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2008 (9) TMI 508 - HC - Income TaxBook profit- Revision- This appeal by the Revenue is directed against the order passed by the Income-tax Appellate Tribunal. The assessee had preferred the appeal before the Tribunal being aggrieved by the order passed by the Commissioner Income-tax under section 263 of the Income-tax Act, 1961. The main ground urged before the Tribunal was that the Commissioner had erred in giving a direction to the Assessing Officer to recompute the income under section 115 JA (wrongly indicated as section 115JB in the impugned order) considering the impact of excess depreciation claimed by the assessee. Held that- (i) that the order passed by the Assessing Officer was not erroneous, which was one of the pre-condition for invoking jurisdiction under section 263 of the Act. Since it was not erroneous it could not have been termed to be prejudicial to the interest of the Revenue. The order of the Commissioner was set aside.
Issues:
1. Appeal against order passed by Income-tax Appellate Tribunal. 2. Jurisdiction of Assessing Officer to recompute income under section 115JA. 3. Applicability of Supreme Court decision in Apollo Tyres Ltd. 4. Classification of the case under section 115JA or 115JB. 5. Application of decision in CIT v. Kovai Maruthi Paper and Board P. Ltd. 6. Pre-conditions for invoking jurisdiction under section 263 of the Income-tax Act. 7. Decision of the High Court. Analysis: 1. The appeal was filed against the order of the Income-tax Appellate Tribunal for the assessment year 1998-99. The main contention was regarding the direction given by the Commissioner Income-tax to recompute income under section 115JA due to excess depreciation claimed by the assessee. 2. The Tribunal referred to the Supreme Court decision in Apollo Tyres Ltd., emphasizing that the Assessing Officer cannot disturb the book profit certified in the profit and loss account under the Companies Act unless specified in the Explanation to section 115J. The Tribunal held that the Assessing Officer's order was not erroneous, a prerequisite for invoking section 263 jurisdiction, and set aside the Commissioner's order. 3. The Supreme Court in Apollo Tyres Ltd. clarified the limited power of the Assessing Officer under section 115J, stating that the officer cannot go behind the net profit shown in the profit and loss account except as provided in the Explanation to the section. 4. While the Tribunal initially considered the case under section 115JB, it was clarified that the case actually fell under section 115JA. The Tribunal's reliance on the decision in CIT v. Kovai Maruthi Paper and Board P. Ltd. was deemed applicable to the case, even though the Tribunal mistakenly believed the case was under section 115JB. 5. The Tribunal's application of the decisions in Apollo Tyres Ltd. and Kovai Maruthi Paper and Board P. Ltd. was found to be correct, despite the misclassification of the case under section 115JB. The ultimate result was not affected by this misclassification. 6. The pre-conditions for invoking jurisdiction under section 263 of the Income-tax Act include the requirement that the Assessing Officer's order must be erroneous, which was not found to be the case in this instance, leading to the setting aside of the Commissioner's order. 7. The High Court concurred with the Tribunal's decision, stating that no substantial question of law arose for consideration, and consequently dismissed the appeal.
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