The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has held that a highly debatable issue does not fall within the ambit of a “mistake apparent from records” for the purpose of invoking section 154 of the Income Tax Act, 1961.
A division bench of the Tribunal comprising Shri Saktijit Dey, Judicial Member and Shri Pradip Kumar Kedia, Accountant Member was considering an appeal filed by the Revenue against Jammu Pigments Ltd.
Earlier, the Assessing Officer initiated proceedings under section 154 of the Act for rectification of the mistake arising due to non-disallowance of expenditure under section 14A read with Rule 8D while computing book profit under section 115JB of the Act and ultimately passed an order disallowing expenditure of Rs.20,63,500/- under section 14A read with Rule 8D while computing book profit under section 115JB of the Act.
Concluding the order in favour of the assessee, the Tribunal held that “it is apparent, subsequently, based on Revenue audit objection, the Assessing Officer initiated proceeding under section 154 of the Act to make the disputed disallowance while computing the book profit and ultimately did so. Therefore, it is evident, the 154 proceeding was at the behest of the Revenue audit. Applicability of section 14A read with Rule 8D to the provisions of section 115JB certainly is a highly debatable issue. Hence, it will not fall within the category of mistake apparent on the face of record as envisaged under section 154 of the Act.”
“In any case of the matter, in case of ACIT Vs. Vireet Investment Pvt. Ltd. [2017] 82 taxmann.com 415 (Delhi-Trib.) (SB) the Special Bench of the Tribunal has held that while computing book profit under section 115JB of the Act, no disallowance can be made with reference to section 14A read with Rule 8D,” the Tribunal said.
Sh. Anupama Singla, Sr. appeared for the respondent-assessee.
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