2007 (9) TMI 268

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....,620. In the course of assessment proceedings it was noticed that although the assessee had excluded the income of floppy units II and III from its total income by claiming exemption under sections 10A and 10B of the Act, the depreciation in respect of these units had been deducted from its income. An explanation was sought from the assessee in this regard. By its letter dated January 8, 1999, the assessee submitted that the claim for depreciation was a clerical mistake. The assessee filed a revised computation. The assessee filed a further application on February 8, 1999, withdrawing its claim of deduction under section 10B of the Act in respect of floppy unit II for the assessment year in question, that is, 1996-97 since that unit had inc....

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....eals) held that since the tax payable on the total income as assessed was nil, there was no positive income and, therefore, the penalty could not be levied. The appeal filed by the Revenue as well as cross-objections filed by the assessee were heard together by the Tribunal. In its cross-objections, the assessee had sought to support the order of the Commissioner (Appeals) additionally on the ground that the Assessing Officer had not recorded his satisfaction in the assessment order that the penalty proceedings ought to be initiated against the assessee. The Tribunal, inter alia, relied on the decision of this court in CIT v. Ram Commercial Enterprises Limited [2000] 246 ITR 568 and concluded that the Assessing Officer had not recorde....

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....nce with, and subject to the provisions (including provisions for the levy of additional income tax) of, this Act in respect of the total income of the previous year of every person: Provided that where by virtue of any provision of this Act income-tax is to be charged in respect of the income of a period other than the previous year, income-tax shall be charged accordingly. (2) In respect of income chargeable under sub-section (1), income-tax shall be deducted at the source or paid in advance, where it is so deductible or payable under any provision of this Act." He further pointed out that the expression "total income" in the above provision has been defined under section 2(45) of the Act is as under: "2. (45) 'total income' m....

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....ome. The position that existed in law earlier has been explained. The relevant observations of the Supreme Court in this regard read as under (page 105 of 289 ITR) "Applying the Elphinstone case [1960] 40 ITR 142 (SC) to the present case, it can be held: a. 'Total income' can only connote a positive figure and prior to the 2003 amendment, Explanation 4(a) to section 271(1)(c) required the computation to be done with reference to 'total income'. b. The computation in the case of a loss making assessees, as in the present case cannot be made. c. The words 'in addition to any tax payable' can only be understood as the words 'additional income-tax' were in the Elphinstone case [1960] 40 ITR 142 (SC) where this court held that these ....

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....riod prior to April 1, 2003, or to any assessment year prior to the assessment year 2003-04. It is the well-settled legal position that an amendment can be considered to be declaratory and clarificatory only if the statute itself expressly and unequivocally states that it is a declaratory and clarificatory provision. If there is no such clear statement in the statute itself, the amendment will not be considered to be merely declaratory or clarificatory." (emphasis supplied) In view of the unambiguous declaration of the law by the Supreme Court, it is beyond doubt that no penalty can be levied under section 27 of the Act on the assessee for the assessment year in question that is 1996-97 since there is no positive assessed income on which....