Gebbs Healthcare Solutions P Ltd Mumbai v. Dcit 8 1 Mumbai

In The Income Tax Appellate Tribunal G Bench Mumbai Before Shri B R Baskaran Am Shri Ram Lal Negi Jm I T A No 87 Mum 2016 Assessment Year 2008 09 M S Gebbs Healthcare Solutions Pvt Ltd Gebbs House 13 Th Street Central Road Midc Marol Andheri E Mumbai 400093 Vs Dy Commissioner Of Income Tax 8 1 Mumbai Appellant Respondent Pan No Aalcs 4978 H Assessee By Shri A V Sonde Department By Shri V Vidhyadhar Date Of Hearing 22 1 1 2017 Date Of Pronouncement 20 12 2017 O R D E R Per B R Baskaran Am The Assessee Has Filed This Appeal Challenging The Order Dated 28 10 2015 Passed By Ld Cit A 16 Mumbai And It Relates To The Assessment Year 2008 09 The Assessee Is Aggrieved By The Decision Of Ld Cit A In Confirming The Rejection Of Rectification Petition Filed By The Assessee U S 154 Of The Act 2 The Facts Relating To The Issue Are Discussed In Brief The Assessee Is Engaged In The Business Of Providing Revenue Cycle Management Rcm Services To Health Care Industry It Is Registered With Seepz And Located In Special Economic Zone Under The Export Oriented Unit Scheme Approved By 2 M S Gebbs Healthcare Solutions Pvt Ltd Ita No 87 Mum 2016 Central Government It Originally Filed Its Return Of Income On 30 09 2008 Declaring A Loss Of Rs 19 876 Consequent To Demerger Order Approved By The High Court The Bpo Division Of The Associate Conce Rn Gebbs Technologies Ltd Was Merged With The Appellant Company W E F 1 4 2007 Therefore The Assessee Filed A Revised Ret Urn Of Income Post Merger On 17 03 2009 In The Revised Return Of Income The Assessee Declared Its Total Income At Nil After Claiming Deduction Of Rs 329 65 Lakhs U S 10 B Of The Act 3 With Regard To The Computation Of Book Profit U S 115 Jb Of T He Act The Assessee Computed The Same At Nil After Claiming Deduction Of Profit Of 10 B Unit Under Clause Ii Of Explanation 1 To Sec 115 Jb However The Assessee Also Added Following Note To The Statement Of Total Income As The Unit Is Located In Sez No Tax On Book Profit Is Chargeable As Per Sec 115 Jb 6 Of Income Tax Act 4 It Is Pertinent To Note That The Ao Had Rejected The Claim For Deduction U S 10 B Of The Act In The Earlier Years But The Same Was Reversed By The Tribunal Since The Revenue Had Preferred Appeal Before The High Court Challenging The Decision Of The Tribunal The Ao Preferred To Disallow The Claim Under Normal Provisions Of The Act Accordingly The Ao Did Not Allow Deduction U S 10 B Of The Act Under Normal Provisions O F The Act It Is Also Pertinent To Note That The Assessee Has Also Accepted Its Liability For Tax U S 115 Jb Of The Act And Also Filed A Working Of Book Profit U S 115 Jb Of The Act During The Course Of Assessment Proceeding Accordingly T He Ao Also Comput Ed The Book Profit U S 115 Jb Of The Act Without Allowing Any Deduction Accordingly The Ao Determined The Book Profit At Rs 401 32 Lakhs And Total Income As Per Normal Provisions Of The Act At Rs 329 65 Lakhs 3 M S Gebbs Healthcare Solutions Pvt Ltd Ita No 87 Mum 2016 5 Thereafter The Assessee Moved A Re Ctification Petition Dated 15 05 2013 Before The Ao U S 154 Of The Act Seeking Rectification Of The Assessment Order It Was Submitted That The Provisions Of Sec 115 Jb 6 Is Applicable To The Assessee Since Its Unit Is Located In Special Economic Zone As Per Sec 115 Jb 6 There Is No Mat Liability For Profits Arising From Unit Carrying On Business In Special Economic Zone The Assessing Officer Noticed That The Assessee Itself Has Accepted Its Liability Under Mat Provisions Accordingly He Took The View That The Action Of The Assessee Admitting The Liability Under Mat Does Not Constitute Mistake Apparent From Record He Also Took The View That The New Claim C Ould Be Made Only By Filing Revised Return Of Income As Held By Honble Supreme Court In The Case Of Goetz India Ltd Vs Cit 284 Itr 323 Accordingly He Rejected The Petition Filed By The Assessee 6 The Ld Cit A Also Rejected The Appeal Filed By The Assessee On The Reasoning That A The Assessee Itself Admitted That The Exemption Claimed U S 10 B Would Not Be Available While Computing The Book Profit U S 115 Jb Of The Act B The Question Of Allowability Of Exemption U S 10 B Involved Lots Of Interpretation Of Facts And Law Therefore It Cannot Be Treated As A Mistake Apparent From The Record Further The Matter Is Still Pending For Adjudication Before Appellate Authorities And It Has Not Reached Any Finality Aggrieved By The Order Passed By Ld Cit A The Assessee Has Filed This Appeal Before The Tribunal 4 M S Gebbs Healthcare Solutions Pvt Ltd Ita No 87 Mum 2016 7 We Have Heard T He Parties And Perused The Record The Ld A R Submitted That The Ld Cit A Has Misdirected Himself That The Assessee Is Claiming Deduction Of Profits Of Sec 10 B Unit While Computing The Book Profit U S 115 Jb Of The Act He Submitted That The Exemption F Rom The Provision Of Mat For Sec 10 B Units Has Been Omitted W E F 1 4 2008 And This Fact Has Escaped The Attention Of Ld Cit A T He Ld A R Submitted That The A Ssessee Has In Fact Sought Deduction U S 115 Jb 6 Of The Act Which It Had Indicated In The Statement Of Total Income Filed Along With The Revised Return Of Income Hence The Ld Cit A Was Not Correct In Observing That The Deduction Claimed By The Assessee U S 10 B Of The Act Is Subject Matter Of Dispute Before The Tax Authorities Which Was Not The Case Of The Assessee At All He Submitted That The Assessee Had Claimed Deduction U S 10 B While Computing Total Income Under Normal Provisions Of The Act However It Has Filed Rectification Petition In Connection With Book Profit Computed U S 115 Jb Of The Act 8 He Submitted That The Assessee Has Inadvertently Accepted The Liability U S 115 Jb Of The Act During The Course Of Assessment Proceedings He Submitted That The Circular No 14 Xl 35 Of 1955 Requires The Ao To Draw The Attention O F The Assessee To The Reliefs Available To The Assessees He Submitted That The Above Said Circular Was Applied In The Case Of Chokshi Metal Refinery Vs Cit 1977 107 Itr 63 Guj 9 The Ld A R Further Submitted That There Is No Estoppel Against Law And Hence The Tax Authorities Should Not Have Rejected The Rectification Petition Of The Assessee On The Reasoning That The Assessee Itself Has Accepted The Liability U S 115 Jb Of The Act In Support Of This Proposition The Ld A R Placed Reliance On The Decision Rendered By Honble Supreme Court In The Case Of Kalidas Dhajibhat Vs The State Of Bombay S Air 1955 Sc 62 Vol 42 Cn 5 M S Gebbs Healthcare Solutions Pvt Ltd Ita No 87 Mum 2016 15 He Submitted That The Co Ordinate Bench Of Itat Has Held As Under In The Case Of Steelfab Engineering Corpn India Vs Acit 2012 54 Sot 79 28 It Is Quite Settled Proposition That Any Claim For Deduction Under Income Tax Act Are Dependent Upon The Conditions Laid Down Under The Provisions Of The Act And There Are Requisite Formalities Which Are Required To Be Done As Per The Law Once These Conditions Are Fulfilled The Assessee Is Entitled For Statutory Deduction Or Claim To Which He Is Entitled To Mere Consent Or Acquiescence By The Assessee Cannot Take Away The Otherwise A Legitimate Claim To Which He Is Entitled To It Is An Admitted Position Of Law That An Admission Or Acquiescence Cannot Be A Foundation For Assessment Where The Income Is Returned Under Erroneous Impression Or Misconception Of Law 10 He Submitted That An Income Which Is Otherwise Not Taxable Cannot Be Brought To Tax By The Assessing Officer Such Kind Of Errors Can Be Rectified U S 154 Of The Act For This Proposition The Ld A R Placed Reliance On The Decision Rendered By Honble Calcutta High Court In The Case Of West Bengal State Warehousing Corporation 157 Itr 149 He Submitted That The Assessee Had Initially Claimed Deduction U S 115 Jb 6 By Way Of A Note Later It Withdrew The Claim Through A Letter And Again Sought The Deduction In The Petition Hence It Cann Ot Be Considered As A Fresh Deduction Claimed So As To Attract The Decision Rendered In The Case Of Goetze India Ltd Supra 11 He Further Submitted That The Tax Collected Against The Authority Of Law Can Be Challenged At Any Stage And For This Prop Osition The Ld A R Took Support Of Decision Rendered By Honble Bombay High Court In The Case Of Nirmala L Mehta Vs A Balasubramaniam Cit 269 Itr 1 6 M S Gebbs Healthcare Solutions Pvt Ltd Ita No 87 Mum 2016 12 On The Contrary The Ld D R Strongly Supported The Order Passed By Ld Cit A 13 We Hav E Heard Rival Contentions And Perused The Record We Notice That The Assessing Officer Has Rejected The Rectification Filed By The Assessee Only On The Reasoning That The Assessee Itself Has Withdrawn The Deduction And Further Fresh Claims Can Be Made Only By Way Of Filing Revised Return Of Income The Ld Cit A As Pointed Out By Ld A R Has Misdirected Himself By Referring To Deduction Claimed U S 10 B Of The Act While The Claim Of The Assessee In The Rectification Petition Was For Deduction U S 115 Jb 6 Of The Act However A Perusal Of The Statement Of Total Income Of The Assessee Would Show That The Assessee Had Initially Claimed Deduction U S 10 B Which Was Not Available To It A Note Was Appended To The Statement Of Total Income That It Is Eligible For Deduction U S 115 Jb 6 Of The Act To The Income Derived From The Business Unit Located In Special Economic Zone However Subsequently For The Reasons Best Known To It The Assessee Agreed To Pay Tax On Book Profit U S 115 Jb Of The Act Subsequently It Again Realised That It Is Not Liable To Pay Tax Under That Section Because Of Provisions Of Sec 115 Jb 6 Of The Act 14 We Notice That The Ao As Well As Ld Cit A Has Not Stated That The Assessee Is Not Eligible For Deduction U S 115 Jb 6 Of The Act They Have Only Stated That The Assessee Itself Has Agreed To Pay Tax U S 115 Jb Of The Act By Withdrawing Its Claim The Undisputed Legal Proposition Is That There Is No Estoppel Against The Law As Enunciated By Honble Supreme Court In The Case Of K Alidas Dhajibhat Vs The State Of Bombay Supra This Proposition Has Been Explained Very Well By The Co Ordinate Bench In The Case Of Steelfab Engineering Corpn India Vs Acit Supra 7 M S Gebbs Healthcare Solutions Pvt Ltd Ita No 87 Mum 2016 15 We Notice That The Cbdt In Its Circular Referred Supra Has Cast A Duty On The Assessing Officer To Make The Assessees About The Reliefs Available To Them The Said Circular Was Also Accepted In The Case Of Chokshi Metal Refinery Supra By Honble Gujarat High Court Undisputedly The Assessee Is Eligible Fo R Deduction U S 115 Jb 6 Of The Act Which The Assessing Officer Has Failed To Bring To The Notice Of The Assessee When The Assessee Has Realised Its Mistake It Has Filed The Impugned Rectification Petition Thus The Error Pointed By The Assessee Is V Ery Much Glaring And Obvious Hence The Same Requires Rectification U S 154 Of The Act As Held By Honble Calcutta High Court In The Case Of West Bengal State Warehousing Corporation Supra 16 We Have Noticed That The Ld Cit A Has Taken The View Th At The Issue Of Deduction U S 10 B Is Debatable In Nature And Hence The Same Falls Outside The Scope Of Sec 154 Of The Act We Have Earlier Noticed That The Claim Of The Assessee Related To Sec 115 Jb 6 Of The Act And The Ld Cit A Has Misdirected Himsel F In This Regard By Presuming That The Claim Was U S 10 B We Have Also Noticed That The Deduction U S 10 B Of The Act Is No Longer Available While Computing Book Profit U S 115 Jb Of The Act The Assessing Officer Has Taken The Support Of Decision Rendered In The Case Of Goetz India Ltd We Notice That The Ld A R Has Rightly Pointed Out That The Ao Was Not Correct In Referring To That Decision In The Facts And Circumstances Of The Case Even Otherwise It Is A Mistake Very Much Glaring And Obvious And H Ence Requires Rectification It Is Also Settled Proposit Ion That Income Tax Cannot Be Collected Without The Authority Of Law 17 In View Of The Foregoing Discussions We Are Of The View That There Is M Erit In The Rectification Petition Filed By The Assessee We Notice That There Is Merit In The Claim For Deduction U S 115 Jb 6 Of The Act And The Same Needs To Be Allowed As Per The Requirement Of The Act While Computing Book Profit 8 M S Gebbs Healthcare Solutions Pvt Ltd Ita No 87 Mum 2016 U S 115 Jb Of The Act Accordingly We Set Aside The Order Passed By Ld Cit A And Direct The Ao To Allow The Claim Made In The Rectification Petition Filed By The Assessee 18 In The Result The Appeal Of The Assessee Is Allowed Order Has Been Pronounced In The Open Court On 2 0 12 2017 Sd Sd Ram Lal Negi B R Baskaran Judicial Member Accountant Member Mumbai Dated 2 0 12 201 7 Ssl Copy Of The Order Forwarded To 1 The Appellant 2 The Respondent 3 The Cit A 4 Cit 5 Dr Itat Mumbai 6 Guard File By Order True Copy Dy Asstt Registrar Itat Mumbai