The Commissioner Of Income Tax, Chennai v. M/S.hydro S&S Industries Ltd

Dated : 28.04.2009 Coram : THE HONOURABLE MR.JUSTICE K.RAVIRAJA PANDIANandTHE HONOURABLE MR.JUSTICE P.P.S.JANARTHANA RAJA Tax Case (Appeal) No.307 of 2009 The Commissioner of Income Tax,Chennai . ... AppellantVs. M/s.Hydro S&S Industries Ltd.,No.5, Smith RoadDhun Building827,Anna SalaiChennai 2. .. Respondent Tax Case (Appeal) preferred under section 260A of the Income Tax Act, 1961, against the order ofthe Income Tax Appellate Tribunal, Madras 'A' Bench, dated 19.9.2008 made in ITA No.2193/Mds/2007 for the assessment year 2000-01. For appellant: Mr.Arun Kurian JosephStanding Counsel (Income Tax) JUDGMENT (Judgment of the Court was delivered byK.RAVIRAJA PANDIAN,J.) The revenue is on appeal before us against the order of the Income Tax Appellate Tribunal, MadrasA Bench, made in ITA No.2193 /Mds/2007 dated 19.9.2008 relating to the assessment year 2000-01. 2. The assessee is in the business of manufacture and sale of plastic components. For the assessmentyear 2000-01, the assessee filed its return on 30.11.2000 showing total income as nil after claimingdeduction under Section 80HHC, 80IB and 80G of the Act. In the assessment order, the assessingofficer restricted the deduction under Section 80IB to Rs.31,03,942/- in the computation of BookProfits for the purpose of section 115JA. Aggrieved by the said order the assessee filed an appealbefore the Commissioner of Income Tax (Appeals), who allowed the appeal in favour of the assessee.The revenue carried the matter on further appeal to the Income Tax Appellate Tribunal. TheTribunal allowed the appeal in favour of the assessee following an order of the Mumbai SpecialBench in the case of Syncome Formulations (I) Ltd. The correctness of the same is now canvassed inthis appeal by formulating the following substantial question of law:-Whether in the facts and circumstances of the case, the Tribunal was right in allowing deductionunder Section 80IB on the basis of book profits under Section 115JA and not on the basis of eligibleprofits under Section 80IB as per normal computation? 3. When the matter is taken up for orders, the learned counsel appearing for the revenue fairlysubmitted that the issue is covered against the revenue and in favour of the assessee by the decisionof the Division Bench of this Court in the case of COMMISSIONER OF INCOME TAX VS.RAJANIKANT SCHENELDER ANDASSOCIATES P. LTD (302 ITR 22) wherein it was held that the useof the words "in accordance with the provisions of Parts II and III of Schedule VI to the CompaniesAct" in Section 115JA of of the Income Tax Act, 1961 is made for a limited purpose of empoweringthe Assessing Officer to rely upon the authentic statement of accounts of the company. While solooking into the accounts of the company, he has to accept the authenticity of the accounts withreference to the provisions of the Companies Act which obligates the company to maintain itsaccounts in a manner provided by that Act and the accounts to be scrutinised and certified by thestatutory auditors and approved by the company in the general meeting and thereafter, to be filedbefore the Registrar of Companies, who has a statutory obligation to examine and be satisfied thatthe accounts of the company are maintained in accordance with the requirements of the CompaniesAct. Sub-section (1A) of Section 115JA does not empower the Assessing Officer to embark upon afresh enquiry in regard to the entries made in the books of account of the company. It was furtherheld by the Division Bench of this court that the assessing officer was not entitled to alter the profitand loss account prepared by the assessee under the provisions contained in the Companies Actwhile arriving at the book profit under Section 115JA and the book profit so arrived at should bebasis for taxation and therefore, the computation under section 80HHC should be limited to the caseof profits of eligible category only. The finding arrived at by the Tribunal was correct and inconformity with the decision of the Supreme Court. 4. The question of law framed in this appeal is identical to the one considered by the Division Bench.Hence, the appeal is dismissed as the question of law has already been decided in favour of theassessee and against the Revenue. krr To 1. The Commissioner of Income Tax Chennai 2. The Income Tax Appellate Tribunal,Chennai 'A' Bench,Chennai