TMI Blog1986 (3) TMI 42X X X X Extracts X X X X X X X X Extracts X X X X ..... e for the accounting year 1983 was Rs. 1,32,52,000 in the estimate of advance tax filed in the year. The petitioner has submitted on June 26, 1984, its income-tax return (under section 139(1) of the Income-tax Act) showing a loss of Rs. 75,84,532 for the assessment year 1984-85, the corresponding accounting year (being the calendar year) 1983. The above position was made clear in the statement of accounts of computation of total income which is annexed as annexure A to the petition. Accordingly, the petitioner addressed to the respondent a letter dated July 20, 1984. In the said letter, the above position was made clear and it was pointed out that income-tax payable thereon comes to rupees nil whereas the petitioner has paid income-tax to the tune of Rs. 74,79,006 as stated above and requested that the total amount refundable to the petitioner-assessee came to Rs. 74,79,006. Thus, the petitioner requested the respondent to release the refund order under section 141 A of the Income-tax Act. A copy of the said letter is annexed as annexure C to the petition. The submission of the petitioner is that the Income-tax Officer was under an obligation to make a provisional assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luded in the valuation of the closing stock was deducted, i.e., the amount of Rs. 1,24,94,085 was deducted and the remaining amount of Rs. 1,53,60,177 was debited to the profit and loss account. Similarly, in the statement with regard to excise duty, it was pointed out that the total excise duty that was paid was Rs. 5,25,68,931 out of which the excise duty included in the valuation of the closing stock of finished goods at various depots, i. e., Rs. 29,80,439, was deducted and the remaining amount of excise duty paid, namely, Rs. 4,95,88,492, was debited to the profit and loss account. Copy of the said letter is annexed as annexure F to the petition. The respondent was under an obligation to pass a provisional refund order under section 141A of the Act within six months from the date of filing of the return, but as nothing was heard from the respondent Income-tax Officer, though the period of six months expired, the petitioner's chartered accountant called on the Income-tax Officer on May 14, 1985, and requested him to send the order under section 141A of the Act on or before June 30, 1985. The respondent by his letter dated July 7,1985 (annexure-H), stated that the order un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as pointed out that the whole of the excise duty and the import duty as paid during the accounting year under consideration will be an allowable deduction and in that very connection, he inquired as to whether the petitioner-company has paid the excise duty more than the amount of Rs. 4,87,27,724 as debited to the profit and loss account and farther inquired whether the amount of deduction in the statement of income has not been included in the aforesaid statement. Similarly, in the matter of import duty, the customs duty of Rs. 1,24,94,085 sought as deduction in the statement of income is not included in the import duty as cost of raw materials and 1986] LAKHANPAL NATIONAL LTD. V. I. T. .O (Guj.) debited to the profit and loss account. Further, The stated that these two amounts, namely, Rs. 1,24,94,085 and Rs. 29,80,439, which are included as cost element in the closing statement as per the established method of accounting shall be automatically allowed in the subsequent assessment year as part of the opening stock. According to him, the said deduction cannot be allowed in view of the language of section 43B of the Act. The respondent has filed a reply-affidavit in this petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d or superannuation fund or gratuity fund or any other fund for the welfare of employees, shall be allowed (irrespective of the previous year in which the liability to pay such sum was incurred by the assessee according to the method of accounting regularly employed by him) only in computing the income referred to in section 28 of the previous year in which such sum is actually paid by him. Explanation.-For the removal of doubts, it is hereby declared that where a deduction in respect of any sum referred to in clause (a) or clause (b) of this section is allowed in computing the income referred to in section 28 of the previous year (being a previous year relevant to the assessment year commencing on the 1st day of April, 1983, or any earlier assessment year) in which the liability to pay such sum was incurred by the assessee, the assessee shall not be entitled to any deduction under this section in respect of such sum in computing the income of the previous year in which the sum is actually paid by him." On a perusal of the language of section 43B, it is clear that it opens with a non-obstante clause which means that it controls the operation of other provisions of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessment of the closing stock of the year 1983 will be in the subsequent previous year which would be in 1984 and the relevant assessment year would be 1985-86. It is true that at the time of making the assessment for the assessment year 1985-86, the respondent will have to be careful in seeing that the petitioner does not claim further deduction for the sum for which deduction is already given. In this case, it is not the contention of the respondent that any sum payable under clause (a) of section 43B of the Act was at any time claimed by way of deduction in any previous year prior to 1983. In fact, the raw materials were imported and the goods were manufactured in the year 1983, and they were cleared also in the year 1983. Therefore, their liability accrued in the year 1983, and they also paid the sum in the year 1983. In that view of the matter, the Explanation to section 43B of the Act is also not attracted in the present case. Mr. J. P. Shah, the learned advocate appearing for the petitioner, has invited our attention to the computation of the total income for the assessment year 1985-86 which is annexed to the petition as annexure-L, wherein it has been pointed out th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sputed that the said goods in the closing stock were either imported or manufactured in the accounting year 1983 and as per the principles of the mercantile method of accounting, the expenditure incurred by way of import duty as well as excise duty would be a permissible deduction in the year 1983, and particularly when the payment thereof is made under section 43B of the Act. Under the circumstances, we do not find any merit in any of the contentions raised by Mr. Shelat, and for the same reasons we accept the contentions raised by Mr. J. P. Shah, appearing for the petitioner-assessee. Coming to the point of making provisional assessment of the petitioner-assessee under section 141A of the Income-tax Act, it is clear that this provision is a mandatory provision inasmuch as the section provides that the Income-tax Officer shall make in a summary manner within six months from the date of submission of the return, a provisional assessment of the sum refundable to the assessee, provided the Income-tax Officer is of the opinion that the regular assessment of the assessee is not likely to be made within six months from the date of furnishing of the return. It is not the case of the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ake a new provision in the Income-tax Act enabling taxpayers to claim a refund of tax on a provisional assessment made on the basis of the return of income and the accounts and documents accompanying it. Any refund of tax on the basis of the provisional assessment will be deemed to have been issued in respect of the regular assessment when such assessment is completed." In the case of Swadeshi Cotton Mills Co. Ltd. v. ITO [1978] 112 ITR 1038 (All), it has been held that section 141A(1) provides that where return has been furnished under section 139 and the assessee claims that the advance tax already paid by him exceeds the tax payable on the return, the Income-tax Officer may make a provisional assessment of the tax refundable to the assessee, if in the opinion of the Income-tax Officer, the regular assessment of the assessee is likely to be delayed, and if no assessment has been made within six months, the Income-tax Officer is bound to make a provisional assessment of the tax refundable. Under the circumstances, we are of the opinion that in this case, the respondent Income-tax Officer has failed in discharging his statutory duty in making the provisional assessment under sect ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
