TaxTMI 
TaxTMI 
2014 (4) TMI 562
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....the penalty levied under Section 271(1)(c) inspite of the fact that the assessee did not furnish any explanation either before the Assissing officer or before the Commissioner of Income Tax(A) for claiming excess depreciation than admissible under Income Tax Act and Explanation I to Section 271(Rs. 1)(C) clearly states that where in respect of any facts material to the computation of income of any person, such person fails to offer an explanation,l the amount added in computing the total income of such person shall for the purpose of section 271(1)(c) , be deemed to represent the income in respect of which particulars have been concealed? The brief facts of the case are that the respondent is a Company involved in the manufacture of steel pipes, Synthetic Filament Yarn and Polyster Clips, etc filed its return for the assessment year 1998-1999. The return was for 23 months disclosing the total loss at Rs. 1,75,91,003/ computed in accordance with the provisions of Income Tax Act and has worked out its taxable liaability under Section 115J of Rs.37,42640/. The Assessing Authority computed books profit for the purpose of levying tax under Section 115 J at Rs 5,58,33,750/. The allegat....
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....pted by the Tribunal for the purposes of levy of tax under Section 115 J . He however further submitted that whether the depreciation is to be calculated in accordance with the Companies Act or under Income Tax Act for the purposes of computation of book profit is subject matter of consideration by the larger Bench of the Apex court in the case of Dynamic Orthpedics P. Limited Vs Commissioner of Income Tax( 2010) 301 ITR page 300 Learned counsel for the respondent submitted that the book profit disclosed by assessee for the purpose of levy of tax under Section 115 J has been accepted by the Tribunal and against the order of Tribunal the Income Tax Appeal No.182 of 2000 filed by the Commissioner of Income Tax Appealhas been dismissed by this Court vide order dated 28.8.2012. thus the order of the Tribunal has become final . He further submitted that for the purposes of levy of penalty the book profit for the purpose of determination of liability under Section 115 J is relevant and not the Income as per the Income Tax Act and since the book profit disclosed by the assessee for the purpose of levy of tax under Section 115 J has been accepted the Tribunal has rightly deleted the pen....
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....any will pay tax on at least 30% of its book profit. In other words, a domestic widely held company will pay tax of at least 15% of its book profit. This measure will yield a revenue gain of approximately Rs.75 crores." The Court held that the purpose of introducing this section was that the Income Tax Authorities were unable to bring certain companies within the net of income tax because these companies were adjusting their accounts in such a manner as to attract no tax or very little tax. It is with a view to bring such of these companies within the tax net that section 115J was introduced in the 1961 Act with a deeming provision which makes the company liable to pay tax on at least 30% of its book profits as shown in its own account. For the said purpose, section 115J makes the income reflected in the companies books of accounts as the deemed income for the purpose of assessing the tax. If we examine the said provision in the above background, we notice that the use of the words in accordance with the provisions of Parts II and III of Schedule VI to the Companies Act was made for the limited purpose of empowering the assessing authority to rely upon the authentic statement of a....
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....and certified to be in accordance with Parts II and III of Schedule VI to the Companies Act, 1956. In the case of Apollo Tyres Ltd. [2002] 255 JTR 273, the apex court held that while computing the income under Section 115J of the Income-tax Act, the Assessing Officer has only power to examine whether the books of account were certified by the authorities under the Companies Act as having been properly maintained in accordance with the Companies Act. It is further held that the Assessing Officer thereafter has limited powers of making increases and reductions as provided for in the Explanation to the said section. The apex court further held that the Assessing Officer does not have the jurisdiction to go beyond the net profits shown in the profit and loss account, except to the extent provided in the Explanation to Section 115J of the Income-tax Act. In the instant case, the accounts maintained by the assessee are certified by the auditors. Under the circumstances, the book adjustment made by the Assessing Officer being contrary to the decision of the apex court, question No. 1 is answered in the negative and in favour of the assessee." In view of our answer to question No. 1, ques....