TMI Blog2000 (2) TMI 184X X X X Extracts X X X X X X X X Extracts X X X X ..... ment allowance should be carried forward unchanged since income has been computed on a notional basis by applying provisions of section 115J(1). The Assessing Officer on the other hand held that in view of the specific provisions of section 115J(2) of the Act, the determination of carry forward of unabsorbed depreciation and unabsorbed investment allowance would be governed by the normal provisions of computation of income irrespective of the deeming fiction contained under section 115J(1). The CIT(A) for the three assessment years involved held that the carry forward unabsorbed depreciation and unabsorbed investment allowance etc. should be restricted only to the extent of amount which has not been absorbed for bringing the total income to the level of 30 per cent of book profit. The Revenue as well as the assessee both are aggrieved against the view taken by the ld. CIT(A). 3. Before adjudicating upon the point in issue involved, the relevant facts may be briefly indicated. For assessment year 1988-89 the assessee filed a return of income on 30-6-1988 declaring total income at Rs. 40,21,458 by invoking the provisions of section 115J of the Act. Subsequently, the return has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed forward without any change. However, the ld. counsel for the assessee company during the course of arguments supported the order of the CIT(A) and did not press the ground raised in the appeals of the assessee. The ld. counsel pleaded that the taxable income adopted for the purpose of levy of tax under sub-section (1) of section 115J should be deemed as available for the purposes of setting off unabsorbed losses or unadjusted allowances in that assessment year and to that extent benefit of set off should be allowed to the assessee company. The ld. counsel further submitted that the stand taken by the Revenue would result in double taxation inasmuch as on the amount of income assessed under section 115J(1), the assessee would be denied the benefit of set off of the unabsorbed depreciation, losses etc. In support of his contentions the ld. counsel heavily relied upon the decision of Gauhati High Court in the case of Lallacherra Tea Co. (P.) Ltd. v. CIT [1999] 239 ITR 611. Further reliance is placed on the following decisions of the Tribunal: (i) Shriram Investments Ltd. v. Asstt. CIT [1996] 59 ITD 570 (Mad.) (ii) Singh Alloys Steel Ltd. v. Dy. CIT [1995] 55 ITD 13 (Cal.) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of their book profits, the total income of such companies chargeable to income-tax for the relevant previous year is treated as an amount equal to 30 per cent of such book profits and is taxed accordingly. At this stage, it will be useful to reproduce sub-section (1) of section 115J which reads as under: Section 115J(1): Not withstanding anything contained in any other provision of this Act, where in the case of an assessee being a company (other than a company engaged in the business of generation or distribution of electricity), the total income, as computed under this Act in respect of any previous year relevant to the assessment year commencing on or after the 1st day of April, 1988 (but before the 1st day of April, 1991) (hereafter in this section referred to as the relevant previous year), is less than thirty per cent of its book profit, the total income of such assessee chargeable to tax for the relevant previous year shall be deemed to be an amount equal to thirty per cent of such book profit. Explanation appended to the section provides for certain adjustments by way of adding amounts and granting deductions for computing the book profit for the purposes of section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dication of the rights of the parties in the action." It also says as respecting assessment the term implies judgment and decision after weighing the facts. A somewhat similar view has been expressed by their Lordships of the Supreme Court while considering the meaning of word 'determination' in the context of the expression used in article 136 of the Constitution in case of Jaswant Sugar Mills Ltd. v. Lakshmi Chand AIR 1963 SC 677. In the context, it was held that the expression "determination" signifies an effective expression of opinion which ends a controversy or a dispute by some authority to whom it is submitted under a valid law for disposal. The Hon'ble Gujarat High Court in Mohit Shantilal Shah v. CIT [2000] 241 ITR 28, while construing the word "determination" occurring in section 87(m) of the Kar Vivad Samadhan Scheme, 1998 referred to the above mentioned judgment of the Supreme Court in the case of Jaswant Sugar Mills Ltd. and held that the word "determination" has the necessary ingredients of conscious decision making by the Competent authority after weighing the facts. In view of the aforesaid decisions of the Hon'ble Gujarat High Court as well as Hon'ble Suprem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uide to construction. However difficult it may be to believe that Parliament ever intended the consequences of a literal interpretation, we can only take the intention of Parliament from the words which they have used in the Act and therefore the question is whether these words are capable of a more limited construction. If not, then we must apply them as they stand, however unreasonable or unjust the consequences and however strongly we may suspect that this was not the real intention of Parliament.' At this stage it would be relevant to mention that the special provisions relating to zero tax companies as enacted under section 115J were in operation for three assessment years viz. Assessment years 1988-89 to 1990-91 and with effect from 1-4-1997 new provisions were enacted by inserting section 115JA by the Finance (No. 2) Act, 1996 w.e.f. 1-4-1997. The scheme for levy of minimum tax on zero tax companies as enacted in section 115JA contains some modifications over the earlier scheme enacted in section 115J. However, the broad parameters of the new scheme viz. treating 30 per cent of the book profit as deemed total income for levy of tax remain the same. Thus sub-section (1) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f tax on zero tax companies. Repelling the contention of double taxation, their Lordships have observed that what is being taxed is income determined on the basis prescribed under the said impugned provision and there is no provision to re-tax the same income as such. It is further pointed out that in view of the judgment of the Supreme Court in Jain Bros. v. Union of India [1970] 77 ITR 107 double taxation per se would not render an otherwise valid provision, as invalid. 6.5 The contrary decision of Gauhati High Court in the case of Lallacherra Tea Co. (P.) Ltd. relied by the ld. counsel does not refer to the earlier decision of Andhra Pradesh High Court in the case of Suryalatha Spg. Mills Ltd. The Andhra Pradesh High Court decision contains a detailed analysis of the statutory provisions contained in section 115J and has cited the various judgments of the Apex Court in support of the view taken. We would therefore with great respect to the Hon'ble Judges of Gauhati High Court, prefer the view taken by the Hon'ble Andhra Pradesh High Court. 6.6 We have also considered the opinion of the eminent jurists namely Shri N.A. Palkhiwala and Shri P.N. Bhagwati, relied upon by the lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any case the Constitutional vires of section 115J has already been upheld by Delhi High Court in National Thermal Power Corpn. Ltd. v. Union of India [1991] 192 ITR 187 and Andhra Pradesh High Court in Suryalatha Spg. Mills Ltd. In the various judicial pronouncements of the Apex Court, cited earlier, it has been held that fiscal legislation should be viewed with greater latitude than laws touching civil rights such as freedom of speech, religion etc. There may be crudities and inequities in complicated experimental economical legislation but on that account alone it cannot be struck down as invalid. R.K. Garg's case. 6.9 Having regard to the aforesaid discussion we hold that only such amounts of unabsorbed depreciation, investment allowances etc. can be carried forward to the subsequent year or years as would have been determined under the regular provisions of the I.T. Act. We would therefore uphold the view taken by the Assessing Officer for the three assessment years involved here and allow the appeals of the Revenue on this issue. The common ground relating to carry forward of unabsorbed depreciation, unabsorbed investment allowance etc. is thus decided in favour of the Reven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Respectfully following the aforesaid decisions of the Supreme Court we therefore uphold the view of the learned CIT(A) and dismiss this ground of appeal. 9. In the three Departmental appeals there is a common ground regarding disallowance made under rule 6B in respect of presentation articles. The disallowances have been deleted by the CIT(A) on the ground that the presentation articles were not meant for advertisement and are not covered under rule 6B. Respectfully following the decision of Madras High Court in S.K.S. Rajamani Nadar v. CIT [1995] 216 ITR 696 as well as Ahmedabad Bench of the Tribunal in Asstt. CIT v. Bell Ceramics Ltd. [1999] 69 ITD 156 we uphold the finding of the CIT(A) and dismiss the common ground in the Revenue's appeals. ITA No. 95O/Ahd/94 Departmental appeal for assessment year 1990-91. 10. In this appeal ground No. 3 taken by the Revenue is directed against the adjustment of Rs. 3,87,438 being depreciation at higher rate deducted for the purposes of computing the book profits as per Explanation to section 115J. The Assessing Officer has discussed the issue vide para 2 of the assessment order. In the notes to the accounts the auditors have pointed out ..... X X X X Extracts X X X X X X X X Extracts X X X X
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