Commissioner of Income Tax vs Eicher Motors Ltd.

A.R. Tiwari, J.—At the instance of the revenue, the Tribunal stated the case and referred the under-noted questions of law u/s 256(1) of the income tax Act, 1961 (''the Act'') arising out of the order dated 30-12-1991 passed in IT Appeal No. 179 (Ind.) of 1991, for our opinion :- 1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the action of the Assessing Officer in making various adjustments u/s 143(1) is patently erroneous and thereby deleting those additions made as a result of the adjustments?

Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that section 143(1A)(a) will not apply to cases where loss declared by the assessee is merely reduced as a result of adjustment u/s 143(1)(a) but does not result in income and thereby cancelling the order levying additional tax?

Briefly stated, the facts of the case are that the year of assessment is 1989-90. The assessee is a Public Limited Company. The assessee returned the loss of Rs. 17,30,98,382 for the assessment year 1989-90. The Assessing Officer made adjustments of Rs. 3,22,34,994 u/s 143(1)(a) of the Act as particularised in the statement of the case. The assessee filed application u/s 154 of the Act before the Assessing Officer for rectification of the order. The Assessing Officer partly rectified the order (Annexure-''A''). The assessee then filed appeal before the Commissioner (Appeals) who further reduced the amount (Annexure-''B''). Aggrieved by the order of Commissioner (Appeals) in part, the assessee filed the appeal before the Tribunal. The Tribunal for the reasons stated in the order concluded that the action of the Assessing Officer in making adjustments of the items, stated above, was patently erroneous. The Tribunal, thus, deleted all the adjustments (Annexure-''C''). The revenue felt aggrieved by the order of the Tribunal and, thus, filed the application u/s 256(1). On this application, the Tribunal stated the case and referred the aforesaid questions.

We have heard Shri Vivek Sharan, learned counsel for the applicant/ revenue and Shri G.M. Chaphekar, learned senior counsel with Shri S.S. Samvatsar, for the non-applicant/assessee.

The counsel for the applicant, right at the threshold, submitted that if question No. (1) is answered in favour of the assessee, then question No. (2) need not be answered. The counsel for the non-applicant did not dispute this contention.

We notice that as regards the question of deletion of the additions, the Tribunal took the view as under:-

Coming to the facts of the instant case, we find that the admissibility of the claim of the assessee is very much debatable, inasmuch as that on application u/s 154 the Assessing Officer himself gave partial relief to the assessee and on further appeal, the CIT(A) also gave some relief to the assessee. The adjustments which have been sustained is still debatable. Much has been argued by the parties for and against. It is not proper to express any opinion at this juncture on the dispute as to whether the amount of Rs. 2,89,61,025 sustained by the CIT(A) as adjustment on account of interest is really deductible u/s 43B or not. Suffice to say that the claim of the assessee does not lack bona fides and ex facie it cannot be included in the adjustment. Similar is the position of other adjustments.

It is clear that the Assessing Officer himself granted some relief u/s 154 and the Commissioner (Appeals) also granted further relief in appeal. The Tribunal concluded that the claim of the assessee is bona fide and is not liable to be included in the adjustments. The deletion of the addition is based on appreciation of facts and factors as unfounded. We do not find any infirmity or error. The counsel for the applicant is unable to show that the deletions ordered by the Tribunal are unsupportable from facts or are contrary to law.

It seems to be the settled position of the law that undisputed amounts cannot be added and should be deleted so far as taxation is concerned. No dispute is raised before us. In our view, the Tribunal was justified in law in holding that the action of the Assessing Officer in making various adjustments u/s 143(1)(a) is patently erroneous and as such deletion of such amounts does not suffer from any infirmity or illegality.

In the circumstances, we answer question No. 1 in favour of the assessee and against the revenue. In view of this answer, as submitted by the applicant and undisputed by the non-applicant, answer to question No. 2 is not necessary.

We, accordingly, dispose of this application without recording our answer on question No. 2 on request and answer question No. 1 in favour of the assessee and against the revenue, but with no orders as to costs.

Counsel fee for each side is, however, fixed at Rs. 750, if certified. Transmit a copy of this order to the Tribunal.