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TMI Blog2013 (8) TMI 410X X X X Extracts X X X X X X X X Extracts X X X X ..... rofit of business on account of loss to sick industrial company were in accordance with law. Therefore, there was no justification for A.O. to pass the order under Section 154 of the Act - No merit in the appeal of the Revenue – Decided against the Revenue. - ITA No. 299/Agr/ 2012 - - - Dated:- 8-8-2013 - Shri Bhavnesh Saini And Shri A. L. Gehlot,JJ. For the Appellant : Shri Waseem Arshad, Sr. D.R. For the Respondent : Shri Deepandra Mohan, Arun Daga Ms. Prarathana Jalan C.A. ORDER Per Bhavnesh Saini, Judicial Member This appeal by the Revenue is directed against the order of learned CIT(A) Gwalior dated 04.04.2012 for A.Y. 2005-06 on the following ground :- "Whether on the facts and in the circumstances of the case, the Ld. CIT(Appeals)is justified in canceling the order passed u/s 154 without considering the fact the after deletion of an addition of Rs.12,92,81,788/- total loss came to Rs.9,81,556/- hence provisions of 115JB are applicable and accordingly tax was determined u/s 115JB of I.T. Act" 2. In the present appeal, the issue relates to applicability of the provisions of Section 154 in the case of the assessee. The assessee has filed return o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as on 31.03.2005, the company's net worth consistence of its paid up share capital of Rs.425.01 lacs has exceeded its accumulated losses of Rs.124.112 lacs. As such, the resultant net worth of the company is positive by Rs.300.89 lacs as on 31.03.2005. The matter is not debatable and it is very simple and straight. Because after personal the entire case record (including appeal effect order u/s 250 and the order of BIFR dated 25.05.2005) it can be said this issue is covered u/s 154 because mistake is very obvious and patent. The reliance is placed on in following case law : "T.S. Balram, ITO Vs. Volkari Brothers and Others (SC) 82 ITR 50." In the order u/s 154 all the provisions which have their big impact on the revenue can also be covered. Many provisions which have the mandatory character in the law also can be covered u/s 154. To avoid the issue of 115JB (MAT provisions) is like to avoid the mandatory provisions of the Income Tax Act. This mistake is overlooking of mandatory provision (115JB) of law (IT Act 1961). This mistake can be rectified. In the case of law of "Addl. CIT Vs. India Tin Industries Pvt. Ltd. (Kar) 166 ITR 166 454" this fact has been supported. After pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d u/s 250 giving effect to the CIT(A)'s order is not valid being not in accordance with law and is beyond AO's jurisdiction, even otherwise the CIT(A) vide order dtd. 29.02.2008 had held that additions made by the AO (vide assessment order dtd. 28.12.2007 for the A.Y. 2005-06) (i) on account of waiver of loan by the State Bank of India MP Financial Corporation (ii) waiver of interest, was not sustainable on facts in law. There was no whisper of applicability of provisions of Sec. 115JB in CIT(A)' order as no working of Book Profit u/s 115JB was made by the A.O. at the time of making assessment and the judgement in "Addl. CIT Vs. Indian Tin Industries Pvt. Ltd. 116 ITR 454 (Kar) as cited by the A.O. is not applicable to the facts of the assessee's case. Thus, the AO had correctly given appeal effect to CIT(A)'s order reducing from assessed income at the time of making adjustment u/s 143(3) on 28.12.2007, the AO had just computed assessee company's income from business under the normal provisions of the IT Act that is under Section 28 to 44 of the I.T. Act. In the alternative no computation of book profit tax thereon was made as mandated u/s115JB. When there was no question o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ditor as company was sick industrial company in this particular year. Debate also on whether the company is a sick industry or not is also envisaged from AO order u/s 154. The matter is highly debatable and cannot be said to be very simple clear or say a mistake apparent from records. In the landmark judgement of the Supreme Court in T.S. Balaram ITO Vs. Volkart Brothers 821 ITR 50 (supra) held that a mistake apparent on record must be obvious and patent mistake and not something which can be established by a process of reasoning on which there may conceivably be two opinions. A decision on a debatable point of law is not a mistake apparent from record the judgement of Devendra Prakash Vs. ITO 721 ITR 151 (All) as cited by the AO is not applicable. 5. The ld. CIT(A) considering the finding of the A.O. and material on record and submission of the assessee held that the provision of Section 154 of the Act do not apply in this case and accordingly cancelled the impugned order. His finding in paras 2.3 to 4 of the appellate order are reproduced as under:- "2.3 Appellant's submissions alongwith AO's order have been considered carefully. Assessment records alongwith assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of Sec. 115JB. There is need to rectify the order passed as above. 2.5 No detail working has been given regarding alleged mistake sought to be rectified. In fact, the said notice is found to have been issued in pursuance of audit objection by Sr. Audit Officer, ITRAP-IV dtd. 21.10.09 regarding non computation of appellant's income u/s 115JB and amount of unabsorbed depreciation to be allowed to it. Appellant's reply to notice u/s 154 and as reproduced by the AO has not been accepted by the A.O. who has assessed appellant's income as per observations made ion the above mentioned audit objection. However, it has been held by various appellate authorities that the A.O. himself must find that a particular mistake has occurred which needs rectification. A.O. has to apply his independent mind to the facts of the case and cannot allow himself to be influenced or guided in the matter by extraneous considerations as is found in appellant's case from perusal of records of the A.O. and as mentioned above. 2.6 Further, the appellant is found to be a sick industrial company during the year under consideration as per order of BIFR dtd. 15.01.2002. It is only for succeeding years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugned order passed u/s 154. The same is, hereby, cancelled. 3. Since the order passed u/s 154 has been cancelled as above, appellant's other ground regarding calculation of book profits by deducting uncorrect amount of unabsorbed depreciation is not being adjudicated upon. 4. In the result, the appeal is allowed." 6. Ld. D.R. relied upon the order of the A.O. He has submitted that provision of Section 115JB apply to the facts of the case. Therefore, the A.O. has correctly passed the order under Section 154 of the Act, rectifying the mistake apparent from record. On the other hand, ld. counsel for the assessee relied upon the order of the ld. CIT(A) and submitted that the working given by the assessee has not been disputed. He has filed copies of original assessment order, order of CIT(A) and Income Tax Appellate Tribunal for relevant assessment year under appeal and the appeal effect given by the A.O. dated 26.08.2008 in the paper book. He has referred to report under Section 115JB (P.B.1) and submitted that Auditor has reduced the loss of sick industrial company from the profit and the detail is given in the audited accounts (P.B.2) and the same facts have been declared in c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowance on account of provision of interest write back from MPFC SBI and of relief in loan to the assessee due to it being not sick industrial company and has computed the income at Rs.12,83,00,230/-. The said addition has been admittedly deleted by the ld. CIT. CIT(A) vide order dated 23.07.2008 (P.B.32) A.O. gave appeal effect under Section 250 of the Act on dated 26.08.2008 (P.B.53) and total loss was carried forward in a sum of Rs.9,81,556/-. The Tribunal also upheld the order of the ld. CIT(A) by dismissing the departmental appeal. The Auditor of the assessee in Annexure-A also reduced the loss of sick industrial company from the profit. Therefore, assessee has disclosed all the particulars regarding income to be computed under Section 115JB while filing return of income. The certificate regarding assessee is sick industrial company issued by BIFR was also filed at the assessment stage. Therefore, when the A.O. applied his mind to all the facts and circumstances of the case and passed the assessment order by making certain additions which have been deleted by the CIT(A) and while giving appeal effect, ultimately the income/loss declared by the assessee has been accepte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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