IBS SOFTWARE PRIVATE LIMITED V. THE UNION OF INDIA

WP(C)/29652/2023

AI Insights

The case involves IBS Software Private Limited challenging an order passed by the Assistant Commissioner of Income Tax under Section 154 of the Income Tax Act, 1961. The petitioner sought rectification of an assessment order for the assessment year 2018-19, which involved discrepancies in the computation of income tax demand, including dual addition of deferred tax and non-granting of various tax credits. The High Court of Kerala at Ernakulam heard the petition and noted that while some issues were still pending, the assessing authority was expected to pass a separate order addressing these within a month.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 739792 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 26-09-2023
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: JAGADEESH LAKSHMAN; JOS WINSON
• Assessee Lawyers: RAJAKANNAN; GOPIKRISHNAN NAMBIAR; JOSON MANAVALAN; KURYAN PAULOSE; C ABRAHAM; JOHN MATHAI
• Keywords: Assessment; Deemed income; Income Tax; MAT credit; Rectification; TDS credit
• Section: 143(3); 143(2); 154; 115JB; 144C(13)

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH TUESDAY, THE 26TH DAY OF SEPTEMBER 2023 / 4TH ASWINA, 1945 WP(C) NO. 29652 OF 2023 PETITIONER: IBS SOFTWARE PRIVATE LIMITED 521-524 NILA, TECHNOPARK CAMPUS, THIRUVANANTHAPURAM, PIN - 695581 REPRESENTED BY ITS CHIEF FINANCIAL OFFICER - MR. ASHISH NANDA BY ADVS. RAJA KANNAN M.GOPIKRISHNAN NAMBIAR JOSON MANAVALAN KURYAN THOMAS PAULOSE C. ABRAHAM K.JOHN MATHAI RESPONDENTS: 1 THE UNION OF INDIA REPRESENTED BY ITS REVENUE SECRETARY, MINISTRY OF FINANCE, NEW DELHI, PIN – 110 004. 2 THE ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 1 (1), 2, AAYAKAR BHAWAN, KAWADIAR P.O., THIRUVANANTHAPURAM, PIN – 695 003. 3 THE DEPUTY COMMISSIONER E-FILING UNIT, CENTRALISED PROCESSING CENTER, INCOME TAX DEPARTMENT, BENGALURU, PIN – 560 500. BY ADV Jagadeesh Lakshman OTHER PRESENT: JOS WINSON-SC-IT THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 26.09.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) NO. 29652 OF 2023 2 DINESH KUMAR SINGH, J. -------------------------------------------- WP(C) NO. 29652 OF 2023 -------------------------------------------- Dated this the 26th day of September, 2023 J U D G M E N T 1. On the last date of posting of this writ petition, i.e., on 11.09.2023, this Court passed the following order. “Heard Mr. Raja Kannan, learned counsel for the writ petitioner. 2. The challenge in the present writ petition is, Exhibit P11 order, passed by the 2 nd respondent Assessing Authority on an application filed by the petitioner under Section 154 of the Income Tax Act, 1961, seeking rectification of the assessment WP(C) NO. 29652 OF 2023 3 order Exhibit P8 for the assessment year 2018-19. 3. The assessee had filed the original return of income for the assessment year 2018-19 on 30.11.2018 for a total income of Rs.43,04,54,470/- under the normal provisions of the Act and Rs.6,53,70,977/- under the deemed income under Section 115JB of the Income Tax Act. Petitioner, thereafter filed revised return on 30.3.2019 declaring total income of Rs.36,74,81,500/- under the normal provisions of the Act and Rs.6,56,90,179/- under the deemed income under Section 115JB of the IT Act. The case was selected for scrutiny assessment under CASS and after issuance of notice under WP(C) NO. 29652 OF 2023 4 Section 143(2) of the Act, the assessment proceedings got completed and the total income of the petitioner was assessed as Rs.92,98,63,480/-. 4. Against the said assessment order, the petitioner had filed an appeal before the Income Tax Appellate Tribunal on 14.9.2022. It appears that the petitioner had also filed a rectification application before the Assessing Authority. 5. While pending appeal against the Original Assessment order, the Assessing Authority has passed the impugned order- Exhibit P11 dated 7.7.2023, on the rectification application filed by the petitioner. WP(C) NO. 29652 OF 2023 5 6. Petitioner had pointed out the following mistakes in the assessment order and requested for correct computation of the income tax demand: “(i) Dual addition of deferred Tax amounting to INR 5,18,93,612/- while computing book profit under Section 115JB of the Act. (ii) Non-granting of TDS/TCS, Foreign Tax Credit & Advance Tax, totaling to INR 5,99,26,801/- available to the credits of Assessee during the year. (iii) Insufficient MAT credit allowed in the order passed u/s 143(3) of the Act.” 7. In respect of claim Nos. i & iii of the application filed by the assessee, the WP(C) NO. 29652 OF 2023 6 Assessing Authority, in the impugned order held that the said issues would be discussed and considered in a separate order. With respect to claim No.ii of the assessee about non filing of TDS/TCS, Foreign Tax Credit & Advance tax, totaling to Rs.5,99,26,801/-, the Assessing Authority had held – the functionality to transfer the TDS credit from one PAN to another PAN is not available with the jurisdictional Assessing Officer. It is further held that the assessee has already been informed about this and the assessee had requested the TDS Deductor to file a revised TDS return incorporating the change. 8. The Assessing Authority further held that WP(C) NO. 29652 OF 2023 7 since the addition made in the assessment order in question is not the nature of mistake apparent from the record and as the credits were given against the TDS entries which were available in PAN No.AADCI5529A, the same is not rectifiable as per the provisions of Section 154 of the Income Tax Act, 1961. In view thereof, the rectification request with respect to the non-granting TDS credit is rejected. 9. Learned counsel for the petitioner further submitted that though the Assessing Authority has held in the impugned order that, so far as claims i & iii in the application are concerned, a separate order will be passed, but no separate order has WP(C) NO. 29652 OF 2023 8 been passed. The order impugned is in respect of claim No.ii. It is therefore submitted that when the Assessing Authority was considering the three issues mentioned in the impugned order and has passed order in respect of only one issue, the order impugned suffers from manifest error and needs to be set aside. 10. Learned counsel for the respondents submitted that he will obtain instructions whether there is any order in respect of claim Nos. i and iii of the petitioner as mentioned in the rectification application. 11. List this case after two weeks for having proper instructions from the Revenue Authorities. WP(C) NO. 29652 OF 2023 9 List this writ petition after two weeks.” 2. Shri. Jose Winson, Learned Standing Counsel for Revenue holding on behalf of Shri. Christopher Abraham, Learned Standing Counsel for Revenue submits that in respect of claim No. (i) and (iii), though noted in the order dated 11.09.2023, but no separte order has been passed. The assessing authority is passing a separate order within a period of one month. Issue No.(ii) has been decided by Ext.P11 impugned order. Considering this fact that a separate order on claim No.(i) and (iii) would be passed within a period of one month, nothing survives in this writ petition. The assessing authority should also consider the issue regarding disallowance of expenses under Section 14(a) while considering the issue No.(i) and (iii) and, pass a WP(C) NO. 29652 OF 2023 10 composite order in accordance with law within a period of one month. 3. With the aforesaid observation and direction, this writ petition is disposed of. 4. The Learned Counsel for the petitioner as well as the Learned Standing Counsel for Revenue should communicate this order to the assessing authority for necessary compliance. Sd/- DINESH KUMAR SINGH JUDGE rpr WP(C) NO. 29652 OF 2023 11 APPENDIX OF WP(C) 29652/2023 PETITIONER’S EXHIBITS Exhibit P1 THE TRUE COPY OF FORM NO. CAA.7 DATED 27.03.2018 ALONG WITH THE ORDER DATED 27.03.2018 ISSUED BY THE NCLT, DIVISION BENCH, CHENNAI, IN THE MATTER OF SCHEME OF AMALGAMATION WITH IBS SOFTWARE SERVICES PRIVATE LIMITED, THIRUVANANTHAPURAM WITH IBS SOFTWARE PRIVATE LIMITED, THIRUVANANTHAPURAM, AND THE SANCTIONED SCHEME OF AMALGAMATION (DATED NIL) Exhibit 2 THE TRUE COPY OF THE ORDER DATED 26.10.2017 ISSUED BY THE NCLT, SINGLE BENCH, CHENNAI, IN THE MATTER OF SCHEME OF AMALGAMATION WITH IBS SOFTWARE SERVICES PRIVATE LIMITED, THIRUVANANTHAPURAM WITH IBS SOFTWARE PRIVATE LIMITED, THIRUVANANTHAPURAM Exhibit P3 THE TRUE COPY OF THE RELEVANT EXTRACT OF THE AUDITOR'S REPORT DATED 17.08.2018 (REPORT ON THE 'STANDALONE FINANCIAL STATEMENTS'), FOR THE A.Y. 2018-19 Exhibit P4 THE TRUE COPY OF THE E-ACKNOWLEDGMENT DATED NIL GENERATED AT THE TIME OF UPLOADING OF DOCUMENTS FOR THE A.Y. 2018-19 Exhibit P5 THE TRUE COPY OF THE E-ACKNOWLEDGMENT DATED NIL GENERATED AT THE TIME OF UPLOADING OF DOCUMENTS FOR THE A.Y. 2018-19 Exhibit P6 THE TRUE COPY OF THE LETTER DATED 28.01.2020 (WITHOUT ANNEXURES) EVIDENCING THE FILING OF VARIOUS DOCUMENTS INCLUDING AUDITED FINANCIAL ACCOUNTS AND AUDITOR'S REPORT FOR THE A.Y. 2018-19 BEFORE THE DEPUTY COMMISSIONER OF INCOME TAX, TRANSFER PRICING CIRCLE 2(3)(1), KOCHI WP(C) NO. 29652 OF 2023 12 Exhibit P7 THE TRUE COPY OF THE INTIMATION DATED 10.06.2020 ISSUED BY THE 3RD RESPONDENT UNDER SECTION 143(1) OF THE ACT, FOR THE A.Y. 2018-19 Exhibit P8 THE TRUE COPY OF THE ORDER OF ASSESSMENT DATED 18.07.2022 PASSED BY THE 2ND RESPONDENT UNDER SECTION 143(3) READ WITH SECTION 144C (13) OF THE ACT, FOR THE A.Y. 2018-19 Exhibit P9 THE TRUE COPY OF THE APPLICATION FOR RECTIFICATION (WITHOUT ANNEXURES) DATED 17.08.2022 SUBMITTED BY THE PETITIONER UNDER SECTION 154 OF THE ACT, BEFORE THE 2ND RESPONDENT Exhibit P10 THE TRUE COPY APPEAL MEMORANDUM (WITHOUT ANNEXURES) DATED 14.09.2022 FILED BY THE PETITIONER BEFORE THE INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH Exhibit P11 THE TRUE COPY OF THE ORDER DATED 07.07.2023 PASSED BY THE 2ND RESPONDENT UNDER SECTION 154 OF THE ACT, FOR THE A.Y. 2018-19 "