TMI Blog2023 (4) TMI 993X X X X Extracts X X X X X X X X Extracts X X X X ..... n was shown in the income computation HELD THAT:- When the AO passed the assessment under section 143(3) of the Act, there was no material placed before him with regard to MTM gains. When there is no material before the AO with regard to MTM gains, there was no occasion for him to apply his mind. Therefore, change of opinion does not arise in this case. In our opinion, the AO has not examined the issue of MTM gains and therefore, the Assessing Officer has rightly issued notice u/s 148 and completed the assessment order under section 143(3) r.w.s. 147 which is a valid assessment order. So far as case law relied on by the assessee is concerned, we have gone through each and every case law and find no application to the facts of the present ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DURGA RAO, JUDICIAL MEMBER: This appeal filed by the Revenue and the Cross Objections filed by the assessee are directed against the order of the ld. Commissioner of Income Tax (Appeals) 15, Chennai, dated 28.03.2019 relevant to the assessment year 2013-14. 2. The assessee has raised cross objections by stating that the reopening of assessment under section 147 of the Income Tax Act, 1961 [ Act in short] is invalid and the ld. CIT(A) failed to adjudicate the issue properly. Since this issue goes to the root of the matter, we proceed to decide the issue of reopening of assessment first. 3. Facts are, in brief, that the assessee is engaged in the business of providing services related to back office and furnished its return of inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee company has conveniently recognises the MTM losses in the P L account, but also reverses the same whenever there is a MTM gain, while at the same time not recognizing the MTM gain as revenue, which is not the correct method. Moreover, reversing earlier years MTM losses is also claimed as a deduction in the current year income computation on the grounds that the same was offered as income in the earlier year. The above treatment was not in consonance with the decision of the Hon ble Supreme Court in the case of CIT Vs. Woodward Governor India P. Ltd. (312 ITR 254) and in view of the above, the MTM gain of ₹.3,91,85,765/- as on 31.03.2013 was added to the total income of the assessee. 4. On appeal, the ld. CIT(A) has upheld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment on the ground that the assessee has conveniently recognizes the MTM losses in the P L account but also reverses the same whenever there is a MTM gain, while at the same time not recognizing the MTM gain as revenue, which is not a correct method and therefore, according to the Assessing Officer there is an escapement of income. The case of the assessee is that whenever there is MTM loss, debited to P L account and no claim was made. So far as MTM gain is concerned, the same was not brought into P L account and submitted that neither the assessee claimed the loss in the return of income nor gain was shown in the income computation. Thus, the Assessing Officer has reopened the assessment under section 147 of the Act within four ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... came to a conclusion that the reasons recorded by the Assessing Officer vide letter dated 30.11.2016 and the observations made by the ld. CIT(A) are quite different. In our opinion, the ld. CIT(A) has not properly considered the issue of reopening of assessment. In this case, the assessment was completed under section 143(3) of the Act dated 25.03.2016 and subsequently, the assessment was reopened on the ground that MTM gains have neither been credited in the profit and loss account nor offered as income in the statement of computation is the main reasons for reopening. 9. Under these facts and circumstances, when the assessee was treating the loss in different method and gains in another method, the assessee should have been explained i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing the same whenever there is MTM gain. In the appellate order, the ld. CIT(A) has not discussed the facts properly and simply deleted the addition made by the Assessing Officer without giving any reason on the basis of any supporting evidence. Under the above facts and circumstances, we set aside the order of the ld. CIT(A) on this issue and direct the Assessing Officer to consider the issue de novo in accordance with law. 11. The assessee has raised in its Cross Objections that in case of MTM gain is taxed, the same may be allowed under section 10AA of the Act and also raised the issue of book profits. We direct the assessee to raise these issues before the Assessing Officer for consideration and pass order in accordance with law. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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