By TIOL News Service

MUMBAI, JAN 02, 2017: THE issue is - Whether an issue which was never the subject matter of consideration in an order passed u/s 143(3) r/w/s 254, can be sought for rectification u/s 154. NO IS THE VERDICT.

Facts of the case:

The assessee had filed its return claiming book profit. Though the same was accepted during assessment, but only after allowing of amounts set aside as provisions for diminution in the value of assets. Assessee being aggrieved by the assessment & certain other issues preferred an appeal to the ITAT, who restored some of the issues. Consequent to above, AO passed an order u/s 143(3) r/w Section 254 giving effect to the order of the Tribunal. In view of amendment to Section 115JB, AO passed an order u/s 154 & rectified its order. This order of AO u/s 154 r/w Section 143(3) increased the book profits u/s 115JB by adding to it the amounts set aside as provision for diminution in value of assets. On appeal, Tribunal held that in the present facts, assessment order passed u/s 143(3) did not merge with the order passed u/s 143(3) r/w 254.

On appeal, the HC held that,

++ This court is of the view that the issue stands concluded by the decision of this Court in Sakseria Cotton Mills Ltd. in favour of the assessee and against the Revenue. The distinction sought to be made by the Revenue on the basis of the amendment to Section 115JB in 2009 with retrospective effect from 2001 does not address the fundamental issue of nonmerger of the order dated 27th February, 2004 with the order dated 30th December, 2008. Therefore, any rectification of the order dated 27th February, 2004 is required to be done within 4 years from 27th February, 2004 as provided u/s 154. It is not disputed before us that issue of the provisions made for diminution in value of assets which is sought to be rectified is an issue which was never the subject matter of consideration in the order dated 30th December, 2008 passed u/s 143(3) r/w Section 254. Therefore, in these circumstances, it could not be rectified u/s 154. Thus, the distinction sought to be made is of no consequence. The decision of Court in Sakseria Cotton Mills Ltd. would apply to facts the present case and no fault can be found with the impugned order in following the decision of this Court. In the above view, the question as proposed does not give rise to any substantial question of law.

(See 2017-TIOL-07-HC-MUM-IT)