CIT vs. Goetze (India) Ltd (Delhi High Court)-32 SOT 101 (Del)
These appeals by the Revenue relates to Assessment Year 2001-02. The respondent-assessee, as noticed above, namely, Federal-Mogul Goetze (India) Limited, had filed return of income on 31st October, 2001 declaring „nil‟income after setting for brought forward losses and depreciation. Tax payable under Section 115JB was also computed at „nil‟. The return was taken up for scrutiny assessment and assessment order under Section 143(3) dated 29th March, 2004 was passed. Total income under the normal provisions in spite of various disallowances etc. was computed at „nil‟but income taxable under Section 115JB was computed at Rs.90,40,4,412/-.
In this year, i.e., the Assessment Year 2001-02, the Assessing Officer had noticed that there was withdrawal of Rs. 1,49,55,335/- from the valuation reserve, but the amount had not been added to the profit and loss accounts filed with the income tax return for computing book profits under Section 1 15JB. The assessee had placed reliance on clause (i) of Explanation below Section 11 5JB (2) but the Assessing Officer rejected the said contention. The assessee did not succeed in the first appeal and the tribunal has observed that reliance placed on the order of the tribunal for the Assessment Year 2000-01 in ITA No. 208/Del/2005 was distinguishable as it related to the jurisdiction of the Commissioner under Section 263 of the Act. In other words, tribunal did not accept the plea of the respondent-assessee.
By order dated 16th May, 2012, the following substantial questions of law were framed in the present appeals:-
“(i) Whether the Income Tax Appellate Tribunal was right in holding that while computing book profit under Section 1 15JA (sic. Section 115JB) of the Income Tax Act, 1961, no disallowance under Section 14A was required to be made?
(ii) Whether the Income Tax Appellate Tribunal was right in deleting interest under Section 234D of the Income Tax Act, 1961?”
Learned counsel for the respondents-assessee, during the course of hearing, has fairly conceded that the first question has to be answered in favour of the Revenue and against the assessee in view of specific provisions in the Explanation 1 below Section 115JB(2) clause (f). The Assessing Officer it is stated had made an addition of Rs.88,292/- to the book profits towards expenditure incurred having nexus with dividend income, which were exempt under Section 10(33). Recording the said statement, the first question is answered in favour of the appellant-Revenue and against the respondent-assessee.