DCIT 7(2)(1), MUMBAI vs. MAHINDRA GESCO DEVELOPES LTF, MUMBAI

Order u/s.254(1)of the Income-tax Act,1961(Act) लेखा सद�य लेखा सद�य ,राजे�� राजे�� केकेकेके अनुसार अनुसार -PER RAJENDRA, AM- लेखा लेखा सद�य सद�य राजे�� राजे�� अनुसार अनुसार Challenging the order dated 19/10/2015 of the CIT(A)-13, Mumbai,the Assessing Officer (AO)has filed the present appeal.Assessee-company filed its return of income on 28/11/2003, declaring total Loss of Rs.3,12,20,237/-.The AO completed the assessment on 28/02/2005, determining the income of the assessee at Rs.27,97,50,140/-. Effective ground of appeal is about deleting of penalty levied by the AO,u/s. 271(1)(c)of the Act. Brief Facts: 2.In this matter,assessment u/s.143(3) of the Act was completed in this case on 28.02. 2005.While computing the income under normal provisions of the Act,the AO disallowed provision on account of impairment of assets and also provision for diminution in value of investment apart from various other additions/disallowance and computed the total income at ₹.27,49,50,140/-.He did not compute the book profits u/s.115JB of the Act,while completing the assessment u/s.143(3)of the Act on 28.02.2005.The assessee preferred appeal before the Ld.CIT(A) and also the Tribunal.The Tribunal,by its order dated 30.06.2011,partly allowed the appeal of the assessee and Revenue’s appeals were dismissed in ITA.s/4291/Mum/2007, 5658/ Mum/2007 & 4129/Mum/2007,dated 30. 06.2011. Subsequently,on 06.01.2012 an order was passed by the AO for giving effect to the order Tribunal,wherein he determined the income of the assessee at Rs. NIL as per the normal provisions of the Act.He,in his order,computed and accepted the book profits u/s. 115JB at Gesco Developers Ltd. (Now Mahindra Life Space Developers Ltd.)

₹.5,48,71,162/-.Later on,he issued a rectification-notice to the assessee.The assessee objected to the proposal of the AO stating that such an adjustment could not be made u/s. 154 of the Act by rectifying the order giving effect to the Tribunal order.The assessee contended that there is no mistake apparent on record in the order passed giving effect to the Tribunal order since this issue is not emanating from the Tribunal order, and the consequential order passed giving effect to the Tribunal is in accordance with law and there is no mistake crept in. However, the AO passed order u/s.154 on 14.03.2013 rectifying the order passed giving effect to the Tribunal order by adding back the provision for diminution in value of assets and provision for diminution in value of investments and computed the book profits at ₹.21,03, 86,222/-observing that there is a mistake apparent on record in passing the order giving effect to the Tribunal order as provisions of Section 115JB were amended by Finance Act 2008 w.e.f 01.04.2001 requiring addition of the amount or amounts set aside as provision for diminution in the value of any asset to the book profits. Assessee preferred appeal before the First Appellate Authority (FAA)and he quashed the order passed by the AO,following the decision of the Tribunal in the case of M/s Weizmann Limited ITA/768/Mum/2012, 742/Mum/2012 and 770/Mum/2012 dated 31.10.2013,wherein an identical issue was decided by the Tribunal. In the meanwhile,the AO initiated penalty proceedings invoking the provisions of section 271(1)(c)of the Act.The FAA deleted the penalty. 3.Before us,the Departmental Representative(DR)stated that there was no justification in deleting the penalty levied by the AO,that admission of an appeal by the Hon’ble High Court could not be basis for deleting penalty,that it was a case of furnishing inaccurate particulars. He relied upon the cases of Prakash S Vyas(272 CTR 353),Emblem Fashion Wear Exports (P.)Ltd.(83 taxmann.com 28)and Shree Gopal Housing & Plantation Corporation, Mumbai( IT Appeal No. 701 of 2015 of the Hon’ble Mumbai High Court). The Authorised Representative(AR)stated that the Tribunal had held that the order passed by the AO under section 154 of the Act was bad in law.He also referred to the circular no.25 of 2015,dtd. 31.12.2015.He stated that the AO was not justified in levying penalty,that the FAA had rightly deleted the penalty. 4.We have heard the rival submissions and perused the material before us.We find that original order was completed,u/s.143(3)of the Act,that the matter travelled up to the Tribunal and it dismissed the appeal filed by the AO and partly allowed the appeal of the assessee,as stated earlier.While giving effect to the order of the Tribunal,the AO finalised the income of 2 -Mahindra Gesco Developers Ltd. (Now Mahindra Life Space Developers Ltd.) the assessee at Rs.5.48 crores, as per the provisions of section 115JB of the Act.Later on the AO issued a notice u/s.154 of the Act and determined the income of the assessee at Rs.21.03 crores as per the provisions of section 115JB of the Act.The Tribunal,on 21/03/2018, dismissing the appeal,filed by the AO,had held that he was not authorised to make addition of MAT income u/s.154 of the Act,while giving appeal effect to order of the Tribunal.As the original rectification order passed by the AO has been quashed by the Tribunal,so, the penalty order would not survive.Otherwise also,the penalty is not leviable in MAT matters for the year under consideration in light of the Circular no.25 of 2015(supra),issued by the CBDT. So,we decide the effective ground of appeal against the AO.