9911796707
TMI Blog2000 (5) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... mpanies; (Profits) Surtax Act, 1964 (hereinafter referred to as "the Act") for the assessment year 1987-88. Counter and rejoinder affidavits have been exchanged and we have heard Shri V.B. Upadhyaya, senior advocate, and Shri Shambhu Chopra, for the petitioner, and learned Departmental counsel for the Revenue. The petitioner is a public limited company incorporated under the Indian Companies Act. The scheme of the Act is that surtax is payable on the chargeable profits of the previous year as exceed the statutory deduction at the rates specified in the Third Schedule. The First Schedule to the Act lays down the rules for computing the chargeable profits and the starting point for computing the chargeable profits of the previous year is th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee equal instalments of Rs.85,000 each in June, September and December, 1986, as prescribed under the Act. The petitioner filed surtax return on September 29, 1987, declaring nil chargeable profits. However, respondent No.2 the Deputy Commissioner of Income-tax, Ghaziabad, made an assessment at Rs.65,08,111 raising a surtax demand of Rs.17,82,838 and also levying interest under section 7C at Rs.6,49,315 vide order dated February 21, 1990, annexure A to the writ petition. The petitioner moved an application for waiver of interest under rule 13C before respondent No. 2, vide annexure B to the writ petition. However, respondent No. 2 waived the interest for the period beyond one year of the filing of the return, vide annexure C to the writ pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... including therein an amount of unpaid sales tax aggregating to Rs.1,30,65,749 which was not due for payment under the U.P. Sales Tax Act. It is alleged in paragraph 15 of the writ petition that although the amount of sales tax outstanding was not payable by the close of the previous year under the Sales Tax Act, the petitioner was advised that keeping in view the amendment proposed by the Finance Bill, 1989, to insert Explanation 2 to section 43B, the amount of sales tax outstanding was not allowable under section 43B of the Income-tax Act. It was brought to the notice of respondent No. 2 that the proviso to section 43B was introduced by the Finance Act, 1987, with effect from April 1, 1988, to provide that if statutory dues including sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to stop this mischief. However, section 43B created a difficulty in respect of taxpayers who had paid sales tax within the statutory period although the payment so made did not fall in the relevant previous year. This was because sales tax collected pertained to the last quarter of the relevant accounting year and it could be paid only in the next quarter which fell within the next accounting year. Hence, even when the sales tax had in fact been paid by the assessee within the statutory period prescribed, those assessees were prevented from claiming the deduction. This was not intended by section 43B, and, hence, the first proviso was inserted by the Finance Act, 1987, in order to eliminate the hardship to such assessees. The question ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (P.) Ltd.'s case [1997] 224 ITR 677, no interest is payable under the Companies Profits (Surtax) Act, in the present case. In the present case it was held that the delay in completion of the assessment was not on the part of the petitioner. The petitioner had submitted before respondent No.1 that had the petitioner not offered the amount of outstanding sales tax in the first revised return of income filed on May 5, 1988 (which the petitioner was under law not obliged to do), there would have been no shortfall in the payment of advance tax vis-a-vis the assessed tax. If the voluntary surrender of sales tax payable is excluded from the assessed income, which under the law as interpreted in Allied Motors (P.) Ltd.'s case [1997] 224 ITR 677 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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