TMI Blog2023 (7) TMI 931X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant : Shri T.Banusekar (CA) And Shri Suraj Nahar (CA)-Ld.ARs For the Respondent : Shri R.Mohan Reddy (CIT)- Ld. DR ORDER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. Aforesaid appeal by assessee for Assessment Year (AY) 2016-17 arises out of the order of learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] dated 20-06-2022 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s. 143(3) of the Act on 24-12-2019. The grounds taken by the assessee are as under: (1) On the facts and circumstances of the case and in light of law, the Learned CIT(A) has erred in holding that Rs. 55,05,28,777/-, being capital loss on sale of investments and on cancellation of investments in M/s. Pricol Pune Limited, have to be adjusted against/added to the book profit computed u/s 115JB. (2) The Learned CIT(A) ought to have noted that the Hon'ble Supreme Court in the case of Apollo Tyres, reported in 255 ITR 273, has categorically stated that while arriving at the book profit, no adjustment, other than those permissible as per the explanation to the provisions of section 115J, shall be permitted so long as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e book profits and subsequently within a period of one month took a totally contrary stand in the Assessment order passed for AY 2016-17 on 24-12-2019 only because the adjustment made by the Appellant on the principle of consistency was favourable to the department. 9) Your Appellant relies on the decisions of the Hon'ble Supreme Court in National Thermal Power Company Limited Vs. Commissioner of Income Tax reported in 229 ITR 383 and in the case of WIPRO Finance Limited reported in 443 ITR 250 wherein the Hon'ble Supreme Court has clearly stated that whether or not the assessee has raised certain issues during the assessment proceedings, the Appellate Authorities are duty bound to consider the same on merits when it is raised before them for the first time. (10) The Learned CIT(A) ought to have noted that the purpose of assessment proceedings before the taxing authorities is to assess the correct taxable income in accordance with law. When an assessee claims an expenditure which should not be allowed or when an assessee offers to tax an income which should not be taxed, it is the duty of the Assessing officer to apply the provisions of law in its letter and spirit, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fits u/s 115JB after adding back claim of excise duty exemption. 4. The assessee preferred further appeal before Ld. CIT(A) and filed supplementary grounds of appeal. It was submitted that the assessee incurred loss on sale of investments for Rs. 38.77 Crores. Another loss of Rs. 16.28 Crores was suffered on surrender / cancellation of investment in M/s Pricol Pune Limited. The total loss thus suffered was Rs. 55.05 Crores. The assessee submitted that the said loss was offered to tax u/s 115JB but the same should be excluded from book-profits considering consistent view taken by the department in earlier years. In earlier years, the assessee took the stand that capital profit from sale of investments / capital assets should not be brought to tax u/s.115JB and therefore, the same should be excluded from book profits. However, the department did not agree with the assessee and proceeded to assess capital profits to tax u/s.115JB. In the present year, the assessee incurred capital loss and therefore, the same treatment should be given to losses. The assessee did not press the issue of adjustment of excise duty exemption u/s 115JB since the assessee had opted to settle the issue in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as they were in the nature of capital receipts falling outside the scope of section 4 5 of the IT Act, 1961. The Assessing Officer rejected the claim of the assessee in his assessment order for A.Y. 2013-14 (dated 25.03.2016 ) and A.Y. 2014-15 (dated 28.12.2016.) The Ld. CIT(A) deleted the additions made by the Assessing Officer in both the years by holding that the capital profits have to be excluded from the working of book profit u/s 115JB. In A.Y. 2016-17 which is the year of appeal, the assessee incurred capital loss amounting to Rs. 55,05,28,777/- which was offered to tax while computing book profit under section 115JB in order to be consistent with the stand taken earlier. The Assessing Officer did not make any adjustment while computing book profit in his assessment order dated 24.12.2019. The Assessing Officer thus, accepted the stand taken by the assessee while finalising the assessment for A. Y. 2016-17. No addition was made by the A.O. in the assessment order dated 24.12.2019 for A.Y. 2016-17 on this ground. In the assessment order for A.Y. 2013- 14 and 2014-15, the Assessing Officer did not accept the stand taken by the assessee and made addition while computing b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid-up share capital of Pricol Pune Limited of Rs. 100 million. Consequent to the amalgamation, the investment in transferor company and the paid-up share capital in the transferee company have been cancelled. As explained in point 1 above, the capital loss rising on cancellation of investment is included in the computation of profits on similar grounds. In case the appeals are adjudicated against the company, then the loss would have to be excluded for the purpose of computation of book profits and to that extent the profits shall stand reduced. Quite clearly, the assessee holds a consistent position that capital gains on sale of investments / assets are to be excluded while computing Book Profits u/s 115JB. Conversely, any loss arising on such sale would not be adjusted in Book Profits and the Book-Profits, to that extent, are to be increased by the amount of loss debited in the Profit Loss Account. Following this consistent policy, the assessee has increased the Book Profits to the extent of loss suffered and debited in the Profit Loss Account. 7. We find that in Assessment Year 2013-14, the assessee earned profits on sale of investments for Rs. 51.14 Lacs and offered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e not a part of revenue and therefore, rejected. 9. In AY 2015-16 also, the assessee offered excise duty exemption u/s 115JB but withdrawn the same in revised return of income. The Ld. AO rejected the same. Though the assessee preferred further appeal, it preferred to settle the same under Vivad Se Vishwas Scheme, 2020. 10. From the above stated facts, it could be seen that though the assessee initially offered the profits on sale u/s 115JB, however, it withdrew all such claims in the revised return of income. In AYs 2013-14, this issue of profit on sale of investments has been settled in assessee s favor. In AY 2014-15 also, substantial claim has been accepted wherein such profits have been excluded u/s 115JB. Therefore, to contend that the loss should be excluded u/s 115JB in this year, considering consistent stand taken by revenue in earlier years, is bereft of any merits. The assessee, though initially offered the profits u/s 115JB, however, later on withdrew such computation in revised return of income. Therefore, it could not be said that the assessee has taken consistent stand in the matter of treatment of profit / loss on sale of investments. The rule of consistency w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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