2015 (10) TMI 67 - AT - Income Tax

Rectification of mistake - period of limitation - computation of MAT credit - whether the order u/s 154 passed by Assessing Officer is beyond the period allowed as per the provisions of Section 154(7) and therefore is beyond the time limit allowed by law and hence void - Held that - In the instant case, the assessee company claimed credit for MAT in the Assessment Year 1998-99 in its return of income which was filed on 24.11.1998 and the income was assessed u/s. 143(1) on 31.03.2000. The MAT credit which was claimed at ₹ 21.31 lakhs related to the Assessment Year 1997-98. In the Assessment Year 1997-98, the Assessing Officer had given effect to the order passed by the Commissioner of Income Tax(Appeals) vide order dated 08.10.2003 and therein computed the assessee s book profit u/s. 115JA at a loss. Thus, the assessee was not required to pay any MAT for Assessment Year 1997-08. Consequentially, the Assessing Officer vide order dated 07.05.2008 passed for the Assessment Year 1998-99 withdrew the MAT credit which was allowed earlier to the assessee. The order dated 07.05.2008 was passed by the Assessing Officer in consequence or to give full effect to the order of the Commissioner of Income Tax(Appeals) which was passed for the Assessment Year 1997-98 in the case of assessee itself. As per the order of the Commissioner of Income Tax(Appeals) passed for the Assessment Year 1997-98, the assessee was not liable to pay any amount of MAT. Therefore, the MAT paid earlier by the assessee for the Assessment Year 1997-98 was refunded to the assessee. Consequential to this, the MAT credit which was allowed to the assessee in the assessment for Assessment Year 1998-99 required to be withdrawn which the Assessing Officer withdrew vide order dated 07.05.2008. Though the Assessing Officer has mentioned the impugned order dated 07.05.2008 as passed u/s. 154 to rectify an apparent mistake but in fact it has been observed that the said order has not been passed to rectify any apparent mistake but was passed to give complete effect to the appellate order passed by the Commissioner of Income Tax (Appeals) for the Assessment Year 1997-98. - Decided against assessee.

Summary

Issues:
Appeal against order of Commissioner of Income-tax (Appeals) - Time limit for rectification u/s 154 - MAT credit claimed by assessee - Calculation of time limit for rectification - Interpretation of original order for rectification - Applicability of legal precedents - Jurisdiction of Assessing Officer - Consequence of appellate order on rectification u/s 154.

Analysis:
The appeal was filed by the assessee against the order of the Commissioner of Income-tax (Appeals)-VI, Ahmedabad concerning the withdrawal of MAT credit claimed by the assessee. The primary issue revolved around the time limit for rectification under section 154 of the Income Tax Act. The Authorized Representative argued that the rectification order passed by the Assessing Officer was beyond the prescribed time limit, rendering it void. The contention was based on the interpretation of the original order and the calculation of the time limit from the date of such order.

The Authorized Representative highlighted that the Assessing Officer failed to withdraw the MAT credit in subsequent orders despite the original order giving effect to the CIT(A)'s decision. The argument emphasized the relevance of the first order passed after the original order for rectification purposes. Legal precedents, including the decision of the Calcutta High Court, were cited to support the contention that the time limit for rectification should be computed from the date of the original order, not subsequent orders.

On the other hand, the Departmental Representative supported the lower authorities' orders. The Tribunal analyzed the case, noting that the Assessing Officer's order was to give full effect to the CIT(A)'s decision for the Assessment Year 1997-98, where the assessee was not liable to pay MAT. The order withdrawing MAT credit for the subsequent year was considered consequential to the appellate order. The Tribunal referred to relevant sections of the Income Tax Act to determine the jurisdiction and applicability of the rectification order in light of the appellate decision.

Ultimately, the Tribunal dismissed the appeal, finding no merit in the assessee's contention regarding the time limit for rectification under section 154. The decision was based on the interpretation of the provisions of the Income Tax Act and the consequential nature of the rectification order in giving effect to the appellate decision. The Tribunal's ruling upheld the Assessing Officer's order withdrawing the MAT credit, emphasizing the jurisdiction and legal basis for the rectification action taken.