9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (2) TMI 676 - AT - Income TaxRectification of mistake - addition to the book profit of the assessee on account of provision for bad and doubtful debts by applying that clause (i) holding that the amounts set aside as provision for diminution in value of the assets covers this item of expenditure debited and is required to be added - CIT (A) upheld the action of AO holding that rectification is because of retrospective amendment and this amendment was not available when CIT (A) decided the issue and further the original addition was under clause (c) of the explanation of Section 115JB and now rectification is made by applying clause (i) of explanation (1) to section 115JB of the Act - Held that - The issue of provision for deduction of provisions of bad and doubtful debts has been considered and decided by Commissioner of Income Tax (Appeals), then rectification is also required to be made by the Commissioner of Income Tax(Appeals) only and not by the Assessing Officer as the matter of allowability of provision of bad and doubtful debts while working out book profit tax u/s 115JB of the Act has already been decided by CIT (A). Admittedly, in this case, the provisions of Section 154 have been invoked by the Assessing Officer, which he is not competent to do. Clarifying the facts that retrospective amendment made u/s 115JB of the act is no doubt a mistake apparent from the record but issue was whether AO can do that when on the same item of expenditure debited in the books of accounts CIT (A) has decided the issue. In our opinion it is only CIT (A) who is competent to assume jurisdiction u/s 154 of the act. Therefore, we are of the view that the rectification provisions invoked by the Assessing Officer are not correct. Therefore we reverse the order of CIT (A) on these count. - Decided in favour of assessee Charging of interest u/s 234D - withdrawal of interest u/s 244A - Held that - As we have already held that AO is not empowered to invoke the provision of section 154 of the act on the matter already decided by CIT (A) u/s 154(1A) of the act and therefore interest u/s 234D as well as interest withdrawal u/s 244A of the act are consequential in nature and accordingly they are if arising out of order u/s 154 of the act of the AO same would also be decided accordingly in favour of the assessee. Levy of interest u/s 234B - addition made by Assessing Officer under Section 154 of the Act arising on account of retrospective amendment u/s 115JB - Held that - No interest shall be chargeable u/s 234B of the act on tax liability arising on the assessee by virtue of retrospective amendment u/s 115JB of the Act.
Issues Involved:
1. Validity and jurisdiction of the order passed under Section 154 of the Income-tax Act. 2. Charging of interest under Section 234D of the Act. 3. Withdrawal of interest under Section 244A of the Act. 4. Deletion of interest charged under Section 234B of the Act due to retrospective amendment in Section 115JB of the Act. Issue-wise Detailed Analysis: 1. Validity and Jurisdiction of the Order Passed Under Section 154 of the Income-tax Act: The assessee challenged the validity of the order passed under Section 154 of the Act, arguing that the Assessing Officer (AO) lacked jurisdiction. The rectification was made due to a retrospective amendment under Section 115JB of the Act by the Finance Act, 2009, effective from 1st April 2001. The assessee contended that the original assessment order had already considered the provision for doubtful debts, and the matter was decided by the Commissioner of Income Tax (Appeals) [CIT(A)], thus merging the AO's order with the CIT(A)'s order. According to Section 154(1A), only the appellate authority could rectify the matter. The tribunal agreed, stating that the AO was not competent to invoke Section 154 as the issue had already been decided by the CIT(A). Therefore, the tribunal quashed the AO's order under Section 154, holding it invalid. 2. Charging of Interest Under Section 234D of the Act: The assessee also contested the charging of interest under Section 234D of the Act. Since the tribunal held that the AO's order under Section 154 was invalid, the consequential interest under Section 234D was also deemed invalid. The tribunal allowed the assessee's appeal on this ground, stating that the interest charged under Section 234D was consequential and should be decided in favor of the assessee. 3. Withdrawal of Interest Under Section 244A of the Act: Similarly, the assessee contested the withdrawal of interest under Section 244A of the Act. The tribunal held that since the AO's order under Section 154 was invalid, the consequential withdrawal of interest under Section 244A was also invalid. The tribunal allowed the assessee's appeal on this ground as well. 4. Deletion of Interest Charged Under Section 234B of the Act Due to Retrospective Amendment in Section 115JB of the Act: The Revenue appealed against the deletion of interest charged under Section 234B, arguing that it was consequential to the addition made due to the retrospective amendment in Section 115JB. The tribunal dismissed the Revenue's appeal, stating that the AO's order under Section 154 was invalid. Furthermore, the tribunal cited the Bombay High Court's decision in the case of JSW Energy Ltd., which held that interest under Section 234B could not be charged when the tax liability arose due to a retrospective amendment. The tribunal concluded that no interest under Section 234B should be charged on the tax liability arising from the retrospective amendment in Section 115JB. Conclusion: The tribunal allowed the assessee's appeals for the assessment years 2004-05 to 2006-07, holding that the AO's order under Section 154 was invalid due to lack of jurisdiction. Consequently, the interest charged under Sections 234D and 244A was also invalid. The tribunal dismissed the Revenue's appeals for the assessment years 2004-05 and 2005-06, upholding the deletion of interest under Section 234B, as the tax liability arose due to a retrospective amendment.
|
