November 2010
S. 154 read with S. 115JA of the Income-tax Act, 1961 — Rectification of mistake apparent from record — Provision for doubtful debts debited to Profit and Loss account — Book profit as per S. 115JA assessed without making any adjustment qua the said provi
By Jagdish D. Shah
Jagdish T. Punjabi
Chartered Accountants
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ACIT (OSD) v. GTL Limited
ITAT ‘G’ Bench, Mumbai
Before P. Madhavi Devi (JM)
and
Rajendra Singh (AM)
M.A. No. 746/Mum./2009
(Arising out of ITA No.
4019/mm/2007)
A.Y. : 1998-99. Decided on :
10-3-2010
Counsel for revenue/assessee
:
Mohd. Usman/K. Shivram and
Paras S. Savla
4. S. 154 read with S. 115JA
of the Income-tax Act, 1961 — Rectification of mistake apparent from record —
Provision for doubtful debts debited to Profit and Loss account — Book profit as
per S. 115JA assessed without making any adjustment qua the said provisions per
Tribunal order — By retrospective amendment such provision made liable for
inclusion in book profit — Whether AO justified in claiming that there was
mistake apparent from record and accordingly, rectifying the order — Held, No.
Per P. Madhavi Devi :
Facts :
The assessee had filed a
return of income for the A.Y. 1998-99 declaring the total income at Rs.11.62
crore u/s.115JA of the Act. The AO assessed the total income at Rs.34.63 crore.
Later on, it was noticed by the AO that the provision of doubtful debts of
Rs.18.99 lacs was not added back to the profit & loss account while computing
income u/s.115JA of the Act. Therefore, the AO passed an order u/s.154 of the
Act on 30-12-2004 adding back the provision for doubtful debts u/s.115JA of the
Act. On appeal the CIT(A) allowed the same relying upon the decision of the
Bombay High Court in the case of CIT v. Echjay Forgins (P) Ltd., (251 ITR 15).
The Tribunal vide order dated 17-3-2009 confirmed the order of the CIT(A).
Thereafter, by the Finance
Act, 2009 clause (g) was inserted in Explanation to S. 115JA(2) of the Act w.e.f.
A.Y. 1998-99 providing that provisions for doubtful debts and advances are
disallowable while calculating book profit u/s.115JA of the Act. Relying on the
decision of the Karnataka High Court reported in the case of M. Srinivasalu v.
UOI, (239 ITR 282), the Revenue contended that an order which is not in
accordance with the retrospective law can be rectified u/s.154 of the Act.
Held :
The Tribunal noted that in
respect of the year under appeal the Tribunal had already decided the case in
favour of the assessee by its order dated 17th March, 2009, whereas the
retrospective amendment of the provisions received the assent of the President
of India on 19-8-2009 i.e., after the order of the Tribunal was passed. Further
relying on the Bombay High Court decision in the case of Sudha S. Mehta, it held
that the assessment proceedings got concluded before the Tribunal under the then
existing law and, therefore, there was no mistake apparent from record in the
order of the Tribunal. Accordingly, the Revenue’s miscellaneous application was
dismissed.
