2019 (4) TMI 1170 - HC - Income Tax

Revision u/s 263 - Adjustment u/s 115JB - book profit for MAT - HELD THAT - Tribunal proceeded to allow the appeal principally on two grounds. Firstly, that by virtue of the judgment of Supreme Court in case of Apollo Tyres Ltd. Vs. Commissioner of Income Tax 2002 (5) TMI 5 - SUPREME COURT , while computing the assessee's book profit under the MAT provision, the Assessing Officer cannot tinker with books of accounts duly audited. Secondly, that the Assessing Officer having carried out inquiries with respect to the genuineness of the donation, the Commissioner could not have exercised revisional powers. Quite apart from these observations of the Tribunal, independently we find that during the year under consideration the assessee had committed to a total donation of ₹ 12.75 crores, out of which ₹ 10.25 cores was actually donated during the period relevant to the assessment year in question. Out of the remaining ₹ 2.50 crores ₹ 2 crores was donated in the next year, but even before the date of closing of the account of the present year and remaining ₹ 50 lakhs was donated shortly after that. In view of such facts, we do not see any reasons to interfere. We are conscious that the decision of the Supreme Court in case of Apollo Tyres (supra) is referred to larger bench, however, this view has been followed consistently by this Court and we do not propose to depart from the same - appeal dismissed.

Summary

Issues:
1. Revisionary jurisdiction of the Commissioner u/s 263 of the Act.
2. Applicability of the Apollo Tyres case in certification of accounts for donation claims.

Issue 1: Revisionary jurisdiction of the Commissioner u/s 263 of the Act
The appeal before the High Court involved the question of whether the Commissioner of Income Tax had the jurisdiction to revise an assessment order passed by the Assessing Officer. The respondent-assessee, a limited company, had claimed a donation benefit of ?12.75 crores in the assessment year 2010-11. The Assessing Officer granted this benefit after examination. However, the Commissioner issued a notice stating that ?2.50 crores of the claimed donation had not been paid by the assessee. The Commissioner disallowed this amount, and the assessee appealed to the Tribunal. The Tribunal allowed the appeal, setting aside the Commissioner's order. The High Court noted that the Tribunal based its decision on two key grounds. Firstly, it relied on the Supreme Court's judgment in Apollo Tyres Ltd. vs. Commissioner of Income-Tax, stating that the Assessing Officer cannot alter audited books of accounts while computing book profit under the MAT provision. Secondly, the Tribunal found that since the Assessing Officer had already inquired into the donation's genuineness, the Commissioner could not exercise revisional powers. The High Court upheld the Tribunal's decision, emphasizing that the assessee had indeed donated a significant portion of the claimed amount during the relevant period, and there was no reason to interfere with the Tribunal's findings. The High Court also noted that while the Supreme Court's decision in Apollo Tyres was referred to a larger bench, the consistent view followed by the Court supported the Tribunal's decision.

Issue 2: Applicability of the Apollo Tyres case in certification of accounts for donation claims
The second issue in the appeal concerned the applicability of the Apollo Tyres case in certifying accounts for donation claims. The High Court observed that the Tribunal's decision was primarily based on the Apollo Tyres case, which emphasized that the Assessing Officer could not tamper with audited books of accounts while computing book profit under the MAT provision. In this case, the Tribunal found that the Assessing Officer had already investigated the donation's genuineness, which precluded the Commissioner from exercising revisional powers. The High Court concurred with the Tribunal's reasoning, noting that the assessee had fulfilled a substantial part of the donation commitment during the relevant period. The Court highlighted that this factual scenario did not warrant interference, especially considering the consistent application of the Apollo Tyres precedent by the Court. Consequently, the High Court dismissed the appeal, affirming the Tribunal's decision and underscoring the importance of adhering to established legal principles in such matters.