TaxTMI 
TaxTMI 
2017 (4) TMI 1620
X X X X Extracts X X X X
X X X X Extracts X X X X
....6,662/- made by the AO to the Book Profit under section 115JB of the Act, in order under section 154 without appreciating the fact that the rectification order was passed taking into consideration the retrospective amendment in Finance No.2 Act, 2009." 3. Briefly stated facts are that the assessee has filed its return of income declare nil income under the normal provision of the Act on 30-10-2001. The assessee computed book profit under section 115JB of the Act at Rs. 33,13,25,132/-. The return of income was accompanied with a copy of the audited balance sheet, profit and loss account and tax audit report under section 44AB of the Act. The AO completed the assessment under section 143(3) of the Act vide order dated 27-02-2004 by making the following adjustments. "a) Disallowance of expenditure related to exempt income. b) Non-compete fees treated as revenue. c) Disallowance of prior period expenses d) Disallowance of amortization of lease land." 4. The adjustment to the book profit for the purpose of computation of income under section 115JB of the Act was made in respect of deduction under section 80HHC of the Act. The AO while completing the assessment under secti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Hence, the book profit of the assessee company u/s 115JB of the Act is recomputed under: - book profit u/s 115JB of the Act (as per order giving effect to the ITAT's order dated 13.04.2009) Rs. 33,51,66,399/- Add: Provision for depletion in value of long term investment Rs.19,15,16,662/- Revised Book Profit u/s 115JB of the Act Rs.53,02,83,061/- 9.. The total income of the assessee company remains unchanged at Rs. NIL, as determined as per order giving effect to ITAT' order dated 13.04.2009. Since, the tax payable on the book profit u/s 115JB of the Act per MAT provisions is higher than the, tax payable on total income as per normal provision of the Act, the same is considered for the purpose of computation of tax liability of the assessee company." Aggrieved assessee preferred the appeal before CIT(A). 5. The CIT(A) decided on the legality of the rectification order passed by AO under section 154 of the Act and held that the rectification passed under section 154 of the Act is time barred. For this he observed in Para 3.2 and 3.3 as under: - "3.2 The facts of the case are discussed above. The appellant claims that issuing of notice under sec. 154 was time b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e allowed. 3.3 Following the above decision of d14(A)'s order, the AO has to issue notice under sec. 154 by 31st March 2008. However the AO issued notice under see. 154 on January 21, 2014 & th1ch is completely time barred by limitation. Hence AO's addition is deleted-and ground of appeal is allowed." Aggrieved, now Revenue is in second appeal before Tribunal. 6. We have heard the rival contention and gone through the facts and circumstances of the case. Before us, the learned CIT DR Miss Vidisha Kalra, argued that the issuance of notice under section 154 of the Act was due to retrospective amendment in regard to the provision for diminution in value of any asset was to be added back in term of section 115JB of the Act. The learned CIT DR pointed out in Para 7.5 of the AO's order which reads as under: - "Even though, the order 'giving effect to the ITAT's order dated 13.04.2009 was passed by the A.O to give effect to the express directions of the ITAT but the fact remains that the AO was required to determine the correct total income as per the provisions of the Act. While doing so, the AO cannot ignore the clear provisions of the Act which even though may n....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he other hand, the learned Counsel for the assessee relied on the decision of Hon'ble Supreme Court in the case of CIT Vs. Sakseria Cotton Mills Ltd. (1980) 124 ITR 570 (Bom) wherein rectification of mistake under section 154 of the Act, the period of limitation under section 154(7) of the Act will apply from the date of original assessment order and date of assessment order of the AO giving effect to appellant's order in respect to the points not subject matter of order under section 154 of the Act and in that situation it is held by Hon'ble Bombay High Court that the period of limitation will be reckoned from the date original assessment order in respect of points not subjected to appellate jurisdiction. The learned Counsel for the assessee also relied on the decision of Hon'ble Supreme Court in the case of Alagendran Finance Ltd. (supra). 8. After hearing both the sides and going through the facts of the case, we find that the issue raised in the present appeal of the Revenue is whether the order of the AO under section 154 of the Act dated 29-03-2014 to rectify the order giving effect to the Tribunals order dated 13-04-2009 is bar by limitation or not? The assessee has fil....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t the order of the AO passed u/s. 143 (3) of the Act, that in the appeal it had not agitated the issue of 115 JB of the Act ,that it had challenged the additions made by the AO under the normal provisions, that the matter had travelled up to the Tribunal, that neither in the order of the FAA nor in the order of the Tribunal the issue of completion of book profit was deliberated upon. In the circumstances the order passed by the AO on 28/11/2008 could be rectified up to 31/03/2013. The AO had passed the rectification order in the month of January, 2014. Clearly, the order of the AO was barred by limitation. We find that in the case of Tony Electronics Limited (supra),the Hon'ble Delhi High Court decided the issue in favour of the Department considering the peculiar facts of that case. In that case the AO had made certain additions u/s. 143(3) of the Act that were challenged before the FAA. The AO had passed order giving effect to the order of the FAA. Therefore, the Hon'ble Court had held that once an appeal against the order passed by an authority was decided by an Appellate Authority the order of the said authority would merge in the order of the FAA. However, in the case under co....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of merger theory that the limitation will be recognized from date of the original order in respect of points not subjected to appellate jurisdiction. A similar issue arose before the Hon'ble Bombay High Court in the case of Ratilal Bacharilal & Sons 282 ITR 457 (page 32 of case law compilation) wherein after applying the doctrine of merger theory, the Hon'ble High Court held that since the deduction u/s. 35B of Rs. 563,350/- was not the subject matter of appeal, the CIT was justified in exercising jurisdiction u/s 263 of the Act qua Rs. 563,350/- although deduction under 35B on Rs. 327,326/- was in appeal. 12. We have gone through the judgment of Hon'ble Supreme Court in the case of Hind Wire Industries(Supra), wherein the Apex Court was posed with the interpretation of section 154(1)(a) of the Act and not section 154(1A) of the Act with which this appeal is concerned because in Hind Wire Industries the original order was not the subject matter of appeal and what was sought to be rectified was the order u/s. 143(3) read with 154 of the Act. The relevant facts are as under: (i) The assessee was assessed to tax vide the original assessment order dated September 21, 1979. (i....