TMI Blog2005 (1) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee to furnish a bank guarantee. It has further been found that the assessee had provided for such liability in its books as reflected by its profit and loss account and the balance-sheet, which were maintained in accordance with the statutory requirement under the Companies Act – It is not possible to state that the Appellate Tribunal had committed any error in law - - - - - Dated:- 19-1-2005 - Judge(s) : D. A. MEHTA., MS. H. N. DEVANI. JUDGMENT The judgment of the court was delivered by D. A. Mehta J.- The Income-tax Appellate Tribunal, Ahmedabad Bench "C", has referred the following question under section 256(1) of the Income-tax Act, 1961 (the Act), at the instance of the Commissioner of Income-tax, Surat: "Whether, on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held by the Tribunal that the excise duty liability was a statutory liability. That the said liability had accrued in the relevant accounting year. That it was an ascertained liability although the same was disputed. The contention raised on behalf of the Revenue to the effect that there was no liability at all in the relevant accounting year was not accepted. Mr. B.B. Naik, learned standing counsel appearing on behalf of the applicant-Revenue, submitted that the question referred to the court was required to be answered in light of the unreported decision rendered by this court in the case of CIT v. Aruna Mills Limited on February 15, 2001, in Income-tax Reference No. 121 of 1989. It was submitted by Mr. Naik that a liability which was b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of CIT v. Bharat Carbon and Ribbon Manufacturing Co. P. Ltd. [1999] 239 ITR 505 the Tribunal had rightly held that the excise duty liability was an ascertained liability and could not be included for the purposes of working out tax liability under section 115J of the Act. Responding to the submission made on behalf of the assessee, Mr. Naik submitted that in the alternative the matter be restored to the file of the Tribunal for the purposes of ascertaining the facts, in the absence of any clear finding recorded by the Tribunal on this aspect. The said submissions were resisted by Mr. Shah. Section 115J, which is a special provision relating to certain companies as is relevant for the present reads as under: "115J. Special provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as reduced by,-" On a plain reading of the provision it is apparent that in the case of a company, whose total income as computed under the provisions of the Act for any assessment year commencing on or after April 1, 1988, is less than thirty per cent, of the book profit, the total income that would be chargeable to tax in the case of such an assessee shall be deemed to be an amount equal to thirty per cent, of such book profit. However, the term "book profit" which is defined by the Explanation to sub-section (1) of section 115J of the Act gives rise to the controversy. "Book profit" means the net profit as shown in the profit and loss account for the relevant previous year prepared in accordance with the provisions of Parts II and III ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shing or deduction of the said liability would not be a ground for holding that liability to pay the excise duty as per the demand notice was not incurred." The Tribunal has found after perusal of the annual report and the audited accounts that the report by the chartered accountants is not qualified; that the profit and loss account and the balance-sheet have been prepared in accordance with the provisions of the Parts II and III of the Sixth Schedule to the Companies Act, 1956. It has further been found that "the assessee had received notices in respect of the amount in question from the Excise Department. Bank guarantee was demanded from the assessee in respect of that amount." The Tribunal has further held that though the excise duty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ." Therefore, it is clear from an overall reading of the impugned order of the Tribunal that before the Tribunal it was an admitted position between the parties that the assessee was in receipt of demand notices from the Excise Department, and that the liability which the assessee was required to discharge by virtue of such demand notice was disputed. If that were not so, there was no necessity to call upon the assessee to furnish a bank guarantee. It has further been found that the assessee had provided for such liability in its books as reflected by its profit and loss account and the balance-sheet, which were maintained in accordance with the statutory requirement under the Companies Act. In the circumstances, it is not possible to sta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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