9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (6) TMI 6 - AT - Income TaxMAT Computation - Reduction of Book Profit by lower of Unabsorbed Depreciation or Business loss, whichever is less without setting off of amounts written back as per order of BIFR - HELD THAT - Since the assessee was discharged by SICA on 16/08/2011 and its net worth turned positive by virtue of implementation of revival scheme, the assessee would be precluded from relief u/s 115JB in view of Explanation 1(vii) to Section 115JB (2) and therefore, no relief would be available from AY 2011-12 onwards. Therefore, the matter of applicability of Sec.115JB was delved into by CBDT and it was proposed to restrict the relief u/s 115JB as per the provisions contained therein. This being the case, the plea as raised by AR could not be accepted since the assessee s claim was specifically examined by appropriate authorities and it was decided not to extend the benefit of provisions of Sec. 115JB after assessee s net worth turned positive. No relief could be granted to the assessee on this point. The case law in CIT V/s Tube Investments of India Ltd. 2012 (1) TMI 35 - MADRAS HIGH COURT is factually distinguishable since the assessee s net worth had not turned positive in that case and the relief as proposed by BIFR was not specifically rejected by the CBDT. Further, that case deal with deduction u/s 43B to an entity which has taken over a sick company. Reduction in Book Profits u/s 115JB - HELD THAT - As per the express provisions of Explanation-1(iii) to S.115JB (2), the assessee would be entitled for deduction of amount of loss brought forward or unabsorbed depreciation whichever is less as per books of account. It is also evident that the assessee has claimed lower of depreciation and book loss while computing Book Profits u/s 115JB for AY 2012-13 which has not been disturbed by AO in the assessment order for AY 2012-13. Therefore, we find certain strength in these arguments. We find that the issue of aforesaid adjustments has not been delved upon either by Ld. AO or by Ld. CIT(A). Therefore we deem it fit to remit the matter back to the file of CIT(A) to specifically adjudicate the issues raised under the appeal by way of a speaking order and bring on record correct factual matrix, in this respect. Needless to add that reasonable opportunity of hearing shall be granted to the assessee, who, in turn, is directed to substantiate his claim. Order is being pronounced after ninety (90) days of hearing - COVID-19 pandemic and lockdown - HELD THAT - Taking note of the extraordinary situation in the light of the COVID-19 pandemic and lockdown, the period of lockdown days need to be excluded. For coming to such a conclusion, we rely upon the decision of the Coordinate Bench of the Mumbai Tribunal in the case of DCIT vs. JSW Limited 2020 (5) TMI 359 - ITAT MUMBAI .
Issues Involved:
1. Exemption from Minimum Alternate Tax (MAT) 2. Non-adjudication of claims by CIT(A) 3. Reduction of Book Profit by lower of Unabsorbed Depreciation or Business Loss 4. Reduction of Book Profits by amounts credited on account of Capital Reserve and Share Premium account 5. Failure to rectify the Appellate Order u/s 154 Detailed Analysis: I. Exemption from MAT: The primary issue was whether the assessee was entitled to exemption from MAT under Section 115JB as directed by the Board of Industrial and Financial Reconstruction (BIFR). The assessee argued that the relief claimed was based on the BIFR order dated 21.09.2010, which provided for exemption from MAT for eight years from the cut-off date. However, the DIT (Recovery) conveyed that the relief under Section 115JB would be available only until the net worth of the company became positive, which occurred on 31/03/2011. Consequently, the assessee was denied MAT exemption from AY 2011-12 onwards. The Tribunal upheld this view, stating that the BIFR’s direction was to "consider" granting relief, not an absolute directive, and the CBDT had decided not to extend the benefit beyond the point when the net worth turned positive. II. Non-adjudication of claims by CIT(A): The assessee contended that the CIT(A) failed to adjudicate claims for adjustments of Book Profit on account of amounts credited to the Profit & Loss Account via the Restructuring Account and the reduction of Book Profit by the lower of Unabsorbed Depreciation or Business Loss. The Tribunal noted that these claims were subsequently dealt with by the CIT(A) under Section 154, which led to a separate appeal (ITA No. 4696/Mum/2019). III. Reduction of Book Profit by lower of Unabsorbed Depreciation or Business Loss: The assessee argued that the Book Profit should be reduced by the lower of Unabsorbed Depreciation or Business Loss, duly adjusted by amounts written back due to reliefs granted by BIFR. The CIT(A) rejected this claim, stating that the starting point for computation under Section 115JB would be the net profit as shown in the Profit & Loss Account prepared in accordance with the Companies Act. The Tribunal found merit in the assessee’s argument that adjustments due to BIFR relief should be considered and remitted the matter back to the CIT(A) for a detailed adjudication. IV. Reduction of Book Profits by amounts credited on account of Capital Reserve and Share Premium account: The assessee submitted that the Book Profit should be reduced by amounts credited to the Profit & Loss Account from Capital Reserve and Share Premium Accounts. The CIT(A) rejected this claim, relying on the Supreme Court decision in Apollo Tyres Ltd. v. CIT. The Tribunal noted that the CIT(A) did not specifically address the issue of adjustments through the Restructuring Account and remitted the matter back for a detailed adjudication. V. Failure to rectify the Appellate Order u/s 154: The assessee claimed that the CIT(A) failed to rectify apparent mistakes in the original appellate order, particularly regarding the non-adjudication of claims for reduction of amounts credited to the Profit & Loss Account as per BIFR's order. The Tribunal found that the CIT(A) did not specifically address these issues and remitted the matter back for a detailed adjudication. Conclusion: The Tribunal dismissed ITA Nos. 2709-10/Mum/2019 concerning the exemption from MAT but allowed ITA Nos. 4696-97/Mum/2019 for statistical purposes, remitting the matters back to the CIT(A) for detailed adjudication on the issues of Book Profit adjustments and rectification of the appellate order.
|
