1999 (5) TMI 45 - AT - Income Tax

Tribunal rules in revenue's favor on chargeable profit calculation & interest levy in landmark case.

The Tribunal ruled in favor of the revenue in an appeal regarding the computation of chargeable profit under section 115J for the assessment year 1989-90. ... Book Profits Issues:1. Computation of chargeable profit under section 115J for Assessment year 1989-90.2. Levy of interest under section 234-B and 234-C.Analysis:Issue 1: Computation of chargeable profit under section 115J for Assessment year 1989-90The case involved an appeal by the revenue against the order of CIT(A) for the assessment year 1989-90. The Assessing Officer computed the total income of the assessee and separately computed the taxable profit under section 115J. The CIT(A) partly allowed the assessee's appeal, directing not to apply section 115J and not to charge interest under sections 234-B and 234-C. The dispute revolved around the company's amalgamation with another entity and the subsequent dissolution, impacting the computation of chargeable profit. The assessee argued that as the company ceased to exist post-amalgamation, the provisions of section 115J should not apply. However, the Assessing Officer proceeded with the assessment based on the revised return filed by the assessee. The Tribunal held that the company was liable under section 115J for the assessment year 1989-90, as the Assessing Officer's actions were justified, and the CIT(A) had erred in misconstruing the provisions of the Act. Therefore, the Tribunal reversed the CIT(A)'s order, allowing the revenue's appeal.Issue 2: Levy of interest under section 234-B and 234-CThe second issue concerned the levy of interest under sections 234-B and 234-C. The CIT(A) had directed not to charge interest under these sections, which was a part of the revenue's appeal. However, the Tribunal's decision primarily focused on the computation of chargeable profit under section 115J. Since the Tribunal reversed the CIT(A)'s order on the main issue, the decision on interest under sections 234-B and 234-C was implicitly aligned with the overall judgment. Therefore, the Tribunal's decision on the main issue encompassed the decision on the levy of interest as well.In conclusion, the Tribunal's judgment clarified the application of section 115J for the assessment year 1989-90, emphasizing the Assessing Officer's actions as valid and overturning the CIT(A)'s decision. The issues regarding the computation of chargeable profit and the levy of interest under sections 234-B and 234-C were comprehensively addressed, resulting in the allowance of the revenue's appeal.