2017 (4) TMI 1102 - AT - Income Tax

Revision u/s 263 - computation of book profit the assessee had incorrectly reduced deduction u/s. 80IB(10) - claim of the assessee was accepted by the AO without applying the provisions of section 115JB correctly - Held that - Principles of primary estoppel will not have any role to play when MAT provisions are to be applied. The assessee can claim its due deduction. But in the name of liberal interpretation or legitimate expectation deduction u/s. 80IB(10) cannot be brought within the fold of the section 115JB. It is a non obstante clause and provisions of section 80IB(10) cannot dilute the rigor encompassing it. As the AO had not given full effect to the provisions of section 115JB so his order would fall in the category of erroneous order. Computation made by him was not as per clear mandate of the law. The assessee itself had in the subsequent two years followed the method as suggested by the CIT in her revisionary order. No reasonable cause was brought on record for not claiming any deduction u/s. 80IB (10) while computing the income under the MAT provisions for the immediate succeeding two AY s. We do not find that there was any change in the provisions of both the sections for the year under appeal and for the subsequent two AY s. Thus there existed the first pre- condition for invoking the provisions of section 263 of the Act as the view taken by the AO was unsustainable in law. The AO had not applied his mind before allowing the deduction to the assessee. We are of the opinion that the CIT was able to demonstrate that the view taken by the AO was not plausible rather it was legally unsustainable and incorrect. Besides it resulted in loss of revenue. Thus both the prerequisites were there when the CIT issued the notice u/s. 263 of the Act. She had decided the issue after considering the available material and legal position prevailing at that point of time. So we hold that the order passed by the CIT does not suffer from any legal or factual infirmity. - Decided against assessee

Summary

Issues Involved:
1. Revisionary order passed by CIT regarding deduction u/s. 80IB(10) in the computation of book profit under MAT provisions.

Analysis:
1. The Assessee filed an appeal challenging the order of the PCIT-13 Mumbai regarding the deduction u/s. 80IB(10) in the assessment. The CIT observed that the deduction claimed by the Assessee was incorrect, leading to higher tax payable under MAT provisions. The CIT referred to relevant case laws and directed the AO to pass a fresh order after considering the issue.

2. During the hearing, the AR argued that the AO's order was not erroneous, citing cases supporting the Assessee's view. The DR contended that the subsequent returns filed by the Assessee differed in computation, indicating inconsistency. The AR explained the variance in computation for subsequent years due to lower tax effect.

3. The ITAT found that the AO's order was erroneous as he did not correctly apply the provisions of section 115JB while allowing the deduction u/s. 80IB(10). The ITAT highlighted the distinction between the two sections, emphasizing that the provisions operate in different fields with distinct purposes. The ITAT concluded that the AO's failure to apply his mind and conduct proper inquiry led to an erroneous order, justifying the CIT's revisionary order.

4. The ITAT dismissed the Assessee's reliance on cases not directly related to the issue at hand. The ITAT upheld the CIT's order, stating that the Assessee's computation for subsequent years aligned with the CIT's directive, indicating the correctness of the CIT's decision. The ITAT found no merit in the Assessee's arguments and upheld the CIT's order, resulting in the dismissal of the Assessee's appeal.

This detailed analysis of the judgment provides a comprehensive understanding of the issues involved and the reasoning behind the decision rendered by the ITAT.