2021 (4) TMI 766 - AT - Income Tax

Rectification u/s 154 - Deduction u/s 10B after adjustment of losses of other units owned by the assessee - as submitted that since the re-computation of deduction u/s 10B was as per CBDT Circular No. 7/2013 dated 16.07.2013, the action of the Assessing officer falls within the preview of Sec.154 - HELD THAT - None appeared on behalf of the assessee. DR could not controvert that the issue on merit itself is covered in favour of the assessee by the Supreme Court in M/S YOKOGAWA INDIA LTD. 2016 (12) TMI 881 - SUPREME COURT - Moreover as rightly pointed out by the learned CIT(A) this issue cannot be subject matter of order under section 154. As an order under section 154 can be passed only on a mistake apparent from record. By no stretch of imagination this issue can be said to be a mistake apparent from record. Appeal by the revenue stands dismissed.

Summary

Issues:
- Appeal against CIT(A) order allowing deduction u/s 10B after adjusting losses of other units
- Validity of Assessing Officer's order under section 154 adjusting losses before computing deduction u/s 10B
- Applicability of CBDT Circular No. 7/2013 in re-computation of deduction u/s 10B
- Whether the issue is debatable and can be rectified under section 154

Analysis:
1. The appeal was filed against the CIT(A) order allowing the deduction u/s 10B after adjusting losses of other units owned by the assessee. The Assessing Officer had passed an order under section 154 of the Income Tax Act, adjusting losses before computing the deduction u/s 10B for the assessment year 2010-11.

2. The appellant raised concerns about the re-computation of deduction u/s 10B in line with CBDT Circular No. 7/2013 dated 16.07.2013, arguing that the Assessing Officer's action fell within the scope of section 154 of the Act. However, the CIT(A) found the issue to be debatable and not suitable for rectification under section 154.

3. The Assessing Officer's order under section 154 was challenged by the assessee before the CIT(A), who referenced the decision in the case of CIT Vs. M/s. Yokogawa India Ltd. (Civil Appeal No. 8498 of 2013) by the Supreme Court, which favored the assessee on merits. The CIT(A) concluded that the issue was indeed debatable and not a clear-cut mistake apparent from the record.

4. The CIT(A) held that the Assessing Officer's rectification order under section 154, allowing deduction u/s 10B after adjusting losses, was not in line with the decisions cited by the appellant. The CIT(A) quashed and set aside the order under section 154, stating that the issue of allowing deduction under section 10B on a stand-alone basis or after adjusting losses from other units was debatable.

5. Upon appeal by the revenue, the ITAT Mumbai heard the case. The departmental representative failed to dispute that the issue was covered in favor of the assessee by the Supreme Court decision referenced. The ITAT Mumbai concurred with the CIT(A) that the issue was not a mistake apparent from the record and could not be rectified under section 154.

6. Ultimately, the ITAT Mumbai upheld the CIT(A) order, dismissing the revenue's appeal. The judgment emphasized that the issue regarding the computation of deduction u/s 10B, particularly in relation to adjusting losses from other units, was debatable and not suitable for rectification under section 154.