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TMI Blog2010 (12) TMI 676X X X X Extracts X X X X X X X X Extracts X X X X ..... d CIT failed to appreciate that there is no order under s. 115JB which could be revised and thereby erred in invoking provisions of s. 263 to review a non-existing order. 3. With out prejudice to the above, on the facts and in the circumstances of the case the learned CIT failed to appreciate the fact that the AO has raised the issue of computing the income of the appellant under the provisions of s. 115JB of IT Act and later on went on to determine the income under the normal provisions of the Act, and thereby erred in assuming jurisdiction under s. 263 which amounts to change of opinion. 4. The learned CIT erred in holding that the R and D expenditure of Rs. 4,30,99,233 which was allowed under the normal provisions of IT A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sequently, on 6th April, 2006, a notice under s. 148 was issued and the assessment was completed on 11th Dec., 2007 reducing the net loss from Rs. 61,21,720 to Rs. 17,18,952. The CIT noticed that, while finalizing the order, the AO failed to properly compute the taxable income of the assessee company under the provisions of s. 115JB of the Act. Therefore, a show-cause notice was issued to the assessee by the CIT under s. 263 of the Act. The assessee company challenged the assumption of jurisdiction by the CIT under s. 263 of the Act basically on two grounds:- (i) There is no order under the provisions of s. 115JB of the Act by the AO and hence there is no question of revision under s. 263 of the Act. (ii) The AO has carefull ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sue is whether the computation was correct or not. In the case of CIT vs. Sterling Chemicals Limited 262 ITR 278 (SC) (sic), it has been held that the interest income cannot be assessed as business income and the same has to be brought to tax under s. 115JB. In the case of the assessee, there was interest income of Rs. 1,98,47,079 credited to the P and L a/c of the assessee. The same was obviously not eligible for exemption under s. 10A of the Act, in view of the decision of the Supreme Court. The AO though raised this issue, finally failed to take note of the same and without any real application of mind accepted the assessee's computation. It is not a case of change of opinion but wrong application of provisions of the Act and therefore t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction claimed by the assessee as per the law. Thus, the CIT after considering the facts elaborately in his order set aside the assessment for the assessment year under consideration and directed the AO to make the assessment afresh by computing the profit chargeable to tax under s. 115JB after giving an opportunity of being heard to the assessee. Aggrieved against the finding and the decision of the CIT, the assessee is in appeal before us. 5. The learned counsel for the assessee submitted that the CIT failed to appreciate that there is no order under s. 115JB which could be revised and thereby erred in invoking provisions of s. 263 to review a non-existing order. Without prejudice to the above, on the facts and in the circumstances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the AO. Further, in support of his contentions, he relied on the decision of the jurisdictional Special Bench of the Tribunal in the case of Rain Commodities Ltd. vs. Dy. CIT (ITA No. 673/Hyd/2009) (2010) 41 DTR (Hyd)(SB)(Trib) 449. 6. On the other hand, the learned Departmental Representative while relying on the order of the CIT opposed the contentions of the learned counsel for the assessee and submitted that the order under s. 115JB of the Act sails together with the assessment order passed by the AO and hence the learned counsel for the assessee is not correct in contending that there is no order under s. 115JB of the Act is existing. The fresh claims made by the assessee company during the proceedings under s. 263 of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the normal provisions of the Act. In this case, since the AO had computed nil tax liability under the normal provisions of the Act, he was bound to compute the tax liability under the MAT. Non-computation of the same implies that the AO had accepted the assessee's computation without application of his mind. Hence, the issue before us is whether non-computation of book profit under s. 115JB of the Act is an error which is prejudicial of the interest of the Revenue or not? In our considered opinion, non-computation of book profit under s. 115JB of the Act is an error which is prejudicial to the interest of Revenue. It. is not a case of change of opinion but non-application of provisions of the Act and therefore the order passed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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