Aluminium Industries Ltd. vs Deputy Commissioner of Income Tax (Assessment) and Another

G. Sivarajan, J.—The petitioner in both the writ petitions is the Aluminium Industries Limited, Kundara, an assessee on the files of the Deputy Commissioner of Income Tax (Assessment), Special Range, Trivandrum. For the assessment years 1989-90 and 1990-91, the petitioner filed returns in respect of its income under the Income Tax Act, 1961, declaring total losses of Rs. 11,92,81,260 and Rs. 11,39,10,709, respectively, as worked out in the statement marked as exhibit P-1 in both the cases. The petitioner also claimed a carry forward of the losses. The first respondent-assessing authority issued intimation u/s 143(1)(a) of the Act, whereby he determined the net losses for the aforesaid two years at Rs. 10,73,86,330 and Rs. 11,27,80,128. The difference in the losses returned by the petitioner and the losses assessed by the assessing authority is due to the disallowances made u/s 43B of the Act in the purported exercise of its power to make prima facie adjustments u/s 143(1)(a) of the Act. The assessing authority by exhibit P-3 proceedings rectified the mistake in the earlier order for 1989-90 and determined the net loss at Rs. 11,70,57,358 u/s 143(1A) of the Act. In the said order, the assessing authority also levied an additional tax amounting to Rs. 2,33,509. Similarly, for the assessment year 1990-91, the assessing authority in exhibit P-2 intimation also levied an additional tax amounting to Rs. 1,26,428 u/s 143(1A) of the Act. Aggrieved by the order levying additional tax for the assessment years 1989-90 and 1990-91, the petitioner preferred revision petitions before the Commissioner u/s 264 of the Act. In these original petitions, the petitioner has prayed for issuance of a writ of certiorari quashing exhibits P-2 and P-3 in so far as they relate to the levy of additional tax and also prayed for a writ of mandamus directing the respondents not to levy additional tax u/s 143(1A) of the Act. In both these cases, the petitioner had filed petitions to raise additional grounds, This is for the reason that Clause (a) of Sub-section (1A) has been substituted with effect from April 1, 1989, to make the provision for levy of additional tax applicable to cases of loss also. The petitioner has challenged the retrospective amendment of Section 143(1A) especially Sub-clause (B) of Clause (a) as void, inoperative and unconstitutional in so far as it levies additional tax on assessed losses after adjustments. The petitioner has, by way of amendment, sought additional relief for quashing Section 143(1A) and in particular Sub-clause (B) of Clause (a) to the extent it levies additional Income Tax on the loss declared by the assessee and also for a declaration that Section 143(1A)(a)(B) is ultra vires the provisions of Articles 14, 19 and 265 of the Constitution of India.

According to the petitioner, in a case where a loss return is filed and even after the prima facie adjustments as contemplated u/s 143(1)(a) of the Act where the resultant figure is again a loss, there is no question of levy of additional tax at all. This contention of learned counsel for the petitioner has no force in view of the amendment made to Section 143(1A) of the Act which specifically provides for levy of additional tax even in a case of loss also. The correctness or otherwise of the prima facie adjustments made by the assessing authority is not in issue in these writ petitions. It is conceded by learned counsel for the petitioner and learned senior standing counsel for taxes that the question canvassed herein is covered by a decision of this court in Kerala State Coir Corporation Ltd. Vs. Union of India (UOI) and Others, . This court in the said decision has held that the provision for levy of additional tax even where the net result is a loss after carrying out adjustments is intended to prevent evasion of tax arid that the amendment of Section 143(1A) by the Finance Act, 1993, levying additional tax with retrospective effect from April 1, 1989, does not violate Articles 14 and 265 of the Constitution.

In view of the said decision of this court, I do not find any merit in the contentions taken in these original petitions. The original petitions are dismissed. But, in the circumstances, there will be no order as to costs.