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TMI Blog2017 (4) TMI 1620X X X X Extracts X X X X X X X X Extracts X X X X ..... period of 4 years, the order passed under 154 of the Act dated 29th March 2014 is barred by section 154(7) of the Act. It is a settled position that the AO while giving effect to the Tribunal's order cannot go beyond the directions of the Tribunal and since in the instant case the issue of calculation of book profit qua diminution in the value of an asset was not the subject matter of the appeal, the Revenue is not justified in contending that the order is within the time limit. Hon ble Supreme Court in the case of Alagendran Finance Ltd [ 2007 (7) TMI 304 - SUPREME COURT] was dealing with section 263(2) of the Act read with clause(c) to Explanation 263(1) which is identical to section 154(1A) as held that since issue of lease equalization fund was not the subject matter of reassessment proceedings, the limitation for revising the assessment order qua lease equalization fund will start from the original assessment order passed u/s. 143(3) of the Act and not from the date of reassessment order passed u/s. 147 - Decided in favour of assessee. - ITA No. 4339/Mum/2015 - - - Dated:- 7-4-2017 - Sri Mahavir Singh, JM And Sri Rajesh Kumar, AM For the Revenue : Miss Vid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te while computing the book profit under section 115JB of the Act. This issue has become final at the time of original assessment passed under section 143(3) of the act vide order dated 27-02-2004. Against other additions, the assessee preferred the appeal before CIT(A) and CIT(A) passed the appellate order vide order dated 05-10-2004 dealing with the issue in favour of assessee on account of computation of book profit for the purpose of section 115JB of the Act. Then in regard to the provision for diminution in the value of investments, the AO gave appeal fact to the order of CIT(A), wherein deduction under section 80HHC of the Act was allowed as per the order of CIT(A). The assessee carried the matter to the Tribunal in respect to the disallowance confirmed by CIT(A) as expenditure related to exempted income and noncompete fees. The department also filed an appeal against the order of CIT(A), against the allowance of claim in regard to computation of deduction under section 80HHC of the Act available determination of book profit under section 115JB of the Act and disallowance of prior period expenses while computing the total income under the normal provisions of the Act. The dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he value of investments and which was not a matter of appeal before the CIT(A)/ITAT. No disallowance was made by the AO and this issue has become final on the date of passing of the assessment order dt. 27.02.2004 by the AO. Notice: as per the appellant has to be issued by March 31, 2008. However, notice was issued by the AO on January 21, 2014 which is completely time barred. This issue has come into consideration of CIT(A)'s order for. the AY 2005-06 on the identical issue in para 2.3 at page 26 of the paper book wherein it is held as under: 2.3 I have considered appellant's submission. The facts are mentioned above. The main issue is with regard to rectification u/s. 154 in computation of book profit for diminution in the value of the investments which appellant had debited in the P L account. The appellant after receiving assessment order appealed before CIT(A) and ITAT as there is no addition in the original assessment order and there was no grounds of appeal or, this issue. However, A.O. had issued notice u/s. 154 which was received by the appellant on 02.04.2012 and the order was rectified u/s. 154 on 17.01.2014. The appellant's main claim in this order is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l income. Hence, the claims of the assessee company that there is no mistake apparent from records in the order giving effect to the ITAT's order is not valid and is therefore rejected as being not tenable In view of the above, she argued that the AO has rectified the order dated 13-04- 2009 giving effect to the order of ITAT. According to her by any logic, the AO cannot rectify the original assessment order under section 143(3) of the Act because that order does not exist in its original form but has been transformed by the subsequent order of CIT(A) and ITAT and what survives at the time of issuance of notice under section 154 of the Act as only order giving effect to the order of ITAT. She explained that the only requirement under section 154(7) of the Act is that the amendment under this section should be made within four years from the FY in which order sought to be amended is passed. She accordingly, urged that since 4 years has not elapsed from the date of passing the order giving effect to the ITAT s order the notice under section 154 of the Act is not at all bar by limitation. In support of her contentions she relied on the decision of the Hon ble Supreme Court i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fication order has been passed to give effect to the retrospective amendment made by the Finance Act 2009 whereby clause 1 was inserted in explanation 1 to section 115JB of the Act. The said clause deals with book profit to be increased by the amounts set aside as provision that diminution in value of any asset and the said retrospective amendment was made to overcome the decision of Hon ble Supreme Court in the case of CIT vs. HCL Comnet System Services (2008) 305 ITR 409 (SC). It is an admitted and undisputed position that the issue of the book profit to be increased by the provision made for diminution in the value of an asset was never the subject matter of appeal either before the CIT(A) or before the Tribunal. The issues raised in appeal before the CIT(A) and Tribunal were disallowance u/s. 14A of the Act, taxability of non-compete fees, addition on account of MODVAT credit, disallowance of foreign exchange loss and computation of deduction u/s. 80HHC of the Act. These very issues were also the subject matter of appeal before the Tribunal in cross appeals filed by the parties. But AO issued notice u/s. 154 of the Act dated 21 January 2014 seeks to rectify the order dated 13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated upon. First four cases relied upon by the assessee support the view taken by us. Even on merits, we find that the issue stands decided in favour of the assessee as held by the Hon'ble Supreme Court in case of Vijaya Bank (supra). Hence, in our opinion, the order of the FAA does not suffer from any legal infirmity. Confirming his order, we decide the effective ground of appeal against the AO. 10. We notice from the provision of Section 154(1A) of the Act which provides that the AO can rectify the order in respect of a matter other than the matter which has been considered and decided by the appellate/revisional authority. In the instant case since the issue of diminution in value of an asset for calculating book profit was not a subject matter of appeal or revision, the original order u/s. 143(3) of the Act dated 27th February 2004 is the order which can be rectified by the AO and since the order passed in 2004 cannot be rectified after a period of 4 years, the order passed under 154 of the Act dated 29th March 2014 is barred by section 154(7) of the Act. The Revenue in its submissions filed before the Tribunal also accepts that they cannot rectify the order u/s. 143( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee filed a petition for rectification of the said order under section 154 of the Act. (iii) Consequent thereto, the assessment order was rectified on July 12, 1982 (iv) However, there was a mistake in the said rectification order, and consequent thereto, the assessee again applied for rectification of the fresh order dated July 12, 1982, vide letter dated July 4, 1986. (v) The Income Tax Officer dismissed the claim of the assessee, saying that it was time barred, and such order was confirmed by the Commissioner (Appeals). (vi) The Tribunal however upheld the contention of the assessee that the rectification application was within the time period as per the statute. (vii) The High Court once again reversed the order of the Tribunal, and held that the period of four years was to be counted from the date of the initial assessment, and not from the fresh order passed on July 12, 1982. (viii) On the basis of these facts, the Supreme Court held that the assessment order dated July 12, 1982 could be rectified as per the application dated July 4, 1986, in view of the fact that there was a mistake in the order dated July 12, 1982 and consequent the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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