BAY CONTAINER TERMINAL PRIVATE LIMITED,CHENNAI vs. DCIT, COPORATE WARD 1(3), CHENNAI

Aforesaid appeal by assessee for Assessment Year (AY) 2016-17 arises out of an order of learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] dated 24-08-2023 in the matter of a rectification intimation issued by CPC Bangalore u/s 154 on 23-03-2019. The grounds taken by the assessee are as under: - 1. The Appellant challenges the order of the Commissioner of lncome Tax (Appeals) (CIT(A)") on the following grounds amongst others each without prejudice to the other or others.

The order of the CIT(A) is arbitrary, and contrary to law, and without considering the documents submitted and computation of income by the Appellant.

The CIT(A) has committed a grave error in not identifying the fundamental error committed by the Assessing Officer in computation of the book profit under section 115JB of the Income Tax Act, 1961. 4. The CIT(A) completely ignored the fact that the Appellant had correctly added back the income tax paid and reduced the deferred tax asset while computing the book profit under section 115JB of the Income Tax Act, 1961. Therefore, the order of the CIT(A) is liable to be deleted. 5. The profit after tax as per the profit & loss statement included the credit to the profit & loss statement a sum of Rs.2,02,58,783/- on account of the deferred tax asset. The Appellant has reduced the same as per explanation - 1(vii) under section 115JB(2) of the Income Tax Act, 1961. Under these circumstances the order of the CIT(A) is liable to be deleted. 6. The CIT(A) has mentioned that deferred tax asset has not been credited to the profit and loss statement as per note 15 and 16 of the profit and loss statement without realising the fact that deferred tax asset is a separate line item in the profit and loss statement along with other tax expenses. The act of CIT(A) disregarding the credit of deferred tax asset is illegal and requiring the interference of this Hon'ble Tribunal. Therefore, the order of the CIT(A) is liable to be deleted. As is evident, the sole grievance of the assessee is computation of book profits u/s 115JB. Having heard rival submissions and upon perusal of case records, the appeal is disposed-off as under. 2. Upon perusal of row no. 19 of CPC rectification order dated 23- 03-2019, it transpires that the assessee has computed book profits u/s 115JB for Rs.969.95 Lacs whereas CPC has computed the same as Rs.1172.51 Lacs. The assessee preferred further appeal against the same. Though the assessee failed to appear during appellate proceedings, the Ld. CIT(A) held that the assessee did not credit deferred tax liabilities of Rs.202.55 Lacs in the Profit & Loss Account but claimed the reduction of the same in computation of book profits. Accordingly, the computation of CPC was confirmed. Aggrieved, the assessee is in further appeal before us. 3. Upon perusal of ‘Schedule-MAT’ of ITR-6 as filed by the assessee, it could be seen that the assessee has reflected book profits - 3 - of Rs.846 Lacs and increased the same by an amount of Rs.123.95 Lacs. Accordingly, the assessee computed book profit of Rs.969.95 Lacs. Upon perusal of financial statements, the same completely matches with ‘Profit before tax’. The amount of Rs.123.95 Lacs is nothing but net of current tax of Rs.326.51 Lacs and deferred tax of Rs.202.55 Lacs. The net of the two i.e., Rs.123.95 Lacs has been reflected by the assessee in ITR-6. Thus, the observation of Ld. CIT(A) that the assessee has not credited deferred tax liabilities of Rs.202.55 Lacs in the Profit & Loss Account, is erroneous. This being so, we allow the appeal of the assessee. The CPC is directed to accept Book Profit of Rs.969.95 Lacs as computed by the assessee and revise the demand / computations accordingly.

The appeal stand allowed.