2016 (4) TMI 570 - AT - Income Tax

Tribunal Upholds Revision Order on Export Losses Deduction, MAT Liability Not Addressed

M/s. United Breweries (Holdings) Ltd. (Successor to UB Global Corporation Ltd. on account of amalgamation) Versus Commissioner of Income-tax, Bangalore

The Tribunal upheld the Commissioner's revision order under section 263 for the assessment year 2004-05. The appeal involved the failure to set off losses ... MAT computation - Excess deduction u/s 80HHC without setting off losses incurred by the assessee on export of trading goods - revision u/s 263 - Held that:- Computing MAT liability under the provisions of sec.115JB, deduction u/s 80HHC shall be allowed after setting off losses suffered on export of trading goods. Therefore, there was no issue on the point of allowing deduction at 100% instead of 30% while computing MAT liability u/s 115JB. There is no quarrel as far as the judgment of Hon’ble Supreme Court in the case of Ajanta Pharma Ltd (2010 (9) TMI 8 - SUPREME COURT) that deduction u/s 80HHC has to be allowed on the full amount of export profits instead of on the reduced rate of 30% in the case of the assessee. We find that the assessee itself has computed deduction u/s 80HHC even on the book profit without applying the decision of the Hon’ble Supreme Court in the case of Ajanta Pharma Ltd (2010 (9) TMI 8 - SUPREME COURT ). When the revision proceedings /s 263 were initiated only on the point of setting off of loss suffered in export of trading goods while computing deduction us 80HHC, then the claim of the assessee that while computing MAT liability of the assessee u/s 115JB deduction u/s 80HHC shall be allowed on the full amount instead of 30% of the profit derived from export of goods cannot be taken into consideration because the revision proceedings u/s 263 of the Act cannot be used for the benefit of the assessee but it is only meant for revision of the assessment order if the same is found erroneous and prejudicial to the interest of revenue. Thus the pre-requisite conditions for invoking provisions of section 263 are the order of the AO is erroneous and prejudicial to the interest of the revenue, and therefore these proceedings cannot be used for the benefit of the assessee. Even if the assessee has committed a mistake in filing return, remedy available with the assessee is under other relevant provisions of the Act and not u/s 263. We do not find any merit or substance in the appeal of the assessee. Consequently, we uphold the impugned order revision order of the CIT. - Decided against assessee. Issues Involved:1. Revision of assessment order under section 263 of the Income-tax Act, 1961 for the assessment year 2004-05.2. Computation of deduction under section 80HHC and Minimum Alternate Tax (MAT) liability under section 115JB.Issue 1: Revision of Assessment Order under Section 263:The appeal was against the Commissioner of Income-tax's order under section 263 of the Income-tax Act for the assessment year 2004-05. The original assessment was completed under section 143(3) on 30/11/2006. The Commissioner noted that the assessment order was erroneous and prejudicial to the revenue as the AO had allowed excess deduction under section 80HHC without setting off the loss from export of trading goods. The Commissioner revised the order, directing the AO to allow deduction under section 80HHC after setting off the loss, resulting in a revised deduction of Rs. 67,47,326 instead of the earlier Rs. 4,48,59,326 claimed and allowed. The issue was limited to the failure to set off the loss under the proviso to section 80HHC(3).Issue 2: Computation of Deduction under Section 80HHC and MAT Liability under Section 115JB:The main contention in this issue was the computation of deduction under section 80HHC while computing MAT liability under section 115JB. The assessee accepted the revised deduction under section 80HHC but contested the direction to compute deduction under section 80HHC for MAT on the book profit under section 115JB. The assessee argued that the deduction on book profit should be on the full amount of export profits, not 30% as directed by the Commissioner. The assessee relied on the judgment of the Supreme Court in the case of Ajanta Pharma Ltd. vs. CIT (327 ITR 305) to support this argument.Analysis:In analyzing the first issue, the Tribunal found that the revision proceedings were initiated solely due to the failure to set off the loss in export of trading goods while computing deduction under section 80HHC. Therefore, there was no issue regarding allowing deduction at 100% instead of 30% for computing MAT liability under section 115JB. The Tribunal upheld the Commissioner's direction to allow deduction under section 80HHC after setting off the losses suffered by the assessee.Regarding the second issue, the Tribunal noted that the revision proceedings under section 263 could not be utilized to benefit the assessee but were meant to correct errors prejudicial to the revenue. The Tribunal emphasized that the conditions for invoking section 263 required the assessment order to be erroneous and prejudicial to the revenue. As the issue of computing deduction under section 80HHC for MAT liability under section 115JB was not part of the revision proceedings, the Tribunal dismissed the appeal and upheld the revision order of the Commissioner.In conclusion, the Tribunal dismissed the appeal, upholding the revision order of the Commissioner under section 263 for the assessment year 2004-05.