J. K. Mehra ( 1 ) THE present writ petition has been filed by thepetitioner feeling aggrieved by an intimation issued under Section 143 (l) (a)of the Income-tax Act whereby the department has raised a demand ofadditional tax of Rs. 55,33,2401- purporting to be payable under Section143 (1 A ). ( 2 ) THE assessee had returned a net loss of Rs. 86,13,36,452. 00 whereasafter adjustments which have been carried out by the department undersection 143 (1) (a), the total loss stood reduced to Rs. 81,01,30,511. 00. Bysome unexplicable logic the department has proceeded to levy the additionaltax leviable under Section 143 (IA) (a) Sub-clause (1 ). For convenience Section 143 (IA) of the Income-tax Act is reproduced hereunder :- "section 143 (1 A) (a): Where, in the case of any person, the totalincome, as a result of the adjustments made under the first provisoto Clause (a) of Sub-section (1), exceeds the total income declaredin the return by any amount, the Assessing Officer shall,- (i) further increase the amount of tax payable under Subsection (1) by an additional income/tax calculated at the rateof twenty per cent of the tax payable on such excess amountand specify the additional Income-tax in the intimation to besent under Sub-clause (1) of Clause (a) of Sub-section (1) : (ii) where any refund is due under Sub-section (1), reduce theamount of such refund by an amount equivalent to theadditional income-tax calculated under Sub-clause (i ). (b) Where as a result of an order under Sub-section (3)of this-Section or Section 154 or Section 250 or Section 254 orsection 260 or Section 262 or Section 263 or Section 264, theamount on which additional Income-tax is payable underclause (a) has been increased or reduced, as the case maybe, the additional Income-tax shall be increased or reducedaccordingly, and,- (i) in a case where the additional Income-tax is increasedthe Assessing Officer shall serve on the assessee a noticeof demand under Section 156 : (ii) in a case where the additional Income-tax is reduced, theexcess amount paid, if any, shall be refunded. Explanation: For the purposes of this Sub-section; "tax payable onsuch excess amount" means,- (i) in any case where the amount of adjustments made under thefirst proviso to Clause (a) of Sub-section (1) exceed the totalincome, the tax that would have been chargeable had theamount of the adjustments been the total income : (ii) in any other case, the difference between the tax on the totalincome and the that would have been chargeable had suchtotal income been reduced by the amount of adjustments. " ( 3 ) THUS, it is clear according to this provision that in case the totalincome of any assessee exceeds the total income declared by him after adjustments by any amount, the Assessing Officer would be entitled to increasethe amount of tax payable under Sub-section (1) by an additional Income-tax calculated at the rate of 20% of the tax payable on such excess amount. This would obviously mean that there has to be an increase in the Income-tax payable as a result of such adjustments and only in that situation the taxpayable has to be further enhanced by a sum equal to 20% of such increasedtax liability. ( 4 ) IN the present case, what has happened is that as a consequenceof adjustment the total loss returned by the assessee has come down by morethan Rs. 5 crores but even after such reduction on account of adjustmentthe said intimation still shows a loss of over Rs. 81 crores. ( 5 ) THE Income-tax is payable only on income which in a businessventure would imply profit after deducting therefrom deductible expensesand not loss. . . If after determining the liability of the assessee after the processof adjustment not result is still loss, there cannot be any question of anyfurther tax liability accruing and as such, no tax would be payable muchlessany additional tax on the amount by which the losses stood reduced. ( 6 ) MR. Rajendra appearing for the department has drawn myattention to Clause (ii) of the Explanation to the aforesaid provision and hassaid that the situation like the present one would be deemed to have beencovered by Clause (ii) of the Explanation. I am unable to accept this becauseeven this clause lays down the principle that "the difference between the taxon total income and the tax that would have been chargeable at such totalincome had been reduced by the amount of adjustment". I am unable to accept this becauseeven this clause lays down the principle that "the difference between the taxon total income and the tax that would have been chargeable at such totalincome had been reduced by the amount of adjustment". So, even under thisexplanation, it is not the reduction in loss which has not resulted in converting the return into one of profit to attract any tax. Mr. Rajendra contendsthat if Sub-clause (a) (ii) of (l-A)of Section 143 of the Act is read withclause (ii) of the Explanation the reduction in loss would also become liableto additional tax. I am unable to accept this argument also. Sub-clause (ii) ofsub-section (1-A) (a) considers a case where the refund is due which couldonly be the case if the excess tax had earlier been deposited on the basis ofcertain estimated profits and the profits stood reduced after adjustments. ( 7 ) THE department would be fully justified in resorting to this lew incase the adjustments result in changing a return from negative to positivereturn showing loss to one showing profit. That is not the case here. ( 8 ) MY. attention has been drawn to the case of Modi Cement Indialimited v. Union of India and Others, reported as 123 (1992) ITR 91 decidedby a Division Bench of this Court expressing the similar opinion. ( 9 ) AT this stage, Mr. Rajendra has also brought to my notice a judgment of a Division Bench of this Court in G. W. No. 2123/92 decided on7. 7. 1992 wherein the Division Bench has taken cognizance of the amendmentintroduced in the Finance Act, 1992 wherein the assessee has been providedwith an alternative remedy under Section 154 of the Income-tax Act andalso under Section 264 by providing for a revision petition, to my mind thatamendment is prospective in operation. Nothing has been shown to me whichmakes the operation of such amendment retrospective. Mr. Rajendra hasfurther submitted that the assessee should deposit the amount and if no taxis found payable the amount shal be refunded. I am unable to accede to thisrequest also. ( 10 ) IN the circumstances, I allow the petition and quash the impugnedorder levying additional tax of Rs. 55,30,240. 00 and direct the department torefund the same to the petitioner. No order as to costs.