2013 (7) TMI 857 - HC - Income Tax

Tax payment u/s 115JA - Minimum Alternate Tax (MAT) - Prima facie adjustment - Whether the Assessing Officer could have made prima facie adjustment and held that minimum alternative tax under Section 115JA was payable by the assessee and compute and calculate the same under Section 143(1)(a) - Held that - Assessee claimed that he was not liable to pay minimum alternative tax under Section 115JA. The contention may be wrong or incorrect but it has to be dealt with and examined. Further computation has to be made under Section 115JA of the Act, which is not possible without examining and considering several aspects - Computation under minimum alternative tax is cumbersome and at that time, involved several debatable issues. The assessee himself had not done any computation under Section 115JA - Prima facie adjustment is not possible - Decided in favour of assessee.

Summary

Issues:
1. Whether the Assessing Officer could have made prima facie adjustment regarding minimum alternative tax under Section 115JA and calculate it under Section 143(1)(a) of the Income Tax Act, 1961?
2. Whether the Income Tax Appellate Tribunal was correct in holding that the Commissioner of Income Tax (Appeals) exceeded his jurisdiction under Section 154 of the Income Tax Act, 1961 by modifying his earlier order?

Analysis:

1. The case involved an assessee company for the Assessment Year 1998-99, which had filed a return of income declaring "nil" income and claimed that minimum alternate tax provisions under Section 115JA were not applicable. The Assessing Officer computed the taxable income under minimum alternative tax at Rs.8,46,300 and levied taxes and interest. The appellant did not offer 30% of book profits under Section 115JA for taxation, leading to the prima facie adjustment under Section 143(1)(a) of the Act.

2. The appellant's first appeal was dismissed, referencing a successful order for the previous assessment year. Subsequently, the appellant filed an application under Section 154 of the Act, relying on the earlier order by the CIT (Appeals) for the previous assessment year, which was allowed by the CIT(Appeals).

3. The Revenue appealed before the tribunal, arguing that the CIT(Appeals) exceeded jurisdiction under Section 154 by rectifying a debatable issue. The tribunal held that the adjustment under Section 143(1)(a) regarding minimum alternative tax was a debatable matter, and the CIT(Appeals) could not rectify a change of opinion on such an issue.

4. The High Court analyzed the case, noting that the issue of prima facie adjustments was in favor of the appellant-assessee based on precedents. The court referred to previous judgments to emphasize that adjustments under Section 115JA required a thorough examination of various aspects and computations, which couldn't be done solely based on the return or enclosed documents.

5. Ultimately, the High Court answered the first issue in favor of the appellant-assessee, stating that the adjustment made by the Assessing Officer was not permissible under the circumstances. The court highlighted that the appellant had already paid tax under Section 115JA as per the final regular assessment, and the appeal was disposed of without disturbing the said assessment or the amount due and payable.

This detailed analysis of the judgment showcases the legal complexities involved in determining the applicability of minimum alternative tax provisions and the jurisdiction of authorities in making adjustments and rectifications under the Income Tax Act, 1961.