AI Drafter 
TaxTMI 
TaxTMI 
2005 (1) TMI 41
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....ing to excise duty in the present case was an 'ascertained liability' within the meaning of that expression in clause (c) of the Explanation in section 115J(1) of the Income-tax Act, 1961?" The assessment year is 1988-89 and the relevant accounting period is the year ended October 31, 1987. The assessee, a private limited company, worked out assessable income at Rs. nil but the return of income declaring total income of Rs. 15,732 under section 115J of the Act was filed on June 30,1988. The net profit as per profit and loss account was Rs. 52,439. The Assessing Officer computed taxable income under the provisions of section 115J of the Act at Rs. 10,46,800 by adding back undischarged excise liability of Rs. 57,52,339. Except for mentioni....
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.... for the purposes of working out the book profits as envisaged by the provisions of section 115J of the Act. According to Mr. Naik the Tribunal has merely observed that the assessee was in receipt of notices from the Excise Department and in these circumstances the Tribunal had committed an error in treating the liability based on such notices as ascertained liabilities. Elaborating on the submission it was contended that the Tribunal had not found that the liability was based on any notice of demand and coupled with the fact that the liability was disputed by the assessee it was wrongly held to be an ascertained liability and deductible. Mr. Manish J. Shah, the learned advocate appearing on behalf of the respondent-assessee, submitted t....
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....re in the case of an assessee being a company, the total income, as computed under this Act in respect of any previous year relevant to the assessment year commencing on or after the 1st day of April, 1988 (hereafter in this section referred to as the relevant previous year), is less than thirty per cent, of its book profit, the total income of such assessee chargeable to tax for the relevant previous year shall be deemed to be an amount equal to thirty per cent, of such book profit. Explanation.- For the purposes of this section, 'book profit' means the net profit as shown in the profit and loss account for the relevant previous year prepared in accordance with the provisions of Parts II and III of the Sixth Schedule to the Companies Ac....
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....nts as per clauses (a) to (f) and is required to be reduced by amounts as per clauses (i) to (iii). For the present only clause (c) of the Explanation is relevant. The net profit figure arrived at in the profit and loss account is required to be increased by "the amount or amounts set aside to the provisions made for meeting liabilities other than ascertained liabilities". It is in the light of this requirement of the provisions that the finding recorded by the Tribunal will have to be tested and appreciated. However, before adverting to the facts found by the Tribunal it is necessary to take note of the decision of the apex court in the case of CIT v. Bharat Carbon and Ribbon Manufacturing Co. P. Ltd. [1999] 239 ITR 505 which has laid d....
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..... While rejecting the contention of the Revenue that there was no liability at all in the relevant accounting year the Tribunal has further found that "on the facts of this case it must be held that it was an ascertained liability." Therefore, in the light of the aforesaid findings of fact recorded by the Tribunal, there is no infirmity in the order of the Tribunal which would require the court to hold that the Tribunal had committed any error in law. In so far as the contention raised on behalf of the Revenue is concerned, it is apparent that the said contention was specifically raised before the Tribunal and the Tribunal has categorically found that the liability was an ascertained liability and rejected the submission that there was n....