SILVER FABRICS P. LTD,MUMBAI vs. JCIT (OSD)4(3), MUMBAI

The captioned appeal by assessee for Assessment Year 2009-10 is directed against the order of Ld. Commissioner of Income Tax (Appeals)-8 [CIT(A)], Mumbai dated 03/01/2003 qua confirmation of levy of surcharge on Tax computed u/s 115JB.

Briefly stated, the assessee was resident corporate assessee engaged in the business of cloth trading whose income was determined at Rs.36,50,464/- under normal provisions and Rs. 2,95,63,955/- u/s 115JB in scrutiny assessment u/s 143(3) vide Assessing Officer [AO] order dated 30/11/2011. Accordingly, tax on Book Profit as per MAT provision was computed as follows:- No. Particulars Amount (Rs.) 1. Book Profit u/s 115JB 2,95,63,955/- 2. Tax on Book Profit @10% 29,56,392/- 3. Surcharge @10% on Tax 2,95,639/- Total Tax Payable 33,49,592/- The assessee contended that as income under normal provisions was below Rs.1 crore and hence surcharge could not be applied on its Tax computed u/s 115JB. The First Appellate Authority, after considering the deeming provisions of Section 115JB, concluded that the assessee was liable for surcharge as deemed total income exceeded Rs. 1 Crore. Aggrieved, the assessee is in appeal before us. 3. Before us, the Ld. Counsel for assessee [AR] contended that surcharge could be applied on Tax only if the total income as per normal provisions of the act exceeded Rs. 1 Crore and not otherwise and hence, the same has wrongly been levied by the lower authorities. Per contra, Ld. DR, by drawing our attention to the provisions of Section 115JB contended that this Section overrides all the provisions of the act and as per these provisions, where tax on total income as per normal provisions is less than prescribed percentage of the M/s Silver Fabrics Private Limited Assessment Year 2009-2010 book profits, then such book profit is deemed to the be the total income of the assessee and accordingly, tax is computed qua deemed total income. As the deemed total income of the assessee exceeded prescribed threshold of Rs.1 crore, surcharge has correctly been applied by the lower authorities. 4. We have heard the rival contentions and perused the relevant statutory provisions as contained in Section 115JB. This Section starts with non-obstante clause and override the Act. We also find that where total income of the assessee as computed under the normal provisions is less than the prescribed percentage of the book profits, then the total income of the assessee as computed get substituted by the book profits of the assessee and deemed to be the total income of the assessee for all purposes. These are deeming fiction and hence are to be applied strictly. Hence, we find strength in the argument of the Ld. DR and conclude that surcharge was rightly levied on the tax payable by the assessee as its total income, though arrived at by deeming fiction of Section 115JB, exceeded the prescribed limit. Therefore, we dismiss the appeal of the assessee. In nutshell, the appeal of the assessee gets dismissed. 5.