Commissioner of Income Tax vs Gujarat State Co-operative Marketing Federation Ltd.

R.S. Garg, J.—At the instance of the Revenue, the Income Tax Appellate Tribunal, Ahmedabad Bench "B", in the matter of Income Tax Appeal No. 1290/Ahd/1992 relating to the assessment year 1990-91 has referred the following question for the opinion of this court:

Whether, the Appellate Tribunal is right in law and in facts in confirming the order passed by the Commissioner of Income Tax (Appeals) deleting additional Income Tax of Rs. 22,42,320 leviable u/s 143(1A) of the Act on the ground that there is loss, additional tax cannot be imposed ?

The short facts for disposal of the present reference are that, the assessee 2 filed a return for the current year 1990-91 on October 23, 1990, declaring loss of Rs. 22,92,36,633, the return was processed u/s 143(1)(a) and as per the adjustment explanatory sheet, the total income was computed at Rs. 3,58,822 and additional tax was calculated on prima facie additions of Rs. 2,63,24,652. The assessee claimed deduction u/s 80P for Rs. 2,58,21,400 on account of the profits from members. The Assessing Officer made certain adjustments and observed that the net income for tax would be Rs. 2,59,62,784 and the assessee would be liable to pay additional tax at the rate of 20 per cent. The matter ultimately went to the Tribunal, which, after placing its reliance on the judgment of the Delhi High Court in the case of Modi Cement Ltd. v. Union of India [1992] 193 ITR 91, held that the assessee was entitled to the deductions and the additional Income Tax could not be levied.

The Supreme Court heard the said matter along with the appeal filed 3 by the Assistant Commissioner of Income Tax against Assistant Commissioner of Income Tax Vs. J.K. Synthetics Ltd., . The Supreme Court has observed that Section 143(1)(a) provided a certain benefit, but after Sub-section (1A) was amended by the Finance Act, 1993 with effect from April 1, 1989, which was the date upon which Sub-section (1A) has been introduced into the Act, it would be clear from the substituted Sub-section (1A) that even where loss declared by an assessee had been reduced by reason of adjustments made under Sub-section (1)(a), the provisions of Sub-section (1A) would apply. The court further observed that it being a retrospective amendment, they could cover the controversy in the appeal and, therefore, the appeal had to be decided in favour of the Revenue.

4 The judgment in the matter of Modi Cement [1992] 193 ITR 91 , on which the Tribunal had placed its reliance had been overruled by the larger Bench of the Supreme Court.

5 In view of the judgment of the Supreme Court in the matter of Asst. Assistant Commissioner of Income Tax Vs. J.K. Synthetics Ltd., , the order passed by the Tribunal is set aside and the reference is decided in favour of the Revenue and against the assessee. The reference stands disposed of. No costs.