COMMISSIONER OF INCOME TAX Vs. REDICO KHAITAN LTD.

JUDGEMENT

(1.) THE assessee filed the return of income for the assessment year 1990 -91, which was processed under Section 143(1)(a) of the Income Tax Act, 1961 (hereinafter referred to as the Act). The Assessing Officer, while processing the return of income, made various adjustments including computation of book profits under Section 115 -J of the Act. The adjustment so made was as under:

(2.) AS a result of the aforesaid adjustment, additional tax as well as a demand under Section 115 -J of the Act was created. The assessee, being aggrieved, filed an application under Section 154 of the Act for rectification objecting to the various adjustments made by the Assessing Officer and also against the tax demanded from the assessee. The Assessing Officer, by its order dated 27th August, 1992 rejected the majority of the objections raised by the assessee. The income was revised on the total adjusted income of Rs. Nil and tax was levied on an income of Rs.18,26,602/ - as computed under Section 115 -J of the Act. Additional Tax under Section 143(1A) of the Act was computed on the amount of Rs.15,36,858/ - added by way of adjustment. The assessee, being aggrieved, filed an appeal, which was partly allowed.

(3.) THE appellate authority further found that the additional tax was incorrectly charged by the Assessing Officer holding that no additional tax was chargeable where the net result of adjustment was a negative figure. This view of the appellate authority was made by relying upon a judgment of the Allahabad High Court in Indo Gulf Fertilizers and Chemicals Corporation Ltd. Vs. Union of India and another, 195 ITR 485. The revenue, being aggrieved, by the order of the appellate authority filed an appeal before the Tribunal, which was dismissed. The revenue, being aggrieved by the order of the Tribunal, has filed the present appeal under Section 260 -A of the Income Tax Act, which was admitted on the following questions of law: -