CALLEO DISTRIBUTION TECHNOLOGIES P.LTD ,NEW DELHI vs. ACIT(CPC), NEW DELHI

The grievances of the assessee read as under:

“1.That on facts and in law the intimation u/s 143(1) of the Income Tax Act, 1961 {herein after referred to as “Act”} dated 15th June, 2016 passed by Assistant Commissioner, Income Tax (CPC) – Bangalore {herein after referred to as “AO”} and order dated 13th April, 2018 passed by Commissioner of Income Tax (Appeals) {herein after referred to as “CIT(A)”} are bad in law and void ab initio.

Briefly stated, the facts of the case are that the assessee filed its return of income for the year under consideration on 29.09.2015 declaring income of Rs. 1,07,50,770/-. The return was processed u/s 143(1) of the Income-tax Act, 1961 [hereinafter referred to as 'The Act'] and accordingly, intimation was received on 22.08.2016. The assessee found that certain adjustments were made by the CPC, Bangalore.

The assessee challenged the adjustments before the CPC by filing rectification application. The rectification application was rejected by the CPC, Bangalore addressing the assessee to approach the concerned Assessing Officer. Thereafter, the assessee approached the Assessing Officer by filing rectification application which was rejected.

The assessee preferred an appeal before the ld. CIT(A) but the appeal of the assessee was dismissed by the ld. CIT(A) who followed the view taken by the Hon'ble Allahabad High Court in the case of Vacment India 369 ITR 304 whereas the assessee placed strong reliance on the decision of the Hon'ble Kolkata High Court in the case of Srel Infrastructure Finance Ltd 72 Taxmann.com 239.

Aggrieved, the assessee is before us.

The ld. counsel for the assessee vehemently stated that the assessee has discharged its tax liability u/s 115JB (1) of the Act. It is the say of the ld. counsel for the assessee that in terms of provisions of section 115JA(1A) and 2A of the Act, the assessee was entitled to carry forward the MAT tax credit to the extent of difference between the tax paid u/s 115JB of the Act and tax payable on total income for the respective year.

The ld. counsel for the assessee further stated that the assessee was required to discharge its tax liability on total income for Assessment Year 2015-16. The assessee was entitled to set off the brought forward of MAT credit to the extent of difference between tax payable on total income for Assessment Year 2015-16 and tax payable on book profit u/s 115JB of the Act.

The ld. counsel for the assessee concluded by saying that the amount eligible for set off was computed by the assessee as difference between the tax liability including surcharge and education cess.

Placing strong reliance on the decision of the Hon'ble High Court of Kolkata in the case of Infrastructure Finance Ltd [supra], the ld. counsel for the assessee vehemently stated that the Hon'ble Kolkata High Court in the case of Srei Infrastructure Finance Limited [supra] has considered the decision of the Hon'ble Allahabad High Court considered by the ld. CIT(A) while dismissing the appeal of the assessee. The ld. counsel for the assessee pleaded that the view in favour of the assessee should be followed as per the ratio laid down by the Hon'ble Supreme Court in the case of Vegetable Products 88 ITR 192.

Per contra, the ld. DR strongly supported the findings of the ld. CIT(A). It is the say of the ld. DR that a debatable issue cannot be a subject matter of rectification u/s 154 of the Act.

We have given thoughtful consideration to the orders of the authorities below. The undisputed fact is that the impugned adjustments have been made while processing the return u/s 143(1) of the Act by the CPC, Bangalore. At the very outset, we are of the considered view that the impugned adjustments are beyond the power of processing the return u/s 143(1) of the Act.

Be that as it may, if certain adjustments have been made by the Assessing Officer/CPC, the remedy available to the assessee is to approach the concerned authority pointing out the glaring mistake apparent from record and if such glaring mistake, instead of being rectified, is rejected by stating that it is a debatable issue, then it would lead to chaos for the tax payer.

Even when the assessee approached the first appellate authority, the first appellate authority took a view which was not in favour of the assessee ignoring the ratio laid down by the Hon'ble Supreme Court in the case of Vegetable Products [supra] wherein the Hon'ble Supreme Court has clearly laid down “If two reasonable constructions of a taxing provisions are possible, that construction which favours the assessee must be adopted. This is a well accepted Rule of Construction recognized by this Court in several of its decisions”.

Considering the facts of the case in totality in light of the decisions discussed hereinabove, we set aside the findings of the ld. CIT(A) and direct the Assessing Officer to allow the claim of MAT credit u/s 115JAA(5) of the Act at Rs. 13,19,558/- as claimed by the assessee.

In the result, the appeal of the assessee in is allowed.