2017 (12) TMI 1283 - AT - Income Tax

Rejection of rectification petition u/s 154 on MAT applicability - provisions of sec. 115JB(6) is applicable to the assessee since its unit is located in Special Economic Zone - whether admitting the liability under MAT does not constitute mistake apparent from record - Held that - We have noticed that the Ld CIT(A) has taken the view that the issue of deduction u/s 10B is debatable in nature and hence the same falls outside the scope of sec. 154 of the Act. We have earlier noticed that the claim of the assessee related to sec. 115JB(6) of the Act and the ld CIT(A) has misdirected himself in this regard by presuming that the claim was u/s 10B. We have also noticed that the deduction u/s 10B of the Act is no longer available while computing book profit u/s 115JB of the Act. The assessing officer has taken the support of decision rendered in the case of Goetz (India) Ltd. 2006 (3) TMI 75 - SUPREME Court We notice that the Ld A.R has rightly pointed out that the AO was not correct in referring to that decision in the facts and circumstances of the case. Even otherwise it is a mistake very much glaring and obvious and hence requires rectification. It is also settled proposition that income tax cannot be collected without the authority of law. Thus we are of the view that there is merit in the rectification petition filed by the assessee. We notice that there is merit in the claim for deduction u/s 115JB(6) of the Act and the same needs to be allowed as per the requirement of the Act while computing book profit u/s 115JB of the Act. Accordingly we set aside the order passed by Ld CIT(A) and direct the AO to allow the claim made in the rectification petition filed by the assessee.

Summary

Issues:
Challenge to rejection of rectification petition u/s 154 of the Act by Ld CIT(A) for AY 2008-09.

Detailed Analysis:

1. Facts and Background:
The assessee appealed against the order of Ld CIT(A) confirming the rejection of the rectification petition filed u/s 154 of the Act for AY 2008-09. The assessee, engaged in providing Revenue Cycle Management services to the healthcare industry, filed a revised return of income post-merger, declaring total income at NIL after claiming a deduction of ?329.65 lakhs u/s 10B of the Act. The AO computed the book profit u/s 115JB at ?401.32 lakhs, not allowing any deduction.

2. AO's Rejection and Ld CIT(A)'s Decision:
The AO rejected the rectification petition, stating that the assessee admitting liability under MAT did not constitute a mistake apparent from the record. Ld CIT(A) upheld the rejection, citing that the claim for exemption u/s 10B was not available while computing book profit u/s 115JB, and the matter was still pending before appellate authorities.

3. Arguments and Submissions:
The assessee contended that it sought deduction u/s 115JB(6) and not u/s 10B, emphasizing the omission of MAT exemption for sec. 10B units from April 1, 2008. The assessee accepted liability under MAT inadvertently, citing Circular No. 14 (XL-35) of 1955 requiring the AO to inform about available reliefs. The assessee argued against estoppel, citing legal precedents.

4. Tribunal's Decision:
The Tribunal noted that the assessee's rectification petition was for deduction u/s 115JB(6) and not u/s 10B. It emphasized that there is no estoppel against the law, and the assessing officer failed to inform the assessee about the available deduction. The Tribunal found merit in the rectification petition, directing the AO to allow the claim u/s 115JB(6) while computing book profit.

5. Conclusion:
The Tribunal allowed the assessee's appeal, highlighting the error in rejecting the rectification petition and emphasizing the need to rectify the mistake in computing book profit u/s 115JB. The decision was based on legal principles, precedents, and the duty of the assessing officer to inform about available deductions, ultimately ensuring the correct application of tax laws.