DCIT/ACIT, CIRCLE - 6(2), KOLKATA, KOLKATA vs. M/S. EMAMI LIMITED, KOLKATA

ORDER PER S.S. VISWANETHRA RAVI, JUDICIAL MEMBER Both these appeals filed by the Revenue against the order dated 28.07.2017 passed by CIT(A)-22, Kolkata u/s 143(3) of the Income Tax Act, 1961 (in short “Act”) for AYs 2009-10 & 2011-12.

(ASSESSMENT YEAR-2009-10) 2. Heard both parties and perused the material available on record. It is noted that the AO initially completed the assessment u/s 143(3) of the Act determining the gross total income of Rs.35,19,13,334/- and allowed the deduction u/s 80IC of the Act. Thereafter, according to AO, the said gross total income is inclusive of upward adjustment as recommended by the TPO in respect of international transaction and passed an order u/s 154 of the Act by holding that the assessee is eligible for deduction of Rs.33,80,38,919/- only (35,19,13,334/- - Rs.1,38,74,418/-) u/s 80IC of the Act and added the said upward adjustment in respect of international & 2026/KOL/2017 (ASSESSMENT YEAR-2009-10 & 2011-12) transaction to the book profit of the assessee u/s 115JB of the Act. The CIT(A) held that upward adjustment is not specified under any of the clauses in Explanation (1) section 115JB of the Act thereby, adjustment made by the AO is deleted.. The relevant finding of the CIT(A) is reproduced herein below:- 7. “Similarly, on an identical issue the Hon'ble ITAT, Hyderabad "B"- Bench in the case of Berkadia Services India Ltd Vs Deputy Commissioner of Income Tax, Circle-1(3),Hyderabad by their order dated 19th September, 2014, reported in [2014] 50 taxmann.com 455 (Hyderabad - Trib.), adjudicated as follows: 18. As regards the issue involved in ground No.10 relating to the addition made by the Assessing Officer on account of TP adjustments, while determining the book profit of the assessee company under S,115JB of the Act, it is observed that the income of the assessee having been finally assessed by the Assessing Officer as per the normal provisions of the Act, this issue is merely of academic nature. Nevertheless, as agreed by the learned representatives of both sides, this issue is squarely covered in favour of the assessee by the decision of the Hon'ble Supreme Court in the case of Apollo Tyres Ltd. v. CIT [2002] 255 ITR 273/122 Taxman 562 wherein it is held that the Assessing Officer has limited power of making adjustments to the book profit as declared by the assessee, and the same is restricted only to the additions and reductions as provided in Explanation to S.115JB, Since the adjustments so provided in the Explanation to S.115JB do not include the addition on account of TP adjustments, we respectfully follow the decision of the Supreme Court in the case of Apollo Tyres Ltd. (supra) to hold that the addition made by the Assessing Officer on account of TP adjustment while determining the book profit of the assessee company under S.115JB of the Act is not sustainable. The same is therefore, deleted and ground No.10 of the assessee's appeal is allowed.

8. Thus, after considering the interpretation of the relevant law as emanating from the ration load down by the Hon'ble apex Court as well as the other Hon'ble lTAT Benches, in my considered view of the matter I find that rectification order passed by the Ld. AO is not sustainable and the adjustment is thus deleted. The appellant gets relief and the Ground is allowed.”

CIT(A) that there was no clause specified in respect of upward adjustment of international transaction.

Order pronounced in the open court on 08.02.2019.