Income Tax Appellate Tribunal - Delhi
Sbl Industries Pvt. Ltd., Haridwar vs Department Of Income Tax on 23 May, 2013
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCHES : "G" NEW DELHI
BEFORE SHRI J.SUDHAKAR REDDY, AM
AND SHRI CM GARG, JM
ITA no. 3957/Del/2012
Assessment Year 2010-11
ACIT, Circle-Hardwar vs. M/s SBL Industries P.Ltd.
D 29 & 30, Industrial area Plot no.3, Sector 12, II E
Haridwar SIDCUL, Haridwar
PAN: AAICS 9462 M
(Appellant) (Respondent)
Appellant by:-Sh.J.S.Khlawat, Sr.D.R.
Respondent by:- Sh. Sanjay Nath, C.A.
ORDER
PER J.SUDHAKAR REDDY, AM
This is an appeal filed by the Revenue directed against the order of the Commissioner of Income Tax (Appeals)-I, Dehradun dt. 29.03.2012 pertaining to the Assessment Year 2010-11.
2. Facts in brief:- The facts of the case as brought out at paras 1 to 1.1 of the Commissioner of Income Tax (Appeals)'s order which is extracted for ready reference.
"The assessee company is a manufacturer of homeopathetic medicine. The only point for determination in this appeal is whether the Assessing Officer was correct in applying minimum alternate tax (MAT) provision under Section 115 JB of the Income Tax Act, 1961 while processing the return under Section 143(1) of the Income Tax Act, 1961. 1.1. Return of income showing total income of Rs.9,81,110/- was e-filed on 04.10.2010. The assessee claimed deduction of Rs.22,26,99,178/-ITA 3957/Del/2012 Page 2 of 7
Assessment Year 2010-11 SBL Industries P.Ltd.
under Section 80-IC of the Income Tax Act, 1961. Even though there was book profit of Rs.22,65,01,252/-, it did not compute MAT payable under Section 115 JB of the Income Tax Act, 1961. The return was processed under Section 143(1) of the Income Tax Act, 1961 by the Centralised Processing Centre (CPC), Bangalore on 17.03.2011. In the intimation issued subsequent to the processing of the return, the book profit was deemed to be the total income and tax thereon @ 15% i.e. Rs.3,39,75,188/- was computed. In other words, the provision of MAT under Section 115 JB of the Income Tax Act, 1961 was applied while processing the return under Section 143(1) of the Income Tax Act, 1961. Aggrieved against this, the assessed has preferred the present appeal."
3. Before the Ld.CIT(A), the assessee contended that the scope of powers of the AO while processing a return under Section 143(1) of the Income Tax Act, 1961 is limited. He can make adjustments only with regard to arithmetical error over an incorrect claim. It was contended that the issue whether a company, which is eligible for deduction u/s 80 IC of the Income Tax Act, 1961, has to pay MAT u/s 115 JB of the Income Tax Act, 1961 or not cannot be decided u/s143(1) of the Income Tax Act, 1961 as it is highly debatable. The CIT(A) accepted the contentions of the assesseee. Aggrieved the revenue is in appeal before us on the following grounds:-
"1. The Ld.CIT(A) has erred in law and on facts in allowing the appeal of the assessee and cancelling the order under Section 143(1) of the Income Tax Act, 1961 passed by the ACIT, CPC, Bangalore.
2. The Ld.CIT(A) has erred in law and on facts in holding the issue "Whether MAT is payable by a company claiming deduction under Section 80-IC" is debatable.ITA 3957/Del/2012 Page 3 of 7
Assessment Year 2010-11 SBL Industries P.Ltd.
3. That the Jurisdictional High Court, Uttarakhand in the case of Sidcul Industrial Associations vs. State of Uttarakhand (2011) 199 Taxman, 75 has held that s.115 JB of the Income Tax Act, 1961 will apply to an assessee being a company, even if it is entitled to deductions under Section 80-IC of the Income Tax Act, 1961.
4. That even though the Ld.CIT(A) has decided that the case falls under the jurisdiction of Assessing Officer of Haridwar Range, Ld.CIT(A) has erred in not providing any opportunity of being heard to ACIT, Circle-Haridwar on the matter and as such the order is against natural justice.
5. The order of the Ld.CIT(A) be set aside and that of the Assessing Officer be restored."
4. The Ld.DR submitted that the AO is empowered to make adjustments u/s.143(1) of the Income Tax Act, 1961. He submitted that the processing is done through computer and as the issue is an apparent mistake committed by the assessee while filing its return of income and the central processing unit has made the said adjustment to correct this apparent mistake. He referred to sec.143(1)(a)(ii) and submitted that if an incorrect claim is made and when such incorrect claim is apparent and from any information in the return, the AO is authorized to make an adjustment.
5. The Ld.Councel for the assessee Mr.Sanjay Nath submitted that Explanation (a)(ii) to Sec.143(1) supports the case of the assessee as the term incorrect claim apparent from any information in the return is defined. He contended that the AO has limited power u/s.143(1) of the Income Tax Act, 1961 and that the adjustment made is beyond his ITA 3957/Del/2012 Page 4 of 7 Assessment Year 2010-11 SBL Industries P.Ltd.
powers, as the computation of book profits u/s 115 JB with reference to deduction u/s 80 IC is a highly debatable issue.
6. Rival submissions heard. On a careful consideration of the facts and circumstances of the case and on a perusal of the papers on record as well as the orders of the authorities below and case laws cited, we hold as follows.
7. The subject matter before us is the scope and ambit of S.143(1) of the Act.
The relevant portions of S.143(1) are extracted for ready reference. Sec. 143(1): Where a return has been made under section 139, or in response to a notice under sub-section (1) of section 142, such return shall be processed in the following manner:
(a) The total income or loss shall be computed after making the following adjustments, namely :-
(i) Any arithmetical error in the return; or
(ii) An incorrect claim, if such incorrect claim is apparent from any information in the return;
........................................................... Explanation :- For the purposes of this sub-section, -
(a) An incorrect claim apparent from any information in the return shall mean a claim, on the basis of an entry, in the return,
(i) Of an item, which is inconsistent with another entry of the same or some other item in such return;
(ii) In respect of which the information required to be furnished under this Act to substantiate such entry has not been so furnished; or
(iii) In respect of a deduction, where such deduction exceeds specified statutory limit which may have been expressed as monetary amount or percentage or ratio or fraction."ITA 3957/Del/2012 Page 5 of 7
Assessment Year 2010-11 SBL Industries P.Ltd.
8. A plain reading of the same shows that u/s 143(1)(a)(ii), the AO can compute the total income or loss, after making adjustment of incorrect claim, if such incorrect claim is apparent from any information in the return. Explanation (a) explains what is "an incorrect claim apparent from any information in the return."
9. S.115 JB is a special provision. It imposes minimum tax liability on an assessee company on its book profits. The mode of computation is specified therein. The Hon'ble Supreme Court in the case of Apollo 255 ITR 273 (2002) held that while computing the book profits of a company u/s 115J under the Act, the AO has only the power of examining whether books of accounts are certified by the authorities under the Companies Act and there after as the limited power of making increase or decrease of certain items specifically provided for in the Explanation to S.115J.
10. Applying the proposition laid down by the Hon'ble Supreme Court to S.115 JB, we find that a deduction u/s 80IC, is not an item of adjustment in Explanation I to S.115 JB. While so, to claim reduction of the amount deductible u/s 80IC, while computing book profits u/s 115 JB, is not in accordance with the apparent reading of the provisions of S.115 JB. Thus, in our considered opinion, such a claim is an incorrect claim and this is apparent from information in the return as defined in the Explanation (a) to S.143(1)(a)(ii) of the Act. Hence the AO is correct in making adjustment u/s 143(1). Thus, we are unable to ITA 3957/Del/2012 Page 6 of 7 Assessment Year 2010-11 SBL Industries P.Ltd.
persuade ourselves to agree with the finding of the Ld.CIT(A)-I, Dehradun on this issue. The fact that the return is processed by a computer or by the Officer himself, does not make a difference, as in our opinion computerized processing is only an aid to the AO. As computation of book profits u/s 115 JB of the Act is not done in accordance with the provisions of the Act, and when an incorrect claim of reduction from book profits of amount which the assessee is eligible u/s 80 IC is made, it is an incorrect claim apparent from the record, which can be adjusted u/s 143(1) of the Act. In the result the order of Ld.CIT(A) is set aside and the order of the AO is restored.
11. In the result the appeal of the Revenue is allowed.
Order pronounced in the Open Court on 23rd May, 2013.
Sd/- Sd/-
(C.M. GARG ) (J.SUDHAKAR REDDY)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: the 23rd May, 2013
*manga
ITA 3957/Del/2012 Page 7 of 7
Assessment Year 2010-11
SBL Industries P.Ltd.
Copy of the Order forwarded to:
1. Appellant; 2.Respondent; 3.CIT; 4.CIT(A); 5.DR; 6.Guard File By Order Dy. Registrar
1. Date of Dictation:
2. Draft placed before the Author on:
3. Draft proposed and placed before Second Member on:
4. Draft discussed/approved by the Second Member on:
5. Approved draft came to Sr.P.S. on:
6. Date of Pronouncement :
7. File sent to Bench Clerk on :
8. Date on which file given to Head Clerk on:
9. Date of dispatching the Order on: