior court does not by itself imply disapproval or approval of judgment below. The relevant portion of the speech of Lord Roskill is set out hereinbelow for the facility of quick reference: "Seemingly the Divisional court felt that this refusal indicated at least implied approval of the decision which it had been unsuccessfully sought to impugn. Counsel surprised your Lordships by sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y this Court was not a speaking one, it is not correct to assume that this Court had necessarily decided implicity all the questions in relation to the merits of the award, which was under challenge before this Court in the special leave petition" ..... ..... ..... ... "8. It is not the policy of this Court to entertain special leave petitions and grant leave under Article 136 of the Constitution save in those cases where some substantial question of law of general or public importance is involved or there is manifest injustice resulting from the impugned order or judgment. The dismissal of a special petition in limine by a non-speaking order does not therefore justify any inference that by necessary implication the contentions raised in the special leave petition on the merits of the case have been rejected by this Court. It may also be observed that having regard to the very heavy backlog of work in this Court and the necessity to restrict the intake of fresh cases by strictly following the criteria aforementioned..." "6. In Rup Diamonds v. Union of India [1989] 2 S.C.C. 356: AIR 1989 S.C. 674] the Supreme Court declared the law by stating that it cannot be said that the mere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s led to the conclusion that the impugned order is correct in law. Had the petitioners approached this Court in time and not allowed the matter to progress before the learned appellate authority, this Court may perhaps have disposed it of differently..." 14. The Supreme Court dismissed the Department's appeal by a brief, non-speaking order which is indicative of the position that the Supreme Court had declined to go into the merits of the matter and thought it fit to dismiss the appeal in limine. We are mindful of the position that the order of the Supreme Court does state the nomenclature of Civil Appeal. We are of the view that the same does not in law change the legal position. We are equally mindful of the position that the Bombay High Court has in its judgment in Snowcem India Ltd.'s case (supra) considered this aspect of the matter, and come to the conclusion that the nomenclature Civil Appeal per se means that leave to appeal was granted, and the Civil Appeal was dismissed, leading to the conclusion that the judgment of the High Court has been upheld on merits. We are unable to agree with the view expressed by the Bombay High Court. 15. To conclude this aspect of the mat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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