COMMISSIONER OF INCOME TAX - CENTRAL - II vs. RIDDHI SIDDHI GLUCO BOILS LTD

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TAXAP/442/2012HC GujaratGJHC24022845201209 August 2012Bench: HONOURABLE MR. JUSTICE VIJAY MANOHAR SAHAI,HONOURABLE MR. JUSTICE N.V.ANJARIA2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court agreed with the view taken by the Income Tax Appellate Tribunal. The Tribunal had relied on the decision in Commissioner of Income Tax vs. Khaitan Chemicals And Fertilizers Ltd. (307 ITR 150). In that case, it was held that net profit for the purpose of Section 115J (which is analogous to Section 115JB) should be computed only after deducting prior period expenses/extraordinary items. Applying this ratio, the Tribunal had dismissed the Revenue's Second Appeal. Consequently, the High Court found no substantial question of law arising for consideration and dismissed the Revenue's appeal as meritless.

What were the facts?

The Revenue, Commissioner of Income Tax - Central - II, filed a Tax Appeal before the High Court of Gujarat at Ahmedabad. The appeal challenged an order passed by the Income Tax Appellate Tribunal (ITAT). The ITAT had dismissed the Revenue's Second Appeal. The core issue revolved around the computation of book profit under Section 115JB of the Income Tax Act, 1961. The assessee, Riddhi Siddhi Gluco Boils Ltd, had been allowed deductions for interest expenses and prior period expenses in its book profit calculation. The Revenue contended that such adjustments should not have been made.

What were the issues?

1. Whether the Appellate Tribunal has substantially erred in law in holding that adjustment in book profit could not be made by including disallowance of interest expenses and prior period expenses while computing book profit under Section 115JB? (Question of law) Assessee's Contention: The judgment does not record any specific contentions made by the assessee before the High Court. However, the ITAT's decision, which the High Court agreed with, implies the assessee argued that deductions for interest and prior period expenses were permissible in book profit computation. Revenue's Contention: The Revenue contended that adjustments for interest expenses and prior period expenses should not have been allowed while computing book profit under Section 115JB. They argued that the ITAT erred in allowing these deductions.

Which sections of the Income-tax Act were involved?

Section 115JB,Section 115J

AI-generated summary — verify with the full judgment below

TAXAP/442/2012 1/2 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL No. 442 of 2012 For Approval and Signature: HONOURABLE MR.JUSTICE V. M. SAHAI

HONOURABLE MR.JUSTICE N.V. ANJARIA ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment? No 2 To be referred to the Reporter or not? No 3 Whether their Lordships wish  to see the  fair copy of the judgment? No 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder? No 5 Whether it is to be circulated to the civil judge? No ========================================================= COMMISSIONER OF INCOME TAX - CENTRAL - II Versus RIDDHI SIDDHI GLUCO BOILS LTD ========================================================= Appearance : MRS MAUNA M BHATT for Appellant(s) : 1, None for Opponent(s) : 1, ========================================================= CORAM : HONOURABLE MR.JUSTICE V. M. SAHAI and HONOURABLE MR.JUSTICE N.V. ANJARIA Date : 09/08/2012 ORAL JUDGMENT (Per : HONOURABLE MR.JUSTICE V. M. SAHAI) 1.0 We   have   heard   Mr.   M.   R.   Bhatt,   learned   senior   standing counsel assisted by Mrs. Mauna Bhatt, learned counsel appearing for the Revenue.

TAXAP/442/2012 2/2 JUDGMENT 2.0 This tax appeal has been filed on the following proposed substantial questions of law. “ Whether the Appellate Tribunal has substantially erred in law in holding that adjustment in book profit   could   not   be   made   by   including disallowance of interest expenses and prior period expenses while computing book profit u/s.115JB?” 3.0 The Commissioner of Income Tax has allowed deduction with regard   to   interest,   expenses   and   prior   paid   expenses   while computing book profit. The Tribunal relied on the decision reported in    Commissioner  of   Income  Tax  vs.   Khaitan  Chemicals  And Fertilizers Ltd. [307 ITR 150]  wherein it has been held that net profit for the purpose under Section 115J was to be computed only after deducting the prior period expenses/extra ordinary items. On the basis of ratio of Khaitan Chemicals And Fertilizers Ltd (supra) the Tribunal has dismissed the Second Appeal filed by the Revenue. 4.0 We are in agreement with the view taken by the Tribunal. In that view of the matter, no substantial question of law arises for consideration of this Court in the present appeal. This tax appeal is meritless. Hence it is dismissed accordingly . [V. M. SAHAI, J.] [N. V. ANJARIA, J.] Amit

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