1. This appeal filed by the Commissioner of Income Tax under Section 260A of the Income Tax Act, 1961, for short, the ‘IT Act’, is marked defective for the reason that only Rs.500/- is paid as court fee and that court fee is leviable on the memorandum of appeal under Article 3(iii)(C)(c) of Schedule II of the Kerala Court Fees and Suits Valuation Act, 1959, for short, the ‘CF Act’, since the total income of the assessee in the case to which the appeal relates, as computed by the assessing officer, exceeds Rs.2 lakhs.
2. Heard learned senior counsel for the appellant and learned Government Pleader on the issue of court fee.
3. Senior Advocate Sri.P.K.R.Menon, on behalf of the appellant, argued that the total income of the assessee is computed under Section 115JB of IT Act, a special provision for payment of tax by certain companies; treated as a Code by itself; and therefore it has to be treated as one not falling within sub-clauses (a), (b) or (c) of Article 3(iii)(C) of the CF Act but one falling under sub-clause (d) thereof. The subject matter of the appeal has to be treated as a matter other than those specified in sub-clauses (a) to (c), it is argued. It is also pointed out that the provision in Section 115JB of the IT Act is geared to book profit of the assessee and such book profit is deemed to be the total income of the assessee. It is argued that such method of assessment by applying a deeming provision under the IT Act cannot be treated as providing the total income of the assessee for the purpose of determining the court fee payable under the CF Act. Reference was made to the decisions of the Apex Court in Commissioner of Income Tax v. Williamson Financial Services and Others [(2008) 297 ITR 17 (SC)] and in Ajanta Pharma Ltd. v. Commissioner of Income Tax [(2010) 327 ITR 305 (SC) to dilate on the scope and purport of Section 115JB of the IT Act and the quality of proceedings thereunder. Reference was also made to the decision of this Court in unnumbered ZITA No.167/11 dated 16.11.2011.
4. Per contra, learned State Government Pleader argued that in all cases, court fee is leviable on the basis of such total income as is computed by the assessing officer and it makes no difference even in cases where the computation of the total income is made in terms of Section 115JB of the IT Act.
5. Article 3(iii)(C) of the CF Act, inserted by Act 2 of 2003 reads as follows:
(C) From an order of the Appellate Tribunal under the Income Tax Act, 1961 or the Wealth Tax Act, 1957,-
|(a) Where the total income of the assessee as computed by the Assessing Officer, in the case to which the appeal relates is one lakh rupees or less||Five hundred rupees.|
|(b) Where such income exceeds one lakh rupees but not exceed two lakh rupees||One thousand and five hundred rupees.|
|(c) Where such income exceeds two lakhs rupees||One per cent of the assessed income, subject to a maximum of ten thousand rupees.|
|(d) Where the subject matter of an appeal relates to any matter, other than those specified in sub-clauses (a) to (c) above||Five hundred rupees.|
7. The assessment year covered by the impugned order is 2005-06. Section 115JB of the IT Act is a special provision for payment of tax by certain companies. It provides that notwithstanding anything contained in any other provision of the IT Act, where in the case of an assessee, being a company, the income tax payable on the total income as computed under the IT Act in respect of the previous year relevant for the assessment year commencing on or after the first day of April, 2001 is less than 7 % of its book profit, such book profit shall be deemed to be the total income of the assessee and the tax payable by the assessee on such total income shall be the amount of income tax at the rate of 7 %.
8. The phrases “such book profit shall be deemed to be the total income of the assessee” and the provision that “the tax payable by the assessee on such total income shall be the amount of income tax ….” in section 115JB of the IT Act clearly show that when the assessment is made in terms of that special provision, the total income of the assessee is arrived at by applying that deeming provision and tax is payable on such deemed total income.
9. In State of Bombay v. Pandurang Vinayak [AIR 1953 SC 244], it was laid down that when a statute says that something shall be deemed to have been done, full effect must be given to that deeming provision and that statutory fiction should be carried to its logical conclusion. The word “deemed” is used a great deal in modern legislation in different senses; that is to say, to create a fiction; to include what is obvious or what is uncertain; to impose in the construction of a statute an artificial construction of a word or phrase that would not otherwise prevail, etc. In each case, it would be a question as to what is the object with which the legislation has made such a deeming provision. See St.Aubyn v. Attorney General [1952 AC 15 (HL)] and Consolidated Coffee Ltd. V. Coffee Board [(1980) 3 SCC 358] rendered following it. Thus, while the purposes and object of creating a legal fiction in the statute may some time differ, when a legal fiction is created, it must be given its full effect. If you are bidden to treat an imaginary state of affairs as real, you must surely, unless prohibited from doing so, also imagine as real, the consequences and incidents, which, if the putative state of affairs had in fact existed, must inevitably have flowed from, or accompanied, it. When the statute states that you must imagine certain state of affairs, it does not say that having done so, you must cause or permit your imagination to boggle when it comes to the inevitable corollaries of that state of affairs. This celebrate statement of law by Lord Asquith in East End Dwellings Co. Ltd. v. Finsbury Borough Council [1952 AC 109 (HL) has withstood the test of time as can be seen from Bhavnagar University v. Palitana Sugar Mill (P) Ltd. [(2003) 2 SCC 111]. See ITW Signode India Ltd. v. CCE [(2004) 3 SCC 48], Ashok Leyland Ltd. v. State of Tamil Nadu [(2004) 3 SCC 1], S.Appukkuttan v. Thundiyil Janaki Amma and Another [AIR 1988 SC 587], Maganlal v. M/s. Jaiswal Industries, Neemach and Others [AIR 1989 SC 2113] and M/s. Orient Paper and Industries Ltd. V. State of Orissa [AIR 1991 SC 672].
10. The deeming provision in Section 115JB is the statutory tool that gets applied in the process of making an assessment by recourse to that special provision. When the total income is computed by applying it, the total income of the assessee for the purpose of levy of income tax would be the total income determined applying that deeming provision. The levy of court fee under Article 3(iii)(C) (a), (b) and (c) is on the total income of the assessee as computed by the Assessing Officer. It does not vary depending upon the method adopted for assessing the total income. The CF Act does not make any classification between the different assessment appeals that could be filed under the IT Act, against orders of the Appellate Tribunal, except for the limited purpose of fixing the different slabs or rates at which court fees has to be paid. Therefore, whatever be the mode on which the total income of an assessee has been computed by the Assessing Officer, the levy of court fee on an assessment appeal would be in terms of sub-clauses (a), (b) and (c) of Article 3(iii)(C). Such an appeal does not fall within the residuary sub-clause (d) of that Article.
11. One argument advanced by the learned senior Adv.P.K.R.Menon on behalf of the appellant is that the deeming provision in Section 115JB of the IT Act cannot apply for purposes of the CF Act. That argument does not stand for the reason that the deeming provision is not even looked into while determining the court fee. The deeming provision under Section 115JB is effectuated only while operating that special provision to determine the total income of the assessee. Once that is done, the result of the operation of the deeming provision gets its result. The chargeability thereafter to tax under the IT Act is an incident that happens on the total income of the assessee so determined. Thus the total income of the assessee becomes a definite and determined component, for all intents and purposes, after its such determination. This would be the effect of determination applying a deeming provision, or even otherwise. The provisions of the CF Act do not enable a re-look at the mode of assessment or the statutory methodology under the IT Act, to classify the different assessment appeals for levy of court fee. For one thing, CF Act contains no such provision. More importantly, that is beyond the purview of a legislation of the type and nature of CF Act. For this reason, the contention of the appellant in this regard does not stand.
For the aforesaid reasons, the objection raised by the Registry is upheld. The appeal remains defective. The appellant is granted four weeks time for curing the defects by paying the balance court fee due in terms of sub-clauses (a), (b) or (c), as the case may be of Article 3(iii)(C) of Schedule II of the CF Act.