SEABIRD MARINE SERVICES PRIVATE LIMITED,JAMNAGAR vs. ACIT, CIRCLE - 1, JAMNAGAR, JAMANGAR

ITA 83/RJT/2025Status: DisposedITAT Rajkot30 May 2025AY 2017-1832 pages
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What did the Tribunal hold?

The Tribunal held that the capital reduction, duly approved by the Board, shareholders, and the High Court, resulted in the extinguishment of investment and amounted to a transfer. Therefore, the addition to book profits under Section 115JB was not justified.

What were the facts?

The assessee company claimed a write-off of Rs. 73.99 crores due to capital reduction in group companies, which was treated as an addition to book profits by the Assessing Officer. The CIT(A) confirmed this addition. The assessee argued that the write-off was an actual extinguishment of investment and not a provision for diminution in value.

What were the issues?

Whether a write-off arising from court-approved capital reduction in group companies constitutes a provision for diminution in value of assets for the purpose of book profit computation under Section 115JB, and whether enhancement of assessment by CIT(A) without a show-cause notice is valid.

Which sections of the Income-tax Act were involved?

Section 115JB,Section 2(47),Section 100,Section 101,Section 251(2)

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Cases cited in this judgment(13)Show list

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Income Tax Appellate Tribunal, RAJKOT BENCH, RAJKOT

Before: DR. ARJUN LAL SAINI & SHRI DINESH MOHAN SINHA

For Appellant: Shri S. N. Soparkar, Ld. AR
For Respondent: Shri Sanjay Punglia, Ld. CIT-DR
Hearing: 30/04/2025Pronounced: 30/05/2025

Captioned appeal filed by the assessee, pertaining to Assessment Year 2017-18, is directed against the order passed by the National Faceless Appeal Centre (NFAC), Dehi/ Commissioner of Income Tax (Appeal) [in short 'Ld. CIT(A)'], dated 02.01.2025, which in turn arises out of an assessment order passed by the Assessing Officer, under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as “the

The order continues below.

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