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TMI Blog2023 (9) TMI 101X X X X Extracts X X X X X X X X Extracts X X X X ..... griculture is exempt under section 10(1) - Therefore, it was incumbent on part of the AO to recompute the tax computation for the purposes of determining the liability under section 115JB by reducing the said agriculture income from the book profits declared by the assessee even though the assessee has not done so in the return of income. We find that the same has effectively been done by the AO by determining NIL tax liability under both the normal provisions as well as MAT provisions while passing original assessment order passed u/s 143(3) r/w 147 dated 14/12/2016 and thereafter, in reassessment order passed u/s 143(3) r/w 147 dated 27/09/2019. Therefore, the assessee was well within its right to claim refund of taxes which was not granted even though the tax liability has been determined at NIL. The action of the AO while disposing off the assessee s application u/s 154 recomputing the book profits by including the agriculture income is therefore clearly not sustainable in eyes of law. Firstly, there was no mistake in the original orders passed by the AO as we have seen above, secondly, there was no notice to the assessee before enhancing the income and thirdly, the AO in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 80IC(2) was claimed on the said income. Thereafter return of income was processed under section 143(1) and returned income was accepted. 4. It was submitted that subsequently, the assessment proceedings were reopened with reference to deduction claimed under section 80IC(2). In response, the assessee company filed its return of income wherein the agricultural income was shown separately and business income from Eco Tourism separately. The AO framed the assessment under section 143(3) r.w.s 147 dt. 14/12/2016 and during the assessment proceedings in para 4 of the assessment order, the AO discussed about agricultural income separately. Thereafter in para 5, the AO has given a categorical findings and accepted the revised computation of income and finally in para 6 has computed the income from business at NIL and agricultural income at Rs. 23,60,000/- and alongwith the assessment order in the computation form which was attached alongwith the assessment order, business income has been shown at NIL and agriculture income at Rs. 23,60,000/- and demand notice was issued declaring NIL demand vide order dt. 14/12/2016. 5. It was further submitted that the assessee was su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... computed and the tax liability of Rs. 4,98,280/- has been calculated. It was submitted that without prejudice to the earlier submission that the matter has attained finality, it was submitted that the order passed under section 154 is illegal and void since it has resulted in enhancement of income and raising of demand and the AO was legally bound to issue the notice before allegedly rectifying the mistake if any and thus having not done so, he is legally debarred from enhancing the income and thus the issuance of notice before rectifying any order by the AO having not been done, the order so passed under section 154 deserves to be set aside. 9. It was further submitted that even otherwise, this alleged mistake which have been mentioned by the AO in his order is highly debatable which is outside the scope of rectification under section 154 of the Act. 10. Without prejudice to above, it was further submitted that even on merits, as per Clause (ii) to explanation (1) to Section 115JB, the income under section 10 is liable to be reduced and which has rightly been recalculated by the assessee and accepted by the AO in the order passed under section 147 r.w.s 143(3) dt. 14/12/201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it is pertinent to mention here that the appellant itself has declared the income in the return and shown tax liability under section 115JB of the Income Tax Act and paid the taxes as per MAT provisions. 4.2 It is seen that the appellant filed its return of income on 30.09.2012 declaring total income of Rs. Nil and deemed total income under section 115JB of Rs. 23,54,772/-. No agricultural income was shown in the Schedule- E I of the return of income where the assessee has to declare such agricultural income. Moreover, the appellant has declared the income/profit from business or profession in Schedule - BP of the return at Rs. 23,54,772/-. The same profit was shown in Part A- P L accounts of the return and declared as income under 115JB. As per Section 115JB of the I T Act, the deemed income u/s 115JB is required to be computed from the book profit shown in the P L account drawn as per the Companies Act. The appellant has declared such book profit in the P L account and paid taxes under MAT by filing return of income. Therefore, that income cannot be reduced as the appellant has drawn the P L account as required by the provisions of Companies Act and MAT also has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the book profits by including the agriculture income is therefore clearly not sustainable in eyes of law. Firstly, there was no mistake in the original orders passed by the AO as we have seen above, secondly, there was no notice to the assessee before enhancing the income and thirdly, the AO in his zeal of disposing off the rectification application has failed to appreciate and consider the unambiguous provisions wherein the agriculture income is exempt from the book profits for the purposes of computing the MAT liability. Even the ld CIT(A) has failed to appreciate the said provisions. Therefore, in light of aforesaid discussions, we are of the considered view that matter as far as tax liability of the assessee is concerned, it has been rightly determined originally at NIL under the MAT provisions of section 115JB and there is no basis for invoking the jurisdiction u/s 154. The assessee is accordingly eligible for refund of taxes which the AO is hereby directed to refund. In the result, the order of the ld CIT(A) is set-aside and the appeal of the assessee is allowed. 14. In ITA No. 128/Chd/2023 pertaining to Assessment Year 2013-14, the assessee has taken the following groun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bility as per MAT provisions and the same has been duly given credit in the assessment order passed U/s 143(3) of the Income Tax Act, 1961. Subsequently, in the rectification application, the appellant pleaded that the self-assessment tax of Rs. 10,42,000/- was not refunded even though the income returned was accepted. However, the AO noted that the appellant has paid self-assessment tax of Rs. 10,42,000/- on the book profit declared and accordingly, he rejected the rectification application. The AO is correct in his action, as he cannot reduce the income declared under 115JB which is derived from the P L account prepared as per the provisions of companies Act. Further, it is pertinent to mention here that the appellant itself has declared the income in the return and shown tax liability under section 115JB of the Income Tax Act and paid the taxes as per MAT provisions. 5.2 It is seen that the appellant filed its return of income on 01.10.2013 declaring total income of Rs. Nil and deemed total income under section 115JB of Rs. 49,24,282/-. No agricultural income was shown in the Schedule- E I of the return of income where the assessee has to declare such agricultural incom ..... X X X X Extracts X X X X X X X X Extracts X X X X
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