N STEEL PVT. LTD,MEHSANA vs. ITO, WARD-3(1)(1),, AHMEDABAD

PER RAJPAL YADAV, JUDICIAL MEMBER : Assessee is in appeal before the Tribunal against order of the ld.CIT(A)-9, Ahmedabad dated 9.2.2018 passed for the Asstt.Year 2013-14.

3. Brief facts of the case are that the assessee has filed return of income electronically on 28.9.2013 declaring total income of Rs.16,25,354/- before set off previous year’s loss. It emerges out that the ld.AO has passed the assessment order on 22.12.2015. He made disallowance out of expenses at Rs.18,32,829/-. Since there was brought forward loss of Rs.34,58,183/- the income of the assessee was determined at NIL. The assessee has shown book profit computed under section 115JB. No adjustment was made on account of any disallowance made under the regular provisions of the Act. Thus, book profit shown by the assessee has been accepted as it is. Ultimate tax demand was raised on the basis of book profit computed by the assessee. At the very outset, the ld.counsel for the assessee submitted that since taxes have been levied upon the assessee on the basis of the book profit, therefore, it does not deserves to be visited with the penalty on the items, which were added while determining the income of the assessee under regular provisions. He further contended that assessment year in the present case is 2013-14 and Circular issued by the CBDT bearing no.25 of 2015 is duly applicable. He has placed on record copy of the above Circular, which reads as under: “ New Delhi, 31st December, 2015 Subject: Penalty u/s 271(l)(c) wherein additions/disallowances made under normal provisions of the Income Tax Act, 1961 but tax levied under MAT provisions u/s 115JB/115JC, for cases prior to A.Y. 2016-17- reg.-

Section 115JB of the Act is a special provision for levy of Minimum Alternate Tax on Companies, inserted by Finance Act 2000 with effect from 1-4-2001.

4. Subsequently, the provisions of Explanation 4 to sub-section (1) of section 271 of the Act have been substituted by Finance Act, 2015, which provide for the method of calculating the amount of tax sought to be evaded for situations even where the income determined under the general provisions is less than the income declared for the purpose of MAT u/s 115IB of the Act. The substituted Explanation 4 is applicable prospectively w.e.f. 01.04.2016.

5. Accordingly, in view of the Delhi High Court judgment and substitution of Explanation 4 of section 271 of the Act with prospective effect, it is now a settled position that prior to 1/4/2016, where the income tax payable on the total income as computed under the normal provisions of the Act is less than the tax payable on the book profits u/s 115JB of the Act, then penalty under 271(l)(c) of the Act, is not attracted with reference to additions /disallowances made under normal provisions. It is further clarified that in cases prior to 1.4.2016, if any adjustment is made in the income computed for the purpose of MAT, then the levy of penalty u/s 271(l)(c) of the Act, will depend on the nature of adjustment.