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2018 (4) TMI 745 - HC - Income TaxMAT - book profit adjustments - Computation of setting off of unabsorbed depreciation - whether tribunal was right in directing AO to determine the depreciation or business loss of each year and to carry forward the lower of two for adjustment which will result in enhancement of assessment for which the Tribunal has no power? - Held that - There is no error in the order passed by the Tribunal in remanding the matter for fresh consideration to the Assessing Officer. In any event, we have indicated in the preceding paragraphs that the Tribunal has no power under the Income Tax Act to enhance the assessment in an appeal. Equally, it cannot be done on an order of remand being passed by the Tribunal to the Assessing Officer. Therefore, we opine that it is sufficient to clarify the legal position as held by the Honble Supreme Court in Hukumchand Mills Ltd. 1966 (9) TMI 38 - SUPREME Court and in MCORP Global (P) Ltd. 2009 (2) TMI 5 - SUPREME COURT followed by the High Court of Gujarat in Fidelity Shares and Security Ltd., Vs. Deputy Commissioner of Income Tax case 2016 (6) TMI 898 - GUJARAT HIGH COURT . The Assessing Officer, while reconsidering the matter on remand, should bear the above legal principle in mind and the assessee cannot be denied whatever benefit he has granted in the Assessment Order dated 28.02.2003.
Issues:
1. Interpretation of provisions regarding setting off unabsorbed depreciation against profits under Section 115JA of the Companies Act. 2. Authority of the Tribunal to direct assessing officer on depreciation and business loss adjustments. 3. Validity of adjustments of unabsorbed depreciation against book profits under Section 115JA. 4. Power of the Tribunal to enhance assessment and take back benefits granted by the assessing officer. Issue 1: The Tribunal remanded the matter to the Assessing Officer to reconsider the calculation aspect. The appellant argued that the Tribunal's decision in a specific case was irrelevant to the present matter. The legal question arose whether the Tribunal can enhance assessment and retract benefits granted to the Assessee. Citing the Supreme Court judgment in MCORP Global (P) Ltd. v. Commissioner of Income Tax, it was clarified that the Tribunal lacks the authority to enhance assessments. The legal principle from the case of Hukumchand Mills Ltd. v. CIT was applied, emphasizing that benefits granted by the assessing officer cannot be withdrawn by the Tribunal. Issue 2: The Division Bench of the High Court of Gujarat in Fidelity Shares and Security Ltd. v. Deputy Commissioner of Income Tax reaffirmed that the Tribunal does not have the power to enhance assessments under the Income Tax Act. It was emphasized that benefits granted by the assessing officer cannot be taken away by the Department. The Tribunal's inability to enhance assessments was highlighted as a legal limitation, ensuring that benefits granted to the Assessee are protected. Issue 3: The High Court clarified that the Tribunal's order to remand the matter for fresh consideration by the Assessing Officer was valid. However, it was emphasized that the Tribunal lacks the power to enhance assessments, even on remand. The legal position established by the Supreme Court and followed by the High Court of Gujarat reiterated that the Assessee cannot be denied benefits granted in the Assessment Order. The Assessee's entitlement to benefits granted by the assessing officer was upheld, emphasizing the legal principles established by previous judgments. Conclusion: The Substantial Question of Law No.2 was answered in favor of the Assessee, aligning with the legal precedents set by the Supreme Court and the High Court of Gujarat. Substantial Questions of Law Nos.1 and 3 were left open for further consideration by the Assessee before the Assessing Officer. The High Court clarified the legal principles governing the Tribunal's authority to enhance assessments and emphasized the protection of benefits granted to the Assessee by the assessing officer. The Tax Case Appeal was partly allowed with no costs, ensuring the Assessee's rights in line with established legal principles.
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