Commissioner of Income Tax vs India United Mills Ltd.

U.T. Shah, J.—u/s 66(1) of the Indian Income Tax Act, 1922, as applied to the Business Profits Tax Act, the Income Tax Appellate Tribunal has referred the following question at the instance of the Revenue :

"Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in reducing the business profits of the assessee-company for the period from January 1, 1948, to December 31, 1948, by a sum of Rs. 76,92,566 which was added by the Income Tax Officer by was of additional gross profit in the Income Tax assessment for the assessment year 1949-50 ?"

The respondent (hereinafter referred to as "the assessee") is a company. The assessment year is 1949-50 and the chargeable accounting period is January 1, 1948, to December 31, 1948.

While framing the assessment under the Indian Income Tax Act, 1922, the Income Tax Officer made a gross profit addition of Rs. 76,92,566 by resorting to proviso to section 13 of that Act. In this way, he computed the business profits of the assessee at Rs. 1,28,46,149.

Thereafter, the Income Tax Officer framed the assessment u/s 12(1) of the Business Profits Tax Act, wherein he worked out the excess profits at Rs. 1,06,67,919. It may be mentioned that in arriving at the excess profits, the Income Tax Officer had started with the business profits of Rs. 1,28,46,149 computed under the Indian Income Tax Act, 1922.

In the Income Tax proceedings the assessee had contested the extra profit addition of Rs. 76,92,566. The Appellate Assistant Commissioner had upheld the said addition. However, in further appeal to the Tribunal, the Tribunal had deleted the said addition from the total income of the assessee.

In the proceedings under the Business Profits Tax Act, the Appellate Assistant Commissioner had upheld the action of the Income Tax Officer. However, in further appeal before the Tribunal, the Tribunal deleted the addition of Rs. 76,92,566. In doing so, it followed its order passed in the Income Tax proceedings.

At the time of hearing of this reference, we have enquired of the Revenue as to whether the Revenue had preferred a reference application against the order of the Tribunal in the Income Tax proceedings and the result thereof. We are told that in spite of the best efforts made by them, they are unable to furnish the said particulars. Under these circumstances, we are of the opinion that the Tribunal was fully justified in following its order in the Income Tax proceedings and deleting Rs. 76,92,566 from the excess profits of the assessee. In this view of the matter, we answer the question in the affirmative and in favour of the assessee.

No order as to costs.