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TMI Blog2019 (12) TMI 901X X X X Extracts X X X X X X X X Extracts X X X X ..... or reassessment u/s 147 of the Income Tax Act, 1961 (Act). The second issue is whether the Revenue authorities were justified in recomputing the book profits of the assessee us/ 115JB of the Act. 3. The facts and circumstances giving raise to this appeal are that the Assessee is a company engaged in the business of manufacturing of precision automotive parts and aerospace components. For asst. year 2010-11, the Assessee filed a return of income declaring a total income of Rs. 4,13,939/- and book profit of Rs. 3,82,83,820/- under the provisions of sec. 115JB of the Act. As per the provisions of Sec.115JB of the Act, in case of a company, the income tax payable on the total income as computed under the income tax act in respect of any previo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vakia . Due to various reasons HSBC Slovakia invoked the bank guarantee given to it by MPP Holdings Ltd., amounting to 6,00,000/- Euros. Conseqently, the value of investments held by the Assessee in MPP Holdings Ltd., eroded considerably and the Assessee wrote of the diminution in value of investments in the profit and loss account and claimed the same as allowable expenditure, incidental to its business. According to the Assessee as per Memorandum of Association of the company, one of the objectives of the assessee was giving bank guarantee to its subsidiary companies. 6. The AO did not allow the claim of the assessee for the reason that the expenditure in question was in the nature of capital investment and any diminution in the value of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /2013. The AO issued a notice u/s 148 to the assessee for asst. year 2010-11 dated 1/9/2017. Reasons recorded by the AO before issue of notice u/s 148 of the Act were as follows:- "The assessee is engaged in the business of manufacturing of Precision Automotive parts and Aerospace components and derives income from the same. For the relevant assessment year assessee had file return of income on 29-9-2010 declaring a total income of Rs. 413939 after setting of loss of Rs. 15,24,14,086/- and income of Rs. 3,82,83820/- under MAT provisions. The return was processed on 31-8-2011 and scrutiny assessment was completed on 26.2. 2013 taking mat provisions for computation of tax. It is seen from the assessment records that assessee debited Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT Act 1961." 9. The assessee filed objections before the AO pointing out that the initiation of reassessment proceedings u/s 147 of the Act was not valid. The AO by an order dated 18/9/2017 dismissed the aforesaid contention of the assessee. It was a plea of the assessee before the AO that the first proviso to sec 147 makes amply clear that where an assessment under sub-section (3) of section 143 or u/s 147 has been made for the relevant assessment year, no action shall be taken under section 147 of the Act, after the expiry of four years from the end of relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the Assessee to make a return u/s 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in nature and therefore while computing book profit u/s 115JB of the Act they have to be added to the profit as per the profit and loss account for arriving at book profit u/s.115JB of the Act. Accordingly the book profit was computed by the AO as follows:- Computation of Income as per MAT provison Income Returned u/s 115JB 3,82,83,820 Add Diminution of value in investment (investment written off) 10,29,59,360 Provision made is disallowed 47,00,000 10,76,59,360 Income Assessed under MAT provision 14,59,43,180 Since tax payable under MAT provision worked out to higher than what tax payable under Normal Provision, the income under MAT provision was adopted for computation of tax. 12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 143(3) of the Act that same item which have not been added to the book profits u/s 115JB of the Act were added in the originally concluded assessment. proceedings u/s 143(3) of the Act when the total income of the assessee was computed under the normal provisions of the Act. Therefore, it cannot be said that there was any failure on the part of the assessee to fully and truly disclose all material facts necessary for his assessment. The plea of the assessee is supported by the following decisions :- 1) MSEB Holding Co. Ltd., Vs. DCIT, 102 Taxmann.com 208 (Bom.) 2) Gujarat ECO Textile Park Ltd., Vs, ACIT 60 Taxmann.com 296 (Bom.) 3) Sun Investment Pvt. Ltd., Vs ACIT, 344 ITR 1 (Delhi) 4) CIT Vs. Mysore Cements Ltd., 35 Taxmann.c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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