BNP Paribas India Holding (P) Ltd. v. ACIT

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The Tax Publishers2020 TaxPub(DT) 4222 (Mum-Trib)

INCOME TAX ACT, 1961

Section 250(6)

As 'Provision for diminution in the value of Investments' was disallowed/added back by assessee while computing its income for the year in which it was created, i.e., assessment year 2013-14, same thus could not have been included in its income for the year under consideration, i.e., assessment year 2017-18 in which it was reversed as inclusion of the same on its reversal in the books of acount during the year in question, i.e., assessment year 2017-18 would undoubtedly lead to a double taxation in assessee hands. Therefore, CIT(A) was not justified in declining to consider assessee's claim.

Appeal [CIT(A)] - Order of CIT(A) - CIT(A) not considered assessee's claim to exclude 'Provision for diminution in the value of investments' already added back by assessee in the year of creation -

Assessee company had created 'Provision for diminution in the value of Investments' during the year ended 31-3-2013. However, said provision was disallowed by assessee in its return of income for assessment year 2013-14. On reversal of said provision in the concerned assessment year 2017-18, AO added the same to income of assessee. On receipt of intimation under section 143(1) dated 30-3-2019 from CPC, Bangalore, wherein upward adjustment of income on account of reversal of 'Provision for diminution in the value of invetments' was made, assessee filed a rectification application which was not disposed off in the mean time case of assessee for year under consideration was selected for scrutiny assessment under section 143(2). Before AO assessee objected to upward adjustment of its income on account of reversal of the 'Provision for diminution in the value of Investments'. However, AO took the view that as assessee had not claimed any deduction of the 'Provision for diminution in the value of Investments' in 'Schedule BP' of its return of income, therefore, there was no reason for him to interfere as regards its income processed under section 143(1). Observing that no addition was being made in the assessment framed by him, AO assessed income vide his order passed under section 143(3), dated 26-6-2019. Aggrieved, assessee carried assessment order passed by AO under section 143(3), dated 26-6-2019 in appeal before CIT(A). CIT(A) concluded that as addition made on account of reversal of provision for diminution in the value of investments' did not emerge from order passed by AO under section 143(3), dated 30-3-2019, same could not be adjudicated upon by him. Held: As 'Provision for diminution in the value of Investments' was disallowed/added back by assessee while computing its income for the year in which it was created, i.e., assessment year 2013-14, same thus could not have been included in its income for the year under consideration, i.e., assessment year 2017-18 in which it was reversed as inclusion of the same on its reversal in the books of account during the year in question, i.e., assessment year 2017-18 would undoubtedly lead to a double taxation in assessee hands. Therefore, CIT(A) was not justified in declining to consider assessee's claim.

Supported by:CIT v. Pruthvi Brokers & Shareholders (P) Ltd. (2012) 349 ITR 336 (Bom) : 2012 TaxPub(DT) 2671 (Bom-HC), Commr. of Cus.(Imports), Mumbai v. Dilip Kumar and Company & Ors. [Civil Appeal No. 3327 of 2007, dated 30-7-2018] : 2018 TaxPub(EX) 737 (SC), Asstt. CIT, Circle 1, Jamnagar v. Rupam Impex (2016) 157 ITD 360 (Rajkot) : 2016 TaxPub(DT) 1098 (Rkt-Trib) and Dattatraya Gopal Bhotte v. CIT (1984) 150 ITR 460 (Bom) : 1984 TaxPub(DT) 1222 (Bom-HC).