2019 (1) TMI 1584 - HC - Income Tax

Admission of appeal - Whether the long term capital gain credited to the profit and loss account and included in the computation of the book profit under section 115JB can be added a second time to such book profit? - whether section 115JB authorised the assessing officer to add back to the book profit the sum written off as irrecoverable by the debit of the profit and loss account? - HELD THAT - There is no point in admitting the appeal on these questions for the reason that there is absence of finding by the tribunal and if the High Court discharges the functions of the tribunal, the parties would lose one forum. In those circumstances, the entire matter as discussed above is remanded back to the tribunal by setting aside its impugned order dated 3rd August 2018 and to make a fresh determination in accordance with law by a reasoned order upon hearing the parties.

Summary

Issues Involved:
1. Whether long term capital gain can be added a second time to the book profit under section 115JB of the Income Tax Act, 1961?
2. Whether the assessing officer can add back the sum written off as irrecoverable to the book profit under section 115JB of the Income Tax Act, 1961?

Analysis:

Issue 1:
The tribunal failed to determine the basic issues before it, specifically regarding the treatment of long term capital gain in the computation of book profit under section 115JB of the Income Tax Act, 1961. The appellant correctly pointed out this deficiency. The High Court emphasized the importance of the tribunal's role in determining such matters and noted that admitting the appeal without a finding by the tribunal would deprive the parties of one forum for resolution. Consequently, the High Court remanded the matter back to the tribunal to make a fresh determination in accordance with the law by providing a reasoned order after hearing the parties. The appeal was disposed of accordingly.

Issue 2:
Another crucial issue raised was whether the assessing officer had the authority under section 115JB of the Income Tax Act, 1961 to add back the sum of &8377; 273,97,17,182/- written off as irrecoverable to the book profit. The High Court's decision to remand the matter to the tribunal for a fresh determination encompassed this issue as well. By setting aside the tribunal's impugned order dated 3rd August 2018, the High Court directed the tribunal to provide a reasoned order after hearing both parties. The application for admission/stay was also disposed of in the same order.

In conclusion, the High Court's judgment in this case focused on the tribunal's failure to address the fundamental issues raised by the appellant regarding the treatment of long term capital gain and the addition of irrecoverable sums to the book profit under section 115JB of the Income Tax Act, 1961. The matter was remanded back to the tribunal to ensure a proper determination in accordance with the law, emphasizing the importance of due process and reasoned decision-making in tax matters.