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Shri Ambica Mills Ltd. Vs. Surtax Officer - Court Judgment

LegalCrystal Citation
CourtIncome Tax Appellate Tribunal ITAT Ahmedabad
Decided On
Judge
Reported in(1984)8ITD576(Ahd.)
AppellantShri Ambica Mills Ltd.
RespondentSurtax Officer
Excerpt:
.....that the ito was justified in rectifying the surtax assessment under section 13 of the companies (profits) surtax act, 1964, by holding that the ito was justified in not deducting the equivalent of the amount payable as surcharge which was actually deposited under the companies deposits (surcharge on income-tax) scheme, 1976. 2. without prejudice to the above, it is submitted that the deposit made under the companies deposits (surcharge on income-tax) scheme, 1976, is deductible in computing the chargeable profits.2. in this case the surtax officer initiated the proceedings under section 13 of the companies (profits) surtax act, 1964 ('the act'), as can be seen from the relevant extracts of the order reproduced below: on verification of records it is observed that tax on income has been.....
Judgment:
1. In this case the assessee has come up in appeal with following two grounds: 1. The learned Commissioner of Income-tax (Appeals) erred in holding that the ITO was justified in rectifying the surtax assessment under Section 13 of the Companies (Profits) Surtax Act, 1964, by holding that the ITO was justified in not deducting the equivalent of the amount payable as surcharge which was actually deposited under the Companies Deposits (Surcharge on Income-tax) Scheme, 1976.

2. Without prejudice to the above, it is submitted that the deposit made under the Companies Deposits (Surcharge on Income-tax) Scheme, 1976, is deductible in computing the chargeable profits.

2. In this case the Surtax Officer initiated the proceedings under Section 13 of the Companies (Profits) Surtax Act, 1964 ('the Act'), as can be seen from the relevant extracts of the order reproduced below: On verification of records it is observed that tax on income has been incorrectly considered at Rs. 1,92,29,380 for allowing deduction while computing chargeable profits.

In response to notice of rectification Shri C.R. Shah attended and objected to the proposed rectification. The assessee's objection is not acceptable. Deposit under the Companies Deposit (Surcharge on Income-tax) Scheme, 1976, made as per the Finance Act is to be reduced from the income-tax payable while computing the chargeable profits. Mistake being apparent from records is hereby rectified.

3. On appeal the Commissioner (Appeals) upheld the order on the ground that Rule 2(i) of the First Schedule to the Act is absolutely clear and unambiguous, the provisions of the rule are so clear that specifically it mentions under Sub-clauses (b) and (c) the other deductions for additional tax liabilities under the Income-tax Act, 1961 ('the 1961 Act') and, therefore, payments in lieu of surcharge are not covered.

4. At the time of hearing, the learned counsel appearing on behalf of the assessee submitted that on merits, the decision of the Special Bench of the Tribunal in Apara Textile Traders Ltd. v. Surtax Officer [1982] 2 ITD 600 (Ahd.) was against the assessee. But since there could be two views possible, the ratio of decision in the case of T.S.Balaram, ITO v. Volkart Bros. [1971] 82 ITR 50 (SC) was applicable and, therefore, order under Section 13 was unjustified.

5. The learned departmental representative vehemently objected to the submission made on behalf of the assessee. According to him, what is required to be seen is whether provisions of the statute are clear or not; it does not matter whether there is difference in view or not. The decisions of two Special Benches in the cases of Apara Textile Traders Ltd. (supra) and Travancore Chemical & Mfg. Co. Ltd. v. ITO [1983] 6 ITD 788 (Coch.) merely held that there could not be any other view possible. Emphasis was made out on paras 5, 9 and 10 of the decision in Apara Textile Traders Ltd.'s case (supra) and also para 8 of Travancore Chemical & Mfg. Co. Ltd.'s case (supra) to plead that even the Hon'ble members of the Benches have held that the provisions are so clear as not to leave any doubt on the fact that surcharge would not include the amount of deposit. Deposit with Industrial Development Bank of India was likened with compulsory deposit under the 1961 Act.

6. In reply, the learned counsel read out the relevant text from the decision in the case of Surtax Officer v. Daulat Ram Dharambir Auto (P.) Ltd. [ST Appeal No. 17(Delhi) of 1979, dated 12-8-1980] since reported in [1981] 6 Taxman 11 (Delhi - Trib.) where the decision was given in favour of the assessee. It was submitted that one of the members constituting the Bench in Delhi was also a member of Special Bench in question deciding the Cochin case later on giving the decision against the assessee. Reliance was also sought to be made on the decision of the Gujarat High Court in the case of Smt. Lilavatiben Harjivandas Kotecha v. J.V. Shah, ITO 7. We have considered submissions and materials. The rule regarding chargeable profits merely says that liability of income-tax, if any, payable by the company in respect of its total income ... shall be deducted. Income-tax includes surcharge. What is to be deducted is the liability. This means actual liability and not liability computed on basis of 'ifs' and 'buts'. Liability is not computed; it is determined.

There cannot be dispute about this. But if one wants to make this aspect of liability a many splendoured thing, one can do so. It is not difficult these days to over-emphasise legal opinions for inadvertently camouflaging the real nature of the point. For resorting to Section 13 (analogous to Section 154 of the 1961 Act), what is required is that mistake should be apparent from record. Even if mistake is based on mistaken view, it should be rectified for, two wrongs do not make one right. Even the elementary principle of accountancy will tell us what is the meaning of actual liability and how it is to be arrived at and that any other approach, if adopted, is bound to prove erroneous one day. One would always like to take chance in so-called sacrosanct sphere of tax planning but if chance fails, enlightened ones should adopt the fair way of conceding unless of course penalty is apprehended. The Supreme Court decision in Volkart Bros.'s case (supra) actually fortifies the revenue's stand. The Supreme Court decision in the case of CIT v. Vegetable Products Ltd. [1973] 88 ITR 192 does not apply to the facts of the case. The Gujarat High Court decision in Smt.

Lilavatiben Harjivandas Kotecha's case (supra) goes against the assessee. Why not keep at heart the great treasure of wisdom in oft-repeated advice of J. Rowlett in Cape Brandy Syndicate v. IRC [1921] 2 KB 403 to the effect that 'In a taxing Act one has to look merely at what is clearly said. There is no room for any intendment.

There is no equity about a tax. There is no presumption as to a tax.

Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used.' We do not find any infirmity in the order of authorities below.


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