2011 (12) TMI 623 - AT - Income Tax

Summary

Issues involved:
The judgment involves issues related to computation of tax liability u/s 115JB, issuance of notice u/s 148, and exclusion of depreciation for computing exemption u/s 10B.

Computation of tax liability u/s 115JB:
The appeal by the Revenue challenged the CIT(A)'s decision regarding the tax liability computation u/s 115JB. The original assessment order determined nil income after set off of brought forward depreciation. The AO reduced deduction u/s 10B without proper explanation. The assessment was reopened u/s 147 due to excess deduction u/s 10B, leading to a notice u/s 148. The CIT(A) found no error in the tax liability calculation, citing differences in depreciation rates under IT Rules and Companies Act. The CIT(A) relied on legal precedents and concluded that the tax liability u/s 115JB was correctly paid by the appellant.

Issuance of notice u/s 148:
The CIT(A) did not delve into the legality of the notice issued u/s 148, focusing instead on the tax liability computation. The AO's reasons for reopening the assessment were vague, mentioning an omission in income computation u/s 115JB. The CIT(A) emphasized that the mistake in tax liability calculation was not due to adjustments under sec. 115JB, supporting the appellant's position based on legal decisions.

Exclusion of depreciation for exemption u/s 10B:
The dispute also involved the treatment of depreciation for computing exemption u/s 10B. The AO restricted the deduction u/s 10B in the book profits u/s 115JB, citing differences in depreciation rates between IT Rules and Companies Act. The appellant referenced a Kerala High Court decision, emphasizing that book profit estimates under sec. 115J should align with depreciation calculated as per the Companies Act. The ITAT dismissed the Revenue's appeal, upholding the CIT(A)'s decision based on legal provisions and lack of contrary evidence.

Separate Judgment:
No separate judgment was delivered in this case.