Ester Industries Limited vs Commissioner Of Income Tax Delhi ...
2013 Latest Caselaw 3275 Del

$~16.
*       IN THE HIGH COURT OF DELHI AT NEW DELHI
+                  INCOME TAX APPEAL NO. 702/2007


                                            Date of decision: 29th July, 2013


        ESTER INDUSTRIES LIMITED
                                                               ..... Appellant
                               Through Mr. R. Santhanam, Advocate.

                               versus

        COMMISSIONER OF INCOME TAX DELHI IV
                                          ..... Respondent
                               Through Mr. Sanjeev Sabharwal, Sr.
                               Standing Counsel.

        CORAM:
        HON'BLE MR. JUSTICE SANJIV KHANNA
        HON'BLE MR. JUSTICE SANJEEV SACHDEVA

SANJIV KHANNA, J. (ORAL):

        Having heard learned counsel for the parties, we frame the

following substantial question of law:

                          "(1) Whether the Assessing Officer could
                   have made prima facie adjustment and held that
                   minimum alternative tax under Section 115JA
                   was payable by the assessee and compute and
                   calculate the same under Section 143(1)(a) of
                   the Income Tax Act, 1961?

                         (2) Whether the Income Tax Appellate
                   Tribunal was right in holding that the
                   Commissioner of Income Tax (Appeals)
                   exceeded his jurisdiction under Section 154 of

ITA No. 702/2007                                                     Page 1 of 5
                    the Income Tax Act, 1961 by modifying his
                   earlier order?"

2.      The assessee is a company and for the Assessment Year 1998-99

had filed return of income declaring "nil" income along with a note

claiming that minimum alternate tax provisions under Section 115JA

of the Act were not applicable. The Assessing Officer by intimation

dated 18th May, 1999 under Section 143(1)(a) of the Income Tax Act,

1961 computed the taxable income under minimum alternative tax, i.e.,

Section 115JA at Rs.8,46,300/-. He calculated income tax payable,

levied interest under Sections 234A and 234B and also additional tax

@ 20%. He observed that the appellant did not offer for taxation, 30%

of the book profits under Section 115JA, which was applicable and,

therefore, prima facie adjustment was in accordance with the

provisions of Section 143(1)(a) of the Act.

3.      The appellant filed first appeal but vide order dated 4th March,

2002 it was dismissed. This order by the first appellate authority in

paragraph 4 has referred to an earlier order passed by the same

authority for the Assessment Year 1997-98, in which the appellant had

succeeded on the same issue/question.

4.      The appellant-assessee thereupon filed an application under

Section 154 of the Act dated 6th May, 2002 relying upon the order

passed by the CIT (Appeals) in the earlier assessment year, i.e.,


ITA No. 702/2007                                               Page 2 of 5
 Assessment Year 1997-98.        This application was allowed by the

CIT(Appeals) vide order dated 18th June, 2002.

5.      Revenue preferred appeal before the tribunal and has succeeded

with the tribunal holding that the CIT(Appeals) had exceeded his

jurisdiction under Section 154 of the Act.       The question whether

adjustment under Section 143(1)(a) in relation to MAT can be made

was a debatable issue and, therefore, the CIT(Appeals) could not have

rectified the so-called mistake, which amounts to change of opinion on

a debatable matter.

6.      Learned counsel for the appellant has submitted and referred to

question No. 2 framed by us and has submitted that rectification was

permissible as the CIT(Appeals) had passed an order contrary to and

had not followed the order of the predecessor relating to Assessment

Year 1997-98. As we perceive, we need not examine this issue in the

present appeal and leave this question open.         Prima facie, the

submission is rather wide. As we feel the appellant is entitled to

succeed on question No. 1 and we are inclined to dispose of the appeal

on this basis. We are not inclined to pass an order of remand as the

appeal relates to Assessment Year 1998-99 and the appeal has

remained pending for long. The appellant has stated at the Bar that

regular assessment order under Section 143(3) dated 18 th December,

2000 has been passed in which income of the assessee has been

ITA No. 702/2007                                             Page 3 of 5
 computed under Section 115JA at Rs.8,46,300/-. This order has been

accepted and tax on the said amount, it is stated, stands paid.

7.      On the question of prima facie adjustments, the issue is covered

in favour of the appellant-assessee and against the respondent in view

of the decision in SRF Charitable Trust versus Union of India &

Others, (1992) 193 ITR 95 (Del.). This judgment was followed in

assessee's own case in the decision dated 14th May, 2012 reported in

(2012) 349 ITR 324 (Del.). The adjustment allowed in the present case

would not be covered within the four corners and limited scope of

Section 142(1)(a). The assessee, as noticed above, had specifically

claimed that he was not liable to pay minimum alternative tax under

Section 115JA. The contention may be wrong or incorrect but it has to

be dealt with and examined. Further computation has to be made

under Section 115JA of the Act, which is not possible without

examining and considering several aspects. In SRF Charitable Trust

(supra) it was observed that where it was evident from the return as

filed along with the document in support that a claim of the assessee

was inadmissible, then adjustment under the said provision was

justified. However, in cases of lack of proof in support of the claim,

adjustment was not permissible and the Assessing Officer should issue

notice under Section 143(2) of the Act. In the present case, on the

question of what and how the adjustment was to be made was disputed

ITA No. 702/2007                                                  Page 4 of 5
 and several aspects were required to be examined.       This was not

possible by merely examining the return or the documents enclosed

with the return itself. Computation under minimum alternative tax is

cumbersome and at that time, involved several debatable issues. The

assessee himself had not done any computation under Section 115JA.

8.      In these circumstances, the question No. 1 is answered in

negative, i.e., in favour of the appellant-assessee and against the

Revenue. As recorded above, the appellant has already paid tax under

Section 115JA pursuant to the regular assessment under Section 143(3)

dated 18th December, 2000, which has become final. This order does

not mean that we have disturbed the said assessment or the amount due

and payable under the regular assessment. The appeal is disposed of.



                                     SANJIV KHANNA, J.

SANJEEV SACHDEVA, J. JULY 29, 2013 VKR