MASTEK LIMITED,AHMEDABAD vs. THE DY.CIT, (OSD) - 1, CIRCLE-4, AHMEDABAD

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ITA 6/AHD/2015Status: DisposedITAT Ahmedabad08 February 2018AY 2009-103 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that while rectifying the order under Section 154 was justified due to a mistake apparent from the record, disallowances made under Section 14A are not to be considered for the computation of book profit under Section 115JB. Therefore, the addition made to the book profit was directed to be deleted.

What were the facts?

The Assessing Officer (AO) rectified the assessment order under Section 154 to include a disallowance made under Section 14A in the computation of book profit under Section 115JB. The assessee argued that this was an error, as such disallowances should not be added back for book profit calculation.

What were the issues?

Whether disallowances made under Section 14A are to be added back while computing book profit under Section 115JB, and if rectifying such an omission under Section 154 is permissible.

Which sections of the Income-tax Act were involved?

Section 14A,Section 115JB,Section 154

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Income Tax Appellate Tribunal, AHMEDABAD “C” BENCH

Before: SHRI N.K. BILLAIYA & SHRI MAHAVIR PRASAD

For Appellant: Shri Urvashi Shodhan, AR

PER N.K. BILLAIYA, ACCOUNTANT MEMBER

1.

This appeal by the Assessee is preferred against the order of the Ld. CIT(A)-2, Ahmedabad dated 24.11.2014 pertaining to A.Y. 2009-10.

ITA No. 6/Ahd/2015 2 . A.Y. 2009-10 2. The assessee’s grievance is twofold. Firstly, the assessee is aggrieved that the ld. CIT(A) erred in confirming the action of the A.O. for notional disallowance of Rs. 41,96,477/- computed u/s. 14A read with Rule 8D while computing the book profit u/s. 115JB of the Act and secondly, the ld. CIT(A) erred in confirming the afore-stated disallowance accepting it as mistake apparent from record rectifiable u/s. 154 of the Act.

3.

Briefly stated the facts of the case are that the assessment was framed u/s. 143(3) r.w.s. 144C of the Act vide order dated 28.03.2015. The returned income was assessed under normal rate of tax at Rs. 34,31,44,411/- and the book profit was taken at Rs. 99,79,75,083/- for the purpose of 115JB of the Act.

4.

Vide notice dated 13.01.2014, the A.O. formed a belief that there is a mistake apparent from record which needs to be rectified because disallowance of Rs. 41,46,720/- made u/s. 14A of the Act has not been considered for working of book profit u/s. 115JB of the Act.

5.

The mistake was rectified and Rs. 41,46,720/- was added to the book profit for the computation of book profit u/s. 115JB of the Act.

6.

Assessee carried the matter before the ld. CIT(A) but without any success.

7.

Before us, the ld. counsel for the assessee pointed out that this issue has been considered by the Tribunal Special Bench, Delhi in the case of Vireet Investment Pvt. Ltd. in ITA No. 502/Delhi/2012. Per contra, the ld. D.R.

ITA No. 6/Ahd/2015 3 . A.Y. 2009-10 strongly supported the findings of the lower authorities and relied upon the decision in the case of GSFC 36 Taxmann.com 230.

8.

We have given a thoughtful consideration to the orders of the authorities below. In our considered opinion, by not considering the disallowance made u/s. 14A for the purposes of the computation of book profit u/s. 115JB a rectifiable mistake was apparent from the record and therefore, there is no infirmity in rectifying the order u/s. 154 of the Act. However, we find that the Tribunal Special Bench, Delhi had the occasion to consider this issue and has held that disallowances made u/s. 14A are not to be considered for the computation of book profit u/s. 115JB of the Act. Respectfully following the same, we direct the A.O. to delete Rs. 41,46,720/- form the computation of book profit u/s. 115JB of the Act.

9.

Appeal filed by the Assessee is partly allowed.

Order pronounced in Open Court on 08- 02- 2018 Sd/- Sd/- (MAHAVIR PRASAD) (N. K. BILLAIYA) JUDICIAL MEMBER True Copy ACCOUNTANT MEMBER Ahmedabad: Dated 08/02/2018 Rajesh Copy of the Order forwarded to:- 1. The Appellant. 2. The Respondent. 3. The CIT (Appeals) – 4. The CIT concerned. 5. The DR., ITAT, Ahmedabad. 6. Guard File. By ORDER

Deputy/Asstt.Registrar ITAT,Ahmedabad

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