DY. C.I.T. vs. MANISH ORGANICS INDIA LTD.

O/TAXAP/83/2000 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 83 of 2000 With TAX APPEAL NO. 163 of 2001

FOR APPROVAL AND SIGNATURE:

HONOURABLE MR.JUSTICE KS JHAVERI

and HONOURABLE MR.JUSTICE K.J.THAKER

================================================================ 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 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 ? 5 Whether it is to be circulated to the civil judge ? ================================================================ DY. C.I.T.....Appellant(s) Versus MANISH ORGANICS INDIA LTD.....Opponent(s) ================================================================ Appearance in Tax Appeal No. 83 of 2000: MR MANISH BHATT, SENIOR COUNSEL WITH MS MAUNA M BHATT, ADVOCATE for the Appellant(s) No. 1 MR TEJ SHAH, ADVOCATE for the Opponent(s) No. 1 Page 1 of 6

O/TAXAP/83/2000 JUDGMENT Appearance InTax Appeal No. 163 of 2001: MR KM PARIKH, ADVOCATE for the Appellant(s) No. 1 RULE SERVED for the Opponent(s) No. 1 ================================================================ CORAM: HONOURABLE MR.JUSTICE KS JHAVERI and HONOURABLE MR.JUSTICE K.J.THAKER

Date : 10/12/2014

ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE KS JHAVERI) 1. These matters were listed on 18.11.2014 and the following order was passed by this Court: “Mr. Parikh, learned advocate for the appellant stated that the question raised in the present appeal is covered by the decision of this Court in the case of Commissioner of Income – tax vs. M/s. Gujarat State Co-op Marketing Federation Ltd. reported in 290 ITR 160. List on 25.11.2014. To be heard with Tax Appeal No. 83 of 2000.” 1.1 Thereafter when the matters were listed on 25.11.2014, they were adjourned to today. Today when the matters are called out, Mr. Tej Shah, learned advocate for the assessee is not present. In view of the fact that sufficient time has already been granted to learned advocate for the assessee, matters are taken up for hearing today. 2. Being aggrieved and dissatisfied with the impugned orders passed by the Income Tax Appellate Tribunal, Ahmedabad Page 2 of 6

O/TAXAP/83/2000 JUDGMENT Bench ‘A’ (hereinafter referred to as ‘the Tribunal’) dated 27.12.1999 in ITA No. 2811/Ahd/1993 for the Assessment Year 1990-91 and order dated 21.12.2000 in ITA No. 3045/Ahd/1995 for the Assessment Year 1991-92, the revenue has preferred Tax Appeals No. 83 of 2000 and 163 of 2001 respectively. 2.1 These appeals were admitted by this Court for consideration of the following substantial questions of law: TAX APPEAL NO. 83 OF 2000 “1.Whether, the Appellate Tribunal is right in law and on facts in holding that additional tax under section 143(1A) was not chargeable when total income after making adjustments under section 143(1)(a) was a loss and whether the Tribunal fell in error in following the decision of the Hon'ble Gauthati High Court reported at 232 ITR 502 whereas four different High Court have held in favour of the Department, which are reported at 225 ITR 252, 229 ITR 682, 228 ITR 320 and 210 ITR 121?” TAX APPEAL NO. 163 OF 2001 Whether, the Income Tax Appellate Tribunal was justified in law and on facts in reversing the order of the commissioner of Income Tax (A) and thereby cancelling the additional tax chargeable u/s. 143(1A) of the Act disregarding the fact that the provisions were made effective from 1-4-1989?” Page 3 of 6

O/TAXAP/83/2000 JUDGMENT 3. The assessees filed return declaring loss. During the course of assessment proceedings, the assessing officer rejected the claim of the assessees and certain disallowances were made and additional tax was levied . On appeal by the assessee before the CIT(A), the CIT (Appeals) partly allowed the same and finally determined fresh loss and additional tax was also reduced. On appeal before the Tribunal by the assessees, by impugned orders, Tribunal partly allowing the appeal, deleted the additional tax levied. Being aggrieved and dissatisfied with the impugned orders passed by the Tribunal, the revenue has preferred the present Tax Appeals for consideration of the aforesaid substantial question of law. 4. The question of law raised in the present Tax Appeals is now already answered by this Court in the case of Commissioner of Income-Tax vs. Gujarat State Co- operative Marketing Federation Ltd. reported in [2007] 290 ITR 160 (Guj) wherein this Court has held as under: “3. The Supreme Court heard the said matter along with the appeal filed by the Assistant Commissioner of Income-tax against J.K. Synthetics Ltd., reported in 251 ITR 200. The Supreme Court has observed that Section 143[1][a] provided certain benefit, but after sub-section [1A] was amended by the Finance Act, 1993 with effect from 1st April, 1989, which was the date upon which sub-section [1A] has been introduced into the Act, it would be clear from the substituted sub- section [1A] that even where loss declared by an assessee had been reduced by reason of adjustments made under sub-section [1][a], the provisions of sub-section [1A] would apply. The Court further observed that it being a retrospective amendment, they could cover the controversy in Page 4 of 6

O/TAXAP/83/2000 JUDGMENT the appeal and, therefore, the appeal had to be decided in favour of the Revenue. 4. The judgment in the matter of Modi Cement, on which the Tribunal had placed its reliance had been overruled by the larger Bench of the Supreme Court. 5. In view of the judgment of the Supreme Court in the matter of Assistant Commissioner of Income- tax Vs. J.K. Synthetics Ltd. [supra], the order passed by the Tribunal is set aside and the Reference is decided in favour of the Revenue and against the assessee. The Reference stands disposed of. No costs.” 5. Having heard learned advocates appearing on behalf of the revenue and the question posed for consideration before us reproduced hereinabove and considering the decision of this Court in the case of Gujarat State Co-operative Marketing Federation Ltd. (Supra), the question, which is raised in the present appeals is required to be answered in favour of the revenue. We are not giving further elaborate reasons for the same as in the case of Gujarat State Co-operative Marketing Federation Ltd. (Supra) it is held by Hon’ble the Supreme Court that Section 143[1][a] provided certain benefit, but after sub-section [1A] was amended by the Finance Act, 1993 with effect from 1st April, 1989, which was the date upon which sub-section [1A] has been introduced into the Act, it would be clear from the substituted sub-section [1A] that even where loss declared by an assessee had been reduced by reason of adjustments made under sub-section [1] [a], the provisions of sub-section [1A] would apply. The Court further observed that it being a retrospective amendment, they could cover the controversy in the appeal and, therefore, the appeal had to be decided in favour of the Revenue. Page 5 of 6

O/TAXAP/83/2000 JUDGMENT Accordingly, the question is answered against the assessee and in favour of revenue. 6. In view of the above, the impugned orders passed by the Tribunal are quashed and set aside. The orders passed by CIT(A) are also quashed and set aside. The orders passed by Assessing Officer are restored. In view of the findings we answer the question raised in these appeals in the negative and hold that the Tribunal was not right in cancelling the additional tax chargeable u/s. 143(1A) of the Act disregarding the fact that the provisions were made effective from 1-4- 1989. Appeals are allowed accordingly. (K.S.JHAVERI, J.) (K.J.THAKER, J) divya Page 6 of 6