HINDUSTAN CONSTRUCTION COMPANY, MUMBAI V. PR. CIT-6, MUMBAI

MA 303/MUM/2023

• Counselvise Citation: [2023] 100 COUNSELVISE.COM (IT) 6846 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 17 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 03-10-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 06-07-2023
• Assessment Year: 2015-2016
• Appeal Filed On: 16-04-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revision of order; Depreciation; Rectification of order; Unabsorbed depreciation
• Section: 263; 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL "H" BENCH, MUMBAI SHRI B.R. BASKARAN, ACCOUNTANT MEMBER SHRI RAHUL CHAUDHARY, JUDICIAL MEMBER MA No. 303/MUM/2023 (Arising out of ITA No. 968/Mum/2021) (Assessment Year: 2015-16) Hindustan Construction Company Limited, Hincon House, L B S Marg, Vikhroli (West), Mumbai – 400083 [PAN: AAACH0968B] ................ Appellant The Principal Commissioner of Income Tax – 6, Mumbai, Room No. 501, 5 th Floor, Aaykar Bhavan, Maharshi Karve Road, Mumbai - 400020 Vs ................ Respondent Appearance For the Appellant/Assessee For the Respondent/Department : : Shri H.P. Mahajani Shri Anil Sant Date Conclusion of hearing Pronouncement of order : : 07.07.2023 04.10.2023 O R D E R Per Rahul Chaudhary, Judicial Member: 1. The present Miscellaneous Application has been filed by the Appellant for rectification of order, dated 25/08/2022, passed by the Tribunal in ITA No. 968/Mum/2021, pertaining to the Assessment Year 2015-16. 2. We have heard the rival submission and perused the order dated 25/08/2022, passed by the Tribunal. 3. The grievance of the Appellant-Assessee is that the Tribunal has, while dismissing the appeal preferred by against the order, dated 30/03/2021, passed by the Ld. Principal Commissioner of Income Tax, MA No. 303/Mum/2023 Assessment Year: 2015-16 2 Mumbai – 6 [hereinafter referred to as ‘the PCIT’], under Section 263 of the Act, made observations and returned findings which would impact the determination of the merits of the issue in the proceedings before Assessing Officer pursuant to the aforesaid order, dated 30/03/2021, passed under Section 263 of the Act. 4. Vide order dated 30/03/2021 the PCIT had, inter alia, set-aside the issue pertaining to computation of book profits under Section 115JB of the Act to the file of the Assessing Officer for de-novo adjudication by exercising power of revision under Section 263 of the Act and holding that Assessment Order dated 26/12/2017 was erroneous in so far as prejudicial to the interest of Revenue. Therefore, in appellate proceedings before us the Appellant had contended the order, dated 26/12/2017, passed by the Assessing Officer was not erroneous. This contention of the Appellant was rejected by Tribunal while confirming the order passed by the PCIT setting aside the issue to the file of Assessing Officer for de-novo adjudication. The observations/findings returned by the Tribunal are to be read and understood in this context alone. As directed by the PCIT, the Assessing Officer is required to decide the issue de-novo and therefore, while the Appellant/Assessee would be free to raise such contentions as the Appellant/Assessee may deem fit, the Assessing Officer would be free to decide the issue de-novo as per law. 5. However, in order to address the grievance of the Appellant, it is clarified that the Assessing Officer shall be free to decide the issue de- novo uninfluenced by the observations made by the Tribunal while dismissing Ground No.4 raised by the Assessee and a paragraph to that effect is inserted after Paragraph 10 of the order, dated MA No. 303/Mum/2023 Assessment Year: 2015-16 3 25/08/2022, passed by the Tribunal. The rectified paragraph 10 shall now read as under: “ Ground No. 4 10. First issue pertains to computation of book profits under Section 115JB of the Act. According to PCIT the Assessing Officer has, while computing book profits, erred in reducing Profits as per Profit & Loss Account by INR 70.66 Crores taking the same to be unabsorbed brought forward book loss. We find that what is contemplated in clause (iii) of Explanation 1 to Section 115JB of the Act is the simple numerical figure being the amount of loss brought forward or unabsorbed depreciation whichever is less. Hence, it could be safely concluded that it is a simple determination of numerical amount which would be eligible for reduction from net profit for the purposes of arriving at the book profit under Section 115JB of the Act. [GO Airlines (India) Ltd. V. DCIT: 189 ITD 430 (Mumbai - Trib.)[13- 01-2021]. Further, we note that Clause (iii) of Explanation 1 to Section 115JB of the Act uses the expression "as per books of accounts". A perusal of the 'Note 3: Reserves & Surplus' forming part of the Audited Financial Statements of the Appellant pertaining to the Assessment Year 2015-16, shows that as per the "books of accounts" of the Appellant, the Appellant had Book Profit of INR 80.64 Crores, and INR 81.65 Crores for the Assessment Year 2014-15 and 2015-16, respectively. The brought forward book loss of INR 11.64 Crores was completely set off against the book profits during the Assessment Year 2014-15 and the balance of INR 69.00. Crores was transferred to Reserve & Surplus. Hence, once the entire book loss as per "books of account" got wiped out by the book profits for the Assessment Year 2014-15, there was no book loss to be carried forward to Assessment Year 2015-16. Thus, the PCIT has rightly concluded that the Appellant did not have any brought forward book loss for the Assessment Year 2015-16, and therefore, the Assessing Officer erred in reducing the Profit as per Profit & Loss Account by INR 70.66 Crores while computing Book Profits under Section 115JB of the Act. In view of the aforesaid, we conclude that the PCIT was correct in holding that the Assessment Order, dated 26.12.2017 was erroneous as well as prejudicial to the interest of Revenue to this extent, MA No. 303/Mum/2023 Assessment Year: 2015-16 4 warranting exercise of powers of revisions under Section 263 of the Act by the PCIT. Further, we note that though in this submission/reply, dated 22.03.2021 the Appellant has tried to justify the action of the Assessing Officer, in the Working of Tax Liability forming part of Computation of Income filed by the Appellant along with the Return of Income the Appellant had reduced the Profits as per Profit & Loss Account by INR 64.72 only. The Assessing Officer has not carried out any inquiry/verification in this regard during the assessment proceedings. We, therefore, decline to interfere with the order of PCIT in this regard. Accordingly, Ground No. 4 raised by the Appellant is dismissed. It is clarified that as per the order dated 30/03/2021, passed by the PCIT u/s 263 of the Act, the Assessing Officer shall be free to decide the issue de-nove on its own merits as per law uninfluenced by the observations made hereinabove’ 6. In result, the Miscellaneous Application preferred by the Assessee/Appellant is treated as allowed for statistical purposes. Order pronounced on 04.10.2023. Sd/- Sd/- (B.R. Baskaran) Accountant Member (Rahul Chaudhary) Judicial Member म ुंबई Mumbai; दिन ुंक Dated : 04.10.2023 Alindra, PS MA No. 303/Mum/2023 Assessment Year: 2015-16 5 आदेश की प्रतितिति अग्रेतिि/Copy of the Order forwarded to : 1. अपील र्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आय क्त/ The CIT 4. प्रध न आयकर आय क्त / Pr.CIT 5. दिभ गीय प्रदिदनदध, आयकर अपीलीय अदधकरण, म ुंबई / DR, ITAT, Mumbai 6. ग र्ड फ ईल / Guard file. आिेश न स र/ BY ORDER, सत्य दपि प्रदि //True Copy// उप/सह यक पुंजीक र /(Dy./Asstt. Registrar) आयकर अपीलीय अदधकरण, म ुंबई / ITAT, Mumbai