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Income Tax Appellate Tribunal, MUMBAI BENCHES “G”, MUMBAI
Before: SHRI RAJESH KUMAR (AM) & SHRI RAM LAL NEGI (JM)
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES “G”, MUMBAI BEFORE SHRI RAJESH KUMAR (AM) AND SHRI RAM LAL NEGI (JM) Assessment Year: 2010-2011 Assessment Year: 2011-2012 Swan Engitech Works Private The Income Tax Officer-8(2)(4), Limited, Room No. 659, Aaykar Bhavan, 1, Sahajanand Compound, M.K. Road, Churchgate, Acharya Done Marg, Sewree, Vs. Mumbai - 400020 Mumbai - 400015 PAN: AAACS6331H (Appellant) (Respondent) Assessee by : Shri J.P. Bairagra (AR) Revenue by : Shri Chaudhary Arun Kumar Singh (DR) Date of Hearing: 25/04/2019 Date of Pronouncement: 18/07/2019
O R D E R PER RAM LAL NEGI, JM The assessee has filed the captioned appeals against two orders dated 20.10.2017 passed by the Ld. Commissioner of Income Tax (Appeals)-14, Mumbai (for short ‘the CIT (A)’), pertaining to the assessment years 2010-11 and 2011-12 respectively, whereby the Ld. CIT (A) has dismissed the appeals filed by the assessee against the assessment orders passed u/s 154 of the Income Tax Act, 1961 (for short the ‘Act’). Since, these appeals pertain to the same assessee and issues involved are identical, the same were clubbed, heard together and are being disposed of by this common and consolidated order for the sake of convenience. Assessment Years: 2010-11 & 2011-12 At the outset, the Ld. counsel for the assessee submitted that the assessee has moved an application for withdrawal of appeal pertaining to the assessment year 2010-11 as the assessee does not want to pursue the same. In view of the application, the Ld. counsel submitted that the assessee may be permitted to withdraw the same. 2. The Ld. Departmental Representative did not oppose the submissions made by the Ld. counsel. Hence, we allow the application filed by the assessee for withdrawal of the appeal and dismiss the present appeal as withdrawn. Brief facts of the case are that the assessee filed its return of income for the assessment year under consideration declaring the total income of Rs. 27,34,020/-. The AO passed the assessment order u/s 143 (3) of the Act determining the total income of the assessee at Rs. 30,22,770/-. The assessee filed application u/s 154 of the Act for rectification of mistake in the assessment order alleging that while calculating MAT profit, the dividend income amounting to Rs. 38,42,295/- which was claimed as exempt u/s 10(34), was required to be deducted . The assessee further contended that the correct book profit u/s 115JB after deduction of exempt income comes to Rs. 4,64,030/- which is less than the tax payable under the normal provisions of the Act. The assessee further contended that from the scheduled of MAT credit available on page ITR- 6, there is MAT credit of assessment year 2007-08 amounting to Rs. 1,15,56,375/- which is allowed to be adjusted in the case of tax liability under normal provisions is higher than tax liability under MAT provisions to the extent of difference. Hence, if the credit to the extent of 4,70,010/- is allowed to be set off against the said liability under the normal provisions of the Act and If the above rectification is done, assessee would be entitled to refund of Rs. 7,36,195/-. The AO passed order u/s 154, whereby Assessment Years: 2010-11 & 2011-12
the AO rejected the application holding that the tax has correctly been computed under the normal provisions of the Act and since the tax payable under the normal provisions was more than the tax payable as per section 115JB of the Act, there is no mistake apparent from record to rectify the same. The AO further placing reliance on the order of the Hon’ble Supreme Court in the case of M/s Goetz India Ltd. dated 24.03.2006 held that any claim before the AO has to be made by way of filing return/revised return. 2. The assessee challenged the order passed by the AO before the Ld. CIT (A). However, the Ld. CIT (A) confirmed the order passed by the AO and dismissed the appeal filed by the assessee. The assessee is in appeal against the impugned order passed by the Ld.CIT (A). 3. The assessee has challenged the impugned order passed by the Ld. CIT (A) by raising the following effective grounds:- 1. “The Hon Commissioner of Income-tax (Appeals)['CIT(A)'] erred in confirming the decision of the Id. AO there is no mistake apparent from record in the order passed u/s 143(3) which can be rectified u/s. 154 of the Income tax Act, 1961 ['the Act']. 2. The Hon CIT(A) erred in confirming the action of the Ld. AO in rejecting the rectification application filed by the appellant against the order passed u/s. 143(3) wherein AO has made the mistake of not reducing dividend income of Rs 38,42,295 which is claimed as exempt u/s 10(34) of the Act while calculating the book profit u/s. 115JB of the Act in spite of mentioning in the written submission given during assessment proceedings. 3. The Hon CIT(A) further erred in not appreciating the fact that as per clause (ii) to section 115JB income which is exempt under provisions of section 10 (excluding section 10(38) as to be reduced from the profits to arrive at the book profit u/s 115JB and since the Ld AO has not reduced the income exempt u/s 10(34) while computing the book profit, there is mistake apparent on record of the order passed u/s 143(3) of the Act. 4. The Hon CIT(A) further erred in not allowing MAT credit which is available with the assessee company of earlier years being the difference between tax payable under MAT provisions and tax Assessment Years: 2010-11 & 2011-12
payable under Normal provisions as provided in section 1 15JAA of the Act. 5. The Hon CIT(A) erred in confirming the finding of the Ld AO that the claim of the Appellant cannot be allowed in view of decision of the Hon. Supreme court in the case of M/s. Goetze India Ltd.(284 ITR 323).” 4. Before us, the Ld. counsel for the assessee submitted that while filing return of income, the assessee company inadvertently did not reduce the dividend income from MAT profits. This fact came to the notice of the assessee during the assessment proceedings. Accordingly, the aforesaid fact was brought to the notice of AO vide written submission dated 20.01.2014, however, the AO rejected the application on the ground that the tax has correctly been computed under the normal provisions of the Act. The Ld. counsel further submitted that since the AO had wrongly applied the ratio laid down by the Hon’ble Supreme Court in the case of Goetz India Ltd. (supra), the Ld. CIT (A) ought to have allowed the appeal filed by the assessee, the Ld. counsel for the assessee relied on the judgment of the Hon’ble Bombay High Court in the case of Pruthvi Brokers and Shareholders 349 ITR 336 (Bom), the judgment of the Hon’ble Madras High Court in the case of CIT vs. Abhinitha Foundation Pvt. Ltd. 396 ITR 251 (Mad) decision of the Mumbai Tribunal in the case of Amit P. Pandya vs. ACIT (2014) 50 taxmann.com 276 (Mumbai Trib), order of the Kochin Bench of the Tribunal in the case of Apollo Tyres Ltd. vs. DCIT (2013) 35 taxmann.com 593, Agra SMC Bench of the Tribunal in the case of Hotel Crystal Inn vs. ITO (2018) 91 taxman.com 106 (Agra Trib.), and submitted that in view of the ratio laid down in the cases referred above, the order passed by the Ld. CIT (A) is erroneous and liable to be set aside. 5. On the other hand, the Ld. Departmental Representative (DR) supporting the order passed by the Ld. CIT (A) submitted that since the authorities below have decided the issue raised by the assessee in accordance with the law laid down by the Hon’ble Supreme Court in the case of M/s Goetz India Ltd., there is no merit in the contention of the assessee. The Ld. DR further submitted Assessment Years: 2010-11 & 2011-12
that the issue raised by the assessee does not fall within the ambit of mistake apparent to rectify the same u/s 154 of the Act. 6. We have heard the rival submissions and in the light of the rival contentions of the parties perused the material on record including the cases relied upon by the parties. As pointed out by the Ld. counsel for the assessee, the AO has not computed the income of the assessee under section 115JB of the Act in the assessment order passed u/s 143 (3) of the Act dated 21.03.2014. However, in the calculation sheet of the assessment order, the AO mentioned the book profit u/s 115JB at Rs. 62,41,610/-. As contended by the Ld. counsel, the AO had wrongly mentioned the book profit of Rs. 62,41,610/- instead of the correct profit of Rs. 25,02,851/-. Since, the AO had not reduced the dividend income of Rs. 38,42,295/-, which had been claimed as exempt u/s 10(34) by the assessee, this fact was brought to the notice of AO vide letter dated 20.01.2014. As contended by the Ld. counsel, if the correct book profit u/s 115JB is considered, the total tax payable u/s 115JB comes to Rs. 4,64,030/- and since the tax payable under the normal provisions is higher than the tax payable under MAT, the final tax liability comes to Rs. 9,34,040/-. As per the abstract of ITR containing schedule of MAT credit and statement of computation, there is MAT credit of assessment year 2007-08 with the assessee amounting to Rs. 1,15,56,375/-, which is allowed to be adjusted in case of tax liability under the normal provisions is higher than the tax liability under MAT provisions to the extent of difference of normal tax liability and MAT liability. In the present case, if the MAT credit is allowed to be adjusted to the extent of Rs. 4,70,010/- to set off against the tax liability, the assessee would be entitled to refund Rs. 7,36,195/-. 7. We notice that the authorities below have not taken into consideration, the facts brought before it by the assessee before the assessment proceedings or in the subsequent proceedings before the AO or Ld. CIT (A). Both the authorities have dismissed the plea of the assessee on the ground that as per Assessment Years: 2010-11 & 2011-12
the ratio laid down by the Hon’ble Supreme Court in the case of Goetz India Ltd. (supra), the assessee is not entitled for any deduction without filing any revised return. Under Section 154 of the Act, the Income Tax Authorities referred to section 116 of the Act may amend any order passed by it of its own motion and rectify the mistake brought to its notice by the assessee or the authority concerned. In the case of Hotel Crystal Inn vs. ITO, the Agra Bench of the Tribunal has held that where deduction u/s 80ID was disallowed on the ground that the assessee did not claim it in its return but in view of the fact that in Form ITR-5 the assessee had actually claim deduction u/s 80ID for the first year, their exist a mistake apparent from record which was liable to be rectified by allowing the assessee’s application for rectification. 8. As pointed out by the Ld. counsel, the coordinate Bench in the case of Amit P. Pandya vs. ACIT (supra) has held that non raising of claim by the assessee in its return of income does not debar the appellate authority from admitting the same. In the said case, the assessee has raised the issue regarding non consideration of claim for depreciation u/s 32(1) (ii) i.e. in respect of tenancy rights of a rental business premises. The assessee’s claim was disallowed by the authorities below on the ground that the assessee had not claimed in its return of income. The relevant para of the order of the coordinate Bench read as under- “We have heard the parties and perused the material on record. The hon’ble High Court has clarified on the powers of the Tribunal, so that the non-raising of a claim by the assessee per its return of income does not constrain an appellate authority from admitting the same where the circumstances justify it, in the sense that there is nothing mala fide in the said raising of the claim before it. No such case having been made out by the Revenue in the instant case, we, accordingly, admitting the assessee’s claim, restore the matter back to the file of the Assessing Officer for his adjudication in accordance with law after allowing the assessee a reasonable opportunity of being heard. We may further clarify that we are in doing so not in any Assessment Years: 2010-11 & 2011-12
manner adverting to the merits of the said claim, but only enabling a decision thereon. We delete accordingly.”
In the case of Apollo Tyers Ltd. vs. DCIT (supra), the Cochin Bench of the ITAT has held that the Tribunal can entertain additional ground raised during the assessment proceedings even if such claim of loss was not made in the return of income. In the said case, the Ld. CIT (A) had rejected the additional ground of appeal relating to deduction u/s 80IA (4)(iv)(a) of the Act holding that since the assessee had not raised the same before the Assessing Officer, the same cannot be raised at appellate stage. The contention of the Ld. Sr. counsel was that even if it is considered as additional ground as observed by the Apex Court in the case of Goetz (India ) Ltd. (supra), the power of appellate authority does not impinge upon in any way. Therefore, the Ld. CIT (A) ought to have adjudicated upon the issue on merits. The relevant para of the order passed by the Bench is reproduced as under:- “29. We have considered the rival submissions on either side and also perused the material available on record. Though a claim was made with regard to deduction u/s 80IA in respect of DG & GT power generating unit at Limda, admittedly, the power generated in the form of steam by gas turbine boiler was not claimed in the return of income. For first time, the assessee makes the claim with regard to generation of power in the form of steam from its gas turbine boiler, No doubt, section 80A(5) says that no deduction shall be allowed under Chapter VIA under the heading “C” Deduction in respect of certain incomes,” unless the same is claimed in the return of income. As rightly pointed out by the learned senior counsel section 80A(5) was brought in the statute book by Finance Act, 2009, of course, with retrospectively effect from 01.04.2003. Therefore, on the date of filing of return of income for the assessment year under consideration, the assessee would not have anticipated the retrospective amendment that would be brought in the statute by finance Act, 2009. The assessee was expected to file the return of income as per the law as it existed on the 01st day of April of the respective assessment year. Therefore, this Assessment Years: 2010-11 & 2011-12
Tribunal is of the considered opinion that it may not be proper to apply the provisions of section 80A(5) for the year under consideration. In view of the above, the decision of this Tribunal in the Kadachira Service Co-op Bank Ltd. (supra) may not be applicable for the year under consideration. In view of the judgment of the apex court in the case of Goetze (India) Ltd. (supra), the claim of has to be made before the assessing officer by way of revised return. However, as observed in the earlier part of the order, the judgment of the Apex Court in the case of Goezte (India) Ltd. (supra) does not impinge upon the power of the appellate authority as observed by the Apex Court itself in the very same judgment. Therefore, this Tribunal is of the opinion that the CIT (A) having co-terminus jurisdiction with that of the assessing officer ought to have considered the issue on merit. Since the CIT (A) has not considered by the matter on merit, this Tribunal is of the considered opinion that the matter needs to be considered by the assessing offer at the first instance. Therefore, order of CIT (A) is set aside and the issue is restored to the file of the assessing officer with a direction to consider the same on merit in respect of deduction u/s 80IA(4)(iv)(a) with regard to generation of power in the form of steam from its gas turbine boiler.”
In the case of CIT vs. Pruthvi Brokers and Shareholders (supra), the Hon’ble Bombay High Court has held that an assessee is entitled to raise before appellate authority additional grounds in terms of additional claims not made in return filed by it. The appellate authorities have the discretion whether or not to permit such additional claims to be raised. It cannot, however, be said that the appellate authorities have no jurisdiction to consider the same, the appellate authority have jurisdiction to entertain the new claim. 11. As per the ratio of law laid down by the Hon’ble jurisdictional High Court in the aforesaid case, the assessee in the present case was entitled to raise additional ground before the Ld. CIT (A) in terms of additional claims not made in return filed by it. Hence, in the light of the cases discussed above, we hold that the Ld. CIT (A) has wrongly dismissed the appeal filed by the assessee Assessment Years: 2010-11 & 2011-12
against the order passed by the AO u/s 154 of the Act without going into the merits. The Ld. CIT (A) ought to have either decide the issue himself or sent the same to the AO for deciding the same on merits. Hence, we respectfully following the judgment of the Hon’ble jurisdictional High Court and the decisions of the Tribunal discussed above, set aside the impugned order passed by the Ld. CIT (A) and send the appeal back to the AO with the direction to decide the application u/s 154 of the Act moved by the assessee afresh on merits after affording a reasonable opportunity of being heard to the assessee. In the result, appeal filed by the assessee for assessment years 2010-11 is dismissed the appeal for the assessment year 2011-12 is allowed for statistical purposes. Order pronounced in the open court on 18th July, 2019. (RAJESH KUMAR) JUDICIAL MEMBER म ुंबई Mumbai; दिन ुंक Dated: 18/07/2019 Alindra PS आदेश प्रतितिपि अग्रेपिि/Copy of the Order forwarded to : अिीिार्थी / The Appellant 1. प्रत्यर्थी / The Respondent. 2. आयकर आयुक्त(अिीि) / The CIT(A)- 3. आयकर आयुक्त / CIT 4. पिभागीय प्रतितिति, आयकर अिीिीय अतिकरण, मुंबई / DR, 5. ITAT, Mumbai गार्ड फाईि / Guard file. 6. आदेशािुसार/ BY ORDER, सत्यापिि प्रति //// उि/सहायक िुंजीकार (Dy./Asstt.