Commissioner Of Income Tax Iii,Chennai v. Southern Petro Chemical Industriescorporation Ltd.,Spic House

IN THE HIGH COURT OF JUDICATURE AT MADRAS Coram THE HONOURABLE MR. JUSTICE M.M.SUNDRESHandTHE HONOURABLE MR. JUSTICE N.ANAND VENKATESH T.C.(A). No.287 of 2010 Commissioner of Income Tax III,Chennai... Appellant vs. Southern Petro Chemical IndustriesCorporation Ltd.,SPIC House, No.83, Anna Salai,Guindy, Chennai - 32... Respondent Appeal filed under Section 260A of the Income Tax Act, 1961against the order of the Income Tax Appellate Tribunal "B"Bench, Chennai dated 05.06.2009 passed in I.T.A.No.1975/Mds/2008.ITA Np.1975/Mds/2008 has been filed against the order dated07/02/2008 in ITA No.307 & 338/06-07 passed by the commissionerof Income-I Tax (Appeals)-V, Chennai-34. ITA No.307 & 338/06-07 has been filed against the order dated31/10/2006 in No.AAACS4668K/51001-S/2006-07 passed by the DeputyCommissioner of Income-Tax, Company Circle V(1), Chennai-34 AAACS4668K/51001-S/2006-07 has been filed against the orderdated 13/06/2006 in AAACS4668K/51001-S/2000-01/1TAT passed bythe Assistant Commissioner of income -Tax Company circle V (1),Chennai-34 for the Assessment year 2000-01.For Appellant:Mr.T.RavikumarFor Respondent :Mr.Subbaraya Iyer (Judgment of the Court was delivered by M.M.SUNDRESH, J.) The Revenue has come up with the appeal being aggrievedagainst the order of the Tribunal by formulating the followingsubstantial questions of law: 1.Whether in the facts and in the circumstancesof the case, the Tribunal was right in holding thatMAT credit is to be set off from the tax payablebefore setting off the tax deducted at source andadvance tax paid? 2.Whether on the facts and in the circumstancesof the case, the MAT credit can be given priority ofset off against tax payable, contrary to the scheme ofSchedule G of Form 1? 3.Whether the interest under Sections 234B and234C has to be calculated after giving the MAT creditagainst the tax payable on the basis of normalcomputation? 4.Whether on the facts and in the circumstancesof the case, the Tribunal was right in holding thatonly 2% of the exempt dividend income should bedisallowed while computing the book profits instead ofdirecting the Assessing Officer to make thedisallowance in accordance with rule 8D of the IncomeTax Rules? 2.Learned counsel appearing for the Revenue would submitthat substantial questions of law 1 to 3 are covered by thedecision of the Apex Court rendered in Commissioner of IncomeTax Vs. Tulsyan Nec. Ltd. ((2011) 330 ITR 0226) against theRevenue and in favour of the assessee and thus these questionsof law are answered against the Revenue. 3.Insofar as the fourth substantial question of law isconcerned, it is submitted that inasmuch as the assessee itselfdid not produce any material with respect to expenditureincurred on the exempted income, the assessing officer hascorrectly done the guess work. The Tribunal ought not to haveinterfered with it by comparing it with the income under the https://hcservices.ecourts.gov.in/hcservices/ normal provisions. Therefore, the substantial question of lawwill have to be answered in favour of the Revenue. 4.Learned counsel appearing for the assessee would submitthat the assessing officer did accept the order of the AppellateTribunal dated 02.12.2002 and retained 2% of the disallowance.However, while giving effect to the order of the Tribunal, hehas wrongly adopted the dividend of 10% while computing bookprofit as against the reduction of expenditure from 10% to 2% incomputing the income under the provisions of the normalprovisions of the Income Tax Act, based upon the decisionrendered by the Tribunal while passing the order. Hence nointerference is required. https://hcservices.ecourts.gov.in/hcservices/ normal provisions. Therefore, the substantial question of lawwill have to be answered in favour of the Revenue. 4.Learned counsel appearing for the assessee would submitthat the assessing officer did accept the order of the AppellateTribunal dated 02.12.2002 and retained 2% of the disallowance.However, while giving effect to the order of the Tribunal, hehas wrongly adopted the dividend of 10% while computing bookprofit as against the reduction of expenditure from 10% to 2% incomputing the income under the provisions of the normalprovisions of the Income Tax Act, based upon the decisionrendered by the Tribunal while passing the order. Hence nointerference is required. 5.We have perused the order of the assessing officer aswell as the Tribunal. It is a case where admittedly the assesseedid not produce any material to show that it had incurredexpenditure. Secondly, the assessing officer himself hasretained 2% of the disallowance. Even the assessing officer didnot give any reason for computing the dividend income at 10%while computing the book profit. Under those circumstances only,the Tribunal passed the order. 6.Though we find force in the submission made by thelearned counsel for the Revenue that the reduction of theexpenditure from 10% to 2% qua normal provisions of the IncomeTax Act differs from the book profit, we find that there is nomaterial which has been considered by the assessing officerwhile adopting 10% insofar as book profit is concerned. 7.In such view of the matter, we find that the issue withrespect to quantum of investment and the cost incurred have notbeen taken into consideration. Therefore, we do not find anysubstantial question of law warranting interference.Accordingly, the Tax Case Appeal stands dismissed. However, wemake it clear that dismissal of the appeal is only on the factsituation and therefore, the percentage adopted by the Tribunalcannot be taken as a precedent. No costs. Sd/- Assistant Registrar(CCC) //True Copy// Sub Assistant Registrar To 1.The Income Tax Appellate Tribunal,"B" Bench, Chennai. 2.The Commissioner of Income-Tax(Appeals)-V121,Mahatma Gandhi Road,Chennai-34 3.The Deputy Commissioner of Income-Tax, Company circle V(1)Chennai. 4.The Assistant Commissioner of Income-Tax, Company circle V(1)Chennai. +1cc to Mr.Subbaraya Aiyar, Advocate, S.R.No.45939+1cc to Mr.T.Ravi Kumar, Advocate, S.R.No.46006 T.C.(A).No.287 of 2010(CO)GSP(01/08/2018)