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Dy. Commissioner of Income tax, Circle - 3 (2) , Hyderabad Versus State Bank of Hyderabad

Rectification of mistake u/s 154 - tax payable u/s 115JB is higher than the tax liability under normal provisions - Held that:- No doubt the AO has applied the provisions of section 115JB treating the assessee as company as per section 2(17)(iii) of the Act. Whereas the assessee is a banking company as per the Banking Regulation Act, as the issue was debatable prior to amendment in Finance Act, 2012. The provisions of section 115JB, during that period before amendment, is applicable to those com .....

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coordinate bench of this Tribunal. - Rectification is possible when other parties agrees that it has no two possible views. Hence, rectification order passed by the AO is wrong considering the fact that the issue involved is disputed one as various Tribunals has given finding that provisions of section 115JB are not applicable to a banking company prior to amendment in finance Act, 2012. Prior to amendment of Finance Act, the issue was settled in favour of the assessee, even though, the is .....

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t the order of the learned Commissioner of Income-tax(A) - 3, Hyderabad, dated 30/09/ 2015 for AY 2006-07. 2. The brief facts of the case are that the assessee filed its return of income for AY 2006-07 on 30/11/2006 admitting income of ₹ 57,77,29,077/-. The taxable income u/s 143(3) of the Act was determined at ₹ 5,69,15,75,328/-. In the scrutiny assessment, the AO held that the assessee falls within the definition of company as defined u/s 2(17) of the Act and held that provisions o .....

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pany prior to 1969-70. Therefore, the assessee was a company as defined u/s 2(17)(iii), therefore, provisions of section 115JB are applicable. 4. On further appeal to ITAT, Hyderabad, though the assessee took ground of appeal on the issue of 115JB, the same was not entertained by the ITAT on the ground that the assessee did not obtain the approval from COD to pursue such issue. 5. Consequent to various orders passed by the CIT(A)/ITAT/263 order, in which the taxable income was determined under n .....

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r u/s 154 after giving opportunity of being heard to assessee. 7. Aggrieved with the above order, assessee preferred an appeal before the CIT(A) - 3, Hyderabad. 8. Ld. CIT(A), after considering the submissions of the assessee, various case laws submitted by the assessee as well as the decision of ITAT, Mumbai in the case of Maharashtra State Electricity Board and assessee's own case for AY 2007-08 in ITA No. 578/Hyd/2010, dated 07/09/2012 and the decision of Hon'ble Supreme Court in the .....

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l: " 1. The learned CIT (A) erred on both law and facts of the case. 2. The Learned CIT (A) erred in cancelling the order passed on 12/02/2015 u/s 154 in which demand of ₹ 52,17,63,800/ -, was raised by invoking provisions of Section 115JB, by holding that applicability of provisions of section 115JB to the assessee is debatable. 3. The Ld.CIT(A) failed to appreciate that the issue of applicability of provisions of Section 115JB has not been decided afresh in the order dated 12/02/201 .....

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d the fact that not considering the income taxable u/s 115JB in the consequential order dated 28/02/2014 was only a mistake apparent from records, which was originally considered both in the asst.order dated 28/12/2007 and in the consequential order dated 01/03/2010, giving effect to the order of Ld.CIT(A) dt.31/03/2009." 10. Ld. DR submitted that original assessment u/s 143(3) was completed by the AO invoking section 115JB of the Act, stating that the said section is applicable to the asse .....

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ot approved by COD and ITAT dismissed the appeal of assessee. Ld. DR submitted that considering the fact that COD has declined at that time when the ground was raised by the assessee, he submitted that assessee cannot invoke the same here. He submitted that the issue is part and parcel of assessment, AO was right invoking section 154 as the mistake was apparent from record. He further submitted that the Finance Act, 2012, with effect from 01/04/2013, in which Explanation 3 was inserted. The abov .....

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mpanies as held by various courts. He submitted that it is not a company under the Companies Act as envisaged, but, is a company as per the Banking Regulation Act, therefore, provisions of section 115JB will be applicable only to the companies which follows provisions of Part - II of Schedule VI to the Companies Act, 1956. He submitted that in the case of the assessee, the assessee is not following the above Schedule - VI and it is following P&L A/c as per the Banking Regulation Act and, acc .....

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the issue was already part of assessment order and accordingly, AO has passed rectification order u/s 154 as the mistake was apparent in the assessment order. 13. Considered the rival submissions and perused the material facts on record. The issue before us is whether AO was right in invoking section 154 in the given case. The facts are, Assessee has raised the applicability of section 115JB in the original assessment passed u/s 143(3), which was the subject matter of appeal before the CIT(A)/I .....

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he fact that taxable income under normal provisions was more than the provisions of section 115JB. However, AO observed subsequently that the tax liability u/s 115JB is higher than the normal provisions. Accordingly, he served a notice to assessee u/s 154. Accordingly, assessee raised objection to such notice, however, AO declined to entertain the objections of assessee and issued order u/s 154. When the assessee carried the matter in appeal before the CIT(A), the CIT(A) decided the issue in fav .....

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n Act, as the issue was debatable prior to amendment in Finance Act, 2012. The provisions of section 115JB, during that period before amendment, is applicable to those companies which prepares its P&L A/c in accordance with the provisions of Part - II of Schedule - VI of the Companies Act, 1956. It is a fact that assessee has never followed Part - II of Schedule - VI to the Companies Act, 1956 and also its financial statements are not placed before Annual General Meetings. Accordingly, provi .....

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"where the parties agree that two views on the point involved", not possible as held by the Gujarat High court in the case of Sarangapur Cotton Manufacturers, 152 ITR 251 (guj.) held that it is a disputed question on which two views are possible would depend upon the approach to the case and the attitude of the parties in the case. If the parties do not feel that two views are possible, then, there is no scope for consideration of such question. If computation, however difficult it ma .....

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