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Before: Shri V. Durga Rao & Shri G. Manjunatha
O R D E R
PER V. DURGA RAO, JUDICIAL MEMBER:
The appeal filed by the assessee is directed against the order of the ld. Principal Commissioner of Income Tax 1, Chennai dated 27.02.2019 relevant to the assessment year 2014-15 under section 263 of the Income Tax Act, 1961 [“Act” in short]. The Revenue preferred an appeal against the order passed by the ld. Commissioner of Income Tax (Appeals)-2, Chennai dated 29.11.2019 for the same assessment year against the order passed under section 143(3) r.w.s. 263 of the Act.
Brief facts of the case are that the assessee has filed its return of income for the assessment year 2014-15 on 18.11.2015 admitting total income of ₹.3,39,00,858/-. The return filed by the assessee was selected for scrutiny and against the statutory notices, the assessee has furnished the details. After considering the details furnished by the assessee, the Assessing Officer has completed the assessment under section 143(3) of the Income Tax Act, 1961 [“Act” in short] on 28.12.2016.
The ld. PCIT passed the revision order under section 263 of the Act since the assessment order passed by the Assessing Officer was erroneous and prejudicial to the interest of Revenue as the Assessing Officer allowed set off of brought forward business loss under section 115JC of the Act. Against the order under section 263 of the Act, the assessee preferred an appeal before the Tribunal.
3.1 In view of the revision order under section 263 of the Act, the Assessing Officer has completed the assessment order under section 143(3) r.w.s. 263 of the Act and levied Alternate Minimum Tax on the total income of the previous year at 18.5% of ₹.3,61,91,450/- and raised the demand of ₹.1,21,90,120/-. On appeal, the ld. CIT(A) allowed the appeal of the assessee against which, the Revenue is in appeal before the Tribunal.
Before us, the ld. Counsel for the assessee has strongly supported the order passed by the ld. CIT(A).
On the other hand, the ld. DR supported the order passed by the Assessing Officer under section 143(3) r.w.s. 263 of the Act.
6. We have heard both the sides, perused the materials available on record and gone through the orders of authorities below. In this case, the original assessment order under section 143(3) of the Act was completed by allowing the set off of brought forward business loss. The ld. PCIT has set aside the assessment order passed under section 143(3) of the Act and directed the Assessing Officer to redo the assessment. Accordingly, the Assessing Officer completed the assessment under section 143(3) r.w.s. 263 of the Act by levying Alternate Minimum Tax on the total income of the previous year at 18.5% of ₹.3,61,91,450/- and raised the demand of ₹.1,21,90,120/-. On appeal before the ld. CIT(A), after considering the submissions of the assessee as well as provisions of section 115JC of the Act, the ld. CIT(A) allowed the ground raised
by the assessee by observing as under:
5. Decision: At the outset, Section 115JC of the Act is reproduced as under: 1. 115JC. (1) Notwithstanding anything contained in this Act, where the regular income-tax payable for a previous year by a person, other than a company, is less than the alternate minimum tax payable for such previous year, the adjusted total income shall be deemed to be the total income of that person for such previous year and he shall be liable to pay income-tax on such total income at the rate of eighteen and one-half per cent. (2) Adjusted total income referred to in sub-section (1) shall be the total income before giving effect to this Chapter as increased by- (i) deductions claimed, if any, under any section (other than section 80P) included in Chapter VI-A under the heading "C.- Deductions in respect of certain incomes"; 50[***] (ii) deduction claimed, if any, under section 10AA and (iii) deduction claimed, if any, under section 35AD as reduced by the amount of depreciation allowable in accordance with the provisions of section 32 as if no deduction under section 35AD was allowed in respect of the assets on which the deduction under that section is claimed.] ……. Further Section 139 reads as under: 139. (1) Every person,- (a) being a company [or a firm]; or (b) being a person other than a company [or a firm], if his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax, shall, on or before the due date, furnish a return of his income or the income of such other person during the previous year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed. 5.1 The AO has taken contrary interpretations of 'Total Income', whereas he has arrived at a 'NIL' total Income under the Normal Computation method after setting off of the brought forward losses with the net profits. However for AMT computation, the AO adopted a position that Total Income means net profits and he has computed the Alternate Minimum Tax (AMT) on net profits without setting off with the brought forward losses. 5.2 However, section 115JC stipulates that the Alternate Minimum Tax (AMT) would need to be computed only on the Total Income of the Appellant. Further section 2(45) defines Total Income is to be computed after giving effect to the provisions of the Act which includes section 72 of the Act which stipulates that brought forward losses is to be set off with the net profits. 5.3 Further section 139(1) stipulates that the assessee has to furnish the return of income in the prescribed form and verified in the prescribed manner after setting forth such other particulars as may be prescribed. In this regard the Appellant has furnished a copy of its return of income (ITR-4) filed wherein it is seen that in Part 8 - TI Computation of Total Income of the Income Tax Return Form, the Total Income is computed after setting off of the brought forward losses with the income. Further on a perusal of Schedule AMT in the Income Tax Return Form ITR-4, AMT is computed only on Total Income. Further Schedule AMT in ITR-4 mentions that the Total Income figure is to be adopted from item 13 of Part 8-TI of the Return i.e. Total Income figure computed after setting off of the brought forward losses with the net profits. 5.4 Given the above, it is clear that AMT is to be computed on Total Income and that the Total Income is to be computed after setting off of the brought forward losses with the net profits. Hence the AO is directed to compute the Alternate Minimum Tax (AMT) on Total Income after setting off of the brought forward losses with the net profits as stipulated under section 115JC of the Act.
In the result the appeal is allowed. This Order is passed under Section 250 read with Section 251 of the Act.”
We have gone through the order passed by the ld. CIT(A) and find that there is no mistake in the order passed by the ld. CIT(A) and no interference is warranted.
So far as appeal filed by the Revenue in 143(3) r.w.s. 263 of the Act as well as order passed by the ld. CIT(A) against the appeal filed by the assessee. We have already decided that on merits, the ld. CIT(A) has rightly decided the issue of computing total income after set off of brought forward losses with the net profit as stipulated under section 115JC of the Act and therefore, no interference is warranted. Accordingly, the ground raised by the Revenue is dismissed.
The order passed by the ld. PCIT is merely an academic and no adjudication is required in view of our above decision in the appeal filed by the Revenue and accordingly, the appeal filed by the assessee is allowed being academic.
In the result, the appeal filed by the assessee is allowed and the appeal filed by the Revenue is dismissed. Order pronounced on 01st April, 2022 at Chennai.