GUJARAT POWER CORPORATION LIMITED-GPCL,AHMEDABAD vs. THE COMMISSIONER OF INCOME TAX, GANDHINAGAR, GANDHINAGAR

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ITA 1497/AHD/2018Status: DisposedITAT Ahmedabad19 September 2019AY 2013-143 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that disallowance computed under Section 14A cannot be imported for adjustment in book profit under Section 115JB. The assessment order was not erroneous, thus the prerequisite for invoking Section 263 was not fulfilled.

What were the facts?

The assessee offered Rs. 1 Lakh for disallowance under Section 14A and added it to book profit. The AO enhanced the disallowance to Rs. 5,26,10,791 but failed to make a corresponding adjustment for book profit under Section 115JB. The CIT invoked Section 263 revisionary powers.

What were the issues?

Whether the CIT was justified in invoking Section 263 powers when the AO's assessment order was not erroneous, and whether disallowance under Section 14A needs to be adjusted for book profit under Section 115JB.

Which sections of the Income-tax Act were involved?

Section 14A,Section 115JB,Section 263,Section 143(3)

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, “A” BENCH, AHMEDABAD

Before: SHRI KUL BHARAT & SHRI PRADIP KUMAR KEDIA

आदेश/O R D E R

PER PRADIP KUMAR KEDIA - AM:

1.

The captioned appeal has been filed at the instance of the assessee against the order of the Commissioner of Income Tax, Gandhinagar (‘CIT’ [Gujarat Power Corp. Ltd. Vs. CIT] A.Y. 2013-14 - 2 - in short), dated 27.03.2018 arising under s. 263 of the Income Tax Act, 1961 (the Act); concerning A.Y. 2013-14.

2.

As per its grounds of appeal, the assessee has essentially challenged the action of the CIT, Gandhinagar in invoking revisionary jurisdiction under s.263 of the Act on the ground that the AO has committed error for not taking cognizance of disallowance computed under s.14A of the Act under normal provisions, for the purposes of adjustment in book profit under s.115JB of the Act.

3. We have carefully considered the rival submissions on the issue. As pointed out on behalf of the assessee, the assessee company had itself offered an amount of Rs.1 Lakhs for disallowance under s.14A of the Act also added it for the purposes of book profit under s.115JB of the Act. The AO applied the provisions of Section 14A of the Act and enhanced the disallowance from Rs.1 lakhs to Rs.5,26,10,791/- under the normal provisions of the Act. However, it is alleged by the CIT that the AO had failed to make corresponding adjustments while calculating book profit under s.115JB of the Act. The supervisory jurisdiction has been invoked by the CIT under s.263 of the Act to correct the aforesaid alleged error which is prejudicial to the interest of the Revenue. In this regard as pointed out on behalf of the assessee that the corresponding adjustment under s.115JB is not permissible in view of the decision of the Special bench in ACIT vs. Vireet Investment Pvt. Ltd. 165 ITD 27 (Delhi)(SB). With the assistance of the learned senior counsel of the assessee, we also find that the issue is squarely covered in favour of the assessee by the decision of the Hon’ble Gujarat High Court in Alembic Ltd. Tax Appeal No. 1249 of 2014 (Guj) as well as the decision of Hon’ble Gujarat High Court in Pr.CIT VS. Gujarat Floro Chemicals Ltd. R/Tax Appeal No. 11 of 2019 judgment dated 17.06.2019. In view of express judicial fiat available from jurisdictional High Court in this regard, the disallowance computed under s.14A of the Act cannot be imported for the purposes of adjustment in book profit under s.115JB of the Act. In this view of the matter, we see no error in the order passed by the AO under s.143(3) of the Act. The assessment [Gujarat Power Corp. Ltd. Vs. CIT] A.Y. 2013-14 - 3 - order thus not being erroneous per se, the pre-requisites for invoking provisions of Section 263 of the Act is not fulfilled. The action of the CIT is thus without jurisdiction. Consequently, the order of the CIT passed under s.263 of the Act dated 27.03.2018 is quashed.

4.

In the result, appeal of the assessee is allowed.

This Order pronounced in Open Court on 19/09/2019

Sd/- Sd/- (KUL BHARAT) (PRADIP KUMAR KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad: Dated 19/09/2019 True Copy S. K. SINHA आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. राज�व / Revenue 2. आवेदक / Assessee 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त- अपील / CIT (A) 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड� फाइल / Guard file. By order/आदेश से,

उप/सहायक पंजीकार आयकर अपील�य अ�धकरण, अहमदाबाद ।

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