2015 (6) TMI 93
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....r set off of brought forward losses. Assessee also declared book profit at 'Nil' u/s 115JB of the Act. During the assessment proceeding, AO noticed that assessee on 18/12/07 has entered into a development agreement with M/s Bhimshankar Realtors Pvt. Ltd. for development of its vacant land. Simultaneously, assessee also executed General Power of Attorney (GPA) in favour of the said developer. As per the terms of the development agreement, assessee was to receive 11.655% of the constructed area. Besides constructed area, the developer also agreed to pay interest from refundable deposits of Rs. 10 crores and non-refundable deposits of Rs. 43.10 crores to assessee. Further, as per the development agreement dated 08/07/07, the developer agreed t....
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....ain. In response to the said show cause notice, assessee filed its written submissions objecting to initiation of proceeding u/s 263 of the Act. It was submitted by assessee that section 115JB would apply where the income assessed and tax thereon under the normal provisions is less than the book profit and tax thereon. However, since in case of assessee, the income determined by AO and the consequent income-tax there on is much more than the book profit as well as the tax to be paid thereon, neither there is any error in the assessment order nor it is prejudicial to the interests of revenue. Further, it was submitted by assessee that even otherwise also, no book profit can be computed u/s 115JB of the Act as assessee is a sick company and t....
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....e us. 4. Ld. AR submitted before us, invoking power u/s 263 of the Act for the purpose of directing AO to compute book profit u/s 115JB of the Act is without jurisdiction as AO has enquired into the matter and examined the issue in course of assessment proceeding. Ld. AR referring to the show cause notice issued by AO on 18/11/10 and 21/12/10 as well as assessee's reply dated 30/11/10 submitted before us that the issue was examined in detail by AO during the assessment proceeding, however, AO since determined the income of assessee at much higher figure than the book profit u/s 115JB, there was no need to apply the provisions of section 115JB of the Act, as required under law. Accordingly, AO passed assessment order by raising the tax dema....
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....ble as per the provisions of law. Ld. AR submitted, as there was no prejudice caused to revenue by virtue of the assessment order, one of the conditions of section 263 is not satisfied, hence, the order passed u/s 263 is invalid. In support of his submissions, ld. AR relied on the following decision: 1. CIT Vs. Greenworld Corporation, [2009] 314 ITR 81 (SC) 5. Ld. DR, on the other hand, submitted before us, the assessment order is erroneous and prejudicial to the interests of revenue as AO while completing the assessment has failed to compute book profit u/s 115JB of the Act though the said provision is clearly applicable. Ld. DR submitted, assessee's claim that section 115JB is not applicable as it is a sick company having accumulated lo....
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....15JB(2)(vii). Of course, it is a fact that AO while completing assessment has not computed book profit u/s 115JB of the Act. However, it is also a fact that AO while completing the assessment has not accepted 'Nil' income offered by assessee and on the other hand, has determined the total income under the normal provisions at Rs. 79,69,38,698 by computing LTCG, on which tax along with interest was computed at Rs. 23,78,47,932. Whereas the book profit as per the assessee's computation, which is also not disputed by ld. CIT, is Rs. 45,08,84,000 and tax thereon is Rs. 4,64,41,052. Therefore, the income computed under the normal provisions and tax thereon being much more than the tax payable on the book profit computed u/s 115JB of the Act, AO ....
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....g upon such order of ld. CIT(A), assessment order cannot be considered to be erroneous and prejudicial to the interests of revenue. It is well known that ld. CIT can exercise power u/s 263 of the Act, on fulfillment of the twin conditions enshrined in the said provision cumulatively. The conditions are, an order sought to be revised must be erroneous as well as prejudicial to the interests of revenue. In absence of any one of the aforesaid conditions, exercise of power u/s 263 becomes invalid. In the present case, even assuming that there is an error in the assessment order as AO has failed to compute book profit u/s 115JB, it cannot be said that assessment order passed is prejudicial to the interests of revenue as the income determined und....