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2016 (2) TMI 676 - ITAT DELHI

2016 (2) TMI 676 - ITAT DELHI - [2016] 47 ITR (Trib) 561 - 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 w .....

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sing 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 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 expendit .....

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red to invoke the provision of section 154 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 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 re .....

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the bunch of five appeals related to assessment years 2004-05 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/- .....

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ective amendment with effect from 1-4-2001 for increasing the 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 require .....

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us on this count. Further while deciding the issue CIT (A) 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 .....

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e no 7 of assessment order Para no 9 Yes Yes 2005-06 ₹ 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 .....

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the same has been passed by the Assessing Officer without 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 th .....

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as erred both on facts and in law in charging interest despite 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 Asse .....

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B of the Act. Accordingly, learned Assessing Officer had made 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 mad .....

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of the learned Authorized Representative was that the order 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 o .....

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ed in section 154(1A) of the act as under :- (1A) Where any 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 a .....

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that the matter which is considered and decided by the appellate 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. T .....

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cided in any proceeding by way of appeal or revision relating 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, m .....

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Department was very much in issue before the ITO as well as 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 Additi .....

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rded in sales tax proceedings directed the ITO to apply a rate 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 .....

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decided by the AAC in appeal. The words any matter are of 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 .....

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ity is the operative decision in law. If the appellate authority 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 appell .....

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tant Commissioner may enhance the assessment. The appellate 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 th .....

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ment order stands merged with the order of the Appellate Assistant 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 i .....

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sistant Commissioner. 11. Here in this case it is evident that 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 p .....

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l order. It is an admitted fact that the learned Assessing 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 Au .....

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39; under chapter IV D of the I.T. Act, were not considered 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 ₹ 33,06.48,39 .....

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arat Earth Movers (112 Taxman 61); 4. That provisions for doubtful 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 conne .....

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off 'conservatism' to rule out any window dressing 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 & Fertili .....

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accountant s casting of statement of affairs as well as ingenuity 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 .....

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#39;the non-obstante' clause make the provisions of section 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 .....

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he whole universe is a 'unified field, where everything 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 i .....

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and Company Law. A brief discussion here would be helpful: 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 expre .....

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anings of terms' Provisions & Reserve as under: , "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 no .....

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of bonus shares etc to shareholders; 3. The extents of earmarking 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 .....

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ries are being contested before arbitrators. This means the 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 t .....

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e eligible for addition under clause (b) to Explanation below 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 prov .....

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reation of any liability is basically flawed. Both assets and 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 th .....

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certained liability' is applied in literal and restricted 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 .....

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#39;liability would be going of context and also against the 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 l .....

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nsurance, pension and similar staff benefit schemes. (vi) Other 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 .....

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o happening of certain events beyond its control. Therefore 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 p .....

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the disallowance of provision of doubtful debts worked out 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. P .....

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ion 210 of the Companies Act. The account of the assessee company 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 val .....

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Whereas, the above mentioned provision is made in the books 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 va .....

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the Companies Act, 1956. As adjusted by the amounts maintained 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 cover .....

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visions cannot be added back for the purpose of determined "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 ad .....

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net Systems and Services Ltd.(292 ITR 299) Delhi it was held: "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 fo .....

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onal Fertilizers Vs Addl.CIT, Range-V (Supra) relied upon by 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 St .....

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sue of provision for deduction of provisions of bad and doubtful 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 i .....

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LTD. v. ASSISTANT COMMISSIONER OF INCOME-TAX AND ANOTHER has 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 .....

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oner. That part of the order of assessment, which relates to 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 afores .....

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er section 154 are matters which were dealt with or considered 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 exce .....

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; means the tax on the total income determined under sub-section (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 .....

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see was enhanced and "additional Income-tax" became 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. There .....

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e Assessing Officer at that stage had, in fact, applied his 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 .....

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second appeal before the Tribunal. In the absence of any challenge 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 & .....

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round 1 to 3 of the appeal are allowed. 15. Ground No 4 of 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 t .....

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d under Section 154 is not valid in view of the provisions 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 al .....

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77; 76,52,089/- charged u/s 234B of the Act, since charging 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 th .....

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are invalid and, therefore, these appeals by the Revenue are 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 .....

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t and in terms of explanation to section 115JB of the I.T. 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 prov .....

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advance tax for the assessment year 2006-07. The computation 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 clau .....

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ferred to in clauses (a) to (g), is debited to the Profit and 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, .....

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relevant financial year was 31st March, 2001 and on that date, 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 .....

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Thus, clause (h) which is reproduced above having been brought 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 &qu .....

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as the appellant, before the Supreme Court, liable to pay 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 r .....

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pective effect. It is well established that while it is permissible 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 .....

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