2022 (4) TMI 1064 - AT - Income Tax

Revision u/s 263 by CIT - AO allowed set off of brought forward business loss under section 115JC - HELD THAT - AO has taken contrary interpretations of 'Total Income', whereas he has arrived at a 'NIL' total Income under the Normal Computation method after setting off of the brought forward losses with the net profits. However for AMT computation, the AO adopted a position that Total Income means net profits and he has computed the Alternate Minimum Tax (AMT) on net profits without setting off with the brought forward losses. Section 115JC stipulates that the Alternate Minimum Tax (AMT) would need to be computed only on the Total Income of the Appellant. Further section 2(45) defines Total Income is to be computed after giving effect to the provisions of the Act which includes section 72 of the Act which stipulates that brought forward losses is to be set off with the net profits. Section 139(1) stipulates that the assessee has to furnish the return of income in the prescribed form and verified in the prescribed manner after setting forth such other particulars as may be prescribed. In this regard the Appellant has furnished a copy of its return of income (ITR-4) filed wherein it is seen that in Part 8 - TI Computation of Total Income of the Income Tax Return Form, the Total Income is computed after setting off of the brought forward losses with the income. Further on a perusal of Schedule AMT in the Income Tax Return Form ITR-4, AMT is computed only on Total Income. Further Schedule AMT in ITR-4 mentions that the Total Income figure is to be adopted from item 13 of Part 8-TI of the Return i.e. Total Income figure computed after setting off of the brought forward losses with the net profits. Given the above, it is clear that AMT is to be computed on Total Income and that the Total Income is to be computed after setting off of the brought forward losses with the net profits. Hence the AO is directed to compute the Alternate Minimum Tax (AMT) on Total Income after setting off of the brought forward losses with the net profits as stipulated under section 115JC. CIT(A) has rightly decided the issue of computing total income after set off of brought forward losses with the net profit as stipulated under section 115JC of the Act and therefore, no interference is warranted. Accordingly, the ground raised by the Revenue is dismissed.

Issues:
1. Revision order under section 263 of the Income Tax Act, 1961
2. Set off of brought forward business loss under section 115JC of the Act
3. Alternate Minimum Tax computation
4. Interpretation of Total Income for AMT computation
5. Compliance with Section 139(1) for return of income

Analysis:

1. The appeal was filed against the order of the Principal Commissioner of Income Tax 1, Chennai under section 263 of the Income Tax Act, 1961. The Assessing Officer allowed set off of brought forward business loss, leading to a revision order by the ld. PCIT as it was deemed erroneous and prejudicial to Revenue's interest. The Tribunal heard both parties and upheld the order of the ld. CIT(A) allowing the appeal of the assessee.

2. The Assessing Officer levied Alternate Minimum Tax (AMT) on the total income, resulting in a demand raised against the assessee. The ld. CIT(A) allowed the appeal by considering the provisions of section 115JC of the Act. The Tribunal found that the AO's computation of AMT on net profits without setting off brought forward losses was incorrect. Section 115JC mandates AMT computation on Total Income after setting off losses with net profits, as per Section 72 of the Act.

3. The Tribunal emphasized that AMT should be computed on Total Income, as defined under section 2(45) of the Act, after setting off brought forward losses with net profits. The assessee's return of income (ITR-4) and Schedule AMT in the form supported this computation method. Therefore, the AO was directed to compute AMT on Total Income as per section 115JC.

4. Compliance with Section 139(1) was crucial for furnishing the return of income. The Tribunal noted that the Total Income must be computed after setting off brought forward losses with net profits, as per the prescribed form and manner. The ld. CIT(A) correctly interpreted the provisions, leading to the dismissal of the Revenue's appeal and allowing the assessee's appeal.

5. The Tribunal concluded that the order passed by the ld. CIT(A) was accurate, and no interference was warranted. The appeal filed by the Revenue was dismissed, and the appeal filed by the assessee was allowed, considering the correct computation of Total Income for AMT as per section 115JC. The order was pronounced on 1st April 2022 at Chennai.

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