TaxTMI 
TaxTMI 
2015 (8) TMI 1150
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....ssee filed a letter stating that the return originally filed be treated as being filed in response to the notice issued u/s 148. However, during the course of assessment proceedings, assessee observed that while filing the original return of income, principal waiver amounting to Rs. 9,26,00,305 by the financial institutions was by mistake offered as income. While computing the book profits u/s 115JB, assessee has inadvertently taken the carried forward depreciation as Rs. 14,86,71,093 instead of Rs. 20,99,67,903, thereby offering to tax an amount of Rs. 34,84,30,788 instead of Rs. 28,71,33,978 u/s 115JB of the IT Act. Accordingly, filed a revised computation of income before the AO duly rectifying the said mistakes and requested to take the same on record. 4. AO rejected the assessment proceedings for the previous year relevant to the A.Y 2007-08, AO adjusted the book profits u/s 115JB by addition of provision of service fee amounting to Rs. 5.00 crores, stating that the same is provision for unascertained liability. AO carried the said adjustment to the current A.Y and reduced the same brought forward losses in the current A.Y. 5. AO erred in not considering the principal loan a....
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....ing officer to explain the correct legal position. It is a settled law that the receipt being one which in law could not be regarded as income, it could not become income merely because the respondent erroneously credited it to the profit and loss account, in view of the apex court's decision in the case of India Discount Co 751TR 191." 7. The CIT (A) held that the claim of the assessee can be considered and the appellate authorities are well within their rights to consider the claim relying on the decision of the ITAT Hyderabad in the case of GVK Industries Ltd vs. ACIT in ITA No.1579/Hyd/2008 dated 30.03.2012. The CIT (A), therefore, held that the judgement of the Apex Court in the case of Goetz India Ltd vs. CIT (284 ITR 323) is inapplicable in this case. 8. The CIT (A) discussed various case laws and held that the assessee obtained the loan for the purchase of machinery and it was a capital receipt ab initio. Thereafter the loan was waived. The CIT (A) further held that the cessation of the loan liability would continue to be capital receipt in the hands of the assessee although it was no longer a liability and therefore, the amount in question pertaining to the waiving ....
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....d losses and give credit to the assessee wherever the law so demands. 12. The CIT (A) further held that with respect to the addition of Rs. 5.00 crores, the same is added back in last year u/s 115JB of the Act and no adjustment or change in the book profits was made in the earlier year. Further the provisions was added back for computing the taxable income as per the I.T. Act. Hence he held that in the current year this amount cannot be added to the book profit, because they were never altered and nowhere was it held that the book profits had been wrongly computed. Accordingly the CIT (A) deleted this addition. 13. Aggrieved, Department has come up in appeal before us and raised the followingh grounds: 1. CIT(A) erred on facts and in law in granting relief to the assessee. 2. CIT(A) erred in law in holding that capital item of Rs. 9,26,OO,306/- had to be deleted from income, as settled issues unrelated to reopening cannot be raised in reopening proceedings. 3. The decision of CIT(A) is erroneous in law because it is contrary to decision of Hon'ble Supreme Court in MIs. Sun Engineering Works Limited. 4. The C/T(A) erred in law in directing that the addition of Rs. 5 Cra....
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....llows: "Claims which have been disallowed in the original assessment cannot be permitted to be reagitated on the assessment being reopened for bringing to tax certain income which has escaped assessment, because the controversy on re-assessment is confined to matters which are relevant only in respect of the income which had not been brought to tax during the course of the original assessment. A matter not agitated in the concluded original assessment proceedings also cannot be permitted to be agitated in the re-assessment proceedings unless relatable to the items sought to be taxed as "escaped income". Indeed, in the reassessment proceedings for bringing to tax items which had escaped assessment, it would be open to the assessee to put forward claims for deduction of any expenditure in respect of that income or regarding the non-taxability of the items at all. Section 147 being for the benefit of the Revenue and not the assessee, the assessee cannot be permitted to convert the reassessment proceedings into an appeal or revision in disguise and seek relief in respect of items earlier rejected or claim relief in respect of items not claimed in the original assessment proceedings, u....