INCOME TAX OFFICER, CORPORATE WARD 3(3), CHENNAI , WANAPARTHY BLOCK, INCOME TAX OFFICE, CHENNAI - V. WOOSU AUTOMOTIVE INDIA P LIMITED, TIRUVALLUR

ITA 2117/CHNY/2024

AI Insights

The case involves an appeal by the Income Tax Officer against the decision of the Commissioner of Income Tax (Appeals), which pertained to the adjustment of an excise duty refund while computing book profits under section 115JB of the Income Tax Act for the Assessment Year 2017-18. The Assessing Officer had initially added the excise duty refund to the book profits, which was contested by the assessee, M/s. Woosu Automotive Pvt. Ltd., on the grounds that the refund was not credited to the profit and loss account but was included in the cenvat credit receivable account. The CIT(A) agreed with the assessee and directed the exclusion of the excise duty refund from the book profits, a decision which the revenue appealed against.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 29405 (ITAT-CHENNAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2025
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act, Companies Act, 2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: NILAY BARAN SOM LD
• Assessee Lawyers: SHREYANSH KUMAR KOCHAR LD
• Keywords: Rectification of order
• Section: 143(3); 154; 2; 115JB

Judgement Text

" आयकर अपीलीय अिधकरण “ए” \u000eा यपीठ चे\u0013ई म\u0016। IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, CHENNAI मा ननीय \u0019ी एबी टी. वक\u001e, \u000eा ियक सद\" एवं माननीय \u0019ी मनोज क ुमार अ'वाल ,लेखा सद\" क े सम)। BEFORE HON’BLE SHRI ABY T. VARKEY, JM AND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM आयकरअपील सं./ ITA No.2117/Chny/2024 (िनधा*रण वष* / Assessment Year: 2017-18) Income Tax Officer Corporate Ward-3(3), Wanaparthy Block, Chennai. बनाम/ Vs. M/s. Woosu Automotive Pvt. Ltd. #130, Narasingapuram Village, Perampakkam Post, Thiruvallur-631 402. \u0002थायीलेखासं./जीआइआरसं./PAN/TAN No. AAACW-7285-L (अपीलाथ\u001a/Appellant) : (\u001d\u001eथ\u001a / Respondent) अपीलाथ\u001aकीओरसे/ Appellant by : Shri Nilay Baran Som (CIT)-Ld. DR \u001d\u001eथ\u001aकीओरसे/Respondent by : Shri Shreyansh Kumar Kochar (CA) - Ld. AR सुनवाईकीतारीख/Date of Hearing : 21-01-2025 घोषणाकीतारीख /Date of Pronouncement : 03-02-2025 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by revenue for Assessment Year (AY) 2017-18 arises out of an order of learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] dated 13-06- 2024 in the matter of a rectification order passed by Ld. Assessing Officer [AO] u/s. 154 r.w.s 143(3) of the Act on 30-03-2022. The grounds taken by the revenue read as under:- 1. The order of the ld. CIT (A) is contrary to the facts and circumstances of the case. 2 2. The ld. CIT(A) erred in deleting the adjustment made by the Assessing Officer on account of refund of Excise duty while computing book profits u/s.115JB of the Act of Rs.5,49,64,786. 3. The ld. CIT(A) erred in accepting the contention of the assessee that profit and loss account was prepared by the assessee in accordance with the provisions of sub section 2 of section 115JB of the Act. 3.1. The ld. CIT (A) failed to appreciate the provisions of [Schedule III] to the 55 [Companies Act, 2013 (18 of 2013)] wherein it has been stated profit and loss account must incorporate all debits and credits. 4. The ld. CIT(A) erred in earning to the conclusion that since the refund of excise duty was not credited in profit and loss account thus AO was not empowered to make adjustments as per explanation 1 to section 115JB of the Act, \"without appreciating that assessee was in violation of sub-section 2 of section 115JB of the Act. 2. As is evident, the sole issue that arises for our consideration is adjustment of excise duty refund while computing book profits u/s 115JB. Having heard rival submissions, the appeal is disposed-off as under. 3. From the facts, it emerges that an assessment was framed against the assessee u/s 143(3) on 21-12-2019 wherein the refund of excise duty for Rs.549.64 Lacs was added while computing income under normal provisions. Subsequently, Ld. AO rectified the order u/s 154 on 30-03-2022 to make certain adjustment. One of the adjustments was refund of excise duty for Rs.549.64 Lacs while computing book profits u/s 115JB. Despite notice, the assessee failed to make any effective representation during rectification proceedings. 4. Aggrieved by aforesaid rectification, the assessee challenged the adjustments made in rectification order before Ld. CIT(A). On the issue of refund of excise duty, it was submitted that excise duty paid on goods was not shown as expenditure in the profit & Loss Account but the same was included in the cenvat credit receivable account which was shown as ‘current assets’ in the Balance Sheet. Since the excise duty was never claimed as deduction, the refund so received could not be added 3 u/s 115JB. As per computation mechanism, only specified additions and deletions were to be made to the profits shown in the Profit & Loss Account as enumerated in Explanation-1 to Sec.115JB of the Act. The Ld. AO made adjustment of refund of excise duty which do not fall under specified adjustments. Concurring with the same, Ld. CIT(A) directed Ld AO to exclude the same u/s 115JB. Aggrieved, the revenue is in further appeal before us. 5. It could be seen that the assessee is following exclusive method to accounting for excise duty in its books of accounts. Another method to account the same is inclusive method wherein excise duty components are routed through Profit & Loss Account. Whatever method is followed by the assessee, the same would not have any impact on the final profit / loss for the year. Both methods are recognized method of accounting. However, the assessee following inclusive method and the assessee following exclusive method could not be treated differently for the purpose of computation of Book Profits u/s 115JB. It could not be said that adjustment u/s 115JB would be made only for the assessee following inclusive method whereas no such adjustment could be made for assessee following exclusive method of accounting. Therefore, to say that this expenditure is not routed through Profit & Loss Account is not correct proposition since the assessee is free to follow any of the method. Nevertheless, the computational mechanism u/s 115JB under both the methods would be similar. 6. The Ld. AR has stated that the assessee has also challenged the addition of refund of excise duty under normal provisions before first appellate authority which is pending for adjudication. To enable the revenue to take a consistent stand in the matter, this issue of adjustment 4 of refund of excise duty u/s 115JB also stands restored back to the file of Ld. CIT(A) for disposal of both the appeals together. The Ld. CIT(A) is directed to re-adjudicate both the appeals in accordance with law. 7. The appeal stand allowed for statistical purposes. Order pronounced on 3rd February, 2025 Sd/- Sd/- (ABY T. VARKEY) (MANOJ KUMAR AGGARWAL) \u000eा ियक सद\" /JUDICIAL MEMBER लेखा सद\" / ACCOUNTANT MEMBER चे1ई Chennai; िदनांक Dated :03-02-2025 DS आदेशकीIितिलिपअ'ेिषत/Copy of the Order forwarded to : 1. अपीलाथ\u001a/Appellant 2. \u001d\u001eथ\u001a/Respondent 3. आयकरआयु:/CIT Chennai. 4. िवभागीय\u001dितिनिध/DR 5. गाड?फाईल/GF "