9911796707
TMI Blog2003 (4) TMI 39X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment year is 1991-92, the relevant accounting period ended March 31, 1991. For the assessment year 1991-92, the assessee filed a return on December 27, 1991, disclosing a total income/loss of Rs. 2,74,33,870. The Assessing Officer processed the same under section 143(1)(a) of the Act and sent an intimation dated January 17, 1992 (annexure A). In the said intimation, the Assessing Officer had made a prima facie adjustment and brought down the loss to Rs. 2,48,40,672. The Assessing Officer also levied additional tax of Rs. 2,38,574 under section 143(1A) of the Act. The details of the adjustment are given in the explanatory sheet. The enclosed statement shows that the assessee had claimed depreciation on block assets of Rs. 1,35,95,225 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n for levy of additional income-tax even where the net result of the prima facie adjustment is a loss is intended to prevent evasion of tax and levy of additional tax does not violate the Constitution, set aside the order of the first appellate authority and restored the order of the Assessing Officer levying additional income-tax. It is against this order of the Tribunal, the appellant has filed this appeal. This court while admitting the appeal ordered notice on the following questions of law. "1. Whether, on the facts and in the circumstances of the case, additional tax under section 143(1A) was leviable especially since the levy has been made with respect to redetermination of depreciation governed by the provisions of section 32(2) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 143(1A) was inserted only to prevent evasion of tax and therefore the additional tax under the said section can be levied only where as a result of the prima facie adjustment the tax liability has been increased. The senior counsel submits that under the scheme of the Act loss and depreciation are dealt with separately and they are mutually exclusive. The senior counsel, in support of the above contention, has referred to the provisions of sections 32(2), 32A(3), 72, 79 and section 80 and submitted that all through depreciation and loss are dealt with separately. The senior counsel also submitted that section 143(1A) is not attracted to a case where the prima facie adjustment is made in respect of depreciation claimed. The senior c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... depreciation claimed. By virtue of the amendment made to section 32, for the assessment year 1991-92, the appellant was entitled to claim deduction of only 75 per cent. of the normal depreciation and the appellant without considering the amendment claimed full depreciation in the return. Thus, the Assessing Officer was entitled to make prima facie adjustment by bringing down the claim to 75 per cent. of the amount claimed in the return. As such there is no illegality in the adjustment. The contention of the appellant is that section 143(1A) is not attracted in this case and to that extent the intimation demanding additional tax is bad. Let us examine the correctness of the said contention. Section 143(1A) of the Act as it originally stoo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... additional income-tax in the intimation to be sent under sub-clause (i) of clause (a) of sub-section (1); (B) in a case where the loss so declared is reduced under sub-clause (ii) of this clause or the aforesaid adjustments have the effect of converting that loss into income, calculate a sum (hereinafter referred to as additional income-tax) equal to twenty per cent. of the tax that would have been chargeable on the amount of the adjustments as if it had been the total income of such person and specify the additional income-tax so calculated in the intimation to be sent under sub-clause (i) of clause (a) of sub-section (1)." It is evident from the provisions of section 143(1A) as it stood before the amendment that the said provision is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 32(2) of the Act and submitted that the deduction of depreciation in the computation of total income arises only in a case where there is income by way of profit and since there is no positive income during the previous year relevant to the assessment year there is no question of depreciation entering in the computation of total income and consequently there is no question of evasion of tax which is the very basis for introduction of section 143(1A). The. senior counsel also brought to our notice that in the assessment order (annexure B) passed under section 143 of the Act the Assessing Officer has treated loss and depreciation separately. As already noted the appellant had contended before the Assessing Officer that a loss return ..... X X X X Extracts X X X X X X X X Extracts X X X X
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