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TMI Blog2021 (11) TMI 635X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessment orders or the record cannot lead to the conclusion that AO has not considered the applicability of special provision as well. The assessment order, in our view, has the presumption of having been made in accordance with the requirements of law and obligations fastened on the A.O. It cannot now be gain said that the AO failed to discharge the statutory obligation while computing the income of assessee for the assessment years in which the provision towards disputed excise duty was made by the assessee. The first and foremost objection of revenue on actual verification of provision made in respective assessment years is that the Tribunal presumed and pre-supposed that the contemperaneous effect would have been given in the books of accounts without material on record. The argument is contrary to the orders made by the AO in this behalf. The contention at the first blush though appears to be persuasive. With the help and assistance of learned counsel appearing for revenue and assessee, we have verified the assessment orders for the years 1997-98; 1998-99 and 1999-2000 and the assessment order in which the present appeal arises and we are of the view that the primary an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee in part. Hence the appeal by the revenue and the following questions of law are raised for consideration. 1. Whether, on the facts and in the circumstances of the case and also in the light of Section 80AB the Tribunal is right in holding that while computing the book profit under Section 115JB, the deduction under Section 80HHC is to be computed as per MAT provisions and not as per the normal provisions of the Income Tax Act, 1961? 2. Whether on the facts and in the circumstances of the case, the Tribunal is right in law and fact i) in presuming that the Assessing Officer has considered clause (c) of Explanation to Section 115JA in the Asst.year 1997-98 1998-99; ii) in holding that merely because proper working is not available on record it cannot be said that the Assessing Officer has not considered the same and are not the approach and the conclusion based presumptions and supposition perverse, arbitrary and illegal? 3. (a) Whether on the facts and in the circumstances of the case, the Tribunal is justified in directing the Assessing Officer to reduce the net profit by the sum of ₹ 3,29,27,056/- in place of ₹ 1,42,02,335/- as has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 2,12,27,493 2 2002-03 3,29,27,056 6. The assessee while working the book profit under Section 115JB reduced the sum of ₹ 3,29,27,056/- claiming reduction under clause 1 of explanation to Section 115JB of the Act. The AO noted that reduction for provision written back is available if at the time of creation of provision, the provision was added to the net profit under Section 115JA or 115JB of the Act. The provisions of Section 115JA were not applied to the case on hand by the A.O. in computing the total income and tax payable for assessment years 1997-98 and 1998-99 yet was determined. The total income charged to tax for both the years was the income computed under the normal provisions of the Act. In other words, the speical provisions under Sections 115JA or 115JB were not applied to the computation of income. The provisions created were disallowed in the assessment year under the normal provisions of the Act. For the assessment years 1997-98, 1998-1999 the income computed was under the normal provisions of the Act or more than 30% of the book profit. Special provisions under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ok profit. Explanation is also provided to the said sub section but from the language used by the legislature, the said explanation is applicable to section 115JB as such, more particularly in the context of book profit. The explanation is divided into two parts. Part I consists of clauses (a) to (g) and it is provided that book profit means the net profit as shown in the profit and loss account which shall be increased by the amount specified in clauses (a) to (g). In part 2 of the said Explanation, book profit is to be reduced by certain amounts as specified in clauses (i) to (vii). As per clause (i), more particularly in respect of the provision made earlier and amount written back by crediting th same to the profit and loss account and in consequence of which the net profit as shown in the profit and loss account is increased, then the said amount is to be reduced from the net profit in the process of computing the book profit. By virtue of proviso to clause (i) to the Explanation, even if the amount is written back from the provision and credited to the profit and loss account, the same shall not be reduced unless in respect of the provision made in the previous year relevant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purpose of Sec.115JB, unless and until it is shown that in the corresponding applicable previous year to the assessment year the provision has been added, the provision now sought to be written back cannot be deducted while computing the book profit of the assessee under section 115JB of the Act. The Tribunal has presumed and assumed that the normal computation and finalisation of the return of the assessee is by taking note of the effect of the provision made towards disputed levy and demand of excise duty. Therefore the finding recorded by the Tribunal is perverse and presumptuous. Hence it is argued that substantial question No.3 and reframed question Nos.2 and 3 may be answered in favour of revenue and against the assessee. 10. Senior Adv.Joseph Markose prefaces his argument, by keeping in view the authoritative pronouncement of the Supreme Court in Ajanta Pharma Ltd., that Section 115JB is a self contained code. The assessment has been made under Sec.143(3) of the Act. Computation of book profit for the purposes of special provisions and comparing such computation with the income arrived at in the normal provisions is on the AO. Once an order under Section 143(3) is m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The AO, as is clear from the respective assessment orders, did not find a case for applying minimum alternate tax i.e. Special Provisions as applicable to the assessee for the first AY 1997-98; 1998-99 referred to above. The AO as well as the CIT have proceeded on the reasoning that unless and until book profits under section 115JA or 115JB are established as duly computed by the AO, the claim for writing back cannot be allowed in the subject assessment years. The reasoning of the primary authority and the first appellate authority is untenable in our consideration of the circumstances of the case and scheme of the Act. We are of the view that once the return was filed by the assessee , it is the responsibility on the AO to compute the income of assessee under normal provisions and special provisions. The income tax is collected on the income whichever is higher in these two methods i.e. either normal provision or special provision. Had it been a case where the AO has omitted or failed to do comply with Section 115JB the remedy available to revenue is different to work out the grievances vis- -vis the respective assessment orders allegedly made by A.O. without reference to the app ..... 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