| The Tax Publishers2021 TaxPub(DT) 4967 (Mum-Trib) INCOME TAX ACT, 1961
Section 263
One of the reasons to reopen the case was allegation of AO that income from assets given on lease, though offered to tax under normal provisions, was not routed through Profit and Loss Account which has led to short-computation of book profits under MAT provisions. However, assessee well explained the fact that accounting treatment given by assessee was in accordance with mandatory AS-19 which mandated assessee to reflect investment in asset under finance lease as 'lease receivable' in balance-sheet on asset side under the head 'loans and advances'. Therefore, since income was not to be routed through Profit & Loss Account, the same was not added back to the book profits under MAT provisions. Therefore, AO duly applied his mind to the issue under consideration and took a possible view in the matter, not contrary to law, assessment order could not be subjected to revision under section 263.
|
Revision under section 263 - Erroneous and prejudicial order - AO took plausible view -
Pr. CIT after perusal of case records, sought revision of this order on the ground that though the lease rental was offered to tax under normal provisions, however, it was not offered to tax while computing book profits under section 115JB. Therefore, the book profits were short computed to the extent of Rs. 2497.13 lakhs. Assessee contended that accounting treatment was in accordance with mandatory AS-19. Assessee consistently followed this accounting practice over the years in accordance with AS-19. Held: Order was passed by AO under section 143(3) read with section 147. One of the reasons to reopen the case was allegation of AO that income from assets given on lease, though offered to tax under normal provisions, was not routed through Profit and Loss Account which has led to short-computation of book profits under MAT provisions. However, assessee well explained the fact that accounting treatment given by assessee was in accordance with mandatory AS-19 which mandated assessee to reflect investment in asset under finance lease as 'lease receivable' in balance-sheet on asset side under the head 'loans and advances'. Whenever, installment was received, the Principal component was to be reduced from that head and the same was not to be routed through profit and Loss Account. This practice was being followed consistently over various years. Therefore, since income was not to be routed through Profit & Loss Account, the same was not added back to the book profits under MAT provisions. Therefore, it could very well be said that AO duly applied his mind to the issue under consideration and took a possible view in the matter which was not contrary to law. This being the case, assessment order could not be subjected to revision under section 263.
Relied:Reliance Corporate IT Park Ltd. v. Pr. CIT [ITA No. 2748/Mum/2015, dated 8-3-2017] and Apollo Tyres Ltd (2002) 255 ITR 273 (SC) : 2002 TaxPub(DT) 1371 (SC) and Malayala Manorama Co. Ltd (2008) 300 ITR 251 (SC) : 2008 TaxPub(DT) 1900 (SC). Distinguished:Bharat Overseas Bank v. CIT (2013) 152 TTJ 546 (Chen-Trib) : 2013 TaxPub(DT) 174 (Chen-Trib) and CIT v. Bhagwan Dass (2005) 272 ITR 367 (All-HC) : 2005 TaxPub(DT) 391 (All-HC).
REFERRED :
FAVOUR : In assessee's favour.
A.Y. :
IN THE ITAT, MUMBAI BENCH
 SUBSCRIBE FOR FULL CONTENT
|