TaxTMI 
TaxTMI 
2014 (11) TMI 61
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....are less than 30% of what is posted in the books of account submitted as part of its obligation under the Company Act, the tax leviable would be 30% of the latter. Obviously for this reason, the profit and loss account which is part of annual report of a company becomes relevant. For the assessment year in its book profits, the respondent posted a sum of Rs. 4,28,17,995/-. This included a sum of Rs. 3,81,48,960/- which is said to be interest on inter corporate deposits for the four consecutive previous years i.e., 1985-86 to 1988-89. A note was appended to the returns with a request to exclude the amount of Rs. 3,81,48,960/- from assessment by stating that the said amount is referable to the earlier assessment years and has also suffered tax. In his order dated 31.03.1993, the Assessing Officer did not accept that plea. Thereupon, the respondent filed I.T.A.No.77/CC.III/CIT(A)III/93-94 before the Commissioner of Appeals-III, Hyderabad. The plea of the appellant was that once the amount has suffered tax and its inclusion in the book profit was only for the purpose of reflecting the financial state of affairs, there was no basis to bring it under the purview of the tax once again ....
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....essment years the provisions under Section 115J of the Act was not inexistence at all since it came into effect, only from 1.4.1988. It is argued that even in respect of other two assessment years i.e., 1988-89 and 1989-90, there was absolutely no basis for the Assessing Officer to subject such amounts for tax twice. since the amounts were subjected to tax in the corresponding assessment years. The learned counsel further submit that notwithstanding the authenticity that is attached to the profit and loss account or the books profits that are reflected in the accounts that are prepared and submitted as part of obligation under the Companies Act, the basic tenets such as that the same amount cannot be brought under the tax twice cannot be ignored and that the exercise to be undertaken by the Assessing Officer is contrary to the explanation to Section 115J of the Act. Another contention of the learned counsel is that the book profit referable to Section 115J of the Act takes in its fold only the income referable to the year, previous to the concerned assessment year and not any thing which has accrued to an assessee, much earlier, in point of time, particularly, an amount, t....
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....for any purpose other than those referred to in sub-section (4) of that section; or (h) the amount credited to the reserve account under section 80HHD, to the extent that amount has not been utilised within the period specified in sub-section (4) of that section; (ha) the amount deemed to be the profits under sub-section (3) of section 33AC, if any amount referred to in clauses (a) to (f) is debited or, as the case may be, the amount referred to in clauses (g) and (h) is not credited to the profit and loss account, and as reduced by, (i) the amount withdrawn from reserves (other than the reserves specified in section 80HHD) or provisions, if any such amount is credited to the profit and loss account : Provided that, where this section is applicable to an assessee in any previous year (including the relevant previous year), the amount withdrawn from reserves created or provisions made in a previous year relevant to the assessment year commencing on or after the 1st day of April, 1988 shall not be reduced from the book profit unless the book profit of such year has been increased by those reserves or provisions (out of which the said amount was withdrawn) under this E....
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....90, the respondent stated as under: Interest on inter corporate deposits in respect of earlier years after profit and loss account is Rs. 3,81,48,960/-. In the note on account that are mentioned in the schedule-12, the following explanation is furnished with reference to the said amount: 15. Pursuant to the change in the accounting policy of the Company, interest income on inter Corporate Deposits amounting to Rs. 400.90 lakhs including Rs. 381.49 lakhs pertaining to earlier years, which was hitherto netted off from Expenditure During Construction Pending Allocation has now been credited to interest income in the Profit and Loss Account. Consequent to this change in the accounting policy as compared to earlier years, the profit for the year is higher by Rs. 400.90 lakhs and Reserves and Surplus and Expenditure During Construction Pending Allocation are higher by Rs. 400.90 lakhs. It is on the basis of this, that the respondent claimed deduction of sum of Rs. 3,81,48,960/- from the book profits. The Assessing officer, however, did not agree. The fact that these very amounts have been subjected to tax in the earlier assessment years was agreed to, even....
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....72 ITR 291) (SC) Taxing Statute should not be interpreted in such a manner that its effect will be to cast a burden twice over the payment of tax on the taxpayer unless the language of the statute is so compellingly certain that the court has no other alternative than to accept it. (Tata Steel & Iron Co., v. Union of India 75 ITR 676). In other words, there can be double taxation if the legislature has distinctly enacted it. A plan reading of Section 115J does not, to our mind, employ the language expressly or impliedly to subject to tax the same item of income twice. Though there is no specific provision u/s.115J for deducting income that has been taxed in the earlier year, though credited to profit and loss account in a subsequent year while computing the book profits liable to tax, the proposition laid down by the special bench of the Tribunal in the case of Sutlej Cotton Mills Propounds such a theory. The general concept of taxation does not allow the taxation of income twice. It is on this basis, that the Tribunal excluded the interest on corporate deposits, for all the four years. The principal contention urged by the learned Senior Counsel for the department is that th....
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....there is specific legislative sanction for it. If one takes into account the complex and complicated scheme under the Act, it is evident that the Parliament has taken every precaution to ensure that no amount is subjected to taxation twice, unless the relevant provision specifically permits of it. There is nothing in the Act which permits the interest on corporate deposits, to be taxed twice. From a perusal of the order of the Assessing Officer, it becomes clear that for their own reasons, the respondent did not want to reflect the income on corporate deposits for the four years mentioned above, in any form whatever. However, the Assessing Officers who dealt with the returns for the corresponding years, did bring those interests directly under the purview of the tax and the tax was levied. Though the facility to bring those very amounts under Section 115J of the Act was available for two assessment years 1988-89 and 1989-90, that was not resorted to, obviously because an Assessing Officer is precluded from making any additions, deletions, or alterations to the profit and loss account, referable to Section 115J of the Act. The reason is that it is only the authorities under the C....