Prakash Krishna, J. - (1.) THE above appeal has been filed under section 260A of the Income Tax Act and it relates to the assessment year 1989 -90. Challenging the legality and validity of the order dated 28.3.2000 passed by the Income Tax Appellate Tribunal (Bench 'B') Allahabad hereinafter referred to as (Tribunal) in ITA No. 2735 (All.) of 1992, the Commissioner of Income Tax has approached this Court. The respondent, an assessee, is a company. It filed income tax return on 28.12.1989 declaring a total loss of Rs. 67,24,21,020. The Assessing Officer processed the income tax return and issued an intimation by invoking section 143(1)(a) of the Income -tax Act. Subsequent thereto, he issued a notice calling upon the assessee on the ground that the following claims for deduction made by it, were prima facie inadmissible, and therefore wrongly allowed to it.
(2.) Entertainment after allowing Rs. 5000 u/s 37(2A) Rs. 51,232 Provision for gratuity under section 40A(7) Rs. 44,64,736
(3.) Under section 43B Rs. 14,35,929 2. The Assessing Officer thereafter passed a rectification order dated 30.12.1991 under section 154 of the Act and disallowed the afore stated four deductions. Thus after making the adjustments of the aforestated amounts to the tune of Rs. 59,71,605 reduced the loss returned by the assessee to that extent. An order charging additional income tax on the adjustment of Rs. 59,71,605 was also passed. 3. The rectification order was the subject matter of the appeal before the Commissioner of Income Tax(Appeals), II -Kanpur who by its order dated 30.9.1992 followed the judgment of this in Indo -Gulf Fertilizers & Chemicals Corpn. Ltd. v. Union of India : [1992] 195 ITR 485/ 64 Taxman 96 (All.) allowed the appeal. It has been held therein that if the resultant income of the assessee is a loss even after the adjustment made under section 154 of the Act, additional tax will not be leviable. The Department carried the matter further in appeal before the Tribunal. The Tribunal dismissed the appeal of the Department. Hence, the present appeal. 4. The appeal has been admitted on the following three substantial questions of law as framed in the memo of appeal: (1) Whether on the fact and in the circumstances of the case, the Income Tax Appellate Tribunal was correct in law in confirming the order of the Commissioner of Income Tax (Appeals) quashing the order under section 154 of the Income -tax Act, 1961 made by the Assessing Officer? (2) Whether on the facts and in the circumstances of the case, the income -tax Appellate Tribunal was correct in upholding the deletion made by the Commissioner of Income -tax (Appeals), of the additional income tax levied under section 143(1A) of the Income -tax Act, 1961 by the Assessing Officer? (3) Whether on the fact and in the circumstances of the case, the Income -tax Appellate Tribunal was correct in law in confirming deletion made by the Commissioner of Income -tax (Appeals), of the additional income tax levied under section 143(1) of the Income Tax Act, 1961 by the Assessing Officer without appreciating that additional income tax was leviable in this case in view of the provisions of section 143(1A) (B) of the Income -tax, 1961 substituted by the Finance Act 1993 with retrospective effect from 01.04.1989?;