2016 (7) TMI 1083 - AT - Income Tax

Rectification of mistake - credit for unabsorbed deprecation / loss was wrongly granted and that mistake was required to be corrected - Addition made U/S 115JB - disallowance of brought forward un-absorbed depreciation applying the provisions of section 79 - Held that - The position that emerges before us is that assessee was entitled to get the credit of unabsorbed depreciation or unabsorbed losses, whichever is less. It is seen on the basis of chart which was attached as Annexure A by Ld.CIT(A) to his order that amount of unabsorbed business loss was for ₹ 24,76,40,000 as against amount of unabsorbed deprecation of ₹ 308.89 lakhs. Thus, the amount of unabsorbed depreciation was less and, therefore, assessee was eligible to get the benefit of the same a deduction from the book profits to compute the taxable amount of book profits u/s 115JB. Thus, there was no mistake, much less a mistake apparent on record, and therefore, the Ld.CIT(A) had rightly quashed the order passed u/s 154. No interference is called for in the order of the ld.CIT(A), and therefore, the same is hereby upheld. - Decided against revenue

Summary

Issues involved:
1. Whether the deletion of addition of ?2,82,31,142 made under section 115JB for disallowance of brought forward unabsorbed depreciation was justified.
2. Whether the enhancement made to the book profit under section 154 by disallowing brought forward unabsorbed depreciation was valid.

Analysis:
Issue 1:
The appeal was filed by the revenue against the CIT(A)'s order deleting the addition of ?2,82,31,142 under section 115JB for disallowance of brought forward unabsorbed depreciation. The revenue argued that the benefit of brought forward unabsorbed depreciation was rightly denied by the Assessing Officer under section 79. However, the assessee's counsel contended that the Assessing Officer misunderstood the facts of the case in the previous assessment year. It was highlighted that the total unabsorbed depreciation was lower than the unabsorbed business loss, justifying the reduction of unabsorbed depreciation from the book profit taxable under section 115JB. The CIT(A) analyzed the facts and found no mistake in the original assessment order, upholding the deletion of the addition.

Issue 2:
The second ground of appeal concerned the enhancement made to the book profit under section 154 by disallowing brought forward unabsorbed depreciation. The Assessing Officer passed an order under section 154 without providing an opportunity to the assessee and without waiting for a reply. The CIT(A) found that the Assessing Officer's action lacked in providing a reasonable opportunity to the appellant, as required under the provisions of section 154. The CIT(A) held that the Assessing Officer's order was not justified and sustainable, citing relevant case laws. The CIT(A) concluded that there was no mistake apparent from the record, and the order passed under section 154 was rightly quashed. The appellate tribunal upheld the CIT(A)'s decision, dismissing the revenue's appeal.

In conclusion, the tribunal dismissed the revenue's appeal, upholding the CIT(A)'s order in favor of the assessee. The detailed analysis of the facts and legal provisions led to the decision that the deletion of the addition and the quashing of the order under section 154 were justified based on the specific circumstances and legal interpretations presented during the proceedings.