DCIT 10(3), MUMBAI vs. SULZER PUMPS INDIA LTD, NAVI MUMBAI

Assessee by: Ms. Heena Doshi Department by: Shri V. Justin (DR) सुनवाईकीतारीख / Date of Hearing: 30.11.2017 घोषणाकीतारीख /Date of Pronouncement: 09.02.2018 आदेश / O R D E R

PER AMARJIT SINGH, JM:

“1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in holding that the assessee is eligible for deduction u/s 80HHC from the book profit u/s 115JB when no such deduction is allowable under the normal provisions of the Act.” 2. The appellant craves leave to add, amend, vary, omit or substitute any of the aforesaid grounds of appeal at any time before or at the time of hearing of appeal.

3. The appellant prays that the order of Ld. CIT(A) on the above ground be set aside and that of the assessing offer be restored.”

4. The brief facts of the case are that the assessee filed its return of income on 30.10.2004 declaring total income to the tune of Rs. Nil after claiming set-off of brought forward losses of Rs.30,92,342/- and book profit u/s 115JB of the Act at Rs.1,42,62,460/-. The return was processed u/s 143(1) of the I. T. Act, 1961 on 07.01.2005. Thereafter the assessment u/s 143(3) of the Act on 27.12.2006 assessing the total , 1910/M/15& C.O.133/M/15 A.Y. 2004-05 income as declared in the return filed. Thereafter, the case was reopened u/s 147 of the Act on following grounds: - “

In the instant case, assessment was completed u/s 143(3) of the Act on 27.12.2006 assessing total income at Nil after set-off of b/f losses. Book Profit u/s 115JB of the Act was computed by the assessee at Rs.1,42,62,460/-. Subsequently, it is noticed that the assessee has claimed deduction u/s 80HHC of the Act at Rs.1,57,53,546/- while computing book profit u/s 115JB whereas there was no deduction allowable under thenormal provisions of the Act. After set-off of brought forward business loss/unabsorbed depreciation, there was no income left for claim/allow ability of deduction u/s80HHC. Therefore, I have reason to believe that income to the extent of Rs.1,57,53,546/- has escaped assessment within the meaning of section 147 of the Act due to failure on the part of the assessee to disclose truly and fully all material facts.”

5. After the reply filed by the assessee, the Assessing Officer was of the view that the assessee did not claim deduction u/s 80-HHC while computing the normal provision of the Act and claimed the deduction u/s 80-HHC of the Act in view of the provision u/s 115JB of the Act. Since the assessee did not raise any claim u/s 80-HHC under the normal provision of the Act but raised the claim while assessing the income u/s 115JB of the Act, therefore, the claim of deduction u/s 80-HHC of the Act was not allowed. Therefore, the income of the assessee was assessed at nil on account of normal provision of the Act and book profit u/s 115JB of the Act was assessed to the tune of Rs.1,57,53,546/-. Feeling aggrieved, the assessee filed an appeal before learned CIT(A) who allowed the claim , 1910/M/15& C.O.133/M/15 A.Y. 2004-05 of the assessee, therefore, the revenue has filed the present appeal before us.

ISSUE NO.1:- 6. Under this issue the revenue has challenged the allowances of deduction u/s 80-HHC of the Act from the book profit u/s 115JB of the Act when no such deduction was claimed under the normal provision of the Act. The Ld. Representative of the revenue has argued that the CIT(A) has wrongly allowed the claim of the assessee while in fact the assessee did not claim any deduction u/s 80-HHC of the Act under the normal provision of the Act and raise the deduction u/s 80-HHC of the Act under book profit u/s 115JB of the Act. However, on the other hand, the Ld. Representative of the assessee has refuted the said contentions. Before going further, we deemed it necessary to advert the finding of the CIT(A) on record: - “3.3 I have carefully considered the above submission of the appellant and the impugned assessment order. Section 115JB was amended by Finance Act, 2011 and clause (iv),(v) and (vi) to Explanation 1 was omitted with retrospective effect from 01.04.2005. Clause (iv) provides that the Book Profit shall be reduced by profit from exports deductible u/s 80HHC. This amendment was brought to negate the decision of the Supreme Court in the case of M/s. Ajanta Pharma Ltd. (supra). However, I find the amendment takes effect only from the A.Y. 2005-06 onwards whereas in the present case, the assessment year involved is 2004.05. In view of this, the claim of the appellant that the eligible deduction ofRs.1,57,53,546/- worked out u/s 80HHC has to be reduced from the Book Profit is found to being order and hence, the action of the AO cannot be sustained.” , 1910/M/15& C.O.133/M/15 A.Y. 2004-05

“On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in holding that the rectification carried out by the AO disallowing the claim of deduction u/s 80HHC amounting to Rs.1,57,53,546/- while computing the book profit u/s 115JB is not as per the provisions of the Act.” 2. The appellant craves leave to add, amend, vary, omit or substitute any of the aforesaid grounds of appeal at any time before or at the time of hearing of appeal.

3. The appellant prays that the order of Ld. CIT(A) on the above ground be set aside and that of the assessing offer be restored.”

10. The facts of the present case are quite similar to the facts of the case as narrated above in the appeal bearing no. 2418/M/2014, therefore, there is no need to repeat the same. The matter of controversy is also the same. This issue is also decided in favour of the assessee against the revenue on the similar lines as narrated above while deciding the controversy in ITA. No.2418/M/2014. Accordingly, the appeal of the revenue is hereby ordered to be dismissed.

CROSS OBJECTION. 133/M/2015:-

“1. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals) (hereinafter referred to as CIT(A)) has erred in not holding that notice u/s.148 dated 25ir March, 2011 is bad in law He ought not to have done so.

, 1910/M/15& C.O.133/M/15 A.Y. 2004-05

2. On the facts and in the circumstances of the case and in law. the learned CIT(A} has erred in not directing to cancel the order passed u/s. 143(3) read with Section 147. He ought not to have done so. 3 On the facts and in the circumstances of the case and in law. the learned CIT{A) ought to have held that the order passed under Section 143(3) read with Section 147 was bad in law since it was passed in the absence of providing the actual copy of the reasons recorded. 4 On the facts and in the circumstances of the case and in law, the learned CIT(A) ought to have held that the order passed without following the procedure laid down by the Hon'ble Supreme Court was bad in law, 5. On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in not following the decision of the Supreme Court in the Ajanta Pharmacals V/s. CIT (327 ITR 305) for computation of Book profits u/s 115JB of the Act He ought not to have done so. 6. Your appellants crave leave to add. to modify, or take additional grounds as need be.” 12. Since the issue on merits has already been decided in favour of the assessee in the appeals by the revenue, the adjudication of challenged of reopening has become only academic in nature, hence, the appeal of the assessee is dismissed as infructuous.