2014 (6) TMI 297 - HC - Income Tax

Application for rectification of order u/s 154 - AO has passed the order after a lapse of six months Bar of limitation - Unabsorbed depreciation for quantification of relief u/s 80HHD of the Act Held that - u/s 154 of the Act, it is mandatory requirement that the Assessing Authority has to pass the order within a period of six months from the date of receipt of the application - in the circular bearing No.73 dated 7-1-1972 issued by the CBDT it was clarified that if the Assessing Authority do not dispose of the application within the time specified under sub-Section 7 of Section 154, it may be disposed of by that authority even after expiry of the statutory time limit on merit in accordance with law. With regard to the contention of the assessee that if the Assessing Authority failed to pass order within the period of limitation prescribed and the rectification deemed to have been granted is concerned, there is no such provision under the Act. Hence no relief can be given. Further, set off of brought forward loss is not challenged in the appeal. The circular issued by the CBDT is binding on the authorities concerned. - thus, there was no infirmity in the order - the assessee is not entitled for any relief in the appeal Decided against Assessee.

Summary

Issues:
1. Rectification of assessment order under Section 154 of the Income-Tax Act, 1961.
2. Time limit for passing rectification order under Section 154.
3. Set off of unabsorbed depreciation for quantification of relief under Section 80HHD.

Analysis:
1. The appellant, a Public Limited Company in the hotel business, challenged the order dismissing their appeal against the rejection of their Section 154 application for rectification of the assessment order. The Assessing Authority rejected the application beyond the prescribed time limit, leading to the appeal.

2. The First Appellate Authority considered the time limit under Section 154(8) of the Act and Circular No.14/2001 by the CBDT. It was held that the Assessing Authority must pass a rectification order within six months from the receipt of the application. The circular clarified that even if the time limit is exceeded, the authority can dispose of the application on merit, which was deemed lawful in this case.

3. The appellant also contested the set off of unabsorbed depreciation for calculating relief under Section 80HHD. The Tribunal and lower authorities upheld the Assessing Authority's decision, stating that the circular by the CBDT is binding. The authorities found no irregularity in the decision, emphasizing that the appellant is not entitled to relief as the findings were factual.

In conclusion, the High Court dismissed the appeal, upholding the decisions of the lower authorities. The substantial questions of law raised by the appellant were held against them, emphasizing the binding nature of the circular by the CBDT and the absence of provisions for deemed rectification under the Act.