TaxTMI 
TaxTMI 
2019 (12) TMI 901
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....e validity of initiation of proceedings for reassessment u/s 147 of the Income Tax Act, 1961 (Act). The second issue is whether the Revenue authorities were justified in recomputing the book profits of the assessee us/ 115JB of the Act. 3. The facts and circumstances giving raise to this appeal are that the Assessee is a company engaged in the business of manufacturing of precision automotive parts and aerospace components. For asst. year 2010-11, the Assessee filed a return of income declaring a total income of Rs. 4,13,939/- and book profit of Rs. 3,82,83,820/- under the provisions of sec. 115JB of the Act. As per the provisions of Sec.115JB of the Act, in case of a company, the income tax payable on the total income as computed under ....
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....ngs Ltd., had given Bank Guarantee to HSBC, Slovakia . Due to various reasons HSBC Slovakia invoked the bank guarantee given to it by MPP Holdings Ltd., amounting to 6,00,000/- Euros. Conseqently, the value of investments held by the Assessee in MPP Holdings Ltd., eroded considerably and the Assessee wrote of the diminution in value of investments in the profit and loss account and claimed the same as allowable expenditure, incidental to its business. According to the Assessee as per Memorandum of Association of the company, one of the objectives of the assessee was giving bank guarantee to its subsidiary companies. 6. The AO did not allow the claim of the assessee for the reason that the expenditure in question was in the nature of capi....
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.... tax payable under Normal provision, the income under MAT provision is adopted for computation of tax. 8. The aforesaid order of the AO passed u/s 143(3) of the Act was dated 26/2/2013. The AO issued a notice u/s 148 to the assessee for asst. year 2010-11 dated 1/9/2017. Reasons recorded by the AO before issue of notice u/s 148 of the Act were as follows:- "The assessee is engaged in the business of manufacturing of Precision Automotive parts and Aerospace components and derives income from the same. For the relevant assessment year assessee had file return of income on 29-9-2010 declaring a total income of Rs. 413939 after setting of loss of Rs. 15,24,14,086/- and income of Rs. 3,82,83820/- under MAT provisions. The return was ....
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....hat both the disallowances were to be added to the MAT income also while computing the total tax. Therefore I have reason to believe that Rs. 10,7659,360/- has escaped assessment within the meaning of section 147 of the IT Act 1961." 9. The assessee filed objections before the AO pointing out that the initiation of reassessment proceedings u/s 147 of the Act was not valid. The AO by an order dated 18/9/2017 dismissed the aforesaid contention of the assessee. It was a plea of the assessee before the AO that the first proviso to sec 147 makes amply clear that where an assessment under sub-section (3) of section 143 or u/s 147 has been made for the relevant assessment year, no action shall be taken under section 147 of the Act, after the ex....
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....initiation of reassessment proceedings. Ultimately the AO passed an order u/s 143(3) r.w.s c 147 of the Act in which he took the view that provision for diminution in value of investment and provision for obsolete machinery were contingent in nature and therefore while computing book profit u/s 115JB of the Act they have to be added to the profit as per the profit and loss account for arriving at book profit u/s.115JB of the Act. Accordingly the book profit was computed by the AO as follows:- Computation of Income as per MAT provison Income Returned u/s 115JB 3,82,83,820 Add Diminution of value in investment (investment written off) 10,29,59,360 Provision made is disallowed 47,....
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....t. year. 15. The question therefore is as to whether it can be said in the present case that there was a failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment. In this regard it is clear from the perusal of the order passed u/s 143(3) of the Act that same item which have not been added to the book profits u/s 115JB of the Act were added in the originally concluded assessment. proceedings u/s 143(3) of the Act when the total income of the assessee was computed under the normal provisions of the Act. Therefore, it cannot be said that there was any failure on the part of the assessee to fully and truly disclose all material facts necessary for his assessment. The plea of the assessee....