ASSISTANT COMMISSIONER OF INCOME TAX , AMRAVATI CIRCLE , AMRAVATI V. M/S APURVA OIL INDUSTRIES PRIVATE LIMITED , AMRAVATI

MA 22/NAG/2023

AI Insights

The case involves the Assistant Commissioner of Income Tax, Amravati Circle, as the applicant, and M/s. Apurva Oil Industries Pvt. Ltd., as the respondent. The Revenue sought to recall an earlier Tribunal order due to the omission of a critical Revenue Audit Objection concerning the computation of Minimum Alternate Tax (MAT) for the assessment year 2007-08. Initially, the Tribunal had dismissed the Revenue's appeal based on the monetary limit for tax effect as per a CBDT circular. However, upon the Revenue's application highlighting the oversight and the significance of the audit objection, the Tribunal decided to recall the earlier order and set the case for a new hearing.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 24476 (ITAT-NAGPUR)
• Duration Of Justice: 1 year(s) 6 month(s) 3 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 22-10-2024
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 11-10-2024
• Assessment Year: 2007-2008
• Appeal Filed On: 19-04-2023
• Laws Referred To: Income-tax Act 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ABHAY Y. MARATHE
• Assessee Lawyers: VEENA AGRAWAL
• Keywords: Set aside; Depreciation; Tax effect; Rectification of order; Audit objection; Unabsorbed depreciation
• Section: 143(3); 154; 254(2); 115JB; 260A

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER, AND SHRI K.M. ROY, ACCOUNTANT MEMBER M.A. no.22/Nag./2023 (Arising out of ITA No.235/Nag./2019) (Assessment Year : 2007–08) Asstt. Commissioner of Income Tax Amravati Circle, Amravati ……………. Applicant (Original Appellant) v/s M/s. Apurva Oil Industries Pvt. Ltd. A–23, MIDC, Amravati 444 601 PAN – AABCA2868E …………….Respondent (Original Respondent) Assessee by : Smt. Veena Agrawal Revenue by : Shri Abhay Y. Marathe Date of Hearing – 11/10/2024 Date of Order – 22/10/2024 O R D E R PER K.M. ROY, A.M. By way of this Miscellaneous Application (“M.A.”), the Revenue seeks recall of the impugned order dated 04/10/2022, passed by the Tribunal in Revenue’s appeal being ITA No.235/Nag./2019, for the assessment year 2007–08. 2. The submissions of the applicant Revenue, as contained in its application, are reproduced below:– “2. this case, e-return of income for the A.Y. 2007-2008 was filed on 27.10.2007 declaring Nil total income after setting off of brought forward losses of Rs.16,38,000/-. The assessment order u/s 143(3) of the Income- tax Act 1961 was passed on 24.12.2009 and gross total income of Rs. 25,39,409/- was determined (after making addition of Rs.9,01,409/-). 2 M/s. Apurva Oil Industries Pvt. Ltd. MA no.22/Nag./2023 After setting off of carry forward losses of A.Y. 2004-05 and 2005-06 of Rs.41,70,000/-, the nil total income was assessed. 3. The assessee had filed appeal before the Id. CIT(A). The appeal of the assessee was allowed and the CIT(A) has deleted the addition of Rs.9,01,409/-. As a result of order giving effect to appellate order, the gross total income of the assessee was revised to Rs. 16,38,000/-. It had become nil after set off of brought forward business losses. 4. Thereafter, a revenue Audit objection was received on 09.12.2013. It was stated in the objection that the assessee company had not computed Book- profit for payment of MAT. As per provision of Income-tax Act, 1961, the assessee is liable to pay tax under Minimum Alternate Tax (MAT) as unabsorbed depreciation of Rs.7,80,984/- (as per book) was only available to be set-off against the book profit of A.Y.2007-08 as elaborated below by the audit: A.Y. Business Loss Depreciation Net Loss as per P&L A/c 2004–05 (–) 3,08,384 (–) 9,40,424 (–) 12,48,808 2005–06 (–) 34,00,552 (–) 8,67,449 (–) 42,68,001 Total (–) 37,08,936 (–) 18,07,873 (–) 55,16,809 2006–07 – – (+) 10,26,889 (+) 10,26,889 Total (–) 37,08,936 (–) 7,80,984 (–) 44,89,920 5. The Revenue Audit had pointed out that unabsorbed depreciation of Rs.7,80,984/- as per books of account, was only available for set off against book profit for A.Y.2007-08. The net profit for the year was Rs. 16,36,434/- and after reducing the unabsorbed depreciation of Rs.7,80,984/-, the book profit for the A.Y. 2007-08 was worked out to Rs. 8,55,450/-. As per revenue audit, Maximum alternative tax @ 11.22% on the book profit of Rs.8,55,450/- was required to be determined at Rs. 95,981/-. 6. The audit objection was found acceptable and as a remedial action, order under section 154 of the Income-tax Act 1961 was issued on 17.12.2013. The rectification order u/s 154 of the Income-tax Act 1961 was passed on 28.03.2014. In the order, after reducing the unabsorbed depreciation of Rs.7,80,984/-, book profit was worked out to Rs.8,55,450/-, on which MAT @ 11.22% is payable as per provisions of Sec. 115JB of the Income-tax Act 1961. The audit objection was treated as settled by the Revenue Audit vide letter dated 27.09.2014. 7. The assessee had filed appeal against the rectification order u/s 154 of the Income-tax Act, 1961 dated 28.03.2014 before the Id.CIT(A). The appeal was decided on 28.06.2019 by the Id. CIT(A)-I, Nagpur vide appellate order No. CIT(A)-1/129/2014-15. The order u/s 154 of the Income-tax Act 1961 was set aside on the ground that the Assessing Offcer had erred in invoking powers u/s 154 in relation to Interpretation of proviso (iii) to the explanation 1 of section 115JB of the Income-tax Act 1961. As such, the Id. CIT(A) had deleted the levy of MAT at Rs.95,981/- 3 M/s. Apurva Oil Industries Pvt. Ltd. MA no.22/Nag./2023 on working of book profit at Rs.8,44,450/-. Further, Ld. CIT(A) has not decided the issue on merit stating the order itself is set aside. 8. The department has filed had filed the appeal before the Hon'ble ITAT, Nagpur against the appellate order of the Id. CIT(A)-I, Nagpur dated 28.06.2019. The Hon'ble ITAT, Nagpur held that the CBDT vide circular dated 08/08/2019 (supra) has amended Para 3 of circular No.3 of 2018 dated 11/07/2018 thereby enhancing monetary limit of tax effect from Rs.20 lakhs to 50 lakhs for filing appeal by the department before the tribunal as per latest circular No. 17/2019 dated 08.08.2019. As the tax effect involved in this case is below the prescribed limit as per above circular. Accordingly Hon'ble ITAT, Nagpur has dismissed the appeal filed by revenue. It is also stated that in the appellate order that if the issue is covered under any of the exception, the department may approach the hon'ble tribunal. 9. In this case, for the sake of brevity, the profit and loss account of the assessee and the status of business loss and depreciation of earlier years are reproduced below: A.Y. Business Loss/Profit Depreciation Net Loss as per P&L A/c (b+c) Whether Carried forward is admissible a b c d e 2004–05 (–) 3,08,384 (–) 9,40,424 (–) 12,48,808 Yes, for both loss and depreciation 2005–06 (–) 34,00,552 (–) 8,67,449 (–) 42,68,001 Yes, for both loss and depreciation Total (–) 37,08,936 (–) 18,07,873 (–) 55,16,809 Yes, for both loss and depreciation 2006–07 (+) 15,42,728 (–) 5,15,839 (+) 10,26,889 Depreciation of ` 10,26,889, will be adjustted and remaining depreciation of ` 7,80,983, and Business loss of ` 37,08,936, will be carried forward 2007–08 21,79,153 5,42,719 (+) 16,36,434 Remaining Depreciation of ` 7,80,983, can be adjusted. 10. As stated above, in this case, the order u/s154 of Income-tax Act, 1961 was passed as a remedial action in pursuance of acceptable revenue audit objection. Therefore, the case is falling within the exemptions. While deciding the appeal, the hon'ble ITAT has held that if the case is falling within any exemptions, the department may approach it. From the point of 4 M/s. Apurva Oil Industries Pvt. Ltd. MA no.22/Nag./2023 view of merit also, as is apparent form the above table, the assessee has not computed the book profit u/s 115JB of the Income-tax Act, 1961. The assessee had not paid the tax under normal provision of the act due to Nil total income after adjustment of brought forward losses and deprecation. As such, it was liable to pay the tax on book profit. By not computing the book profit, the assessee had not paid the due taxes, thereon. It is submitted that the computation of total income and also computation of the book profit is part of the return of income. The assessee has not determined the book profit and tax thereon. It is submitted that the same is a mistake, which is apparent form records, and therefore rectifiable u/s 154 of the Income-tax Act, 1961. 11. It is requested that the judgment and order dated 04.10.2022 passed by the Hon'ble ITAT, Nagpur Bench in ITA No. 235/Nag./2019 in the case of M/s Apurva Oil Industries Pvt. Ltd. (AABCA2868E), Amravati for AY 2007-08, be revisited within the meaning of section 254(2) of the Income Tax Act, 1961. It is, therefore, prayed that the Hon'ble ITAT be pleased to recall the same and adjudicate upon the same on merits. 12. The department has not preferred appeal under section 260A of the Income Tax Act, 1961 in this case, and it is prayed that the Hon'ble ITAT rectify its order in the light of the above.” 3. It is manifest that there is a Revenue Audit Objection. The Department failed to bring it out before the Tribunal at the time of hearing However, since it is a matter of record, the appeal cannot be summarily dismissed since it falls within the exception clause, as rightly pointed out by the learned Departmental Representative. Accordingly, we hereby recall the impugned order dated 04/10/2022, passed by the Co–ordinate Bench of the Tribunal, Nagpur Bench, being appeal in ITA no.235/Nag./2019, for A.Y. 2007–08, for denovo adjudication on merit. The Registry is directed to fix the appeal in due course after issuance of notice to the parties fixing the date of hearing. 4. In the result, M.A. filed by the Revenue is allowed. Order pronounced in the open Court on 22/10/2024 Sd/- V. DURGA RAO JUDICIAL MEMBER Sd/- K.M. ROY ACCOUNTANT MEMBER 5 M/s. Apurva Oil Industries Pvt. Ltd. MA no.22/Nag./2023 NAGPUR, DATED: 22/10/2024 Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Nagpur; and (5) Guard file. True Copy By Order Pradeep J. Chowdhury Sr. Private Secretary Sr. Private Secretary ITAT, Nagpur "