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| The Tax Publishers2021 TaxPub(DT) 1409 (Visakhapatnam-Trib) INCOME TAX ACT, 1961
Section 263
While computing book profit in terms of section 115JB, assessee reduced certain sum for fuel surcharge adjustment shown under 'unascertained liabilities', as AO neither verified the liability nor the expenditure under MAT provisions under section 115JB, there was an error which was prejudicial to the interest of revenue with regard to non-verification of financial surcharge adjustment in the assessment made under section 143(3) and invocation of provisions of section 263 was justified. However, matter was remitted to AO for consideration of case on merits.
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Revision under section 263 - Erroneous and prejudicial order - While computing book profit in terms of section 115JB, assessee reduced certain sum for fuel surcharge adjustment shown under 'unascertained liabilities' -
Assessee claimed deduction under section 80-IA and assessment was completed. In case of assessment under section 115JB as per MAT provisions, book profit declared by assessee was accepted by AO. Pr.CIT took the case for revision on allegation that assessee had reduced certain sum for fuel surcharge adjustment shown under 'unascertained liabilities'. Pr.CIT alleged that assessee took said amount directly into balance sheet without routing the same through the profit and loss account. Assessee contended that PCIT wrongly invoked jurisdiction under section 263 because AO already made the conscious decision after review of balance sheet and profit and loss account.Held: As per Explanation (1) of clause (c) of the provisions of Section 115JB, amount set aside to provisions made for meeting liabilities, other than ascertained liabilities required to be increased by such amount for MAT purpose. In the instant case, AO neither verified the liability nor the expenditure under MAT provisions under section 115JB. Merely because the balance sheet and profit and loss account are placed before AO at the time of assessment, it cannot be construed that AO verified the entire issues unless specific information is called by AO. Therefore, there was an error which was prejudicial to the interest of revenue with regard to non-verification of financial surcharge adjustment in the assessment made under section 143(3). Expenditure debited to profit and loss account or reduced from the profit before tax as exceptional item needed to be verified as per facts on merits. Therefore, matter was remitted back to AO to examine the issue in the light of the submissions made by assessee and case laws relied on during the appeal proceedings and decide the issue afresh on merits.
Relied:Bharat Earth Movers v. CIT (2000) 245 ITR 428 (SC) : 2000 TaxPub(DT) 1505 (SC), Malabar Industrial Co. Ltd. v. CIT (2000) 109 Taxman 66 (SC) : (2000) 243 ITR 83 (SC) : 2000 TaxPub(DT) 1227 (SC), Sesa Starlite Limited, Erstwhile Sesa Goa Ltd. v. CIT (2021) 123 Taxmann.com 217 (Bom-HC ) : 2020 TaxPub(DT) 4621 (Bom-HC) and Oriental Bank Of Commerce v. Addl. CIT (2018) 254 Taxman 197 (Del-HC) : 2018 TaxPub(DT) 452 (Del-HC).
REFERRED :
FAVOUR : Matter remanded.
A.Y. : 2013-14
IN THE ITAT, VISAKHAPATNAM BENCH
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