Case Law Details
Brief of the Case
Bombay High court held In the case of R.B. Shreeram Durgaprasad (P) Ltd. vs. The CIT that concept of double taxation is not attracted in the present matter. The Export firm has to pay tax as it has actually utilized that amount as its income while the assessee has to pay tax as it attempted to conceal that income. The income really belongs to the assessee and he is answerable to pay tax upon it even if the same taxed in the account of export firm.
Facts of the Case
The assessee and the other assessee (Export firm – not party) were two units which belong to a group of companies commonly known as Durgaprasad and More group of companies. Both assessee’s deal in export of manganese. Search and seizure proceedings were conducted on both the parties and found that real profit were not entered in books of accounts. The assessments were then completed under Section 144 of the Income Tax Act. ITAT has confirmed additions during the A.y. 1950-51 to 1958-59 on export firm. The Assessee disputed that in light of above additions in past, current addition of Rs. 1.71 crores is not correct and it will amount to double taxation.
Contention of the Assessee
The assessee company has submitted that income of Rs.1.71 crores is already assessed to tax at the hands of Export firm, Private Limited Company. It cannot be called upon to pay tax as it will be amount to double taxation. It needs to know that the other party i.e. export unit is not the party to this proceedings. The ld. Counsel of the assessee argued that same income cannot be taxed twice. He referred the decision (1966) 60 ITR 0074 (ITO vs. Bachu Lal Kapoor) in which it was decided that the individual can not be separately taxed in respect of income of HUF.
Contention of the Revenue
The ld. Counsel of the revenue submitted that it is not same income and same assessee is not being subjected to tax in relation to that income. He contends that thus concept of double taxation is not attracted here. He came to a conclusion that there was unaccounted business, there was also hundi loans from the parties which were not genuine loans. manganese ore was exported at a rate higher than rates accounted for in the books and unauthorized foreign exchange earned outside India was sold at unauthorized rates and more profits were made. This profit was brought back to India through illegal channels and part of money was kept in the custody of export firm.
Held by ITAT
ITAT confirmed the addition of Rs. 1.71 crores on the ground that it is not the case of double taxation. The income is being taxed in the case is not the same income and also the same assessee is not being charged twice.
Held by High Court
The Supreme Court in the case of (2004) 6 SCC 235 (CIT vs. P.V.A.L. Kulandagan Chettiar) explained the concept of double taxation. It explained that to constitute double taxation, objectionable or prohibited, the two or more taxes must be (1) imposed on the same property, (2) by same State or Government; (3) during the same taxing period; and (4) for the same purpose. There is no double taxation where (a) the taxes are imposed by different States, (b) one of the impositions is not a tax, (c) one tax is against property and the other is not a property tax, or (d) the double taxation is indirect rather than direct.
In this case, there is no dispute in addition of income. There is no challenge to this addition. The only contention is that said amount is already taxed. The amount which has gone to Export firm actually belonged to assessee. It has concealed that income and clandestinely made it over to export firm. Thus, its ownership over said amount of Rs.1.71 Crore is not in dispute. It cannot be permitted to urge that as Export firm has paid tax on that amount; the same cannot be demanded from it. It is settled that it cannot be permitted to take advantage of its own wrong. Thus, the Export firm has to pay tax as it has actually utilized that amount as its income while the assessee has to pay tax as it attempted to conceal that income. In this situation, we find that the concept of double taxation is not attracted in the present matter.
Accordingly decided against the assessee.
There is a decision of the Supreme Court in the case of State of Karnataka vs Ayyanahalli Bakkappa &Sons (1988)71 STC 202 where the same turnover of sales were already assessed in the hands of three depots which were not registered as dealers, the Department cannot pass a reassessment order against the Respondent in respect of the same turnover, since two assessments on the same turnover is not permissible.