2004 Commissioner of Income Tax-I,Chennai.Appellantv.M/s. Vijayashree Finance and Investment Co. Pvt. Ltd.,Chennai v. Commissioner of Income Tax
Case at a glance
Outcome
Dismissed
The appeal is dismissed
Provisions considered
Key paragraphs
- Para 66. In the light of the exposition of law in respect of thejurisdiction of the assessing officer, which has been over-reached in this case, we are of the view that the order of theassessing officer is hit by the ratio laid down in the case…
Judgment
IN THE HIGH COURT OF JUDICATURE AT MADRASDated : 18.12.2007Coram :THE HONOURABLE MR.JUSTICE K.RAVIRAJA PANDIANandTHE HONOURABLE MRS.JUSTICE CHITRA VENKATARAMANTax Case (Appeal) No.309 of 2004 Commissioner of Income Tax-I,Chennai. Appellantv.M/s. Vijayashree Finance and Investment Co. Pvt. Ltd.,Chennai. Respondent Tax Case Appeal filed under section 260A of the Income TaxAct, 1961 against the order of the Income Tax AppellateTribunal, Madras 'B' Bench in ITA No.894/Mds/95 dated 29.05.2003for the assessment year 1990-91 against the order of the Commissioner of Income Tax (Appeals) IV, Madras 600 034 dated28.10.1994 and made in I.T. Appeal No. 80/93-94 against theorder of the Assistant Commissioner, Company Circle IV (5)Madras 6 dated 3.3.1993 and made in PAN/GIR.No.47-066-C7-4678/22-V for the assessment year 90-91.For Appellant: Mr.N.Muralikumaran, St. Standing Counsel for IT Dept. For Respondent: Mr.VenkatanarayananJUDGMENT(Judgment of the Court was delivered byK.RAVIRAJA PANDIAN, J.)By framing the following two substantial questions of law, the revenue has filed the present appeal : https://hcservices.ecourts.gov.in/hcservices/
Whether in the facts and circumstances of thecase, the Tribunal was right in holding that theprofit on sale of land carried to capital reservecannot be added to book profit under section 115J?2. Whether in the facts and in circumstances of thecase, the Tribunal was right in holding that sincenotes form part of the accounts, even where profitsof a non recurring nature have not been made part ofthe book profits, although the schedule VI stipulatesthe same, the assessing officer cannot add the sameto re-work the book profit?2. The facts culminating in filing of the appeal are asfollows : The assessee is a company in which public are notsubstantially interested. As provided under section 115J of the Act, the assessing officer found that the assessee hastransferred the amount of Rs.10,17,207/- realised from the saleof the land to 'capital reserve' and did not form part of thebook profit. The assessing officer added the profits from thesale of the land to the book profits while making computationunder section 115J of the Income Tax Act.
3. Aggrieved by the order, the assessee filed an appealbefore the Commissioner of Income Tax (Appeals), who byupholding the order of the assessing officer dismissed theappeal. The assessee carried the matter on appeal before the Income Tax Appellate Tribunal. By reason of the impugned order, the Tribunal allowed the appeal. The correctness of the same isnow canvassed before this Court by the revenue.4. Learned counsel on either side submit that the issue iscovered in favour of the assessee, in the light of the decisionin the case of Apollo Tyres Ltd. v. Commissioner of Income Tax,(2002) 255 ITR 273 (SC), which has also been followed by aDivision Bench of this Court in T.C. (A) No.1104 of 2007 decidedon 06.08.2007 in the case of CIT v. Kovai Maruthi Paper & BoardP. Ltd.5. The apex Court in the above cited decision has heldthat the assessing officer, while computing the income undersection 115J of the Act has only the power of examining whetherthe books of account are certified by the authorities under the Companies Act as having been properly maintained in accordancewith the Companies Act.
The assessing officer, thereafter hasthe limited power of making increases and reductions as providedfor in the Explanation to the said section. To put itdifferently, the assessing officer does not have thejurisdiction to go behind the net profit shown in the profit andloss account except the extent provided for in the explanationto section 115J of the Act. https://hcservices.ecourts.gov.in/hcservices/
Operative part
In the light of the exposition of law in respect of thejurisdiction of the assessing officer, which has been over-reached in this case, we are of the view that the order of theassessing officer is hit by the ratio laid down in the case of Apollo Tyres cited supra and the Tribunal has rightly reversedit. We do not find any ground to interfere with the order of the Tribunal. The appeal is dismissed. No costs. MfSd/Asst. Registrar/true copy/Sub Asst. RegistrarTo1. The Assistant Registrar, Income Tax Appellate Tribunal, III Floor, Rajaji Bhavan, Besant Nagar Chennai 90.2. The Commissioner of Income-tax (Appeals) IV, Madras 34.3. The Assistant Commissioner, Company Circle IV (5) Madras 6.4. The Commissioner of Income Tax I, Chennai.T.C. (A).No.309 of 2004NG(CO)SR/7.1.2008
Questions this judgment answers
What did the Court decide in this case?
The Court recorded the following disposition: The appeal is dismissed
Which statutory provisions did this judgment involve?
Income Tax Act, 1961 — s. 115J; Companies Act, 2013.
Precedent status how later indexed judgments have treated this case
No known negative treatment found in the Courts & Cases corpus.
This is a result about the indexed corpus, not a finding that the judgment remains good law. Coverage may be incomplete.