2000 (12) TMI 15 - HC - Income Tax

High Court rules on validity of orders under Business Profits Tax Act, 1947, stating regular assessment must occur within four years.

British India Corporation Ltd. And Another Versus BP. Gupta, Inspecting Assistant Commissioner of Income -Tax And Others.

British India Corporation Ltd. And Another Versus BP. Gupta, Inspecting Assistant Commissioner of Income -Tax And Others. - [2002] 255 ITR 579, 172 CTR ... Issues involved:1. Validity of the impugned order of the Income-tax Appellate Tribunal and the order passed by the Inspecting Assistant Commissioner of Income-tax.2. Merger of provisional assessment into regular assessment under the Business Profits Tax Act, 1947.3. Claim for refund of tax paid based on provisional assessments.4. Interpretation of provisions under section 13(5) to (7) of the Business Profits Tax Act, 1947.Analysis:1. The judgment pertains to a writ petition filed to challenge the impugned order of the Income-tax Appellate Tribunal and the order passed by the Inspecting Assistant Commissioner of Income-tax. The petitioner, a public limited company taken over by the Central Government, submitted returns for various accounting periods. The regular assessment made in 1969 was quashed by the Tribunal, leading to a reference to the High Court, which decided in favor of the assessee. The Tribunal and High Court held that regular assessment must be made within four years from the end of the chargeable period. The petitioner sought a refund of tax paid based on provisional assessments after the regular assessment was quashed, but the claim was rejected by the Inspecting Assistant Commissioner and the Commissioner of Income-tax (Appeals).2. The court analyzed the merger of provisional assessment into regular assessment under the Business Profits Tax Act, 1947. Referring to sections 13(5) to (7) of the Act, the court highlighted that there is no right of appeal against a provisional assessment, indicating its merger into the regular assessment. Citing relevant case law, the court emphasized that tax pursuant to provisional assessment is liable to be adjusted based on the regular assessment. The court concluded that once the regular assessment is made, the provisional assessment ceases to exist, and if the regular assessment is quashed, there is no liability based on the provisional assessment.3. The judgment addressed the claim for a refund of tax paid based on provisional assessments. The court noted that the provisional assessment stands only until a valid regular assessment is made or could have been made. Rejecting the contention that an inflated provisional assessment without a regular assessment would leave the assessee without a remedy, the court emphasized the need to prevent such anomalies and ensure that the statutory remedy against provisional assessment is maintained.4. The court interpreted the provisions under section 13(5) to (7) of the Business Profits Tax Act, 1947, to support the petitioner's claim for a refund. Relying on legal precedents, the court held that the provisional assessment merges into the regular assessment and any excess tax paid as a result of the provisional assessment should be refunded to the assessee. Consequently, the court allowed the writ petition, quashed the impugned orders, and directed the respondents to refund the tax paid on the basis of provisional assessments along with interest to the petitioner within a specified timeframe.