TMI Blog2015 (8) TMI 1150X X X X Extracts X X X X X X X X Extracts X X X X ..... nd hence the ratio of the decision in the case of Goetz India Ltd vs. CIT (Supra) is applicable. In fact the proceedings are u/s 147, which are for assessing undisclosed income. Further, the Apex Court in the case of CIT vs. Sun Engineering Works (P) Ltd (S.C) (1992 (9) TMI 1 - SUPREME Court ) wherein held where the claims of the assessee durng the course of re-assessment proceedings relating to the escaped income are accepted, still the allowance of such claims has to be limited to the extent to which they reduce the income to that originally assessed. The income, for purposes of “re-assessment” cannot be reduced beyond the income originally assessed. Hence, we are of the opinion that the CIT (A) had erred - Decided in favour of revenue. Provision of service fee made by the company in earlier years deleted while computing book profits - Held that:- In the course of assessment proceedings assessee has filed revised computation of income stating that the brought forward losses as per books of accounts has not been calculated correctly for the purpose of section 115JB. The brought forward business loss reduced from the book profit were stated to be ₹ 20,99,67,903 as against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es under the normal provisions of income tax and offered to tax a book profit of ₹ 34,84,30,788 as per the provisions of section 115JB. 3. A survey u/s 113A was conducted on assessee s premises and consequent to the survey the assessee s case was reopened by issue of notice u/s 148 of the I.T. Act. In response to the notice issued u/s 148, assessee filed a letter stating that the return originally filed be treated as being filed in response to the notice issued u/s 148. However, during the course of assessment proceedings, assessee observed that while filing the original return of income, principal waiver amounting to ₹ 9,26,00,305 by the financial institutions was by mistake offered as income. While computing the book profits u/s 115JB, assessee has inadvertently taken the carried forward depreciation as ₹ 14,86,71,093 instead of ₹ 20,99,67,903, thereby offering to tax an amount of ₹ 34,84,30,788 instead of ₹ 28,71,33,978 u/s 115JB of the IT Act. Accordingly, filed a revised computation of income before the AO duly rectifying the said mistakes and requested to take the same on record. 4. AO rejected the assessment proceedings for the previ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of Chetan Chemicals Pvt Ltd 267 ITYR 770 supports the above contention of the appellant. Further, the assessing officer is not correct in treating the capital receipt on . account of waiver of principle amount, merely because the appellant had credited the same to the profits loss account but inadvertently failed to reduc the same in the computation of income. It was the duty of the assessing officer to explain the correct legal position. It is a settled law that the receipt being one which in law could not be regarded as income, it could not become income merely because the respondent erroneously credited it to the profit and loss account, in view of the apex court's decision in the case of India Discount Co 751TR 191. 7. The CIT (A) held that the claim of the assessee can be considered and the appellate authorities are well within their rights to consider the claim relying on the decision of the ITAT Hyderabad in the case of GVK Industries Ltd vs. ACIT in ITA No.1579/Hyd/2008 dated 30.03.2012. The CIT (A), therefore, held that the judgement of the Apex Court in the case of Goetz India Ltd vs. CIT (284 ITR 323) is inapplicable in this case. 8. The CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n rejected respectfully following the decision of the Apex Court in the case of Goetz India Ltd., Vs. CIT (284 ITR 323) . 11. The CIT(A) held that the claim is to be considered and the decision of the Apex Court in the case of Goetz India Ltd., Vs. CIT (284 ITR 323) in not applicable in the appellate proceedings and following the decision in the case of GVK Industries (Supra) directed the AO to compute the correct figure of brought forward losses and give credit to the assessee wherever the law so demands. 12. The CIT (A) further held that with respect to the addition of ₹ 5.00 crores, the same is added back in last year u/s 115JB of the Act and no adjustment or change in the book profits was made in the earlier year. Further the provisions was added back for computing the taxable income as per the I.T. Act. Hence he held that in the current year this amount cannot be added to the book profit, because they were never altered and nowhere was it held that the book profits had been wrongly computed. Accordingly the CIT (A) deleted this addition. 13. Aggrieved, Department has come up in appeal before us and raised the followingh grounds: 1. CIT(A) erred on facts an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... K Industries Ltd vs. ACIT (ITA No.1579/Hyd/2008 dated 30.03.2012) as the facts in this case are not similar to that as in the case of GVK Industries. The fact is that the assessee has not filed revised return and hence the ratio of the decision in the case of Goetz India Ltd vs. CIT (Supra) is applicable. In fact the proceedings are u/s 147, which are for assessing undisclosed income. Further, the Apex Court in the case of CIT vs. Sun Engineering Works (P) Ltd (S.C) (198 ITR 298) has stated as follows: Claims which have been disallowed in the original assessment cannot be permitted to be reagitated on the assessment being reopened for bringing to tax certain income which has escaped assessment, because the controversy on re-assessment is confined to matters which are relevant only in respect of the income which had not been brought to tax during the course of the original assessment. A matter not agitated in the concluded original assessment proceedings also cannot be permitted to be agitated in the re-assessment proceedings unless relatable to the items sought to be taxed as escaped income . Indeed, in the reassessment proceedings for bringing to tax items which had escaped ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the law. We do not find any infirmity in the order of the CIT (A) as he has rightly directed the AO to compute the correct figure of brought forward losses. We, therefore, set aside this issue of computation of book profit u/s 115JB as well as set off of the book losses against such book profit to the file of the AO for being done denovo in accordance with the law. 19. In the result, appeal of the Revenue is partly allowed for statistical purposes. C.O. No. 18/Hyd/2013 1. The cross objection has been filed by the assessee against the direction given by CIT (A) to the AO to reopen the earlier assessment years and reduce the cost of assets to the extent the loan which has been waived and to rework the depreciation. We find that the entire cost of machinery has been paid by the assessee to the suppliers. Therefore, there is no question of reduction in the cost of acquisition of assets on which depreciation has been granted. The issue is with regard to the treatment of waiver of the principle portion of the loan. The waiver of loan does not reduce the cost of acquisition of the plant and machinery. The waiver is for reduction on the liability which has arisen on the liab ..... X X X X Extracts X X X X X X X X Extracts X X X X
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