Antony Lara Enviro Solutions Pvt. Ltd Vs PCIT (ITAT Mumbai)
This appeal before the Income Tax Appellate Tribunal, Mumbai concerned the validity of a revisionary order passed under section 263 of the Income-tax Act, 1961, for the assessment year 2020–21. The assessee challenged the jurisdiction assumed by the Principal Commissioner of Income-tax (PCIT), contending that the revision was based merely on a change of opinion and not on any real error in the assessment order.
The assessment for the year was completed under section 143(3) on 09.09.2022, wherein the Assessing Officer (AO) accepted the returned income under both normal provisions and the Minimum Alternate Tax (MAT) provisions. Subsequently, the PCIT examined the assessment records and formed a prima facie view that the AO had failed to conduct adequate inquiry regarding the inclusion of one-fifth of a “transition amount” under section 115JB(2C) while computing book profit for MAT purposes.
The transition amount in question arose from the first-time adoption of Indian Accounting Standards (Ind-AS) with effect from 01.04.2017. The total transition amount was ₹41.40 crore, of which one-fifth, amounting to ₹8.28 crore, was added to book profits each year as mandated by section 115JB(2C). According to the PCIT, the assessee had erroneously included adjustments relating to capital reserve and securities premium in the transition amount, even though clause (iii) of the Explanation to section 115JB(2C) required their exclusion. The PCIT further observed that no specific inquiry on this aspect appeared to have been conducted during the assessment proceedings for A.Y. 2020–21. On this basis, relying on Explanation 2(b) to section 263, the PCIT held the assessment order to be erroneous and prejudicial to the interests of the Revenue and set it aside for limited verification.
