ACIT Vs Corro Health Infotech Pvt Ltd (ITAT Chennai)
The Chennai ITAT dismissed the Revenue’s appeal against the order of the Commissioner of Income Tax (Appeals) for AY 2022-23 concerning adjustments made by the Central Processing Centre (CPC) while processing the assessee’s return under Section 143(1) of the Income-tax Act. The Revenue challenged the deletion of an ICDS adjustment, restoration of carried forward loss/unabsorbed depreciation, and grant of prepaid tax credits.
The assessee, engaged in providing integrated revenue cycle management services in the global healthcare industry, had filed its return declaring nil taxable income and claimed carried forward unabsorbed depreciation. During processing under Section 143(1), CPC noticed a mismatch between the ICDS disclosures reported in Clause 13(e) of Form 3CD and the disclosures made in Schedule ICDS of the return. Treating the difference as under-reported income, CPC made an adjustment of ₹24,00,70,753, reduced the carried forward loss/unabsorbed depreciation, and did not grant prepaid tax credits amounting to ₹7,53,32,100.
Before the CIT(A), the assessee also filed a rectification application under Section 154. According to the assessee, CPC acknowledged that ICDS deviations had been wrongly treated as disallowances, although the rectification did not completely restore the returned loss. The CIT(A) held that the assessee had already considered the ICDS adjustments while filing the return. It observed that amortisation of Right-of-Use (ROU) assets amounting to ₹11,53,31,686 had already been disallowed under Schedule BP while computing business income and that any further adjustment would result in double disallowance. The CIT(A) further observed that CPC had considered only ICDS adjustments resulting in increase in profit while ignoring ICDS adjustments resulting in decrease in profit. It held that this selective consideration led to an incorrect computation of income and travelled beyond the scope of prima facie adjustments permissible under Section 143(1). The CIT(A) therefore directed deletion of the ICDS adjustment, restoration of the returned carried forward loss/unabsorbed depreciation, and grant of prepaid tax credits.
