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2020 (3) TMI 114 - AT - Income TaxRevision u/s 263 - MAT - assessment of the prior period income s assessment for the purpose of sec.115JB computation - declaration of additional income followed payment of tax as per settlement Commission orders u/s 245D(4) and 245D(6B) order(s) - HELD THAT - Case file suggests that the clinching factual position herein is that the assessee had declared additional income of ₹12,56,69,73/- in its disclosure petition(s) before the Settlement Commission on 18.03.2014 for assessment year(s) 2010-11 to 2013-14. It is an admitted fact that the said additional income had not been included in the corresponding computation(s) finalized earlier. The said declaration of additional income followed payment of tax as per sec. 245D(4) and 245D(6B) order(s) in pages 49 to 70 and 71 to 86; respectively. There is further no dispute that the corresponding additional income of ₹12,56,69,703/- had also been incorporated in the books of account of the relevant previous year 2013-14 as well as in the profit and loss account as an exceptional income alongwith the corresponding expenditure of ₹153,50,000/- which had not been claimed in the settlement petition. Once the assessee had declared additional income of ₹12.56 crores in earlier assessment year(s) 2010-11 to 2013-14 in due compliance of the Settlement Commission and got the same assessed under normal scheme than MAT assessment, there is hardly any scope left of under-assessment on impugned prior period income going by the PCIT s observations. We wish to re-emphasise here that PCIT has raised the issue of prior period income of ₹11,04,19,703/- for sec. 115JB computation only relating to the relevant previous year. We thus are of the opinion that once the said prior period income stood assessed under normal provisions in the corresponding earlier assessment year(s) 2010-11 to 2013-14, The Assessing Officer s alleged inaction in not disallowing the very sum(s) as prior period income for the purposes of MAT computation could neither be termed as erroneous nor causing prejudiced to interest of the Revenue going by the foregoing settled legal proposition (supra). The assessee had admittedly incorporated its additional income of ₹12,56,69,703/- in its books of account of the relevant previous year in the nature of its capital. The same therefore acquired the character of a capital receipt routed in profit and loss account as per part- I and part-II of the schedule-VI of the Company s Act. That being the case, we hold that there was no loss or prejudice caused to the Revenue even otherwise also since a capital receipt not taxable under the normal provision could also not be added u/s 115JB MAT computation as per this tribunal s co-ordinate Bench s decision Tata Metaliks Ltd. vs. Income Tax Officer, Ward-3(2), Kolkata 2018 (4) TMI 1757 - ITAT KOLKATA Assessee ought not to have any grievance at this premature stage since the PCIT has merely directed the Assessing Officer to recompute its book profits as per the foregoing detailed observations - assessee had very well placed all of its additional income declaration details before the Settlement Commission followed by the corresponding order(s) finality culminating assessment thereof in assessment years) 2010-11 to 2013-14 in normal scheme. We thus conclude that even if the PCIT s directions are taken as for the purpose of mere re-computation, the same go against the settled legal proposition that the sec. 263 revision jurisdiction is not attracted in absence of the corresponding assessment being both erroneous as well as causing prejudice to interest of the Revenue. In Narayan Tatu Rane vs. Income Tax Officer 2016 (5) TMI 1162 - ITAT MUMBAI also holds that insertion of Explanation-2 in sec. 263 vide the Finance Act, 2015 w.e.f 01.06.2015 does not ifso facto mean that every regular assessment could be revised even in those cases wherein the action of the Assessing Officer satisfies normal prudence test in scrutiny. We accordingly hold that the PCIT s revision directions qua this former issue of prior period income s sec. 115JB MAT computation is not substantive. The same is accordingly reversed. Deduction of excise duty on payment basis - paid for the period from December, 2009 to July 2011 as per the settlement of the case - deduction u/s 43B - Held that - In clinching factual aspects as well that the Assessing Officer s action in not disallowing / adding the impugned excise duty claim could neither be termed as erroneous nor prejudicial to the interest of the Revenue so as to set sec. 263 revision mechanism in motion as per PCIT s directions. We accordingly accept the assessee s foregoing arguments challenging correctness of the impugned revision action. The same stands reversed. - Decided in favour of assessee.
Issues Involved:
1. Prior period income and its admissibility under Section 115JB of the Income Tax Act, 1961. 2. Deduction of excise duty on payment basis and its eligibility under Section 43B of the Income Tax Act, 1961. Issue-wise Detailed Analysis: 1. Prior Period Income and its Admissibility under Section 115JB: The assessee-company, engaged in manufacturing sponge iron and TMT bars/rods, filed its return for the assessment year 2014-15 declaring a loss of ?3,89,72,058/-. The Assessing Officer (AO) completed the regular assessment on 02.11.2016, accepting the assessee's returned loss and computing the book profits under Section 115JB at ?103,77,217/-. The Principal Commissioner of Income Tax (PCIT) invoked Section 263 revision jurisdiction, terming the assessment order erroneous and prejudicial to the interest of the Revenue on two grounds. The first issue was the deduction of prior period income of ?11,04,19,703/- from the book profit, which the PCIT deemed inadmissible under Section 115JB. The assessee had declared additional income of ?12,56,69,703/- for earlier assessment years (2010-11 to 2013-14) before the Settlement Commission, which had not been included in the original income tax returns. The additional income was incorporated in the books of accounts for the financial year 2013-14 as "exceptional income" along with corresponding expenses of ?1,52,50,000/-. The assessee contended that since the additional income was already assessed and taxes paid in the respective years, it should be excluded from the current year's book profits to avoid double taxation. The Tribunal observed that the additional income had been duly assessed under normal provisions in the earlier years, and the corresponding income was included in the books as a capital receipt. Therefore, the inclusion of this income in the book profits for the current year under Section 115JB was not warranted. The Tribunal concluded that the AO's action in not disallowing the prior period income for MAT computation was neither erroneous nor prejudicial to the interest of the Revenue. 2. Deduction of Excise Duty on Payment Basis under Section 43B: The second issue raised by the PCIT was the deduction of excise duty amounting to ?6,28,68,798/- on payment basis instead of the available unpaid excise duty of ?3,00,50,738/-. The assessee had made an application before the Customs and Central Excise Settlement Commission admitting liability for non-payment of excise duties and interest for the periods December 2009 to July 2011 (Unit-II) and April 2010 to July 2011 (Unit-I). The total liability admitted was ?10,98,68,798/-, out of which ?4,70,00,000/- had already been claimed in earlier years. The balance amount of ?6,28,68,798/- was claimed in the current year. The Tribunal noted that the AO had examined the deduction claim under Section 43B and allowed it based on the actual payment of excise duty. The Tribunal found that the deduction was permissible under Section 43B, which allows such deductions on actual payment irrespective of the year in which the liability arose. Therefore, the AO's action in allowing the deduction was neither erroneous nor prejudicial to the interest of the Revenue. Conclusion: The Tribunal held that the PCIT's invocation of Section 263 revision jurisdiction was not justified as the AO's assessment order was neither erroneous nor prejudicial to the interest of the Revenue. The Tribunal reversed the PCIT's directions and restored the original assessment order dated 02.11.2016. The assessee's appeal was allowed.
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