2021 (10) TMI 243 - HC - Income Tax

MAT Computation u/s 115JB - Revisions proceedings u/s 263 - CIT directed the AO to make certain additions to book profit u/s 115JB - Earlier AO had issued notice under Section 154 of the Act wherein he had asked respondent as to why remedial action should not be taken for computing income under the MAT provisions, but dropped the proceedings - Whether Tribunal was right in holding that, the AO had applied his mind while passing the order u/s 143 (3) of the Act? - HELD THAT - AO has applied his mind while passing the original order and dropping the rectification proceedings. It is settled law that no revisionary jurisdiction would lie on which issues are debatable. It is also settled law that once the Assessing Officer has taken one of its two possible views it cannot be regarded as being erroneous. What we find is in the order passed by CIT, there is no mention any where as to under which category of the explanation A to K below Sub Section 2 of Section 115 JB of the Act these four items mentioned above would fall. If the CIT felt that the Assessment Order passed by the Assessing Officer is erroneous, he ought to have identified under which category from A to K in the explanation below Sub Section 2 of Section 115 JB of the Act these four items would fall. This is mainly because the Assessing Officer took a view that these four items would not fall under the items mentioned in the explanation. ITAT has also observed that the disputed four items are not part of the list appearing in the section. Without identifying under which part of the list disputed four items form part of CIT could not have exercised its revisionary powers. Tribunal has not committed any perversity or applied incorrect principles to the given facts and when the facts and circumstances are properly analysed and correct test is applied to decide the issue at hand, then, we do not think that question as pressed raises any substantial question of law.

Summary

Issues:
1. Assessment of income under normal provisions and Minimum Alternate Tax (MAT) provisions.
2. Application of revisionary powers under Section 263 of the Income Tax Act.
3. Appeal to the Income Tax Appellate Tribunal (ITAT) challenging the revisionary order.
4. Interpretation of Section 115 JB of the Act regarding the addition of specific items to book profit.
5. Consideration of Assessing Officer's decision-making process and application of mind.

Analysis:

1. The respondent, a government enterprise, declared NIL income under normal provisions but had a Book Profit of &8377; 28,003.83 Lakhs under Section 115 JB of the Income Tax Act. The Assessing Officer made an addition of &8377; 109,31,36,711/- under normal provisions but did not include this amount in the book profits. The issue arose when the CIT exercised revisionary powers under Section 263 to direct the addition of the said amount to the book profit for MAT calculation.

2. The CIT's order was challenged by the respondent before the ITAT. The ITAT held that the disputed items were not part of Section 115 JB, and thus, there was no justification for the CIT's revisionary action. The questions of law framed included whether the Assessing Officer had applied his mind while passing the order and whether the CIT's actions were justified under the circumstances.

3. The High Court upheld the ITAT's decision, stating that the Assessing Officer had considered all relevant documents and had issued a notice under Section 154 regarding MAT computation. The court found no perversity in the ITAT's order and emphasized that once the Assessing Officer had taken a view, it could not be considered erroneous. The court also noted that the CIT failed to identify the specific category under Section 115 JB to justify the revisionary action.

4. The court concluded that the Tribunal did not commit any errors in its analysis and application of the law. It emphasized that the Assessing Officer's decision-making process was sound, and the CIT's failure to categorize the disputed items under Section 115 JB was a crucial flaw. As a result, the appeal was dismissed, highlighting that no substantial question of law was raised.

This detailed analysis of the judgment highlights the key issues surrounding the assessment of income, application of revisionary powers, and the interpretation of relevant provisions under the Income Tax Act.