2019 (7) TMI 790 - AT - Income Tax

MAT - Addition of writeback of Provision for NPA in the computation of book profit u/s 115JB - assessee being NBFC company is stated to be engaged in the business of credit card operations and financing payments through credit cards and debit card management - Provisions of card receivables was not added back in the computation of Book Profits u/s 115JB in earlier years i.e. A.Ys. 2007-08 to 2010-11 when the provision was made - scope of amendment by the Finance (No.2) Act, 2009 HELD THAT - It is undisputed fact that the assessee had filed return of income for AY 2007-08 much before the date of the said amendment and therefore, the said amendment could not be given effect to by filing revised return of income u/s 139(5) which already expired on 31/03/2009. It is also an undisputed fact that the write-back of ₹ 363.37 Lacs has been made out of provisions of ₹ 3449.82 Lacs made in AY 2007-08. Nothing on record controvert the aforesaid fact. We find that in AY 2007-08, the assessee had book losses of ₹ 4601.10 Lacs and even after adding back the said provisions as envisaged by the amendment, the resultant figure would have still been a negative figure and the assessee would not have any liability to pay tax u/s 115JB. Therefore, we find substantial force in these arguments raised by Ld. AR before us. As evident from assessment order dated 27/01/2014 of immediately preceding AY 2011-12 that similar treatment given by the assessee to write-back of ₹ 1899.12 Lacs in that year has been accepted by the revenue since no computation of Book Profit has been made in the assessment order. Therefore, following the principle of consistency, the assessee s claim was to be accepted, there being no change in factual matrix. Assessee was entitled for deduction of writeback while computing Book Profits u/s 115JB for the impugned AY. Ground No. 1 stand allowed.

Summary

Issues:
1. Disallowance of tax deducted on service charges paid for services provided by VISA/Master Card International.
2. Addition of writeback of Provision for NPA in the computation of book profit u/s115JB.
3. Interest charged u/s 234B, 234C, and 234D.

Issue 1: Disallowance of Tax Deducted on Service Charges:
The Revenue contested the Ld. CIT(A)'s decision to allow the tax deducted on service charges paid for services by VISA/Master Card International, arguing it was not an allowable deduction. The Tribunal dismissed the Revenue's appeal, citing previous rulings in the assessee's favor and no change in circumstances, leading to the dismissal of the Revenue's appeal.

Issue 2: Addition of Provision for NPA in Book Profit:
The assessee challenged the addition of the writeback of Provision for NPA while computing book profit u/s 115JB. The Tribunal analyzed the provisions made in previous years and the retrospective amendment to Section 115JB. It concluded that the writeback was rightly claimed as a deduction, considering the nature of the provision and the consistent treatment in previous assessments. The assessee's appeal was partly allowed on this issue.

Issue 3: Interest Charged u/s 234B, 234C, and 234D:
The Tribunal noted that the interest charged under these sections was consequential and mandatory, requiring no further adjudication.

In conclusion, the Revenue's appeal was dismissed, while the assessee's appeal was partly allowed concerning the addition of Provision for NPA in the computation of book profit. The Tribunal pronounced the order on 7th May 2019.