COMMISSIONER OF INCOME TAX Vs. TATA YODOGAWA LTD

JUDGEMENT

(1.) This is a Tax Reference Case sent under Section 256(1) of the Income Tax Act, 1961 by the Income Tax Appellate Tribunal, Patna Bench, Patna . The Tribunal has referred two questions of Law, which are as under:-

(2.) It appears from the statement of the case submitted before us that the Tribunal not only decided the issues in favour of the assessee on the basis of legal opinion formed by it in the order dated 8.1.1998 but also was of the view that the order ought to be rectified under Section 154 of the I.T. Act, 1961 which was wrongly done by the lower authority, looking to the scope of Section 154 of the Act of 1961. The Assessing Officer has given reason for forming opinion that the provisions of the excise duty, written back, should be held as profit from business for the purpose of deduction under Section 32 AB of the I.T. Act, 1961 and the Tribunal was justified in law in holding that the dividend (Rs. 5.05 Lacs), capital gains (Rs. 10.75 Lacs) were also deductible under Section 32 AB of the Act of 1961. However, in the order of reference dated 18.5.99, the questions have been referred to us for deciding the question of correctness about the decision given by the Tribunal in order dated 8.1.98 with respect to its interpretation of Section 154 of the Act in the facts of the case.

(3.) The learned counsel for the revenue Sri Deepak Roshan vehemently submitted that the Tribunal has committed serious error of law by taking help of Section 41(1)(a) of the Act, 1961 when specific provision for computation under Section 32 AB is available. Counsel for the Revenue further vehemently submitted that, it is true that the assessee has submitted his returns in relevant years and claimed the liability created by the order passed by the Excise Department to be a liability of the assessee and he therefore, was not taxed on that amount which was meant for the excise duty payment. Ultimately the Patna High Court decided in favour of the assessee and held, that the assessee is not liable to pay the excise duty; therefore, from the judgment of the Patna High Court, it is clear that the liability of the Assessee in the relevant year was not ascertained as it was disputed by the Assessee and ultimately, it was found that the assessee was not liable to pay the excise duty and therefore, the said liability of the assessee was not ascertained liability and consequently, in view of Section 32 AB (3)(V), the Assessee was not entitled to add the accumulated amount for the contingent liability as provided under the relevant year so as to claim the adjustment under Section 32 AB of the Act. So far as the dividend and the capital gains are concerned, learned counsel for the appellant did not press the issue seriously in view of the judgments rendered by the various High Courts wherein, it has been held that the dividend and the capital gains are income for the purpose of allowance under Section 32AB of the Income Tax Act.