THE DCIT, CIRCLE-4(1)(2), AHMEDABAD V. M/S. TORRENT POWER LIMITED, AHMEDABAD

MA 10/AHD/2024

AI Insights

The case involves Torrent Power Limited, which filed Miscellaneous Applications (MAs) against the orders related to the assessment years 2013-14, 2014-15, and 2015-16. The core issue was the inclusion of the Debenture Redemption Reserve (DRR) in the computation of book profit under Section 115JB of the Income Tax Act, 1961. The Tribunal had previously allowed the exclusion of DRR based on a precedent set in the case of ACIT vs. Genus Electrotech Ltd. The Revenue challenged this decision, arguing that the DRR should be included and that the legal ground taken by the assessee was not applicable. The Tribunal dismissed the Revenue's applications, upholding the exclusion of DRR from the book profit calculation and directing the AO to re-compute the book profit in accordance with the law.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 102773 (ITAT-AHMEDABAD)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 17-04-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2014-2015
• Other Referred Cases: ACIT vs. Genus Electrotech Ltd., National Rayon Corporation Ltd. vs. CIT, Goetze India Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRAMDEEP SINHA
• Assessee Lawyers: S.N. SOPARKAR; PARIN SHAH
• Keywords: Set aside
• Section: 115JB

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, AHMEDABAD BEFORE SHRI T.R. SENTHIL KUMAR, JUDICIAL MEMBER & SHRI NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER MISCELLANEOUS APPLICATION No. 92/Ahd/2023 [in CO No.120/Ahd/2019 (in ITA No.2047/Ahd/2018)] & MA No. 10/Ahd/2024 (in ITA No.1598/Ahd/2019) & M.A. No.12/Ahd/2024 (In ITA No.128/Ahd/2020) (Ǔनधा[रण वष[ / Assessment Years :2013-14, 2014-15 & 2015-16) Torrent Power Limited Torrent House, Nr. Dinesh Hall, Off. Ashram Road, Ahmedabad, Gujarat – 380009 Torrent Power Limited Torrent House, Nr. Dinesh Hall, Off. Ashram Road, Ahmedabad, Gujarat – 380009 Torrent Power Limited Torrent House, Nr. Dinesh Hall, Off. Ashram Road, Ahmedabad, Gujarat - 380009 बनाम/ Vs. Deputy Commissioner of Income Tax Circle -4(1)(1), Ahmedabad & Deputy Commissioner of Income Tax Circle -4(1)(2), Ahmedabad & The ACIT Circle -4(1)(1), Ahmedabad èथायी लेखा सं./जीआइआर सं./PAN/GIR No. : AACCT0294J (Respondent) .. (Applicant) MA Nos. 92/Ahd/2023, 10 & 12/Ahd/2024 [Torrent Power Limited] A.Y. 2013-14, 2014-15 & 2015-16 - 2 – Assessee by : Shri S. N. Soparkar, Sr. Advocate & Shri Parin Shah, A.R. Revenue by : Shri Shramdeep Sinha, CIT. DR Date of Hearing 04/04/2025 Date of Pronouncement 17/04/2025 O R D E R PER SHRI NARENDRA PRASAD SINHA, AM: The Revenue has filed the following three Miscellaneous Applications: Sl. No. M.A. No. ITA No. A.Y. Order Dated 1 92/Ahd/2023 CO No. 120/Ahd/2019 (in ITA No.2047/Ahd/ 2018) 2013-14 28.06.2023 2 10/Ahd/2024 1598/Ahd/2019 2014-15 21.09.2023 3 12/Ahd/2024 128/Ahd/2020 2015-16 21.09.2023 2. As the issue involved in all three Miscellaneous Applications are identical, they were heard together and are being disposed of vide this common order. 3. We will take MA No.92/Ahd/2023 as the lead case. 4. The brief facts of the case are that the Tribunal in CO No.120/Ahd/2019 in ITA No.2047/Ahd/2018 for the A.Y. 2013- 14 had adjudicated the issue of additional ground of assessee in respect of reduction of book profit under Section 115JB of the Income Tax Act, 1961 (in short ‘the Act’) being the Debenture Redemption Reserve (‘DRR’) for Rs.23,80,78,403/-. The MA Nos. 92/Ahd/2023, 10 & 12/Ahd/2024 [Torrent Power Limited] A.Y. 2013-14, 2014-15 & 2015-16 - 3 – assessee had submitted that while computing book profit u/s.115JB, it had taken profit before appropriation of impugned DRR. Thus, the book profit included the amount of DRR. The assessee, for the first time before the Tribunal, had taken a ground that the DRR was required to be excluded from book profit u/s.115JB of the Act as the DRR was not a reserve falling under the provision of Explanation 1(b) to Section 115JB(2) of the Act. As to whether the DRR created by the assessee was a reserve and was required to be added to profit as per provision of Section 115JB(2) of the Act, was adjudicated by the Tribunal and it was held that this issue was already decided by the Co-ordinate Bench of Tribunal in the case of ACIT vs. Genus Electrotech Ltd., reported in 71 taxmann.com 101. It was held in that case that DRR is created for known liabilities and, therefore, the same cannot be equated with normal reserve made in books of account and accordingly need not to be included in the books profit. Following that decision, the AO was directed to adjudicate the issue afresh as per the provisions of law and the additional ground in the cross objection raised by the assessee was allowed for statistical purposes. 5. The Revenue has now raised objection that this ground was not raised by the assessee in the course of assessment proceeding or before the First Appellate Authority and that it was raised for the first time before the Tribunal in the Cross Objection filed against department appeal. Further that, the judgment of Hon’ble Supreme Court in the case of National Rayon Corporation Ltd. vs. CIT, [1997] (227 ITR 764) as relied upon in the order of the MA Nos. 92/Ahd/2023, 10 & 12/Ahd/2024 [Torrent Power Limited] A.Y. 2013-14, 2014-15 & 2015-16 - 4 – Tribunal was in the context of Companies (Profits) Surtax Act, 1964 and not with respect to Income Tax Act, 1961. According to the Revenue, the ratio of National Rayon Corporation Ltd. (supra) was rendered in a completely different context and could not have been applied to the present case. 6. Shri Shramdeep Sinha, Ld. CIT.DR submitted that the assessee cannot claim an additional deduction which was not claimed in the return of income as held by Hon’ble Supreme Court in the case of Goetze India Ltd. (284 ITR 323). Further, that the judgment in the case of National Rayon Corporation Ltd. (supra) was delivered in totally different context and could not have been applied to the facts to the present case. The Ld. CIT.DR further submitted that the Tribunal had allowed the deduction on the presumption that the book profit included the amount of DRR whereas the assessee had not added DRR in MAT computation. In this regard, he had drawn our attention to the Schedule MAT of ITR and Form 29B of Auditor’s Report and submitted that the assessee had not added any DRR amount in the profit after tax (as per books of account) while computing book profit in accordance with the provision of section 115JB of the Act. Thus, according to the Ld. CIT.DR, there was mistake apparent from the record. He, therefore, requested that the order of the Tribunal be recalled and the matter adjudicated afresh. 7. Per contra, Shri S. N. Soparkar, the Ld. Senior Counsel submitted that there was no mistake in the order of the Tribunal and that the decision of the Tribunal was correct and was based MA Nos. 92/Ahd/2023, 10 & 12/Ahd/2024 [Torrent Power Limited] A.Y. 2013-14, 2014-15 & 2015-16 - 5 – on correct appreciation of the facts of the case. He further submitted that the additional ground taken by the assessee was a legal ground and could have been raised for the first time before the Tribunal. He also relied upon various judicial decisions in support of his contention that there was no mistake apparent from record in the order of the Tribunal. 8. We have considered the rival submissions. The Tribunal had adjudicated the additional ground regarding reduction of book profit u/s.115JB of the Act by the DRR and had decided this issue in favour of the assessee following the earlier decision of the Tribunal in the case of Genus Electrotech Ltd. (supra). In fact, the relevant portion of the said decision was also reproduced in the order. Thereafter, a categorical finding was given in para 17 of the order as under: “17. Before us, no material has been placed on record by the learned DR to demonstrate that the decision of Tribunal as discussed above has been set aside /stayed or overruled by the Higher Judicial Authorities. Before us, learned DR has not placed any material on record to point out any distinguishing feature in the facts of the assessee and case as discussed above nor has placed any contrary binding decision in its support. Thus, respectfully following the order this tribunal in the case mentioned above, we hereby direct the AO to adjudicate the issue afresh as per the provisions of law and in the light of the above discussion. Thus, the ground of additional cross objection raised by the Assessee is hereby allowed for the statistical purposes.” MA Nos. 92/Ahd/2023, 10 & 12/Ahd/2024 [Torrent Power Limited] A.Y. 2013-14, 2014-15 & 2015-16 - 6 – 9. It is, thus, found that the Tribunal had decided the issue in favour of the assessee following the earlier decision of the Tribunal in the case of Genus Electrotech Ltd. (supra). The Revenue was unable to produce any evidence that the earlier decision in the case of Genus Electrotech Ltd. (supra) was overruled by any higher judicial authorities. In view of this fact the objection raised by the Revenue that the judgment in the case of National Rayon Corporation Ltd. (supra) was delivered in totally different context and could not have been applied to the facts to the present case, can’t be accepted. At the same time, the matter was set aside to the AO with a direction to adjudicate the issue afresh as per the provision of law. Thus, in essence, while holding that the assessee, in principle, was eligible for reduction of book profit u/s.115JB of the Act by the DRR; the matter was left to the AO to re-compute the book profit as per the provision of law. We, therefore, do not find any mistake in the order of the Tribunal. The computation of book profit u/s.115JB of the Act as per the provisions of law and the direction given in the order dated 28.06.2023 was left only to the AO and it was for the AO to verify whether the amount of DRR was added to the profit after tax while computing the book profit. The additional cross objection raised by the assessee was a legal ground which was rightly admitted and adjudicated by the Tribunal. We do not find any mistake in the order of the Tribunal and, therefore, the M.A. No.92/Ahd/2023 in CO No.120/Ahd/2019 is dismissed. MA Nos. 92/Ahd/2023, 10 & 12/Ahd/2024 [Torrent Power Limited] A.Y. 2013-14, 2014-15 & 2015-16 - 7 – M.A. Nos. 10 & 12/Ahd/2024 10. The issue involved in these two miscellaneous applications are identical to M.A. No.92/Ahd/2023. Therefore, the findings and the decision as given in M.A. No.92/Ahd/2023 is applicable to these two miscellaneous applications as well. 11. In the result, all three Miscellaneous Applications filed by the Revenue are dismissed. This Order pronounced on 17/04/2025 Sd/- Sd/- (T.R. SENTHIL KUMAR) (NARENDRA PRASAD SINHA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 17/04/2025 S. K. SINHA True Copy आदेश कȧ ĤǓतͧलͪप अĒेͪषत/Copy of the Order forwarded to : 1. अपीलाथȸ / The Appellant 2. Ĥ×यथȸ / The Respondent. 3. संबंͬधत आयकर आयुÈत / Concerned CIT 4. आयकर आयुÈत(अपील) / The CIT(A)- 5. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय अͬधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड[ फाईल / Guard file. आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलȣय अͬधकरण, अहमदाबाद / ITAT, Ahmedabad "