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TMI Blog2015 (1) TMI 923X X X X Extracts X X X X X X X X Extracts X X X X ..... A No. 210 to 212/Nag/2013 - - - Dated:- 19-12-2014 - R. C. Sharma, AM And Sanjay Garg, JM,JJ. For the Appellant : Shri Arvind Sonde For the Respondent : Shrimati S Padmaja ORDER Per R. C. Sharma,AM. These are the three appeals filed by the assessee against the three separate orders dated 28.3.2013 passed by the Commissioner of Income Tax-IV under section 263 of the Income Tax Act, 1961 (the Act) for the assessment years 2003-04 to 2005-06. Since issue involved in all these appeals is common, therefore, we have heard these appeals together and these are being disposed of by this consolidated order, for the sake of convenience. 2. Rival contentions have been heard and record perused. In the order passed u/s 263 of the Act by the ld. CIT for the A.Y. 2003-04, he observed as under : 2. On going through the records, it was noticed that in 'Schedule-1, Book profit u/s. 115JB', it has been stated that the book profit for the purpose of section 11 5JB is NIL after deducting absorbed depreciation and carry forward business loss as per clause (iii) of explanation to section 115JB(2), and, therefore, no tax is payable. The then AO. found that there was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d High Court Order and further IPCL was later merged with Reliance Industries Ltd in AY 200708. The above facts were intimated to ITO-IV, Nagpur vide our letter dated 30.08.2010 filed on 31.08.2010 wherein the assessee has requested for transfer of records to the LTU, Mumbai since the jurisdiction of the case upon merger lies with LTU, Mumbai (copy of the same is enclosed for reference as Annexure '1'). Without prejudice to our above submissions, the assessee company submits that it had filed return of income for AY 2003-04 on 28.11.2003 declaring total loss of Rs.(-)82,44,840/-. The case was selected for scrutiny and assessment was completed u/s.143(3) of the I.T. Act vide an order dated 08.11.2005 wherein the income was assessed at ₹ 85,90,171/-. The above case was reopened u/s.148 vide notice dated 30.03.2010. during the course of reassessment proceedings, the assessee filed report u/s.II5JB of the I T Act, 1961 for computing book profits of the company in Form 29B, issued by the Chartered Accountants, wherein the working of book profit of Rs.(-)5,96,23,000 was given (Form 298 is enclosed as Annexure'2'). After perusing the details on record, the AO duly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the position of law as on date when AO passes an order had to be taken into consideration.,- The court has held as follows: Held, dismissing the appeals, that the law which was applicable on the date when the Assessing Officer passed the order had to determine the erroneous nature of the order passed by the Assessing Officer. On that basis the order passed by the Commissioner could not be justified by any subsequent pronouncement of law and consequently the order of the Assessing Officer could not be held to be erroneous as law applicable on the date of passing order by the Assessing Officer had to be applied. The order of the Tribunal did not suffer from any legal infirmity warranting interference. Without prejudice to our above submissions, we wish to state that: You have referred to the decision of ITAT, Pune Bench decision in the case of Kirloskar Ferrous Industries Vs. ACIT decided on 31.01.2012 and have mentioned that the ITAT has directed that the loss and unabsorbed depreciation has to be compared in each of the previous years separately before quantifying the amount of set off. In this connection, we submit that at the outset, the ITAT has not decided th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s mentioned in section 205 of the Companies Act. However, there is no reference in either section II5JA or I15JB (with which we are dealing presently) of any depreciation to be provided as per section 205 of the companies Act. Accordingly, if there was any profit during any particular year, it is appropriate to allocate /adjust such profits against the b/f business loss and depreciation in the same proportion in which they stand at the beginning of the year. Following this principle, the total business loss land unabsorbed depreciation on year to year basis as per the books of accounts can be worked out and accordingly the lower of business loss and unabsorbed depreciation at the beginning of the year is deductible as per clause (iii) of Explanation 1 to section 115JB. Your honour will thus appreciate that the provisions of section 115JB. Your honour will thus appreciate that the provisions of section 115JB have been applied correctly as reflected by the auditor's certificate. We enclose herewith a working of book profit u/s 115JB as given in form No.29B. We also enclose herewith the working of brought forward loss and depreciation which has been reflected in Form No.29B. You w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der u/s.147 r.w.s.143(3) dated 30-11-2010 has taken one of the possible views while computing the book profit u/s.115JB of the Income Tax Act and hence the order passed by the Assessing Officer is not erroneous so as to be prejudicial to the interest of the revenue within the meaning and as contemplated u/s.263 of the Income Tax Act. 2. In your letter dated 21-12-2012 initiating revision proceeding, you have relied upon the judgment of ITAT Pune Bench in the case of Kirloskar Ferrous Industries Ltd. - ITA No.1044/PN/10, for forming an opinion that the book profit for AY 2003-04 ought to have been reduced by unabsorbed depreciation or business loss, whichever is less on a year to year basis as held in that case. The very fact that the assessee reduced the book profit by taking one particular view point and the Assessing Officer recomputed the book profit in a different manner and the Hon'ble ITAT disregarding both the view have pronounced a third view for computing the book profit by itself makes the issue highly debatable. We therefore submit that merely because the Assessing Officer has taken one out the above three possible view, the assessment order passed by the Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion (1) (iii) to section 115JB. However, as in each of the earlier years, it is clearly seen that either the unabsorbed depreciation or the business loss is zero, therefore the carrying forward of loss I depreciation as claimed by the assessee and .allowed by the AO is incorrect. I, therefore, hold the order u/s. 143(3) r.w.s. 147 of the IT. Act, 1961 passed by the ACIT, Circle-7, Nagpur on 30/11/2010, as erroneous insofar as it is prejudicial to the interests of revenue In this view of the matter, I hereby set aside the said assessment order dated 30/11/2010 with a direction to the A.O. to pass a fresh order after giving adequate opportunity of being heard to the assessee. 5. Against the above order of CIT passed u/s.263, assessee is in further appeal before us. 6. Learned AR reiterated the arguments taken before the lower authorities and also invited our attention to the judicial pronouncements as contained in the paper book and contended that the order passed by the AO was neither erroneous nor prejudicial to the interest of Revenue and after applying his mind and discussing the issue followed one of the possible legally tenable view regarding set off of unabsorbed deprec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AY Unabsorbed Depreciation Business Loss Capital Gain Loss 1997-98 337,271,756 0 4,634,535 1998-88 168,027,820 0 0 1999-00 0 175,361,887 0 2000-01 0 174,002,549 0 2001-02 0 255,695,097 0 2002-03 107,513,345 0 0 Total 612,812,921 605,059,533 4,634,535 10. The CIT Nagpur issued notice dated 21.12.2012 for revision of order u/s.263. As per the CIT the book profit u/s.115JB was not computed as per law in as much as the brought forward unabsorbed depreciation or business loss whichever is less, had to be computed in each of the previous year separately before qualifying the amount for set off. Accordingly, it was held by the CIT that brought ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cepted in assessment order dated 08.11.2005 has been restored. Under these circumstances, it cannot be said that order passed u/s.143(3) r.w.s. 147 dated 30.11.2010 was erroneous as alleged mistake, if at all to be considered, it could only be in the assessment order u/s 143(3) dated 08.11.2005. Since the time limit for passing the order u/s.263 by the CIT has to be computed with reference to the assessment order passed on 08.11.05, as the error, if any, is committed in that order, the same is required to be revised uptill 31.03.2008, and hence the revision order passed by the CIT u/s.263 on 28.03.2013 is beyond the period of limitation provided in sub-section (2) of section 263. 14. Now, coming to merits of order passed u/s.263, we found that AO has accepted the assessee's computation of total income u/s.115JB while passing the assessment order u/s.143 dated 08.11.2005. The AO further accepted the computation of Book profit u/s 115JB while passing another order dt. 30.11.2010 u/s.143 rws 147 of the Income-tax Act, even after considering the reason for reopening the earlier assessment order. The reason given by the CIT for revision of assessment order u/s 263 was the manner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law. (ii) CIT v. Max India Ltd [295 ITR 282] For example, when the Assessing Officer adopts one of two courses permissible in law and it has resulted in loss of revenue, or where two views are possible and the Assessing Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the Revenue, unless the view taken by the Assessing Officer is unsustainable in law. (iii) CIT v. Gabriel India Ltd [203 ITR 108] Held, that the Income-tax Officer in this case had made enquiries in regard to the nature of the expenditure incurred by the assesse. The assesse had given a detailed explanation in that regard by a letter in writing. All by the Income-tax Officer on being satisfied with the explanation of the assesse. This decision of the Income tax Officer could not be held to be erroneous simply because in his order he did not make an elaborate discussion in that regard. (iv) CIT v. Saluja Exim Limited Where two views possible, Assessing Officer Adopting One view - Revision not Permissible. 15. Even on merit while computing the book profit u/s.115JB the assessee is required to reduce brought forward u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rectification stage had taken different interpretation of this provision in order to pass order u/s.154 of the IT Act. Therefore, the learned CIT(A) rightly held that the issue is debatable and the conclusion could be drawn after long drawn discussions. There was no mistake apparent on record; therefore, on a debatable issue the proceedings u/s. 154 of the IT Act would not be valid. The learned DR merely relied upon the order of the AO u/s.154 of the IT Act and has not pointed out any infirmity in the order of the learned CIT(A). In view of the above, we do not find any merit in the appeal of the revenue. Same is accordingly dismissed. The above view has been also followed by the Ahmedabad ITAT in the case of ACIT vs. Arvind Mills Ltd. (ITA No. 3440/Ahd/2010) and held as under: We have considered the rival submissions and do not find any merit in the appeal of the revenue. The identical issue is considered by the ITAT Mumbai Bench in the case of Amline Textiles (P) Ltd (supra) and the issue was decided in favour of the assessee. The learned CIT(A) reproduced the operative portion of the order in the impugned order. Even, according to explanation (iii) to section 115JB (2) of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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