Central Hatcheries Pvt Ltd Vs ACIT (ITAT Jabalpur)
Summary: The assessee-company’s return for AY 2022-23 was processed under Section 143(1). While computing book profit under Section 115JB, the CPC made an adjustment concerning the treatment of agricultural income and the assessee’s share of profit from a partnership firm, resulting in a MAT demand of ₹2.42 lakh. The assessee contended that the adjustment involved a debatable issue beyond the limited scope of Section 143(1), that agricultural income and the share of profit from the partnership firm should be excluded from book profit, and that the CIT(A) had failed to adjudicate the specific ground concerning the share of profit from the firm. The assessee relied upon T.S. Balaram, ITO v. Volkart Brothers, (1971) 82 ITR 50 (SC), on the scope of a mistake apparent from the record. The Jabalpur ITAT observed that the CIT(A), while upholding the CPC adjustment, discussed the treatment of agricultural losses but did not consider the assessee’s submissions regarding its share of profit from the partnership firm. Accordingly, without deciding the merits, the Tribunal set aside the CIT(A)’s order and restored the appeal for fresh adjudication, with directions to consider all the issues and provide the assessee an adequate opportunity of hearing. The appeal was allowed for statistical purposes.
CIT(A) Failed to Adjudicate Exclusion of Partnership Profit While Computing MAT; Jabalpur ITAT Orders Fresh Decision
The assessee-company’s return for AY 2022-23 was processed under Section 143(1). While computing book profit under Section 115JB, the CPC made an adjustment concerning the treatment of agricultural income and the assessee’s share of profit from a partnership firm, resulting in a MAT demand of ₹2.42 lakh.
The assessee contended that:
- the adjustment involved a debatable issue beyond the limited scope of Section 143(1);
- agricultural income and the share of profit from the partnership firm should be excluded from book profit;
- the relevant figures were supported by its audited profit and loss account; and
- the CIT(A) failed to adjudicate the specific ground concerning the share of profit from the firm.
The Jabalpur ITAT observed that the CIT(A), while upholding the CPC adjustment, discussed the treatment of agricultural losses but did not consider the assessee’s submissions regarding its share of profit from the partnership firm.
Accordingly, without deciding the merits, the Tribunal set aside the CIT(A)’s order and restored the entire appeal for fresh adjudication, with directions to consider all the issues and provide the assessee an adequate opportunity of hearing.
List of Cases Discussed / Relied Upon
- T.S. Balaram, ITO v. Volkart Brothers,(1971) 82 ITR 50 (SC) — relied upon by the assessee for the proposition that a mistake apparent from the record must be an obvious and patent mistake and not one requiring a long-drawn process of reasoning.
FULL TEXT OF THE ORDER OF ITAT JABALPUR
This appeal, by the assessee, is directed against the order of the Learned Addl/Joint Commissioner of Income-tax (Appeals)- 11, Delhi dated 20.03.2025 pertaining to the assessment year 2022-23. The assessee has raised the following grounds of appeal: –
“1. On the facts and in the circumstances of the case, the learned Commissioner of Income Tax (Appeals) [CIT(A)] has erred in not treating the intimation issued under section 143(1) as invalid in law, particularly when it involves debatable issues, as held by the Hon’ble Supreme Court in T.S. Balaram v. Volkart Bros. (1971) 82 ITR 50 (SC).
2. The learned CIT (A) has erred in law and on facts in not allowing the deduction of agricultural income and share of profit from a partnership firm from the book profit as per the audited profit and loss account while computing Minimum Alternate Tax (MAT) liability under Section 115JB of the Act. Accordingly, the liability arose on the above front may kindly be deleted.
3. On the facts and circumstances of the case, the ld. CIT (A) has not dealt the issue of share profit from firm to be eligible item for deduction from book profit as per audited profit and loss account in its discussion and hence forth the ground of assessee’s appeal has not been dealt properly for calculating MAT and hence forth the liability arose on the above front may kindly be deleted on account of natural justice also.
4. On the facts and circumstances of the case, the la. CIT (A) have erred in not examining the fact of the case from Income Tax Return and Computation of Income and as considering the profit from agriculture activity as loss from agriculture activity and henceforth demand raised on account of MAT of Rs 2,41,800/-may kindly be deleted.
5. On the facts and circumstances of the case, taxpayer denies its liability to pay demand of Rs 2,41,800/- being incorrect and against law.
6. On the facts and in the circumstances of the case the ld. AO was not justified in charging interest under section 234A, 234B and 234C of the Act considering the remand context and absence of mens rea or concealment.
7. The appellant craves leave to add or amend any ground of the appeal.”
2. The facts giving rise to the present appeal are that the assessee filed its return of income for the relevant assessment year, the return was processed u/s 143(1) of the Income-tax Act, 1961 (“Act”, for short), and while processing the return, the income and tax liability of the assessee were determined after making an adjustment in respect of the computation of book profit u/s 115JB of the Act. Consequently, a demand of Rs.2,41,800/- was raised against the assessee on account of MAT liability. Aggrieved against this, the assessee preferred an appeal before the CIT(A) who dismissed the appeal of the assessee. Now, the assessee is in appeal before the Tribunal.
3. Apropos to the grounds of appeal, the Ld. Counsel for the assessee submitted that the intimation issued under section 143(1) of the Act was not sustainable in law insofar as the adjustment made therein involved a debatable issue. He submitted that the scope of adjustment u/s 143(1) of the Act is limited and an issue requiring interpretation of law or examination of disputed facts cannot be treated as a mistake apparent from the record. In support of his contention, the learned Counsel placed reliance upon the judgment of the Hon’ble Supreme Court in T.S. Balaram, ITO v. Volkart Brothers, (1971) 82 ITR 50 (SC), and submitted that a mistake apparent from the record must be an obvious and patent mistake and not one which requires a long-drawn process of reasoning. The learned Counsel further submitted that the assessee had furnished the audited profit and loss account along with the return of income and computation of income. The Ld. Counsel pointed out that the assessee had also taken a specific ground regarding share of profit from the partnership firm. This ground has not been adjudicated by the Ld. CIT(A).
4. On the other hand, the Ld. Departmental Representative for Revenue strongly supported the orders of the lower authorities.
5. Heard the rival submissions of the parties and perused the material available on record. The first issue arising for our consideration is whether the adjustment made while processing the return u/s 143(1) of the Act was within the permissible scope of the said provision. The assessee’s case is that the adjustment involved determination of the correct book profit u/s 115JB of the Act and treatment of agricultural income and share of profit from the partnership firm. Looking to the facts of the present case, I find that the Ld. CIT(A) while adjudicating the issue whether CPC could have made adjustment did not advert to the submissions of the assessee on the issue of share of profit from the partnership firm. For the sake of clarity, the relevant contents of the appellate order are reproduced herein below: –
“4. Submission of the appellant and material available on records have been considered carefully. The appellant requested to quash the processing order by CPC and liability assessed of Rs. 2,41,800/- on account of MAT liability may kindly be deleted. As per Income Tax Act, where the net result of computation of agricultural income from various sources is a loss, the loss will be disregarded and the net agricultural income of the assessee shall be taken as Nil. Further, loss incurred in agriculture will be allowed to be set off against gains from agriculture. No set off will, however, be allowed in respect of an assessee’s share in the agriculture loss of an association of persons or a body of individuals. Keeping in view the above facts, I donot find any infirmity in the processing order u/s 143(1) of the Income Tax Act by CPC for the Asstt. Year 2022-23 in the case under consideration and the claim of the appellant on this account has no force and requires rejection. The judicial cases reported by the appellant is not identical with the case under consideration. Grounds of appeal of the appellant for the Asstt. Year 2022- 23 is dismissed.
6. Hence, considering the facts that the issue raised by the assessee and the submissions made thereon by the assessee are not considered. I deem it proper and expedient in the interest of justice to set aside the impugned order and restore the appeal to the file of the Ld. CIT(A) to decide it afresh, after giving adequate opportunity of hearing to the assessee. Grounds raised in this appeal are allowed for statistical purpose.
7. In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 21/08/2026.
