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Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI
Before: SHRI GEORGE MATHAN & SHRI INTURI RAMA RAO
आदेश / O R D E R
PER GEORGE MATHAN, JUDICIAL MEMBER:
This is an appeal filed by the assessee against the Order of the Commissioner of Income Tax (Appeals)-7, Chennai, in dated 25.01.2019 for the AY 2012-13.
Mr. R.Clement Ramesh Kumar, Addl.CIT, represented on behalf of the Revenue and Mr.Kuriachan, CA, represented on behalf of the assessee.
It was submitted by the Ld.AR that the assessment had originally been completed u/s.143(3) on 05.03.2015. Subsequently, an order u/s.263 had been passed on 31.03.2017 setting aside the Assessment Order with a direction to look into the various issues. The AO passed consequential order, wherein, the AO while computing the income of the assessee made disallowance to an extent of Rs.60,77,160/- representing the addition of difference in 10% of written off stock in trade to an extent of Rs.11,80,588/-, Disallowance of claim of delayed payment charges to an extent of Rs.38,68,470/- and Disallowance of differential amount with respect to assessee’s claim u/s.43B disallowed u/s.40 during the previous year to an extent of Rs.10,29,101/-. It was a submission that as the assessee was having loss, the book profits of the assessee was computed u/s.115JB of the Act, under the provisions of MAT. In computation of the book profits, for the purpose of MAT, the AO made the addition of Rs.60,77,160/-. It was a submission that in view of the provisions of explanation to sub-section 1A of Section 115JB of the Act, the adjustment made to the total income under the regular provisions ought not to have been added to the book profits. The Ld.AR also placed reliance on the decision of the Hon’ble Supreme Court in the case of M/s.Apollo Tyres Ltd., vs. CIT reported in 255 ITR 273. It was a submission that the Ld.CIT(A) had without considering the submissions of the assessee dismissed the assessee’s appeal. It was a prayer that the additions representing the amount of Rs.60,77,160/- was not liable to be added when computing the book profits u/s.115JB of the Act.
In reply, the Ld.DR vehemently supported the order of the AO and the Ld.CIT(A).
We have considered the rival submissions.
A perusal of the provisions of Sec.115JB and the explanation provided thereto clearly shows that the three disallowances which have been made by the AO and which have resulted in an addition of Rs.60,77,160/- does not fall under any provisions of adjustments that can be made under the explanation to Sec.115JB for the purpose of increasing the book profits of the company in respect of computation under MAT.
This being so, in view of the principles laid down by the Hon’ble Supreme Court in the case of M/s.Apollo Tyres Ltd. vs. CIT reported in 255 ITR 273, referred to supra, wherein, it has been categorically held as follows:
“………9. Therefore, we are of the opinion, the assessing officer while computing the income under Section 115-J has only the power of examining whether the books of account are certifies by the authorities under the Companies Act as having been properly maintained in accordance with the Companies Act. The assessing officer thereafter has the limited power of making increases and reductions as provided for in the Explanation to the said section. To put it differently, the assessing officer does not have the jurisdiction to go behind the net profit shown in the profit and loss account except to the extent provided in the Explanation to Section 115-J ”.
We are of the considered opinion that the said amount of Rs.60,77,160/- cannot be added in computing the book profits u/s.115JB of the Act.
In the result, the appeal filed by the assessee is allowed.
Order pronounced on the 29th day of July, 2019 in Chennai.