1995 (5) TMI 85

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....ely from M/s. Ramalakshmi Mills and Rs. 1, 11,079 and Rs. 1,24,143 respectively for the asst. years 1991-92 and 1992-93 from M/s. Ramalakshmi Mills for the asst. years under consideration from M/s. Gowrishankar Screws. The assessees did not include the relevant share income in their returns. However, in the accompanying statements the fact that they were partners in the above firms and their share income were included and it was contended that the share income was not included on the ground that the tax on the income was paid by the respective firm as per section 182(3) of the Act. The Assessing Officer did not accept this contention. Based on the information furnished in the returns he included the relevant share income under section 143(1....

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....include apparent adjustments on account of incorrect claims. One cannot say that the ITO did not consider the Circular fully. Hence this claim of the assessees that the Circular of the Board in question was not considered by the Assessing Officer is hereby rejected. 6. Then we come to the issue of scope of section 143(1A) and as to whether these items fall within the provisions of that section. The provisions of section 143(1A) are restrictive. The assessees'share from the registered firms is to be determined in accordance with the provisions of section 182. The provisions of section 182(1) read as under : 182(1) : " Notwithstanding anything contained in sections 143 and 144 and subject to the provisions of sub-section (3), in the case of....

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....here the assessee is a member of an association of persons or body of individuals and as a result of the adjustments made under the first proviso to clause (a) of sub-section (1) in the income or loss declared in the return made by the association or body, as the case may be, or as a result of an order made under sub-section (3) of this section or section 144 or section 147 or section 154 or section 155 or sub-section (1) or sub-section (2) of section 186 or section 250 or section 254 or section 260 or section 262 or section 263 or section 264 or any order of settlement made under sub-section (4) of section 245D passed subsequent to the filing of the return referred to in clause (a), there is any variation in his share in the income or loss....

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....ted that the tax on the income is to be paid by the firm under the provisions of section 182(3). The basic principle of tax is that any additional tax would be attracted only if the tax was payable. In the present case the tax on the income from the firm was not payable by assessees but was payable by the firm in which they are partners. Since the tax itself is not attracted, such income would not attract additional tax also. This is so because of the basic principle that in order to attract tax and additional tax the amount should be brought within the taxability of income to be included. In view of the above, we hold that the additional tax is not attracted in the present case on account of inclusion of share from the registered firms to ....