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Income Tax Appellate Tribunal, MUMBAI BENCH “C”, MUMBAI
Before: SHRI C.N. PRASAD, HONBLE & SHRI MANOJ KUMAR AGGARWAL, HONBLEShri Prasad Bapat Shri Saurabh Despande
O R D E R PER C.N. PRASAD (JM) 1. This appeal is filed by the Revenue against the order of the Ld.CIT(A)–13 Mumbai dated 03.02.2016 for the Assessment Year 2003-04 arising out of the order passed u/s. 154 of the Act.
The Revenue in its appeal challenged the order of the Ld.CIT(A) in quashing the order passed u/s. 154 of the Act.
(A.Y: 2003-04) M/s. Mahindra Lifespace Developers Ltd.
Briefly stated the facts are that, the assessment u/s. 143(3) was completed in this case on 28.02.2005 and while computing the income under normal provisions of the Act, Assessing Officer 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/-. Apparently the Assessing Officer 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.
Assessee preferred appeal before the Ld.CIT(A) and also the Tribunal and the Tribunal by order dated 30.06.2011 partly allowed the appeal of the assessee and Revenue’s appeals were dismissed in ITA.Nos. 4291/Mum/2007, 5658/Mum/2007 & 4129/Mum/2007 dated 30.06.2011. Subsequently order giving effect to the Tribunal was passed on 06.01.2012 by the Assessing Officer determining the income under normal provisions of the Act at Nil. The Assessing Officer in this order computed and accepted the book profits u/s. 115JB at ₹.5,48,71,162/- as returned by the assessee.
Subsequently a notice u/s.154 was issued to the assessee to explain as to why the provision for diminution in value of assets and the provision for diminution in value of investments should not be added back
(A.Y: 2003-04) M/s. Mahindra Lifespace Developers Ltd. to the book profits. The assessee objected for the proposal of the Assessing Officer stating that such an adjustment cannot 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 Assessing Officer 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 Ld.CIT(A) and the Ld.CIT(A) quashed the order passed by the Assessing Officer following the decision of the Tribunal in the case of M/s Weizmann Limited v. DCIT in ITA.No. 768/Mum/2012, 742/Mum/2012 and 770/Mum/2012 dated 31.10.2013 wherein an identical issue has been decided by the Tribunal.
(A.Y: 2003-04) M/s. Mahindra Lifespace Developers Ltd.
Ld.DR strongly supported the order of the Assessing Officer and submitted that the computation of book profits arose in the order passed giving effect to the Tribunal order and since in view of the provisions of section 115JB any provision made or set-aside for diminution in value of asset should be added back to the book profits and therefore as there is a mistake apparent on record in not adding back these provisions while computing the book profits, the Assessing Officer rightly rectified the order by adding back the same.
Ld.AR submitted before us that the Assessing Officer travelled beyond the direction of the Tribunal by modifying the order giving effect to the Tribunal to make adjustments to the book profits. Learned Counsel for the assessee submitted that there is no mistake apparent on record to modify the order giving effect to the Tribunal as the issue of whether diminution in value of investments/assets while computing the book profits u/s. 115JB was not the issue before either the Ld.CIT(A) or the Tribunal. The Learned Counsel for the assessee submitted that if at all if there is a mistake it is in the order passed u/s. 143(3) and not in the order passed giving effect to the Tribunal order. Ld. Counsel for the assessee strongly placed reliance on the decision of the Coordinate Bench in the case of M/s.Weizmann Limited v. DCIT (supra) and submitted that an identical issue came up before the Tribunal and the Tribunal held that the (A.Y: 2003-04) M/s. Mahindra Lifespace Developers Ltd. rectification made u/s. 115JB by the Assessing Officer on the issue of adding back of provision of diminution in value of investments while computing the book profits u/s. 115JB of the Act by modifying the order u/s.143(3) r.w.s. 254 was not permissible.
We have heard the rival submissions, perused the orders of the authorities below. We find that an identical issue came up before the Coordinate Bench i.e. whether the Assessing Officer can rectify the order giving effect to the Tribunal holding that there is a mistake apparent on record in not adding back the diminution in value of investment while computing the book profits u/s. 115JB of the Act and the Tribunal taking not of the decision of the Hon'ble Jurisdictional High Court and the ratio of the decision in the case of CIT v. Sakseria Cotton Mills Ltd. [124 ITR 570] held that the issue relating to allowability of deduction on account of provision of diminution in value of investments while computing the book profits u/s. 115JB was not the subject matter of appeal before the Tribunal and there being no direction given by the Tribunal on this issue it cannot be said that there was any mistake in the order of the Assessing Officer passed u/s. 143(3) r.w.s. 254 of the Act calling for any rectification u/s.154 of the Act. It was further held that such mistake if any was in the order originally passed by the Assessing Officer u/s. 143(3) of the Act and not in the order passed while giving effect to the Tribunal. This decision
(A.Y: 2003-04) M/s. Mahindra Lifespace Developers Ltd. squarely applies to the facts of the assessee’s case since the Tribunal nowhere in its order directed or decided the issue of adding back of diminution in value of investment/assets while computing the book profits u/s. 115JB of the Act. Therefore, the rectification order passed by the Assessing Officer, modifying order giving effect to the Tribunal order and computing the book profits by adding back the diminution in value of investments/assets is bad in law as there was no any mistake in the order passed by the Assessing Officer giving effect to the order of the Tribunal. The mistake if any was in the Assessment Order originally passed by the Assessing Officer u/s. 143(3) on 28.02.2005 and not in the order passed giving effect to the Tribunal on 06.01.2012. In the circumstances Ld.CIT(A) rightly quashed the order passed u/s. 154 of the Act. Hence we sustain the order of the Ld.CIT(A) and reject the ground of Revenue.
In the result, appeal of the Revenue is dismissed.
Order pronounced in the open court on the 21st March, 2018.