2013 (8) TMI 1118 - AT - Income Tax

Summary

Issues involved:
The judgment involves the interpretation of provisions of section 154 of the Income-tax Act, 1961 regarding rectification of errors, applicability of section 72A(6) for computation of book profit u/s 115JB, and whether the assessee can claim set off of losses relating to a firm.

Rectification u/s 154:
The Assessing Officer issued a notice u/s 154 of the Act to rectify the book profit computation u/s 115JB due to the loss of the firm not being allowed. The assessee contended that as per Sec. 72A(6), losses of the erstwhile firm converted into a company can be set off in the successor company's income. The Assessing Officer passed a rectification order adding the firm's losses to the book profit.

Debatable issue and CIT(A) decision:
The CIT(A) held that the rectification order was not in accordance with the law as the issue was debatable, citing relevant case laws. The CIT(A) observed that the accumulated loss and unabsorbed depreciation of the firm, now part of the company's accounts, were correctly considered for book profit u/s 115JB under section 72A(vi) r.w.s. 47(xiii).

Revenue's appeal and Tribunal decision:
The revenue appealed the CIT(A)'s decision, arguing that the action u/s 154 was lawful and the firm's losses should not be allowed for book profit u/s 115JB. The Tribunal upheld the CIT(A)'s decision, stating that the issue was debatable and could not be rectified u/s 154. The Tribunal dismissed the revenue's grounds and upheld the CIT(A)'s order.

Conclusion:
The Tribunal dismissed the revenue's appeal and the assessee's Cross-Objection (C.O.), admitting the C.O. due to a two-day delay but ultimately dismissing it as infructuous. Both the revenue's appeal and the C.O. were dismissed, upholding the CIT(A)'s decision regarding the rectification u/s 154 and the computation of book profit u/s 115JB.