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Income Tax Appellate Tribunal, “A” BENCH: KOLKATA
This appeal preferred by the revenue is against the order of the Ld. CIT(A) –IV, Kolkata dated 27.03.2009 for AY 2000-01.
The revenue has preferred this appeal against the action of Ld. CIT(A) on the following grounds of appeal: “1. That on the facts and circumstances of the case, the Ld. CIT(A) has erred on facts to comment that none appeared for the Department when no opportunity was allowed for hearing.
2. That on the facts and circumstances of the case, the Ld. CIT(A) has erred as well as in the law to vacate the computation of book profit u/s. 115JA when book profit was computed after giving due opportunity to the assessee.
3. That on the facts and circumstances of the case, the Ld. CIT(A) has erred as well as in law to hold that provision of rule 8 is applicable in computation of book profit u/s. 115JA in the case of interest income for an amount of Rs.7,13,250/- and profit on sale of fixed assets for an amount of Rs.2,20,31,606/- when such profit is not related to profit from growing and manufacturing of tea.”
TONGANI Tea Co. Ltd., AY 2000-01 3. Briefly stated the facts of the case are that the assessee company filed its return of income for the relevant AY 2000-01 declaring total income of Rs.96,03,528/- under normal provisions of the Act and book profit of Rs.64,99,092/- u/s. 115JA of the Income-tax Act, 1961 (hereinafter referred to as the “Act”). The case of the assessee was assessed u/s. 143(3)/147 of the Act on 27.12.2005 and the total income under normal computation of provisions was computed at Rs.10,78,00,000/- and book profit u/s. 115JA of the Act was determined at Rs.8,18,91,021/-. Aggrieved by the said assessment order, the assessee preferred an appeal before the Ld. CIT(A). While the appeal was pending before the Ld. CIT(A, the Ld. CIT invoked his revisionary power u/s. 263 of the Act and set aside the order passed by AO u/s. 143(3)/147 of the Act for framing assessment de novo. In view of this revisional order u/s. 263, the Ld. CIT(A) dismissed the first appeal filed by the assessee vide order dated 12.01.2007 against the order u/s. 143(3)/147 holding it to be infructuous. Meanwhile, against the order passed by Ld. CIT u/s. 263 of the Act the assessee filed an appeal before the Tribunal and the Tribunal vide order dated 11.12.2006 vacated the direction of the Ld. CIT requiring the AO to assess income only as per sec. 50B but directed the AO to re-compute the total income in accordance with law after giving opportunity of hearing to the assessee. Thereafter, the AO issued fresh notices u/s. 143(2) and 142(1) of the Act and framed an order of assessment dated 28.12.2007 giving effect to the order of this Tribunal. While giving effect to the order of the Tribunal, the AO assessed the total income under computation provision at Rs.10,78,00,000/-. However, no book profit u/s. 115JA was assessed by the AO in the aforesaid order dated 28.12.2007 although certain observations were made by the AO with regard to computation of book profit in the body of the assessment order. Aggrieved by this order of the AO, the assessee then preferred an appeal before the Ld. CIT(A) -4, Kolkata who decided the appeal vide his order dated 09.04.2008. In the said appeal, the assessee had objected to the observations made by the AO in the body of the assessment order against the adjustments to be made in computation of book profit. The Ld. CIT(A) decided the issue at para 28 of the appellate order dated 09.04.2008 and observed as under: “28. In ground no. 9 the assessee has objected to AO’s action of not allowing assessee’s claim for exclusion of Rs.93,42.154/- & Rs.5,23,00,566/- in the computation of Book Profit u/s. 115JA of the Act. From perusal of the impugned order dated 28.12.2007 I find that the AO has not assessed “Book Profit” u/.s. 115JA of the Act. In my opinion, the assessee’s claims
TONGANI Tea Co. Ltd., AY 2000-01 are, therefore, premature. The assessee cannot file an appeal against observations made in the order, which are not acted upon by the AO for the purpose of assessing the total income. The assessee can come up in appeal if or as and when the AO makes the assessment of Book Profit, if any. Ground No. 9 is, therefore, dismissed in limini.”
According to Ld. CIT(A), since the AO had not computed the book profit in assessment order dated 28.12.2007, therefore, the assessee ought not to have appealed against the mere observations of the AO in respect to book profit. Therefore, the Ld. CIT(A) in the appellate order had not given any finding or direction to the AO concerning computation/recomputation of the book profit u/s. 115JA of the Act. However, it was pointed out by the Ld. AR that while passing the giving effect order of the Ld. CIT(A) dated 09.04.2008, the AO erroneously assessed the book profit u/s. 115JA of the Act at Rs.8,06,29,994/- after making certain adjustment/addition. Aggrieved by this AO order dated 09.11.2008 giving effect to the Ld. CIT(A) order, the assessee preferred an appeal before the Ld. CIT(A)-4, Kolkata and the Ld. CIT(A) in his order dated 27.03.2009 held that the AO’s action of assessing book profit u/s. 115JA was beyond the scope of the appellate order dated 09.04.2008 passed by Ld. CIT(A) since no such direction relating to computation of book profit was given by the Ld. CIT(A) in his appellate order. Accordingly, the Ld. CIT(A) set aside the assessment of book profit u/s. 115JA of the Act made by the AO in the order dated 09.11.2008. Apart from the foregoing the Ld. CIT(A) also deleted adjustment/additions made by the AO in computation of book profit u/s. 115JA. Aggrieved by the last stated action of Ld. CIT(A), the revenue is in appeal before us.
At the time of hearing of the appeal, the Ld. AR drew our attention that subsequent to the passing of order dated 09.11.2008 wherein the AO assessed the book profit u/s. 115JA which is under challenge before us, the AO initiated rectification proceedings by issuing notice u/s. 154 of the Act therein he admitted that there was a mistake committed in the earlier order dated 28.12.2007 by not assessing the book profit u/s. 115JA of the Act. Pursuant to such notice, the AO passed an order dated 07.11.2009 u/s. 154 wherein he assessed the book profit u/s. 115JA at Rs.2,42,22,029/-. Referring to the rectification order dated 17.11.2009 the Ld. AR submitted that when in the subsequent proceeding the AO himself has admitted that in the order dated 28.12.2007 he had not assessed book profit u/s. TONGANI Tea Co. Ltd., AY 2000-01 115JA and non-assessment of such book profit was a mistake apparent from record then it would not lie in the mouth of the department to agitate in the present appeal to the contrary that the AO was competent to assess the book profit by passing an order u/s. 251 of the Act with a view to give effect to the directions and finding of the Ld. CIT(A). On the other hand, the Ld. DR relied on the order passed by the AO dated 19.11.2008 and claimed that since while arriving at the total income pursuant to the direction of the Ld. CIT(A) the AO found that book profit u/s. 115JA was higher and the AO rightly assessed to the book profit to tax.
After giving our thoughtful consideration to the submissions made by both the parties and having perused the records, we do not find any infirmity in the order of the Ld. CIT(A). Admittedly, in the assessment order dated 28.12.2007 which was a de novo assessment (after Ld. CIT’s 263 order read with Tribunal order dated 11.12.2006), the AO did not assess the book profit of the assessee u/s. 115JA of the Act though made certain observations regarding the book profit. Against the observation made by the AO concerning book profit, the assessee raised specific grounds before the Ld. CIT(A) which were rejected by him because in his opinion, merely on observation by AO in respect of book profit, the assessee could not prefer appeal when the AO ultimately has not assessed the book profit u/s. 115JA of the Act. We, therefore, find that there was a categorical finding by the Ld. CIT(A) that in the assessment order dated 28.12.2007 the AO had not assessed book profit u/s. 115JA of the Act while giving effect to the order of Ld. CIT(A) dated 09.04.2008 wherein no direction was issued by him to compute/re-compute the book profit. In the light of the aforesaid facts and law governing the subject, we find that AO while passing the order dated 09.11.2008 with a view to give effect to a finding/direction of the Ld. CIT(A), the AO could not have assessed the book profit u/s. 115JA of the Act. The scope and ambit of the said order passed u/s. 251 was restricted only to specific findings and directions contained in the order passed by the Ld. CIT(A). From a perusal of the appellate order dated 09.04.2008, we find that no direction or finding was given by the Ld. CIT(A) requiring the AO to assess the book profit u/s. 115JA of the Act. Accordingly, we do not see any infirmity in the order of the Ld. CIT(A) setting aside the computation of book profit
TONGANI Tea Co. Ltd., AY 2000-01 made by the AO in the impugned order dated 09.11.2008. Moreover, we note that subsequent to the impugned action of AO, the very same AO issued order u/s. 154 of the Act, wherein he rectified his order dated 28.12.2007 and computed the book profit which action has been upheld by this Tribunal. So, therefore anyway this appeal is only an academic exercise. Therefore, we are not inclined to entertain this appeal of the Revenue and, therefore, it is dismissed.
In the result, the appeal of revenue is dismissed.
Order is pronounced in the open court on 29/08/2018 Sd/- Sd/- (M. Balaganesh) (A. T. Varkey) Accountant Member Judicial Member
Dated: 29th August, 2018 Jd.(Sr.P.S.)
Copy of the order forwarded to:
1 Appellant – ACIT, Circle-4, Kolkata. 2 Respondent – M/s. Tongani Tea Co. Ltd., 15B, Hemanta Basu Sarani, Kol-700 001. 3 CIT(A)-IV, Kolkata. (sent through e-mail) CIT , Kolkata 4 DR, Kolkata Benches, Kolkata (sent through e-mail) 5