Cit vs M/S Daulat Ram Dharam Bir Auto (P) ...
2010 Latest Caselaw 3859 Del

                                      UNREPORTED
*     IN THE HIGH COURT OF DELHI AT NEW DELHI


+                               ITR No. 1/1992


CIT                                                    ..... Appellant
                          Through:   Mr.Sanjeev Sabarwal, Sr.Standing
                                     Counsel.
                 versus

M/s. DAULAT RAM DHARAM BIR AUTO (P) LTD. ..... Respondent
              Through: Mr.Prem Nath Monga with Mr.Manu
                       Monga, Advocate.


%                              DATE OF DECISION: August 18, 2010


CORAM:
HON'BLE MR. JUSTICE A.K.SIKRI
HON'BLE MS. JUSTICE REVA KHETRAPAL

1. Whether reporters of local papers may be allowed
   to see the judgment?

2. To be referred to the Reporter or not?

3. Whether judgment should be reported in Digest?


                          J U D G M E N T (ORAL)

18.08.2010

: A.K.SIKRI, J.

1. The assessee filed the return of chargeable profits on 28.10.1983

declaring such profits at Rs. 6,23,358/-. Taking the total income of the

assessee after appeal effect at Rs.36,05,010/- and after deducting the

income tax payable thereon at Rs. 22,17,081/-, the IAC (Asstt.)

computed the gross chargeable profits at Rs.13,87,929/-. The IAC

(Asstt.) computed the capital by adding paid up capital of Rs.5 lakhs and

reserves of Rs.42,01,368/-. Statutory deduction at 15% of

Rs.47,01,368/- was computed at Rs.7,05,205/-. On the above figures,

the sur-tax was determined at Rs.2,37,829/- and as the assessee had paid

the sur-tax in advance amounting to Rs.2,52,458/-, the IAC computed

the refund at Rs.14,629/-.

2. The Commissioner of Income-tax issued a notice u/s 16 of the

Companies (Profits) Sur-tax Act, 1964, seeking to revise the order of

IAC(Asstt.) being prejudicial to the interest of Revenue. The CIT

observed that a perusal of the annual accounts for the accounting year

1981-82 ending on 30.6.1982 had shown that, on the first day of the

previous year, there was a credit balance of Rs.23,05,998/- under the

head "Profit and Loss Appropriation Account". Relying on the

judgment of the Madras High Court in the case of Vasantna Mills Ltd.,

reported in 32 ITR 337 and of the Supreme Court in the case of Mysore

Electrical Industries Ltd., reported in 80 ITR 566 and referring to a

number of judgments of the High Courts in which the aforesaid

judgment of the Supreme Court had been followed, the CIT came to the

conclusion that the IAC(Asstt.) had not computed the statutory

deduction properly and he directed the IAC(Asstt.) to recompute the

amount of statutory deduction on the capital computed after excluding

the above-mentioned amount of Rs.23,05,998/-.

3. The assessee preferred an appeal before the Tribunal against the

CIT's order. The Tribunal observed that the judgments of the Calcutta

High Court in the case of Dunlop India Ltd. vs. CIT, 141 ITR 542, and

of the Supreme Court in the case of Vazir Sultan Tobacco Co. Ltd.,

132 ITR 559, were available when the IAC (Asstt.) passed the order u/s

62 of the Companies (Profits) Sur-tax Act. It was further observed that

the learned CIT did not point out any factual mistake in the order of the

IAC(Asstt.). The Tribunal came to the conclusion that the order passed

by the IAC(Asstt.) was in accordance with law and it could neither be

held as erroneous nor prejudicial to the interests of Revenue.

4. On this reasoning, the Tribunal set aside the order passed by the

Commissioner of Income-Tax. The Revenue approached this Court by

moving an application which was allowed by this Court and the Tribunal

was directed to refer the following question:

"Whether on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in cancelling the order of the Commissioner and restoring in its place that of Sur-tax Officer?"

5. From the facts narrated above, it is clear that the Assessing Officer

while passing the assessment order had referred to two judgments of the

Supreme Court. On the other hand, Commissioner of Income-Tax while

revising this order under Section 16 of the Companies (Profits) Sur-tax

Act was of the opinion that other two judgments of the Supreme Court

and a number of judgments of the High Court were applicable. What is

clear from the aforesaid is that two views were possible, one taken by

the Assessing Officer and another by the C.I.T. It is now authoritatively

determined by the Supreme Court that merely because other view which

is taken by the C.I.T. is also a possible view, would not be a ground to

revise the order passed by the Assessing Officer if the Assessing Officer

held the view which was also one of the possible views. To put it

otherwise mere change of opinion cannot be the basis of invoking the

jurisdiction under Section 16 of the Companies (Profits) Sur-tax Act.

For our benefit, we may refer to the judgment of the Supreme Court in

CIT vs. Max India Ltd., 295 ITR 282 wherein this aspect has been dealt

with by the Supreme Court. To the same effect is the judgment of the

Supreme Court in Malabar Industrial Co. Ltd. vs. Commissioner of

Income Tax, 243 ITR 83 which was followed in the aforesaid case. We

thus are of the opinion that the Tribunal was right in setting aside the

order of the Commissioner and thus the answer is in affirmative, that is,

in favour of the assessee.

A.K. SIKRI (JUDGE)

REVA KHETRAPAL (JUDGE) August 18, 2010 'sn'