Tribunal Denies MAT Exemption Due to BIFR's Non-Absolute Direction; Remits Book Profit Adjustments for Further Review.

The Tribunal dismissed ITA Nos. 2709-10/Mum/2019, denying the exemption from MAT, as the BIFR's direction was not absolute. However, it allowed ITA Nos. 4696-97/Mum/2019 for statistical purposes, remitting the issues of Book Profit adjustments and rectification of the appellate order back to CIT(A) for detailed adjudication.

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Issues Involved:
1. Exemption from Minimum Alternate Tax (MAT)
2. Non-adjudication of claims by CIT(A)
3. Reduction of Book Profit by lower of Unabsorbed Depreciation or Business Loss
4. Reduction of Book Profits by amounts credited on account of Capital Reserve and Share Premium account
5. Failure to rectify the Appellate Order u/s 154

Detailed Analysis:

I. Exemption from MAT:
The primary issue was whether the assessee was entitled to exemption from MAT under Section 115JB as directed by the Board of Industrial and Financial Reconstruction (BIFR). The assessee argued that the relief claimed was based on the BIFR order dated 21.09.2010, which provided for exemption from MAT for eight years from the cut-off date. However, the DIT (Recovery) conveyed that the relief under Section 115JB would be available only until the net worth of the company became positive, which occurred on 31/03/2011. Consequently, the assessee was denied MAT exemption from AY 2011-12 onwards. The Tribunal upheld this view, stating that the BIFR’s direction was to "consider" granting relief, not an absolute directive, and the CBDT had decided not to extend the benefit beyond the point when the net worth turned positive.

II. Non-adjudication of claims by CIT(A):
The assessee contended that the CIT(A) failed to adjudicate claims for adjustments of Book Profit on account of amounts credited to the Profit & Loss Account via the Restructuring Account and the reduction of Book Profit by the lower of Unabsorbed Depreciation or Business Loss. The Tribunal noted that these claims were subsequently dealt with by the CIT(A) under Section 154, which led to a separate appeal (ITA No. 4696/Mum/2019).

III. Reduction of Book Profit by lower of Unabsorbed Depreciation or Business Loss:
The assessee argued that the Book Profit should be reduced by the lower of Unabsorbed Depreciation or Business Loss, duly adjusted by amounts written back due to reliefs granted by BIFR. The CIT(A) rejected this claim, stating that the starting point for computation under Section 115JB would be the net profit as shown in the Profit & Loss Account prepared in accordance with the Companies Act. The Tribunal found merit in the assessee’s argument that adjustments due to BIFR relief should be considered and remitted the matter back to the CIT(A) for a detailed adjudication.

IV. Reduction of Book Profits by amounts credited on account of Capital Reserve and Share Premium account:
The assessee submitted that the Book Profit should be reduced by amounts credited to the Profit & Loss Account from Capital Reserve and Share Premium Accounts. The CIT(A) rejected this claim, relying on the Supreme Court decision in Apollo Tyres Ltd. v. CIT. The Tribunal noted that the CIT(A) did not specifically address the issue of adjustments through the Restructuring Account and remitted the matter back for a detailed adjudication.

V. Failure to rectify the Appellate Order u/s 154:
The assessee claimed that the CIT(A) failed to rectify apparent mistakes in the original appellate order, particularly regarding the non-adjudication of claims for reduction of amounts credited to the Profit & Loss Account as per BIFR's order. The Tribunal found that the CIT(A) did not specifically address these issues and remitted the matter back for a detailed adjudication.

Conclusion:
The Tribunal dismissed ITA Nos. 2709-10/Mum/2019 concerning the exemption from MAT but allowed ITA Nos. 4696-97/Mum/2019 for statistical purposes, remitting the matters back to the CIT(A) for detailed adjudication on the issues of Book Profit adjustments and rectification of the appellate order.

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