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2010 (4) TMI 682 - AT - Income TaxRectification of mistake - The Assessing Officer has mentioned that revised estimate filed by assessee reducing the taxable income under section 115JB is rejected On the ground that the revision of income is permissible in accordance with section 139(5) within one year from the end of relevant assessment year or before the completion of the assessment whichever is earlier - CIT(A) in his order dated 13-12-2004 has allowed the claim of the assessee with regard to the sum of Rs. 25 crore claimed in the revised claim of the assessee but has directed that the same should be taxed as capital gains. - Held that - This mistake committed by the Assessing Officer at the stage of giving effect to the ITAT order has been made good by passing the order under section 154 dated 25-6-2007. It is clear that this is a mistake apparent from record and covered by the provisions of section 154 of the Act. It is true that in the course of assessment proceedings on 18-3-2004, after the expiry of time allowed under section 139(5), the assessee had filed a revised plea making certain additional claims and denying the liability under section 115JB of the Income-tax Act. However, it is to be noted that the revised plea was categorically rejected by the Assessing Officer in his assessment completed on 30-3-2004. - Though the assessee had filed grounds before the CIT(A) with regard to rejection of recast profit and loss account and revised Form 29B, the CIT(A) had not decided the issue as regards to MAT liability in favour of assessee. Therefore, we are of the view that the finding of the CIT(A) in his order dated 12-5-2009 that I am of the opinion that the issue relating to tax payable under section 115JB at Rs. 38,26,607 in the original return has been decided in favour of the appellant by the CIT(A) is erroneous. In case the action of the Assessing Officer is not sustained, the assessed income would fall below the returned income under section 115JB of the Act, which is not permissible as per the dictum laid down by the Hon ble Supreme Court in the case of CIT v. Shelly Products (2003 -TMI - 6120 - SUPREME Court) Appeal is allowed
Issues Involved:
1. Whether the CIT(A) erred in holding the order passed under section 154 as related to a debatable issue. 2. Rejection of the recasted Profit and Loss account and revised Form 29B by the Assessing Officer. 3. Whether the tax liability under the normal provisions was more than the MAT liability. 4. Necessity of showing the computation of tax liability under section 115JB. 5. Validity of rectification under section 154 due to omission of MAT liability. 6. Recasting of Profit and Loss account approved by shareholders. 7. Taxability of Rs. 25 crores received as consideration towards the sale of technical know-how. Detailed Analysis: 1. Debatable Issue under Section 154: The revenue argued that the CIT(A) erred in holding the order under section 154 as related to a debatable issue. The CIT(A) had concluded that since the issue was debatable, it could not be rectified under section 154. However, the tribunal found that the omission of MAT liability was a clear mistake apparent from the record, which could be rectified under section 154. This was supported by the precedent set in the case of Nicco Corpn. Ltd. v. CIT [2005] 272 ITR 58 (Cal). 2. Rejection of Recasted Profit and Loss Account and Revised Form 29B: The Assessing Officer rejected the revised Profit and Loss account and Form 29B filed by the assessee after the due date prescribed under section 139(5). The tribunal upheld this decision, noting that the revised documents were filed beyond the permissible period and were therefore not acceptable. The assessee did not dispute this rejection before CIT(A) or ITAT. 3. Tax Liability Comparison: The tribunal noted that the tax liability under the normal provisions was more than the MAT liability as per the original assessment order. However, after giving effect to the ITAT order, the MAT liability exceeded the normal tax liability, which warranted rectification under section 154. This was a mistake apparent from the record. 4. Necessity of Showing Computation under Section 115JB: The CIT(A) had failed to appreciate that the computation of MAT liability was necessary once it exceeded the normal tax liability. The tribunal emphasized that the failure to compute MAT liability in the original order was a mistake that needed rectification. 5. Validity of Rectification under Section 154: The tribunal found that the rectification under section 154 was valid as there was a clear mistake in the omission of the MAT liability. The CIT(A)'s decision that the issue was debatable and could not be rectified under section 154 was overturned. 6. Recasting of Approved Profit and Loss Account: The tribunal agreed with the revenue that once the Profit and Loss account was approved by the shareholders, it could not be recast for tax purposes. This was supported by the decision in Gujarat State Petroleum Corpn. Ltd. v. Jt. CIT [2010] 123 ITD 335 (Ahd). 7. Taxability of Rs. 25 Crores: The ITAT had previously adjudicated that the Rs. 25 crores received for the sale of technical know-how was not taxable. The tribunal noted that this decision did not affect the computation of MAT liability, which was a separate issue. Conclusion: The tribunal allowed the revenue's appeal, reversing the CIT(A)'s order and validating the rectification under section 154. The cross-objections raised by the assessee were dismissed, affirming that the revised accounts filed after the due date were rightly rejected and the original MAT computation was correctly reinstated.
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