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Facts
The assessee, ACC Limited, filed its return of income for AY 2019-20. Subsequently, a revised return was filed. The assessee's revised return was processed, and an addition of Rs. 578.79 crore was made on account of provision for taxation while computing book profit under Section 115-JB of the Act.
Held
The Tribunal held that the amount of Rs. 500.63 crore, representing tax adjustment for earlier years, should be reduced from the current tax. It also held that the deferred tax charge of Rs. 28.96 crore should be reduced. Consequently, an addition of Rs. 49.20 crore was directed to be made.
Key Issues
Whether the addition on account of provision for taxation to book profit under Section 115-JB is to be made after netting prior year adjustments and deferred tax charges, and whether the order passed by CIT(A) is void ab initio for not providing an opportunity of video hearing.
Sections Cited
250, 115-JB, 143(1)
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Income Tax Appellate Tribunal, “A” BENCH, MUMBAI
Before: SHRI NARENDRA KUMAR BILLAIYASHRI SANDEEP SINGH KARHAIL
Date of Hearing – 19/03/2025 Date of Order - 16/04/2025
O R D E R PER SANDEEP SINGH KARHAIL, J.M.
The assessee has filed the present appeal against the impugned order dated 21.03.2024, passed under section 250 of the Income Tax Act, 1961 (“the Act”) by the learned Commissioner of Income Tax (Appeals) – National Faceless Appeal Centre, Delhi, [“learned CIT(A)”], for the assessment year 2019-20.
In this appeal, the assessee has raised the following grounds: - “1. In law and in the facts and circumstances of the appellant's case, the order passed by the learned CIT(A) u/s 250 of the Income-tax Act is void ab initio being bad in law.
2. In law and in the facts and circumstances of the appellant's case, Order u/s 143(1) is void-ab-initio since the Intimation order was passed without providing any opportunity of being heard about various addition made in the Order.
3. In law and on the facts and in the circumstances of the case of appellant, the Ld. CIT(A) has erred in upholding the addition of Rs. 558.55 crores on account of provision for taxation while computing book profit u/s 115JB instead of deleting entire adjustments made by AO-CPC.
4. In law and on the facts and in the circumstances of the case of appellant, the Ld. CIT(A) has erred in not providing video hearing before adjudicating the case.”
3. The sole grievance of the assessee is against the addition on account of the provision of taxation while computing the book profit under section 115- JB of the Act.
4. The brief facts of the case pertaining to this issue, as emanating from the record, are: The assessee is a private limited company and is engaged, inter alia, in the business of manufacture and sale of cement, generation of power, etc. For the year under consideration, the assessee filed its return of income on 29.11.2019, declaring a total income of Rs.1756,46,08,380/- under normal provisions of the Act and Rs.1621,75,28,937/- under section 115-JB of the Act. Thereafter, the assessee filed its revised return of income on 13.11.2020, declaring a total income of Rs.1757,90,95,190/- under the normal provisions of the Act and Rs.1621,75,28,937/- under section 115-JB of the Act. The revised return of income filed by the assessee was processed vide intimation dated 13.01.2021 issued under section 143(1) of the Act, inter alia, making an addition of Rs.578.79 crore on account of provision for taxation to the book profit under section 115-JB of the Act.
5. Since the assessee had only made an addition of Rs.49.20 crore, the learned CIT(A), vide impugned order, directed the AO to restrict the addition to the balance amount of Rs.558.55 crore as per the provisions of Explanation- 1 to Section 115-JB of the Act. Being aggrieved, the assessee is in appeal before us.
6. We have considered the submissions of both sides and perused the material available on record. As per the assessee, the amount of Rs.578.79 crore was already added by the assessee to the book profit and the same was grouped under net expenses and shown under “Others” in Form ITR. As per the assessee, the amount of the current tax of Rs.578.79 crore was already added after the netting of the tax adjustment of earlier years, i.e., Rs.500.63 crore. Thus, as per the assessee, after reducing the tax adjustment of earlier years amounting to Rs.500.63 crore, which were already offered to tax in the earlier years and after reducing the deferred tax charged amounting to Rs.28.96 crore, the assessee had added back an amount of Rs.49.20 crore being the net tax expense to the book profit under section 115-JB of the Act. In this regard, during the hearing, the learned Senior Counsel appearing for the assessee, by referring to the statement of profit and loss account for the year ending 31.03.2019 submitted that out of current tax amounting to Rs.578.79 crore, the tax adjustment for earlier years amounting to Rs.500.63 crore, which was disallowed in earlier years and deferred tax charge of Rs.28.96 crore was reduced, thereby making an addition of Rs.49.20 crore to the book profit under section 115-JB of the Act. Thus, as per the assessee current tax provision debited in the Profit & Loss Account was Rs.578.79 crore, while the assessee credited profit and loss by Rs.500.63 crore, being the tax adjustment for earlier years. Accordingly, the assessee claims that when the current tax is subjected to adjustment while computing book profit under section 115-JB any reversal of such tax adjustment made in earlier years and credited to Profit & Loss Account of the current year cannot be subject to tax while computing the book profit under section 115-JB of the Act in the current year. It is further the plea of the assessee that this practice of showing tax (net-off basis) is consistent over the years.
7. Further, from the perusal of the computation of book profit for the purpose of section 115-JB of the Act as supported by the report under Form No.29B issued by the independent Chartered Accountant, we find that the current tax liability of the assessee for the year under consideration was Rs.78.16 crore while the deferred tax was amounting to Rs.28.96 crore. Thus, the total tax expense was to the extent of Rs.49.20 crore.
8. From the perusal of the intimation issued under section 143(1) of the Act, we find that the AO – CPC considered the entire amount of Rs.578.79 crore as the income tax paid or payable by the assessee and added the same while computing the book profit under section 115-JB of the Act. Thus, it is evident that the amount of Rs.500.63 being the tax adjustment of earlier years, which was disallowed in earlier years while computing the income of the assessee, was not reduced in the year under consideration, thereby resulting in the double addition of the same amount. Therefore, we find merits in the submissions of the assessee that the amount of Rs.500.63 crore being the tax adjustment for earlier years should be reduced from the current tax and only the balance amount being the net tax expenditure can be added under Explanation – 1 to section 115-JB of the Act. We also do not find any merits in the addition of deferred tax charge amounting to Rs.28.96 crore by the learned CIT(A), and we are of the considered view that the same is also required to be reduced for computing total tax expenses for the year under consideration. Accordingly, we direct the AO to make an addition of Rs.49.20, being the tax expenditure, under Explanation – 1 to Section 115-JB of the Act. Accordingly, Ground No.3 raised in assessee’s appeal is allowed.
9. In view of the aforesaid findings, the other grounds raised by the assessee are rendered academic and, therefore, are left open.
In the result, the appeal by the assessee is allowed.
Order pronounced in the open Court on 16/04/2025