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M/s. NHPC Ltd. Versus Asstt. Commissioner of Income Tax, Circle-II, Faridabad And Vica-Versa

2016 (2) TMI 676 - ITAT DELHI

Rectification of mistake - addition to the book profit of the assessee on account of provision for bad and doubtful debts by applying that clause (i) holding that the amounts set aside as provision for diminution in value of the assets covers this item of expenditure debited and is required to be added - CIT (A) upheld the action of AO holding that rectification is because of retrospective amendment and this amendment was not available when CIT (A) decided the issue and further the original addi .....

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bad and doubtful debts while working out book profit tax u/s 115JB of the Act has already been decided by CIT (A). Admittedly, in this case, the provisions of Section 154 have been invoked by the Assessing Officer, which he is not competent to do. Clarifying the facts that retrospective amendment made u/s 115JB of the act is no doubt a mistake apparent from the record but issue was whether AO can do that when on the same item of expenditure debited in the books of accounts CIT (A) has decided th .....

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e matter already decided by CIT (A) u/s 154(1A) of the act and therefore interest u/s 234D as well as interest withdrawal u/s 244A of the act are consequential in nature and accordingly they are if arising out of order u/s 154 of the act of the AO same would also be decided accordingly in favour of the assessee.

Levy of interest u/s 234B - addition made by Assessing Officer under Section 154 of the Act arising on account of retrospective amendment u/s 115JB - Held that:- No interest s .....

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05 to 2006-07. Two appeals in ITA Nos. 422 & 423/Del/2013 for assessment years 2004-05 & 2005-06 are preferred by revenue and three appeals in ITA Nos. 433 to 435/Del/2013 for assessment years 2004-05 to 2006-07 are preferred by the assessee. 2. Brief facts of the case are that assessee is a company and is paying taxes u/s 115JB of the Act. For the assessment years concerned assessee has debited an amount of ₹ 8,76,59,179/- , ₹ 8,95,79,008/- and ₹ 7,32,97,524/- for resp .....

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he book profit for provision on account of diminution in the value of any assets as per clause (i) to Explanation 1. Therefore Ld AO initiated action u/s 154 of the act and made addition to the book profit of the assessee on account of provision for bad and doubtful debts by applying that clause (i) holding that the amounts set aside as provision for diminution in value of the assets covers this item of expenditure debited and is required to be added. Assessee carried the matter before CIT (A) a .....

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has held that interest u/s 234B of the Act is not payable by the assessee as the tax liability has arisen on it because of retrospective amendment to the Income tax act and assessee could not have visualized the amendment in past and therefore assessee could not be asked to pay interest u/s 234B of the act. Against this the revenue is in appeal for two years. Admittedly in third year ld AO himself did not charge any interest u/s 234B of the Act. 3. The facts are also tabulated as under :- A Y Am .....

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; 8,95,79,008/- ₹ 56,07,261/- Para no 3 page no 2 of the assessment order Para No 10 Yes Yes 2006-07 ₹ 7,32,97,524/ Nil Para no 3 page no 2 of the assessment order Para No 9 No N.A. ITA Nos. 433 to 435/Del/2013 for AYs 2004-05 to 2006-07(Assessee) 4. Firstly, we take up the appeal of the assessee, wherein the assessee has challenged the order of CIT (A) on identical grounds. For the sake of convenience, the grounds of appeal raised by the assessee in assessment year 2004-05 are as un .....

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having proper jurisdiction. iii. On the facts and circumstances of the case, the ld. CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that the order passed by the ld. Assessing Officer under Section 154 of the Act is bad in law and liable to be quashed as the same is barred by limitation. iv. On the facts and circumstances of the case, the ld. CIT(A) has erred both on facts and in law in confirming the action of the Assessing Officer in charging interest of & .....

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ite an amount of ₹ 11,40,99,330/- being pending for refund for the assessment year under consideration. vii. That the appellant craves leave to add, amend or alter any of the grounds of appeal. 5. The first to third grounds of appeal is against the validity and jurisdiction of order passed by learned Assessing Officer under Section 154 of the Income-tax Act, 1961 (for short the Act ). The brief facts of the ground are that the Assessing Officer has passed the order under Section 154 of the .....

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de an addition of ₹ 8,76,59,179/- being provisions made for doubtful debts. 6. Learned Authorized Representative contended before us that in the original assessment order passed on 28.12.2006 by the Assessing Officer has already made addition of this amount while working out book profit tax vide para no. 5 of that order. He took us to the relevant page of the assessment order and submitted that during the year, the assessee has made a provision for doubtful debts created during the year at .....

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of the Assessing Officer has got merged with the order of Commissioner of Income Tax(Appeals) and according to the provisions of section 154(1A), there is a bar for making any rectification by AO. Therefore he submitted that the order passed u/s 154 of the Act Cannot be passed by him but by CIT(A) only. 7. Learned Departmental Representative, on the other hand, submitted that AO has initiated the action u/s 154 of the Act only because of retrospective amendment in the law and, therefore, it has .....

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matter has been considered and decided in any proceeding by way of appeal or revision relating to an order referred to in sub-section (1), the authority passing such order may, notwithstanding anything contained in any law for the time being in force, amend the order under that sub-section in relation to any matter other than the matter which has been so considered and decided. 9. The constraint is that, where any matter is considered and decided in any proceeding by way of appeal or revision r .....

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llate authority cannot be rectified by The Assessing officer but by that concerned authority who has passed an appeal order or revision order. If the appeal is filed relating to the matter and the same was considered and decided or be treated to have been considered or decided by the appellate authority, it is no longer open for the assessing authority to re-open or re-agitate or rectify the said issue or matter u/s 154 of the act. 10. The first pertinent question is whether the matter has been .....

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ng to the order referred to in subsection (1), the authority passing such order may amend the order passed under sub-section (1) in relation to any matter, other than the matter which has been so considered and decided. Sub-section (1A) was inserted by Act 31 of 1964 w.e.f. 6-10-1964 and it has been held that the said insertion is procedural and clarificatory in nature. It talks about any matter . "Any matter" in our opinion, means the subject-matter of the appeal. If the point, in iss .....

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before the AAC. The Sales Tax Department treated the concealed purchases on the basis of parcha Nos. 4, 5, 6 and 7 relating to zeera. The Sales-tax Officer was of the view that parcha Nos. 4, 5, 6 and 7 established that the assessee had made purchases from different parties and those purchases have not been disclosed in the account books. These parchas related to concealed or suppressed purchases of zeera. However, ultimately the Additional Judge (Revision) as well as High Court in the sales ta .....

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ate of 3.2 per cent on the enhanced turnover of ₹ 1,90,000. The order of the AAC has been quoted in extenso above. Therefore, the matter of determination of the total income of the assessee on account of parcha Nos. 4, 5, 6 and 7 found in the survey by the sales tax authorities was very much under consideration of the Appellate Assistant Commissioner. Even if while computing the total income, the ITO on account of some omission did not include the income of zeera amounting to ₹ 17,61 .....

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wide amplitude and are co-related with the subject-matter of appeal. It was not disputed and could not possibly be disputed by the department that the income generated from undisclosed sales of zeera was not the subject-matter of the appeal. 11. Coming to the judgment of the Kerala High Court given in the case of CIT v. K.P. Subbarama Sastrigal [1993] 203 ITR 342, we find that the Kerala High Court did not agree with the decision of the Allahabad High Court in J.K. Synthetics Ltd. v. Addl. CIT [ .....

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ority modifies or reverses the decision of the Tribunal, it is obvious that it is the appellate decision that is effective and can be in force. In law the position would be just the same even if the appellate decision merely confirms the decision of the Tribunal. As a result of confirmation or affirmance of the decision of the Tribunal by the appellate authority, the original decision merges in the appellate decision and it is the appellate decision alone which subsists and is operative and capa .....

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powers of the Appellate Assistant Commissioner are as wide and as extensive as those of Assessing Officer, barring that the Appellate Assistant Commissioner cannot go outside the record and so he cannot discover new source of income, which are not disclosed either in the return of the assessee or in the assessment order as pointed out by the Supreme Court in CIT v. Shapporgi Pallongai Mistry [1962] 43 ITR 891. 13. Thus it is apparent that the Appellate Authority can look into and adjudicate upo .....

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sistant Commissioner and it was not open for the ITO to initiate the proceedings under section 154 of the Act. The test is whether or not the order of the ITO on a particular point was the subject-matter of appeal before the Appellate Assistant Commissioner. 14. The Kerala High Court in the case of K.P. Subbarama Sastrigal ( supra) on which strong reliance was placed by the learned Standing Counsel, we find that even in the said ruling it has been mentioned that the order of the assessment made .....

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hat whether the provisions of bad and doubtful debts shall be added back to the book profit of the assessee or not for payment of taxes u/s 115JB of the act has been considered by the AO while framing assessment u/s 143(3) and decided by CIT (A) in appeal before him. Therefore the matter here is whether the provisions of bad and doubtful debt are required to be added to work out book profit tax or not. It is also not the issue that the provision for bad and doubt full debts is covered under clau .....

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Officer has made addition on account of the provisions for doubtful debts debited in the profit and loss account of the assessee for the purpose of working out profit tax under the provisions of Section 115JB of the Act as under:- 5 The assessee had computed book profit u/s 115 JB at ₹ 2,42,21,60,970/- in the original return filed. The figure of book profit was enhanced u/s 154 on 28.01.2005 subsequent to decision of Hon'ble Authority, for Advance Ruling whereby 'advance against de .....

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for addition while computing book profit: (i) Provision for Gratuity Rs.11,77,03,897/- (ii) Provision for Leave Encashment ₹ 8,35,81,430/- (iii) Provision for post retirement medical scheme ₹ 4,17,03,884/- (iv) Provision for doubtful debts created during the year ₹ 28,28,14,257/- ₹ 52,58,03,468/- Less: Provisions for Doubtful Debts written back/ adjusted Balance, ₹ 19,51,55,078/- Balance ₹ 33,06.48,390/- 5.1 The assessee was accordingly required to show cause .....

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oubtful debts are not liabilities much less unascertained liabilities and; 5. That Profit &. Loss A/c prepared in accordance with Schedule VI of balance cannot be disturbed in view of ratio of case of Appollo Tyre Ltd., (255 ITR 273), Shri Sajjan Mills Ltd. (156 ITR 589). 5.2 The main argument, in the repertoire of defenses, traces the meanings of terms liabilities and 'provisions'. Since the issue in hand is intimately connected with accounting principles in general, it would be app .....

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to lure the gullible. On the other hand, the obdurate tax laws would not permit any claim, which has a tinge of uncertainly attached to it, and it is paradoxical that the two are expected to be complementary and supplementary to each other. So where do the two' meet? Nowhere! The judicial history is replete with pronouncements that accounting practices cannot override any provision of the Act (Tuticorin Alkali Chemicals & Fertilizers, Ltd, vs. CIT (1997) 227 ITR 172 (SC) and that mode of .....

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genuity of human nature to devise ways to circumvent the law. Therefore, in adopting accountant's book profit, it attached some riders to block its understatement (Clauses a to f of Explanation) and also loosened strings so as to ensure the bounties and benedictions to spheres targeted under the normal provision are not undone Clause (i) to (vii) of Explanation. The additions and reductions of these adjustments are very critical for reaching 'at MAT Profit . The guiding forces for achiev .....

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tion 115JB a self contained code which in turn also implies that the provisions have to be given strict interpretation to ensure compliance on the dotted lines. 5.4. As stated above the bedrock of the defense put forward hangs around the dentity of terms 'provisions' and 'liabilities'. Are the terms to be under stood u/s 115JB in the same sense as in the accounting domain or differently in view of above discussions ? And if not, then what is the true nature of these terms? The pr .....

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is interwoven and is just a different manifestation of the same cosmic energy, In spite of this common source of origin, most of the things retain district identities except when, like that of conjoined Siamese twins, identities so merge into each other that differentiation and separation are difficult, the accounting world is no different in this respect. Accumulated tosses can become 'asset' and profits and gains are married into a family with surname 'liability'. Thus there c .....

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5.5 Provision: - The Company Act Part III of Schedule- VI of Company Act, defines provisions as, (l)(a)_ The expression provision shall subject to sub clause (2) of this clause mean "any amount written off or retained by way of providing for depreciation renewals or diminution in value of assets, or retained by way of providing for any known liability of which the amount cannot be determined with substantial accuracy; (b) The expression 'reserve' shall not, subject as aforesaid, in .....

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quot;Where " (a) Any amount written off or retained by way of providing for depreciation, diminution in value of assets or retained by way of providing for any known liability; or (b) Any amount retained by way of providing for any known liability Is in excess of the amount which in the opinion of the directors is reasonably necessary for the purposes, the excess shall be treated for the purposes of this Schedule as a reserve and not as a provision. 5.6 The above discussion broadly conceptu .....

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marking in all circumstances are at the best , reasonable estimation only. 4. There is a thin line separating provisions from reserves and many a time, when provision is in excess of actual requirements, the same is also considered as hidden reserve. Provision for contingencies are sometimes described as inner reserves, where the expected contingency is exceptional or abnormal or secret reserves are often built up by providing for excess depreciation, having' assets undervalued, allowing und .....

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debits are still realizable. Though this might be tainting the debt, yet it cannot be said that the debt has become bad or certainty of badness has ensued. Had that been the case the claim of bad debt would have arisen. Any provision therefore, in excess of actual liability incurred can only be described as "reserves". It can be argued that in terms of the definition of provision and reserve in the companies act, decision to this effect is the prerogative of the directors. Yes certain .....

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ow u/s. 115JB which reads as "the amount carried to any reserve by whatever name called." The amount set apart might have been labeled as 'provision', but being a 'reserve' in essence squarely falls within the mischief of this explanation and, therefore, is liable to be added back. 5.8 Without prejudice to what is 'discussed above, even if it be presumed that provisions for 'doubtful debts' is a provision, can it be said that the decline does not lead to cre .....

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nd liabilities are two sides of the same coin - one representing sources of funds and the other application thereof - and are necessary corollaries of the system of Double Entry System of Book Keeping. Any change in one side has to be necessarily followed up by changes on the other side too. Any consumption or loss of an asset -decrease, decay or loss - unaccompanied by increase in revenue would definitely involve out flow of funds in the form of decrease in capital or increase in liabilities. 5 .....

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ed sense, it may lead to unintended results-ascertained liabilities of capital nature would also have to be disallowed. Moreover what is allowed to be reduced is claim of expenses or losses and not the liability accruing on account thereof. Thus, when the section 115JB says 'unascertained liability', it really means 'unascertained liabilities on account of losses or expenses'. A word is a skin of a living thought and may vary greatly in content and color according to the context .....

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e spirit of the legislation 5.10 There is legislative support also for taking this view. If the contention of the assessee that 'provision for doubtful debts' is a provision and not reserve, is accepted, then the decline in the value cannot be anything but 'liability'. The Companies Act, defines provision for anticipated diminution in value of assets and increase in liabilities in one breath. No distinction of asset and liabilities is apparent because both are different sides of .....

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ther provisions." The above classification and grouping sufficiently indicates that 'provisions for doubtful debts' is a kind of liability only. 5.11 Coming to the last limb of the contention that even if this 'provision1 be a provision for a liability, it is on, account of ascertained liability. The word 'ascertained' in context of tax laws connotes two things - certainly of happening and it's amenability to quantification. If either of the two ingredients is absent .....

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it cannot be said that the liabilities have crystallized and become 'ascertained'. Moreover the conduct of the assessee in adding back these provisions in the normal computation is an adequate indicator of the true nature of these claims. It may be relevant to mention here that in assessment year 2002-03 Id. CIT (A) has confirmed the addition made to book profit on account of the above provisions. Therefore the amount of above provisions are added back to the figure of book profit u/s 1 .....

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by the AO at ₹ 8,76,59,179/- is concerned, the Ld. ARs raised their retentions on this disallowance as under: In this respect it is submitted as under: That Section 115JB sub-section (2) of Income Tax Act provides:- Every assessee, being a company, shall, for the purposes of this section prepare its profit and loss account for the relevant previous year in acccrdcr.ee with the provisions of section 210 of the Companies Act, 1956. Provided that while preparing the annual accounts including .....

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ompany has been prepared as per the provision of Schedule VI of the Companies Act, 1956. Provisions with regard to the doubtful debts, provisions for project expenses and provision for ex-gratia and other employee provisions were made as per accounting standard prescribed by the Institute of Chartered Accountants to prepare accounts as per schedule VI of the Companies Act. - Provision of Doubtful debt is an anticipatory diminution in value of assets and such amount is provided to present true &a .....

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s in compliance with the accounting principles and as mandated by other Statues towards anticipated losses. As such these items may not fall u/s 115JB(2). This view is supported by the decision of the Calcutta Tribunal in case of Sutlej Cotton Mills Limited Vs. ACIT (45/TD22.) "That provisions for doubtful debts and obsolete & surplus stores are against the assets of the assessee and not against the any liability and that the value of the assets have been reduced to the extent of the pr .....

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ned under Explanation of sub sect/on (IA) of Sec. 115J. One such adjustment specified in Cl. (C) of the Explanation is that the amount or amount or amount set aside to provision made for meeting liabilities other than ascertained liabilities is to be added back to "Book Profit' to determined the deemed total income under section 115J. The provision made for diminution in value of investment and for doubtful loans cannot be covered by the said CL (C) in as much as such provision are in r .....

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"Book Profit" under section 115J. Similar, view was expressed in the case of Usha Martin Industries Ltd. Vs. Joint Commissioner of Income Tax (2003) 81 TTJ (Cal) 518, that Explanation to section 115 J(2) is only for provision with respect to liabilities & that too unascertained liabilities said clause does not cover provision made for diminution in value of assets. Therefore, the provision for doubtful debts could not be added back to the net profit as per P&L a/c by invoking ( .....

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d: "Provision for Bad and Doubtful debts is to be treated as on ascertained Liability and therefore, it cannot be included in the Book Profit under Section 115JA." It is requested to please delete the above additions as the same is uncalled for and against the expressed provisions of Section 115JB of Income Tax Act", 9.4 I have carefully considered the submissions of the Id. AR and perused the order of assessment. It is found from the assessment order that the AO has at length dev .....

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y the Id. ARs, the following decisions clearly point out that the provisions of bad and doubtful debts is a provision for diminution in the value of asset i.e. debt, and therefore, it cannot be a provision of liability as no liability would be fastened on the appellant if a debt is not recovered. So, the provision of bad and doubtful debts is not to be adjusted 115JB of the I.T.Act, in view of the following judgments: (i) Mahatrashtra State Electricity Board Vs JCIT 82 ITD 422 (Mum.) (ii) ACIT V .....

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btful debts has been considered and decided by Commissioner of Income Tax (Appeals), then rectification is also required to be made by the Commissioner of Income Tax(Appeals) only and not by the Assessing Officer as the matter of allowability of provision of bad and doubtful debts while working out book profit tax u/s 115JB of the Act has already been decided by CIT (A). Admittedly, in this case, the provisions of Section 154 have been invoked by the Assessing Officer, which he is not competent .....

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as held that :- 9. In the case of India Tin Industries P. Ltd. [1987] 166 ITR 454 their Lordships of the Karnataka High Court came to hold that sub-section (1A) of section 154 specifically provides that any matter which has not been considered and decided in any proceeding by way of appeal or revision, may be amended by the authority passing such an order in exercise of its power under section 154(1). Their Lordships further came to hold that the doctrine of merger is not a doctrine of rigid and .....

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o items not forming the subject-matter of the appellate order and left untouched does not merge in the order of the Commissioner. Even after an appeal from an order of assessment is decided by the Commissioner, a mistake in that part of the order of assessment which was not the subject-matter of the appeal and was thereafter left untouched by the Commissioner, can be rectified by the Income-tax Officer. 10. On consideration of the aforesaid judgments relied upon by learned standing counsel for t .....

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red and decided by the appellate authority or not, since the answer to the said question would be determinative as to whether the Income-tax Officer possessed necessary authority under section 154 to initiate such a proceeding or not ? 11. On a perusal of the impugned order under section 154 (annexure 1), it would be apparent that the rectification was made of two aspects, i.e., nonlevy of interest under section 234B and the alleged excess deduction allowed on account of depreciation. 12. In so .....

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ction (1) of section 143 on regular assessment. In the present case, originally, an order under section 143(1) was passed against the assessee in which the assessee's return was accepted and certain amount was found to be refundable. Thereafter, exercising power under section 143(3), a regular assessment took place enhancing the assessed tax determined to be payable by the assessee. Explanation 3 provides that in Explanation 1 and in sub-section (3) "tax on the total income determined u .....

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me payable, no question of levy of interest for "non-payment of advanced tax" could arise. This is obviously so since such determination of additional income-tax was the consequence of regular assessment and determination of additional Income-tax payable. This aspect is also purely academic since the additions effected by the Income-tax Officer were ultimately deleted by the Commissioner of Income-tax (Appeals) in appeal. Therefore, in our view no question of payment of interest under .....

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judicial mind and "disallowed depreciation". Against the said order, the assessee carried an appeal in which an issue was raised regarding disallowance of depreciation. That issue was dealt with by the Commissioner in the appellate order by rejecting the same. Therefore, in so far as depreciation is concerned, it is clear that the appellate order merged with the original order under section 143(3) and since the issue regarding depreciation formed a part of the subject-matter of the ap .....

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allenge permitting the Assessing Officer to vary or review or revise his own order under a plea of correcting the mistake as contemplated under section 154 is to in effect allow him to override or overreach the order passed by the higher authorities in appeal or revision. This is clearly not the intention of legislation of section 154(1A) of the Income-tax Act. We are of the view that the scope of section 154(1A) remains limited to the "mistakes apparent from records". Such mistakes ca .....

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the appeal is against the order of Charging of interest u/s 234D of the act and ground no 5 is against the withdrawal of interest u/s 244A of the act. As we have already held that AO is not empowered to invoke the provision of section154 of the act on the matter already decided by CIT (A) u/s 154(1A) of the act and therefore interest u/s 234D as well as interest withdrawal u/s 244A of the act are consequential in nature and accordingly they are if arising out of order u/s 154 of the act of the A .....

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of Section 154(1A) of the Act. 18. The appeals of the assessee for assessment years 2005-06 and 2006-07 are also having identical facts and circumstances that of the appeal for assessment year 2004-05, therefore, following our own decision in appeal no. 433/Del/2013, we also held that the orders passed under Section 154 of the Act by the Assessing Officer is invalid as per the provisions of Section 154 (1A) of the Act. Identically, we also held so in the appeal of the assessee for assessment yea .....

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of interest u/s 234-B is consequential in nature 2) Whether the ld. CIT(A) was right in law in deleting the interest amounting to ₹ 76,52,089/- charged u/s 234B of the Act consequent to the addition made in pursuant to the amended provisions of section 115JB of the Act. 3) That the appellant craves for the permission to add, delete or amend the grounds of appeal before or at the time of hearing of appeal. 21. The main ground of the Revenue s appeal is regarding deletion of interest charge .....

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re also arising from that order, we dismiss both the grounds of Revenue s appeals. 22. Even on the merits of the appeal of revenue,issue is decided against the revenue. On identical issue considering levy of interest u/s 234B of the act on retrospective amendment in section 115JB of the act Honourable Bombay high court in [ 2015 ] 60 taxmann.com 303 (Bombay) Commissioner of Income-tax, Mumbaiv. JSW Energy Ltd. has held that interest u/s 234B of the act cannot be charged when liability on the ass .....

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Act, that explanation has been brought on the statute book and with retrospective effect from 1st April, 2001, therefore, this calculation of the tribunal is erroneous in law. 12. However, Mr. Kaka, learned senior counsel invited our attention to section 234B of the I.T. Act to submit that this is provision to recover interest for default in payment of advance tax. It directs payment of simple interest and in terms of this provision provided any assessee who is liable to pay advance tax under se .....

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on of income based on which the advance tax was paid was in tune with the law prevailing on the date on which tax was due and payable. Any further addition in the income by way of amended provisions and which were incorporated subsequently, therefore, does not attract payment of interest as there is no default. 13. Mr. Kaka also invited our attention to section 115JB and particularly, insertion of clause (h) in Explanation (1). That clause reads as under : "(h) The amount of deferred tax an .....

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nd Loss account, and as reduced by....' 15. The Tribunal in this regard noted rival contentions and the admitted facts. It also relied upon and followed the judgment of Hon'ble Calcutta High Court in Emami Ltd. v. CIT[2011] 337 ITR 470/200 Taxman 326/12 taxmann.com 64. 16. In paragraph 13 of the Tribunal's impugned order the relevant portion from Calcutta High Court's judgment has been extracted. The Calcutta High Court, therefore, found that the provisions would indicate that th .....

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ate, admittedly, the appellant before it had no liability to pay any amount of advance tax in accordance with the then law prevailing in the country. Consequently, the appellant paid no advance tax and submitted its regular returns on 31st October 2001, within the time fixed by law wherein it declared its total income and the book profit both as Nil. The amendment to section 115JB by virtue of Finance Act, 2002 and which was referred to in the Calcutta High Court judgment has retrospective effec .....

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ght in with retrospective effect but by Finance Act 2008, the advance tax computation by the assessee for the year 2006-07 cannot be faulted and it cannot be said that the assessee is in default and therefore, there is any liability to pay interest in terms of section 234B of the Income Tax Act, 1961. 18. In the case of Star India (P.) Ltd. v. CCE[2006] 280 ITR 321/150 Taxman 128 the Hon'ble Supreme Court held that the service of "broadcasting" was made a taxable service with effec .....

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service tax as broadcaster. 19. The Supreme Court noted that the Appellants' appeal pending before the Commissioner was rejected by him on the basis of this amendment. The tribunal also maintained this order and that part of the order passed by the Commissioner was not challenged in appeal. However, the appellant was aggrieved by the fact that the tribunal held it liable to pay interest on the amount which it was required to pay by reason of the 2002 amendment. The assessee contended that on .....

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missible for the Legislature to retrospectively legislate, such, retrospectivity is normally not permissible to create an offence retrospectively. There were clearly judgments, decrees or orders of courts and Tribunals or other authorities, which required to be neutralised by the validation clause. We can only assume that the judgments, decree or orders, etc., had, in fact, held that persons situate like the appellants were not liable as service providers. This is also clear from the Explanation .....

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