MAKUM TEA CO INDIA LIMITED Vs. DEPUTY CIT

JUDGEMENT

(1.) THE petitioner, Makum Tea Company (India) Limited, is a limited company and is an assessee under the Income-tax Act, 1961. In this writ petition, the petitioner-company has challenged the order dated March 19, 1993 (annexure-II), issued under Section 143(1)(a) of the Income-tax Act, 1961, demanding income-tax and additional tax for the assessment year 1992-93 and the order dated June 10, 1993, in purported exercise of powers under Section 154 of the Act refusing to rectify the mistakes so far as interest on deposit and interest on loan, etc., are concerned and adding the same in the total income of the petitioner.

(2.) THE petitioner-company submitted its return of income for the assessment year 1992-93 relevant to the previous year 1991-92 on December 30, 1992, showing a total income of Rs. 75,61,610. THE total tax including surcharge payable by the petitioner-company amounted to Rs. 39,13,134. In addition a sum of Rs. 1,96,656 was also payable on account of interest under Sections 234B and 234C of the Act. Accordingly, the petitioner-company has paid a total sum of Rs. 41,09,790. THE petitioner-company also furnished a detailed computation of taxable income for the year ended on March 31, 1992, along with the return of income indicating the depreciation allowable, additions made to the fixed assets during the year 1992, amounts disallowable under Section 43B, profit on sale of investment, shares and lease, etc. In the purported exercise of powers under Section 143(1)(a), the first respondent added certain income mentioned in para. 5 of the writ petition and determined the total income at Rs. 1,34,47,568 and levied the total tax payable at Rs. 60,51,403. THE first respondent also determined surcharge payable at Rs. 9,07,710 and an additional tax under Section 143(1A) of the Act amounting to Rs. 9,09,196. After adjustment of the amount already paid by the petitioner-company, a net amount of Rs. 47,82,173 was determined as payable. THE petitioner-company filed a petition for rectification of the mistake apparent on the face of record under the provisions of Section 154 of the Income-tax Act, 1961. In the said petition (annexure-III), it was pointed out that the addition made by respondent No. 1 as pointed out in para. 5 of the written statement resulted in double taxation. It was indicated in the said petition that at page 11 of the balance-sheet, the amount of Rs. 4,18,20,484 shown as profit before taxation includes other income of Rs. 1,68,33,032 and the break up of which is available in schedule 14 (page 18) of the balance-sheet shows that the other income amounting to Rs. 1,68,33,032 also includes the income which has been added back. It was further pointed out that the mistake is apparent on the face of the record and this is required to be rectified, and till such rectification is made, the tax demand of Rs. 47,82,173 may be stayed.

(3.) DR. Saraf submits that the respondents acted beyond their jurisdiction in adding the amount of interest on deposit and interest on loan as those were not income from other sources. DR. Saraf also questioned the powers of the respondents under Section 143(1)(a) of the Act to make adjustment of the income derived from interest on deposit which is already included in the income from other sources which has been included in the other income of Rs. 1,68,33,032. The purported exercise of powers under Section 143(1)(a) of the Act has been assailed as beyond the jurisdiction of respondent No. 1 inasmuch as no deduction, allowance or relief for loss carried forward was claimed by the petitioner-company in the return and this rules out the scope of prima facie adjustment of the income.