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Income Tax Appellate Tribunal, “C”, BENCH KOLKATA
Before: SHRI A.T.VARKEY, JM &DR. A.L.SAINI, AM
आदेश / O R D E R Per Dr. A. L. Saini:
The captioned appeal filed by the Assessee, pertaining to assessment year 2011-12, is directed against the order passed by the Pr. Commissioner of Income Tax, Central-1, Kolkata, under section 263 of the Income Tax Act, 1961 (in short the ‘Act’) dated 24.03.2017.
In this appeal, the assessee has challenged the correctness of the order passed by the ld Pr. CIT, Central-1, Kolkata u/s 263 of the Act.
Paharpur Cooling Towers Ltd. Assessment Year:2011-12 3.When this appeal was called out for hearing, learned counsel for the assessee invited our attention to the order dated 31.01.2018, passed by the Division Bench of Jaipur Tribunal in the case of M/s ARL Infratech Ltdin the Assessment Year 2012-13 whereby the issue “that order passed by the assessing officer is not prejudicial to the interest of Revenue when the Minimum Alternate Tax (MAT) u/s 115JB of the Act payable by assessee is more than the tax liability payable under normal provision”, has been discussed and adjudicated in favour of assessee. The ld Counsel submitted before us that it is settled proposition of law the Commissioner can invoke the provision of Section 263 of the Act only when the twin conditions being the order of the Assessing Officer is erroneous as well as prejudicial to the interest of the Revenue are satisfied. In the case in hand for the sake of argument even if the order of the Assessing Officer is considered as erroneous but the same is not prejudicial to the interest of the Revenue so far as the claim of higher depreciation is concerned as the income of the assessee would be computed u/s 115JB and the tax liability under Minimum Alternate Tax(MAT) is still more than the normal computation of income.Learned counsel for the assessee submitted that the present appeal is squarely covered by the aforesaid order of the Tribunal, a copy of which was also placed before the Bench.
4.Learned Departmental Representative nevertheless relied upon the orders of the authorities below.
We see no reasons to take any other view of the matter than the view so taken by the Division Bench of Jaipur Tribunal inthe case of M/s ARL Infratech Ltdin the Assessment Year 2012-13 vide order dated 31.01.2018 In this order, the Tribunal has inter alia observed as follows:
“3. It is pertinent to note that the Assessing Officer while completed the assessment u/s 143(3) of the Act has made an addition of Rs. 19,126/- on account of excess stock found during the course of survey proceedings in the normal computation of income. However, the tax was charged on the book profit u/s Page | 2
Paharpur Cooling Towers Ltd. Assessment Year:2011-12 115JB of the Act computed at Rs. 9,01,53,202/- and therefore, even if the claim of higher/additional depreciation is disallowed there will be no effect on the tax liability as the AO has computed the total income as per the provisions of Section 115JB and charged MAT on the same. Therefore, we find that the claim of higher depreciation on the Energy Saving Equipments as well as pollution control equipments is not going to effect the Revenue when the income of the assessee was assessed u/s 115JB and MAT was charged. Even if the claim was disallowed if the higher depreciation claim was disallowed the tax liability under MAT was still higher than the normal computation. It is settled proposition of law the Commissioner can invoked the provision of Section 263 of the Act only when the twin conditions being the order of the Assessing Officer is erroneous as well as prejudicial to the interest of the Revenue are satisfied. In the case in hand for the sake of argument even if the order of the Assessing Officer is considered as erroneous but the same is not prejudicial to the interest of the Revenue so far as the claim of higher depreciation is concerned as the income of the assessee would be computed u/s 115JB and the tax liability under MAT is still more than the normal computation of income. The ld. DR has fairly admitted this fact that even after disallowance of the claim of higher depreciation the tax liability under MAT would be higher than the normal computation. Further, this issue of higher/additional depreciation is not recurring in nature and limited to the year under consideration. Accordingly, in view of the above facts and circumstances of the case we are of the considered opinion that once the condition of prejudicial to the interest of the Revenue is not satisfied then the ld. CIT is not justified in revising the order of the Assessing Officer passed u/s 143(3) of the Act hence, we set aside the impugned order passed u/s 263 of the Act.”
We heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials available on record. We note that first of all let us examine the tax liability under the normal provision of the Act and under section 115JBMinimum Alternate Tax.
(A). Computation of Tax Liability under normal provisions of I.T.Act Amount (Rs.) Amount Amount (Rs.) Total income as per order u/s 1,24,35,94,229 154 /143(3) dated 14.08.2015 Add: Additional Depreciation as 1,93,20,000 discussed at para no. 4 above Total income 1,26,29,17,229 Tax liability 42,93,91,857
Paharpur Cooling Towers Ltd. Assessment Year:2011-12 Computation of Tax Liability under u/s 115JB-MAT Book profit as per order u/s 154 / 143(3) dated 2,68,51,68,595 14.08.2015 Tax Liability 53,51,67,527 From the above two tables, we note that the tax liability of the assessee under the normal provisions of I.T Act comes at Rs. 42,93,91,857/-(after adjusting the disputed amount by ld PCIT), whereas the tax liability u/s 115JB-MAT comes to the tune of Rs. 53,51,67,527/- which is more than normal income tax liability. As per the scheme of the Act, the assessee is supposed to pay the income tax as per Minimum Alternate Tax under section 115JB of the Act to the tune of Rs. 53,51,67,527/-, which is more than the tax liability computed under the normal provision of the Act at Rs.42,93,91,857/-. If for the time being, we presume that the issue discussed by the ld. PCIT is correct and after giving the effect of the issue raised by the ld. PCIT, even then the tax liability under the normal provision would be below than the tax liability u/s 115JB of the Act therefore there is no loss to the Revenue. Therefore, we can conclude that the order of the Assessing Officer may be erroneous but it is not prejudicial to the interest of the revenue.
In order to exercise the jurisdiction u/s 263 of the Act, the ld PCIT needs to satisfy two conditions namely, i) the order is erroneous and ii) the order is prejudicial to the interest of revenue. In the assessee`s case under consideration one of the conditions “prejudicial to the interest of the revenue” is not satisfied therefore the order passed by the ld. PCIT needs to be quashed.As the issue is squarely covered in favour of the assessee by the decision of the Division Bench, inthe case of M/s ARL Infratech Ltdin the Assessment Year 2012-13 vide order dated 31.01.2018and there is no change in facts and law and the Revenue is unable to produce any material to controvert the aforesaid findings of the Division Bench (supra). We find no reason to interfere in the said order of the Division Bench, therefore, respectfully following the judgment of the Division Bench we conclude that order passed by the assessing officer is not Page | 4
Paharpur Cooling Towers Ltd. Assessment Year:2011-12 prejudicial to the interest of Revenue, hence we quash the order of ld PCIT under section 263 of the Act.
In the result, the appeal of the assessee is allowed.
Order pronounced in the Court on 11.12.2019