THE COMMISSIONER OF INCOMETAX.VIJAYAWADA V. M/S SRI JAYALAXMI TOBACCO CO.(P) LTD.

RC/165/2000

AI Insights

The case revolves around the Income Tax Appellate Tribunal's reference to the High Court concerning the legality of denying relief under Section 80HHC and the imposition of additional tax under Section 143(1A) of the Income Tax Act, 1961. The respondent, M/s. Sri Jayalakshmi Tobacco Co., P. Ltd., had filed a return claiming a deduction under Section 80HHC, which was not accompanied by an auditor's report. The Income Tax Officer initially disallowed this claim and levied additional tax. However, both the Commissioner of Income Tax (Appeals) and the Tribunal later reversed the additional tax decision, citing conflicting judgments on the interpretation of Section 80HHC. The Supreme Court's judgment in Kvaverner John Brown Engg. (India) P. Ltd. was pivotal in resolving the dispute, leading to the dismissal of the Reference Case.

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 719159 (HC-ANDHRA_PRADESH)
• Appeal Type: Others
• Pronouncement Date: 26-04-2012
• Assessment Year: misc
• Other Referred Cases: Kvaverner John Brown Engg. (India) P. Ltd. V. Asstt. Commissioner of Income Tax
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Keywords: Additional tax; Auditor's report; Deduction; Income Tax; Prima-facie adjustment
• Section: 154; 80HHC; 143(1)(a); 143(1A); 256(1)

Judgement Text

" THE HON'BLE MR JUSTICE V ESWARAIAH And THE HON’BLE SRI JUSTICE K.G.SHANKAR R.C.No.165 of 2000 DT.26-04-2012 Between: Commissiioner of Income-tax, Vijayawada. … Applicant And M/s.Sri Jayalakshmi Tobacco Co., P. Ltd., Guntur (Mangalagiri Road). … Respondent Counsel for the Appellants: Counsel for respondent: Sri The Court made the following ORDER: THE HON'BLE MR JUSTICE V ESWARAIAH And THE HON’BLE SRI JUSTICE K.G.SHANKAR R.C.No.165 of 2000 J U D G M E N T: (Per the Hon’ble Sri Justice V.Eswaraiah) The Income Tax Appellate Tribunal filed this reference case under Section 256 (1) of the Income Tax Act, 1961 (for short ‘ the Act’) for opinion of this Court to answer the following questions: 1. Whether in the facts and circumstances of the case, the Tribunal is correct in law in upholding the CIT (A)’s order that a prima-facie adjustment denying relief u/s. 80HHC cannot be made even though the assessee had not filed the auditors report along with the return, following the decision of the Allahabad High Court reported in 142 ITR 584 and the Supreme Court’s decision reported in 179 ITR (St.) 61 which were rendered in the context of registration/assessment of Charitable trusts?” 2. “Whether in the facts and circumstances of the case the Tribunal is justified in canceling the additional tax levied? In the instant case the assessee company filed return of income admitting the loss for the assessment year 1991-1992. While processing the return under Section 143 (1) (a) and determining the income, the assessee claimed deduction under Section 80 HHC as the return was not accompanied by auditors report. The Income Tax Officer also levied the additional tax. The rectification petition filed under Section 154 was also dismissed, against which the assessee filed an appeal before the Commissioner of Income Tax (Appeals) to delete the disallowance made by the Assessing Officer and also to delete the additional tax levied under Section 143 (1A) of the Act. The Commissioner of Income Tax (Appeals) by order dated 8-3-1993 following the earlier decisions of the High Court as well as the Hon’ble Supreme Court in Nanji Bhai Dongar Bhai (179 ITR (S.T) (61) held that the Assessing Officer was not justified in disallowing the claim while making prima facie adjustments under Section 143 (1) (a) of the Act, and therefore, held that the rectification order is to be cancelled and there should be no levy of additional tax. As against the said order of the Commissioner of income Tax (Appeals) the Revenue filed an appeal before the Income Tax Appellate Tribunal, and the Tribunal, by its order dated 28-2-1996 upheld the order of the Commissioner of Income Tax (Appeals) insofar as the claim for deduction provided by the statute and restored the levy of additional tax with respect to the items other than deduction under Section 80 HHC. Against the said orders of the Tribunal, at the instance of the Department, the above said questions were referred for opinion of this court. Both the counsel appearing for the parties fairly submit that the issue involved in this reference case is squarely covered by the judgment of the Supreme Court in the case of Kvaverner John Brown Engg. Iindia) (P) Ltd. V. Asstt. Commissioner of Income Tax [1]. The relevant paragraph of the aforesaid judgment of the Hon’ble Supreme Court is as follows: “We find merit in this civil appeal. As stated above, we are concerned with the assessment years 1996-97 and 1997-98. One of the main conditions stipulated by way of the first proviso to Section 143 (1) (a), as it stood during the relevant time, referred to prima facie adjustments. The first proviso permitted the Department to make adjustments in the income or loss declared in the return in cases of arithmetical errors of in cases where any loss carried forward or deduction or disallowance which on the basis of information available in such return was prima facie admissible but which was not claimed in the return or in cases where any loss carried forward, or deduction or allowance claimed in the return which on the basis of information available in such return was prima facie inadmissible. In the present case, therefore, when there were conflicting judgments on interpretation of Section 80O, in our view, prima facie adjustments contemplated under Section 143 (1) (a) was not applicable and, therefore, consequently appellant was not liable to pay additional tax under Section 143 (1A) of the 1961 Act.” In view of the Judgment of the Hon’ble Supreme Court in Kvaverner John Brown Engg. (India) P.Ltd (supra) and in view of the aforesaid facts and circumstances, the Reference Case is liable to be dismissed and it is accordingly dismissed. No costs. ______________ V. ESWARAIAH,J ________________ K.G.SHANKAR,J Dt:26-04-2012 grk THE HON'BLE MR JUSTICE V ESWARAIAH And THE HON’BLE SRI JUSTICE K.G.SHANKAR (The Judgment of the Bench delivered by Hon’ble Sri Justice V.Eswaraiah) R.C.No.165 of 2000 DT.26-04-2012 [1] (2008) 216 CTR (SC) 193 "