Tribunal directs AO to review deduction u/s.10B & computation u/s.115JB

The Tribunal allowed the appeal and cross objection for statistical purposes, directing the AO to review the issues of deduction u/s.10B and computation of book profit u/s.115JB in light of the Tribunal's order.

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Issues:
Appeal against order of CIT(A) regarding deduction u/s.10B of the Act and computation of book profit u/s.115JB of the Act.

Analysis:
The appeal and cross objection were directed against the orders of the CIT(A) regarding the assessment year 2008-09. The assessee, a private limited company engaged in manufacturing and exporting, claimed deduction u/s.10B of the Income Tax Act, 1961, and paid taxes on book profit u/s.115JB. The AO disallowed the deduction due to a delay in filing the return of income, leading to an appeal before the CIT(A)-9, who partially allowed relief, stating that the filing of the return within the due date is not mandatory for claiming the deduction. Subsequently, the AO issued a notice for rectification under section 154, revising the book profit. Both the assessee and the Revenue appealed to the Tribunal, which set aside the appeals and directed the AO to recompute the book profit after deciding on the deduction u/s.10B. The assessee challenged the section 154 order before the CIT(A) but was unsuccessful. The Tribunal set aside the appeal and cross objection to the AO for reconsideration in light of the deduction u/s.10B, as directed in its order.

The AR for the assessee argued that since the issue of deduction u/s.10B impacts the computation of book profit u/s.115JB, both the appeal and cross objection should go back to the AO. The DR agreed, acknowledging the interconnection between the deduction and book profit. After hearing both parties and reviewing the orders, the Tribunal found that the issue of deduction u/s.10B was pivotal to the computation of book profit u/s.115JB. As the Tribunal had directed the AO to reconsider the deduction issue, the computation of book profit also needed to be reassessed. Consequently, the appeal and cross objection were set aside to the AO for further consideration in accordance with the Tribunal's directions.

In conclusion, the Tribunal allowed the appeal and cross objection for statistical purposes, directing the AO to review the issues of deduction u/s.10B and computation of book profit u/s.115JB in light of the Tribunal's order. The decision was pronounced on 28th April 2021 at Chennai.

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