2017 (8) TMI 523 - AT - Income Tax

Tribunal validates revised return, excludes Section 115JB for insurance company, renders reassessment moot.

The Tribunal partially allowed the appeal by validating the revised return filed by the assessee and ruling that Section 115JB does not apply to the ... Validity of revised return u/s 139(5) - return was revised after issuance of intimation u/s 143(1) - Whether the return filed by the assessee u/s 139(5) after processing of the return u/s 143(1) is a valid return? - claim of benefit of excess set off of losses and carry forward of the same as per the revised return filed by the assessee - Held that:- Similar issue has come in the case of Tarsem Kumar vs. Income Tax Officer [2013 (1) TMI 456 - PUNJAB AND HARYANA HIGH COURT] wherein held the expressions “intimation” and “assessment order” have been used at different places. The contextual difference between the two expressions has to be understood in the context the expressions are used. Assessment is used as meaning sometimes “the computation of income”, sometimes “the determination of the amount of tax payable” and sometimes “the whole procedure laid down in the Act for imposing liability upon the tax payer”. In the scheme of things, the intimation u/s 143(1)(a) cannot be treated to be an order of assessment There was no regular assessment framed therefore, the assessee for A.Y. 2005- 06 could file the revised return after complying with the provisions of Sec. 139(5) up to 31.3.2007. The revised return filed on 26.9.2006 was thus validly filed within limitation. Consequently, the claim of the petitioner-assessee for the refund of the additional tax deposited is valid and justified – Decided in favour of assessee Applicability of provisions of Section 115JB - Assessee is an insurance company incorporated under the Insurance Act - Held that:- Provisions of Section 115JB are not applicable in the case of the assessee as the assessee is engaged in the business of general insurance. This ground of the assessee stands allowed. Issues Involved:1. Validity of reassessment proceedings under Section 147 of the Income Tax Act.2. Validity of revised return filed after intimation under Section 143(1).3. Applicability of Section 115JB to a general insurance company.4. Set-off of unabsorbed loss/unabsorbed depreciation.5. Addition of Rs. 27,12,326 as expenditure relating to exempt income.6. Disallowance under Section 14A.Detailed Analysis:1. Validity of Reassessment Proceedings under Section 147:The assessee challenged the reassessment proceedings initiated under Section 147, arguing that the notice under Section 148 was issued after the expiry of four years from the end of the relevant assessment year, making the proceedings time-barred. However, this issue became infructuous as the Tribunal decided on other grounds.2. Validity of Revised Return Filed After Intimation under Section 143(1):The Tribunal examined whether a revised return filed under Section 139(5) after the processing of the original return under Section 143(1) is valid. The assessee filed a revised return increasing the loss available for set-off. The AO and CIT(A) rejected the revised return, considering it invalid as it was filed post intimation under Section 143(1). The Tribunal referred to the Supreme Court's decision in ACIT v. Rajesh Jhaveri Stock Brokers (P) Ltd., which clarified that an intimation under Section 143(1) is not an assessment order. Therefore, the revised return filed within the time allowed under Section 139(5) is valid. The Tribunal set aside the CIT(A)'s order, directing the AO to accept the revised return as valid.3. Applicability of Section 115JB to a General Insurance Company:The assessee contended that Section 115JB does not apply to general insurance companies. The Tribunal referred to its earlier decision in the assessee's own case and the Delhi High Court's decision in CIT v. The Bank of Tokyo Mitsubishi UFJ Ltd., which held that Section 115JB does not apply to entities not required to prepare accounts as per Part II and III of Schedule VI of the Companies Act. The Tribunal also considered Explanation 3 to Section 115JB, inserted by the Finance Act, 2012, effective from 01.04.2013, and concluded it is not retrospective. Thus, Section 115JB is not applicable to the assessee, a general insurance company.4. Set-off of Unabsorbed Loss/Unabsorbed Depreciation:This issue was consequential to the applicability of Section 115JB. Since the Tribunal held that Section 115JB does not apply, the issue of set-off of unabsorbed loss/unabsorbed depreciation became infructuous.5. Addition of Rs. 27,12,326 as Expenditure Relating to Exempt Income:This issue was also consequential to the applicability of Section 115JB. With Section 115JB not applicable, this ground became infructuous.6. Disallowance under Section 14A:This issue was consequential to the applicability of Section 115JB. Since Section 115JB was held not applicable, this ground also became infructuous.Conclusion:The Tribunal allowed the appeal partly by accepting the revised return filed by the assessee as valid and holding that Section 115JB does not apply to the assessee, a general insurance company. Consequently, the issues related to set-off of unabsorbed loss, addition of expenditure relating to exempt income, and disallowance under Section 14A became infructuous. The reassessment proceedings issue also became moot following these decisions.