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Income Tax Appellate Tribunal, MUMBAI BENCH “C”, MUMBAI
ORDER PER GAGAN GOYAL, A.M: This appeal by Revenue is directed against the order of Commissioner of Income Tax (Appeals)-51, Mumbai [for short ‘CIT (A)’] dated 27.07.2022 under section 250 of the Income Tax Act, 1961 (for short ‘the Act’) for A.Y. 2013-14. The assessee has raised the following grounds of appeal:
Grounds of appeal
Tax effect relating to each ground of appeal (see note below) 1 "On the fact and circumstances of the case - and in law, CIT (A) erred in holding that the order passed by AO u/s 154 is bad in law.
2. On the fact and circumstances of the case 77,58,703/- and in law, CIT (A) erred in rejecting the adjustment of 7 disallowance u/s14A while computing book profit u/s 115JB of the Act. 3 "The appellant craves to leave, to add, to - amend and/or to alter any of the ground of appeal, if need be. Total tax effect (see note below)
Brief facts of the case are that original order in the case of assessee was passed u/s. 143(3) on 31-03-2016, making certain additions against which the assessee filed appeal before the Ld. CIT (A). In that original appeal assessee got substantial relief and while passing appeal effect giving order the AO observed that he hasn’t considered the book profit at the time of original order as the normal income assessed by him was more than the book-profit u/s 115JB.
Thereafter during appeal order giving effect AO observed that disallowance made u/s 14A amounting to Rs. 3,87,79,993/ was not added back in the book profits computed u/s 115JB of the act. AO issued notice u/s 154(3) on 30-08-2017 and thereafter passed the order u/s 154 dated 04-10-2017 adding back amount of disallowance u/s 14A to the book-profit of Rs. 74,66,90,126/-. Against this order passed u/s. 154 asssessee preferred an appeal before the Ld. CIT (A). In the appeal proceedings Ld. CIT (A) allowed the appeal of the assessee and deleted this adjustment in the book-profit of the assessee.
We have gone through the order of AO, order of Ld. CIT (A) and submissions of the assessee. We observed that the order of AO passed u/s 154 is not sustainable as the AO has resorted to review the assessment order on this issue in the guise of a rectification proceeding. As AO himself stated in para-1 of the order that “in the order passed u/s 143(3) dated 31-03-2016 book-profit u/s 115JB was not separately computed since the tax payable under normal provisions of the act is higher than the tax payable on book-profit u/s 115JB.
The issue covered by the AO in proceeding u/s 154 of the act is debatable which requires detailed deliberations. Hence, the same can’t be the part of proceedings u/s 154. AO has no power to review the concluded proceedings u/s 154. The assessee has declared all particulars regarding assessment and AO has taken a conscious view to frame a regular assessment and made certain additions which has been deleted by the Ld. CIT (A) and further confirmed by the tribunal, now AO is not empowered to review the assessment order already framed. It is against the spirit of provisions of sec 154. With this back ground we found that order of the AO was beyond jurisdiction hence, bad in law. 6. On merits also disallowance u/s 14A can’t be added back while computing the book-profits u/s 115JB of the act. ACIT Vs Vireet Investments Pvt. Ltd. (2017) 82 Taxmann.com 415 (Delhi-Trib) (SB). Reason is apparent computation under clause (f) of explanation -1 to sec 115JB (2) considers actual expenses incur for earning exempt income, whereas computation under rule 8D of sec 14A is on ad hoc basis. In these terms, we don’t find any infirmity in the order of Ld. CIT (A) and order of the AO found to be bad in law both on the terms of assuming jurisdiction u/s 154 and on merits also.
In the result, appeal filed by the Revenue is dismissed. Order pronounced in the open court on 24th day of January, 2023.