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TMI Blog2011 (4) TMI 1353X X X X Extracts X X X X X X X X Extracts X X X X ..... e completing the reassessment, the Assessing Officer has failed to make necessary disallowance in terms of clause (f) of explanation (1) to section 115JB of the Act in respect of dividend income claimed exempt u/s 10 of the I T Act, which resulted in under assessment of book profit u/s 115JB of the I T Act. Therefore, the CIT was of the opinion that the order passed by the Assessing Officer u/s 143(3)/147 on 29.11.2006 was erroneous in so far as it is prejudicial to the interest of the revenue. Accordingly, proceedings u/s 263 were initiated by the CIT. 2.1 In response to the notice issued u/s 263, it was submitted that while completing the assessment u/s 143(3)/147 on 29.11.2006, the Assessing Officer had made two additions viz ₹ 6.87 crores in respect of arrears of depreciation and ₹ 1.35 crores in respect of revaluation reserve for the purpose of computing book profit u/s 115JB of the Act. Both these additions were subsequently knocked down by the CIT(A). It was submitted that in view of the CIT(A)'s order and the Supreme Court's decision in the case of CIT vs Apollo Tyres Ltd reported in 255 ITR 273, there was no case for disallowance in terms of clause (f) of expl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of assessment order dated Nov 29, 2006 passed u/s 143(3) r.w.s147 of the Act without appreciating the fact that the CIT(A)/VI has deleted all the additions/deletions/adjustments made by the A?O in t he said order and thus, the order of the Cit(A) got merged with assessment order passed by the Assessing Officer u/s 143(3) r.w.s 147. The appellant prays that order passed u/s 263 of the Act to be struck down as null and void-ab-initio. 3. On the facts and circumstances of the case and in law, the CIT erred in directing the Assessing Officer to compute book profit u/s 115JB of the Act after making necessary adjustment to the book profit in terms of clause (f) of explanation (1) to sec.115JB of the act. The appellant prays that it b held that on the facts and circumstances, invoking section 263 for directing such disallowance is not in accordance with law and that no addition to the book profit u/s 115JB in terms of clause (f) of explanation (1) to sec. 115JB of the act is called for" The assessee has also taken additional ground which reads as under: "The order dated 30.3.2009 passed by the CIT u/s 263 of the I T Act is beyond the limitation period as the issue on which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passed by CIT holding that order passed by the Assessing Officer on 29.11.2006 is erroneous and prejudicial to the interest of revenue as no disallowance of expenditure in respect of exempt income is made by the AO under clause (f) to explanation 10 31.3.2009 Expiry of limited u/s 263(2) if limited reckoned from Sl No.5 i.e. the assessment order. 11 19..2009 Finance Act no.II got the assent from the President 4.2 Arguing the additional ground first the ld counsel for the assessee referring to the decision of the Hon'ble Supreme Court in the case of Alagendra Finance Ltd (supra) submitted that in a case of reassessment of items other than item sought to be revised by the CIT, the period of limitation commences from the date of original assessment order. Since in the instant case the reassessment was made on 29.11.2006 on the issues of arrears of deprecation debited to the P&L account and revaluation of reserve credited to the P&L account for the purpose of calculation of profit u/s 115JB and since the order sought to be revised u/s 263 relates to addition of dividend income claimed exempt u/s 10 for the purpose of computation of book profit u/s 115JB, therefore, the order so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paper book, the ld counsel for the assessee drew the attention of the Bench to the notice dated 9.6.2005 issued u/s 148. Referring to the reasons for reopening of the assessment at page 92, he submitted that the reasons for reopening of the assessment u/s 147 of the Act was on account of computation of book profit u/s 115JB due to reduction of arrears of depreciation amounting to ₹ 6,86,82,986/- and revaluation reserves of ₹ 1,35,09,886/-. 4.11 Referring to the order passed u/s 143(3)/147, a copy of which is placed at pages 93 to 100 of the paper book, he submitted that the Assessing Officer has calculated the revised book profit at ₹ 63,66,99,819/- as against ₹ 55,45,06,447/- determined by him in the order dated 22.3.2004. 4.12 Referring to the decision of the Hon'ble Bombay High Court in the case of Ashok Buildcon Ltd vs ACIT & another reported in 325 ITR 574 (Bom) and the decision of the Hon'ble Supreme Court in the case of CIT vs Alagendran Finance Ltd reported in 293 ITR 1(SC), he submitted that in the case of revision of the assessment of items other than the items sought by the CIT, the period of limitation begins from the original assessment and no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of Godrej & Boyce Mfg P Ltd vs ACIT reported in 328 ITR 81 is binding on the assessee as well as the revenue and the decision of the Third Member in the case of Wimco Seedlings Ltd (supra) is not applicable. 6 The ld counsel for the assessee, in his rejoinder submitted that the assessee can always raise a legal issue at any point of time in the shape of additional grounds in view of the decision of the Hon'ble Supreme Court in the case of NTPC reported in 229 ITR 383. He also relied on the decision of the Hon'ble Supreme Court in the case of Jute Corporation of India reported in 263 ITR 245. 6.1 After hearing both the sides and in view of the decision of the Hon'ble Supreme Court in the case of NTPC Ltd reported in 229 ITR 383 and in the case of Jute Corporation of India Ltd reported in 187 ITR 688, the additional ground raised by the assessee is admitted for adjudication. 7 We have considered the rival submissions made by both the parties, perused the orders of the authorities below and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. There is no dispute to the fact that the assessee, in the instant case has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In the case Alagendran Finance Ltd (supra) the assessment for the AYs 1994-95, 1995-96 and 1996-97 were completed in 1997 and 1998. In the orders of assessment, the assessee's claim relating to "lease equalisation fund" was accepted. Thereafter, orders of reassessment were initiated in respect of three other items but not the item relating to "lease equalisation fund" and reassessment were made. Thereafter, the Commissioner by an order dated 29.3.2004, initiated revision proceedings only in relation to the item 'lease equalisation fund'. The Tribunal held that the revision proceedings were barred by limitation as they were initiated more than four years after the original assessment, which was upheld by the Hon'ble High Court. On further appeal, the Hon'ble Supreme Court has held as under: (short note) "Affirming the decision of the High Court, that the Commissioner had sought to revise only that part of the order of assessment which related to Lease Equalisation Fund; but the proceedings for reassessment had nothing to do with that item of income. The doctrine of merger did not apply in a case of this nature; the period of limitation commenced from the dates of the original as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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