1993 (6) TMI 108 - AT - Income Tax

Assessing Officer Assessment Order Business Income Business Loss Mining Business Original Assessment Regular Assessment Unabsorbed Depreciation

Summary

Issues:
1. Jurisdiction of Assessing Officer under section 154 to rectify mistakes in the order.
2. Determination of book profits under section 115J and eligibility for deduction under section 80HHC.
3. Whether deductions under section 80HHC should be allowed before set off of unabsorbed depreciation and losses.
4. Interpretation of the Circular No. 559 dated 4-5-1990 issued by the Central Board of Direct Taxes.
5. Application of section 154 and levy of tax under section 115J.

Detailed Analysis:
1. The appeal challenged the order of the CIT (A) confirming the tax levied by the Assessing Officer under section 115J of the IT Act. The Assessing Officer revised the assessment, determining business income at nil by setting off losses and depreciation. Subsequently, the Assessing Officer initiated proceedings under section 154 and levied additional tax. The appellant contended that the Assessing Officer's order under section 154 lacked jurisdiction as it did not rectify an apparent mistake. The appellant argued that the determination of book profits did not consider the eligible relief under section 80HHC. The appellant relied on the decision of the Special Bench of the Tribunal and the provisions of section 80HHC to support their claim.

2. The Departmental Representative argued that the Assessing Officer rectified a mistake by not levying additional tax under section 115J in the original assessment. They contended that no deduction under section 80HHC could be allowed when there was no positive gross total income. The Tribunal held that Chapter XII-B is a complete code for tax levy and rectification under section 154 is for glaring mistakes. The Tribunal rejected the appellant's claim that the deduction under section 80HHC should precede set off of losses. The Tribunal cited Supreme Court decisions to support that deductions can only be allowed on positive gross total income.

3. The Tribunal concluded that the Assessing Officer was justified in assuming jurisdiction under section 154 and levying tax under section 115J. The Tribunal emphasized that if a deduction under section 80HHC was not allowed in the regular assessment, it cannot be claimed in the computation of profits under section 115J. The Tribunal dismissed the appeal, upholding the levy of additional tax under section 115J based on the revised assessment.