1999 (2) TMI 58 - HC - Income Tax

Summary

Issues involved:
The judgment involves issues related to the adjustment made by the Assessing Officer in determining the income of the assessee u/s 115J of the Income-tax Act, 1961. The questions revolve around the correctness of the adjustments made under section 143(1)(a) and the applicability of the decisions of the Andhra Pradesh High Court in similar cases.

Judgment Details:

Issue 1: Adjustment made under section 115J:
The Assessing Officer computed the loss excluding unabsorbed depreciation while determining the book profit under section 115J, contrary to the assessee's return which included unabsorbed depreciation. The Tribunal held that the issue was debatable and adjustments made under section 143(1)(a) were not appropriate. The legal position regarding the computation of loss under section 115J was unsettled until a Tribunal decision in March 1992 favored the Revenue. The Assessing Officer exceeded his jurisdiction by making adjustments that were subject to doubt or argument, as acknowledged by various Tribunal Benches.

Issue 2: Rectification under section 154:
The question arose whether the Assessing Officer could invoke section 154 after sending the intimation under section 143(1)(a). The Department argued that only obvious errors could be rectified under section 154, not debatable issues. However, the court found that the Assessing Officer erred by making controversial adjustments under section 143(1)(a), leading to a higher income determination than returned by the assessee. The Assessing Officer failed to exercise the jurisdiction under section 154 to rectify such errors.

Issue 3: Appellate jurisdiction and Tribunal's authority:
A contention was raised regarding the Tribunal's authority to adjudicate on the validity of adjustments made under section 143(1)(a) in an appeal against the rejection of the assessee's application under section 154. The court noted that this argument was not raised earlier and declined to address it as no question of law was formulated in the petition under section 256(2). The Tribunal's order was considered consequential to its view and within the scope of appellate jurisdiction.

In conclusion, the court dismissed the petitions, emphasizing that the legal positions under sections 143(1)(a) and 154 were well-settled, and no useful purpose would be served by calling for a reference. The court declined to address new contentions not raised earlier and upheld the Tribunal's authority in the appellate process.