IBS Software Private Limited Vs Union of India (Kerala High Court)
Summary: The petitioner, IBS Software Private Limited, is a private limited company and an assessee under the Income Tax Act, 1961. For assessment year 2020-21, the petitioner’s return was subjected to scrutiny and the assessment was finalised. Subsequently, the petitioner received a notice under Section 148A proposing reassessment on the ground that certain income had escaped assessment.
The basis of the proposed reassessment was an amount of Rs.8,05,92,988/- claimed as a deduction towards “Marked to Market valuation of hedge reserve”. According to the proposed basis, deduction was not allowable under Section 40A(13) in respect of marked-to-market valuation of hedge reserve computed in accordance with ICDS VI.
The petitioner initially sought an adjournment. Thereafter, by email dated 07.11.2024, it explained that the sum of Rs.8,05,92,988/- deducted in the computation for AY 2020-21 had already been included in its tax computation for AY 2019-20. The petitioner furnished computation statements for AYs 2019-20 and 2020-21 in support of its explanation. According to the petitioner, the amount had already been included in taxable income for AY 2019-20 and had suffered tax, and its deduction while preparing the computation for AY 2020-21 was an accounting consequence.
