2018 (11) TMI 599 - HC - Income Tax

Rectification of mistake - MAT computation - whether the profits u/s. 115JB ought to be computed after deducting the deduction u/s. 54EC? - Held that - Undisputed fact is that the Tribunal directed the Assessing Officer to compute the assessee s book profit in a particular manner. The Assessing Officer correctly understood such direction and gave effect to the Tribunal s order also. He now proposes to rectify his order giving effect to the Tribunal s judgement on the ground that there had been an apparent error. In our opinion therefore, there had been no error in the Assessing Officer s order dated 12.12.2017 implementing the Tribunal s direction. It may be that the Revenue has certain disputes with the proposition that the Tribunal adopted while giving such direction. Such issue is not before us and we would therefore not comment on the same. However, as long as an order of the Tribunal stands, the assessment order was required to be implemented. Further having implemented it, it was simply not open for him to exercise power of rectification which is meant for correcting any error apparent on record.

Summary

Issues:
Challenge to notice seeking to rectify an order for giving effect to a judgment of the Income Tax Appellate Tribunal.

Analysis:
The petitioner, a company registered under the Companies Act, challenged a notice issued by the Assessing Officer seeking to rectify an order passed to implement a judgment of the Income Tax Appellate Tribunal. The Tribunal had directed the Assessing Officer to compute the petitioner's book profit in a specific manner with regard to the application of section 115JB of the Income Tax Act, 1961, and the availability of adjustment under section 54EC of the Act. The Tribunal's direction was based on a judgment of the Madras High Court, which allowed the deduction under section 54EC in an assessment under section 115JB. The Assessing Officer initially complied with the Tribunal's order by recalculating the petitioner's book profit as per the directions given. However, the Assessing Officer later issued a notice seeking to rectify the order, citing an apparent error in allowing the deduction under section 54EC.

The High Court observed that the issue was straightforward, as the Assessing Officer had correctly implemented the Tribunal's direction in the initial order dated 12.12.2017. The Court noted that the Assessing Officer's proposal to rectify the order based on an apparent error was unfounded, as there was no mistake in implementing the Tribunal's judgment. The Court emphasized that once an order of the Tribunal is in place, it must be implemented, and the power of rectification is not meant to challenge the correctness of such implementation. The Court clarified that any disputes with the Tribunal's proposition should be addressed separately and not through the rectification process. Consequently, the Court quashed the impugned notice dated 13.02.2018 and disposed of the petition accordingly.