BSEL Infrastructure Realty Ltd. v. Asstt. CIT

SUBSCRIBE FOR FULL CONTENT


The Tax Publishers2012 TaxPub(DT) 2501 (Mum-Trib) : (2012) 137 ITD 0061 : (2012) 150 TTJ 0159 : (2012) 078 DTR 0147 INCOME TAX ACT, 1961 --Penalty under section 271(1)(c)--Concealment Addition in normal provisions of Act vis-a-vis income computed under section 115JB--The penalty under section 271(1)(c) in the case of the assessee cannot be imposed, because there was no tax sought to be evaded because the additions in respect of which penalty have been imposed, was made while computing the total income under the normal provisions of the Act and finally the income of the assessee was determined on the basis of the book profit under section 115JB. Accordingly, the penalty imposed by the assessing officer and as confirmed by the Commissioner (Appeals) is cancelled. The first issue that is, whether the penalty under section 271(1)(c) can be levied in respect of addition/disallowance made by the assessing officer under the normal computation of the Act when the assessment has been finally made and tax has been paid under section 115JB. It is an undisputed fact in this case that under the normal provisions, the total income was assessed at Rs. 16,13,33,970 and book profit under section 115JB the income was computed at Rs. 67,44,11,568. Since the tax computed under the provisions of section 115JB was higher than the tax computed on the income under the normal provisions of the Act, therefore, the assessing officer has completed the assessment and levied the tax under section 115JB only. On this background, we proceed to analyse, whether in such a situation penalty under section 271(1)(c) can be levied in this case. Section 115JB starts with a non-obstante clause and provides that where in the case of an assessee-company the income-tax is payable on the total income as computed under this Act is less than 15% of its book profit, such a book profit shall be deemed to be the total income of the assessee and the tax payable by the assessee on such total income shall be the amount of income tax. The scheme of the Act is that, if the tax payable under the normal procedure, i.e., under the normal computation under the IT Act is higher, then such amount is taxable income of the appellant. On the other hand, if the book profits are deemed to be the total income of the assessee in terms of section 115JB and is more than the income under the normal provisions of the Act, then by legal fiction such a book profit will be deemed to be the 'total income' of the assessee. Thus, if the tax has been imposed and collected on the deemed income under section 115JB in the assessment, then the tax under the normal provisions/computation is not leviable or charged. On the same logic, if any addition or disallowance has been made in the normal computation/provisions of the IT Act and finally assessment has not been completed or tax has not been levied on such normal computation, then such an additions/disallowances cannot be a subject matter of penalty, as no tax have been levied on such additions/ disallowances. When the income-tax is paid on the book profits by a legal fiction, such a legal fiction has to be taken to its logical conclusion and it cannot be held that for the purpose of penalty, normal computation would be considered even though tax has not been levied under the normal provision/computation. [Para 8] The penalty under section 271(1)(c) in the case of the assessee cannot be imposed, because there was no tax sought to be evaded because the additions in respect of which penalty have been imposed, was made while computing the total income under the normal provisions of the Act and finally the income of the assessee was determined on the basis of the book profit under section 115 JB. Accordingly, we cancel the penalty imposed by the assessing officer and as confirmed by the Commissioner (Appeals) is cancelled. [Para 8] SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2012 TaxPub(DT) 2501 (Mum-Trib) : (2012) 137 ITD 0061 : (2012) 150 TTJ 0159 : (2012) 078 DTR 0147

INCOME TAX ACT, 1961

--Penalty under section 271(1)(c)--Concealment Addition in normal provisions of Act vis-a-vis income computed under section 115JB--The penalty under section 271(1)(c) in the case of the assessee cannot be imposed, because there was no tax sought to be evaded because the additions in respect of which penalty have been imposed, was made while computing the total income under the normal provisions of the Act and finally the income of the assessee was determined on the basis of the book profit under section 115JB. Accordingly, the penalty imposed by the assessing officer and as confirmed by the Commissioner (Appeals) is cancelled.

The first issue that is, whether the penalty under section 271(1)(c) can be levied in respect of addition/disallowance made by the assessing officer under the normal computation of the Act when the assessment has been finally made and tax has been paid under section 115JB. It is an undisputed fact in this case that under the normal provisions, the total income was assessed at Rs. 16,13,33,970 and book profit under section 115JB the income was computed at Rs. 67,44,11,568. Since the tax computed under the provisions of section 115JB was higher than the tax computed on the income under the normal provisions of the Act, therefore, the assessing officer has completed the assessment and levied the tax under section 115JB only. On this background, we proceed to analyse, whether in such a situation penalty under section 271(1)(c) can be levied in this case. Section 115JB starts with a non-obstante clause and provides that where in the case of an assessee-company the income-tax is payable on the total income as computed under this Act is less than 15% of its book profit, such a book profit shall be deemed to be the total income of the assessee and the tax payable by the assessee on such total income shall be the amount of income tax. The scheme of the Act is that, if the tax payable under the normal procedure, i.e., under the normal computation under the IT Act is higher, then such amount is taxable income of the appellant. On the other hand, if the book profits are deemed to be the total income of the assessee in terms of section 115JB and is more than the income under the normal provisions of the Act, then by legal fiction such a book profit will be deemed to be the 'total income' of the assessee. Thus, if the tax has been imposed and collected on the deemed income under section 115JB in the assessment, then the tax under the normal provisions/computation is not leviable or charged. On the same logic, if any addition or disallowance has been made in the normal computation/provisions of the IT Act and finally assessment has not been completed or tax has not been levied on such normal computation, then such an additions/disallowances cannot be a subject matter of penalty, as no tax have been levied on such additions/ disallowances. When the income-tax is paid on the book profits by a legal fiction, such a legal fiction has to be taken to its logical conclusion and it cannot be held that for the purpose of penalty, normal computation would be considered even though tax has not been levied under the normal provision/computation. [Para 8] The penalty under section 271(1)(c) in the case of the assessee cannot be imposed, because there was no tax sought to be evaded because the additions in respect of which penalty have been imposed, was made while computing the total income under the normal provisions of the Act and finally the income of the assessee was determined on the basis of the book profit under section 115 JB. Accordingly, we cancel the penalty imposed by the assessing officer and as confirmed by the Commissioner (Appeals) is cancelled. [Para 8]