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Income Tax Appellate Tribunal, MUMBAI BENCH “J”, MUMBAI
Before: SHRI AMIT SHUKLA & SHRI RAJESH KUMAR
Per Amit Shukla, Judicial Member:
The aforesaid appeal has been filed by the assessee against impugned order dated 25.06.2014, passed by Ld. CIT(Appeals)-17, Mumbai in relation to the order passed u/s. 154 of the IT Act, 1961, for the A.Y. 2012-13.
2. The main grounds urged before us by the assessee out of other grounds raised
in the appeal are as under:
1. Restricting the Minimum Alternative Tax (‘MAT’) credit and confirmation of demand: On the facts and circumstances of the case and in law, the Commissioner of Income-tax (Appeals) -17 (‘Hon’ble CIT(A)’) erred in not appreciating the facts of the Appellant’s case and the position in law adopted by the Appellant and thereby doing the following:
J P Morgan Services India Private Limited a. Restricting the MAT credit under section 115JAA of the Income-tax Act, 1961 (‘Act’) to Rs.34,38,72,162 (instead of Rs.70,48,67,942 as claimed by the Appellant in the return of income); and b. Confirming the demand to the extent of Rs.46,32,69,200 as was determined in rectification order dated February 5, 2014, passed under section 154 of the Act by the Assessing Officer (‘AO’). The Appellant prays that the AO be directed to grant the balance MAT credit of Rs.36,09,95,780 and consequently delete the demand raised by the Appellant.
4. Interest under section 234B and 234C of the Act On the facts and circumstances of the case and in law, the Hon’ble CIT(A) erred in confirming the action of the AO of levying interest under section 234B of the Act (of Rs.8,41,65,395) and 234C of the Act (of Rs.1,86,67,294).”
The brief facts, qua the issue raised by the assessee, are that the assessee company has filed its return of income for the AY 2012- 13 on 29 November 2012 u/s 139(1). The assessee’s final tax liability was computed under MAT as per the provisions of section 115JB of the Income-tax Act, 1961 (‘Act’) at Rs.1,55,80,39,421/-. The assessee claimed credit of the following against tax liability so arrived at under section 115JB of the Act and, accordingly, claimed a refund of Rs.5,09,855/- in the return of income:
Particulars Amount in Rs. MAT credit set off brought forward 70,48,67,940 (pertaining to AYs 2006-07 to 2011-12) AY Rs. 2006-07 - 17,25,360 2007-08 - 31,84,802 2008-09 -13,21,94,539 2009-10 - 22,38,91,079 2010-11 - 29,60,35,360 2011-12 - 4,78,36,802
Tax deducted at source 7,32,30,744 Advance Tax 77,50,00,000 Self assessment tax 55,00,000
J P Morgan Services India Private Limited The return of income was processed and an intimation was issued to the assessee under section 143(1) of the Act, dated 23 May 2013, wherein the total demand payable by the assessee was determined at Rs.83,97,11,920/- by the AO.
The assessee aggrieved by the adjustment filed a petition for rectification u/s. 154 before the AO stating that the credit of Rs.70,48,67,940/- as claimed in the return of income u/s. 115JAA, pertained to the AYs 2010-11 and 2011-12 has not been granted and also there is a consequential levy of interest u/s. 234B and 234C amounting to Rs. 9,93,73,204/- and Rs.3,60,30,036/-.
The learned Assessing Officer passed the order on such petition, after observing and held as under:
The contention of the assessee is carefully gone through and after verification of the records, it is submitted that: i. It is seen that the income of the assessee company was assessed under normal provisions of the IT Act for the AY 2006-07, 2007-08, 2008-09 and 2009-10 and no MAT credit is available to the assessee for these years. As requested by the assessee, credit under section 115JAA pertaining to AY 2010-11 and AY 2011-12 is being granted to the assessee company amounting to Rs.34,38,72,162/-. ii. Interest levied under section 234B and 234C is levied accordingly as per total tax liability and provisions of the IT Act, 1961. Being mistake apparent from record, the same is rectified u/s. 154 of the I. T. Act, 1961. The assessee is granted MAT credit of Rs.34,38,72,162/- u/s. 115JAA of the IT Act and calculate interest accordingly as per provisions of Income Tax Act.
In the first appeal, the assessee submitted that under the scope and provisions of section 143(1), the AO was required to give
J P Morgan Services India Private Limited credit for the taxes on the basis of information given return of income and he cannot look beyond the return of income filed by the assessee. In support, certain decisions were also relied upon. However, the learned CIT (A) confirmed the order of the AO on the ground that no MAT credit was available to the assessee in the A.Ys. 2006-07 to 2009-2010 and, therefore, he has rightly denied the credit and also observed that the assessee could not produce any evidence to substantiate that MAT credit was available to the assessee for the years under consideration.
Before us, the learned counsel for the assessee submitted that under the scope and provisions of section 143(1), the AO could not have travelled beyond the return of income filed by the assessee and make adjustments based on some other record. The AO has denied the MAT credit on the ground that under the normal provisions of the Act in the A.Ys. 2006-07 to 2009-2010, no MAT credit was available due to the additions made by the AO. He submitted that firstly, this cannot be the reason for denying the MAT credit and secondly, the additions made in those years finally stood deleted by the Tribunal, which vitiates the entire premise of the AO. In support he filed the copy of the Tribunal orders for A.Y. 2006-07 and 2008-09 before us. On the scope of adjustment made u/s. 143(1), he strongly relied upon the decision of Hon’ble Madras High Court in the case of CIT vs. Asian Peroxides Ltd. (2005) 275 ITR 68 and Gujarat Petrosynthese Ltd. & Anr. Vs. O L Rungta and Ors., [2009] 316 ITR 282.
On the other hand, learned DR submitted that the present appeal has been filed against order u/s. 154 and the intimation u/s. 143(1) now stands merged with section 154. The AO has made the adjustment u/s 143(1) on the basis of material available on record, which was duly considered by him at the time of proceedings u/s. J P Morgan Services India Private Limited
The Tribunal order which has now been filed by the learned counsel was not available with the AO and the best course would be for the assessee to move application for rectification u/s. 154 before the AO.
We have heard the rival submissions and have also perused the relevant findings given in the impugned orders. Section 143(1)(a) provides for adjustment to be made to the income or loss declared in the return, however same is circumscribed to arithmetical errors in the return, accounts or documents accompanying the return of income which can be rectified. What could be prima facie admissible or inadmissible has to be decided on the basis of information available in the return of income or the documents accompanying the said return of income and not from the other records. The record should pertain to the assessment year in question and not the earlier assessment years, as has been understood by the AO while denying the MAT credit to the assessee. In the return of income the assessee has sought MAT credit of Rs. 70,48,67,942/- which has been reduced to Rs.34,38,72,162/- on the ground that assessment was made under the normal provisions of the Act for the A.Ys. 2006-07 to 2009- 10 and, therefore, no MAT credit is available to the assessee for these years. If the AO had this information on record, then it was incumbent upon the AO to select the return of income for scrutiny u/s. 143(2), because this was a record pertaining to earlier years on the basis of which he could have reason to believe that assessee’s claim in the return of income qua the MAT credit was excessive. Thus, we hold that the AO could not tinker with the return of income under the scope and ambit of section 143(1), because there was no arithmetical error or any mistake to make any adjustment while processing the return of income. In any case, now it has already been brought on record that in the A.Ys 2006-07 to 2009-2010 the J P Morgan Services India Private Limited additions made under the normal provisions, which was the ground to make the adjustments by the AO, stands deleted and, therefore, the assessee’s computation in those years would be made under the MAT provisions and consequently, the assessee would be eligible for MAT credit u/s. 115JAA. Accordingly, the ground raised by the assessee is allowed.
The issue pertaining to charging of interest under sections 234B and 234C will also go in favour of the assessee, because they are purely consequential.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 15th March, 2017.