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2016 Supreme(P&H) 98
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
AJAY KUMAR MITTAL, RAJ RAHUL GARG, JJ.
M/s. Cairn India Limited - Petitioner
Vs.
Deputy Commissioner of Income Tax and another - Respondents
CWP No. 1089 of 2016
Decided on : 20.1.2016
Advocate Appeared:
Mr. C.S. Aggarwal, Mr. Prakash Kumar, Mr. Ashim Aggarwal, Mr. Pawan Kumar, for the petitioner
The main legal point established in the judgment is that statutory remedies should be availed of when a right or liability is created by a statute, and the availability of alternative remedies for challenging assessment orders under the Act.
Headnote:
MAT - Income Tax - Section 115JB of the Income Tax Act, 1961 - [Section 115JB] - The court discussed the provisions of Section 115JB of the Income Tax Act, 1961, which deals with the computation of book profit for the purpose of Minimum Alternate Tax (MAT). The court highlighted the procedure to be followed by the Assessing Officer before passing a final assessment order, as laid down in Section 144C of the Act. The court also emphasized the availability of alternative remedies for challenging assessment orders under the Act.
Fact of the Case:
The petitioner, a resident company engaged in the business of minerals, oils, petroleum, gas, and related activities, challenged the recomputation of book profit for the purpose of MAT under Section 115JB of the Income Tax Act, 1961. The Assessing Officer had proposed adjustments to the total income and book profits, which were upheld by the Dispute Resolution Panel.
Finding of the Court:
The court found that the petitioner should avail the alternative remedy of appeal against the orders passed by the authorities, as the impugned orders were appealable under the Act. The court cited precedents to emphasize the principle that statutory remedies should be availed of when a right or liability is created by a statute.
Issues: The issues involved included the recomputation of book profit for MAT, the procedure to be followed by the Assessing Officer before passing a final assessment order, and the availability of alternative remedies for challenging assessment orders under the Act.
Ratio Decidendi: The court's decision was based on the principle that statutory remedies should be availed of when a right or liability is created by a statute. The court emphasized the availability of alternative remedies for challenging assessment orders under the Act and dismissed the petition, stating that the petitioner should avail the alternative remedy of appeal.
Final Decision: The petition was dismissed, and the court directed the petitioner to avail the alternative remedy of appeal against the orders passed by the authorities.
Ajay Kumar Mittal, J.
1. The petitioner prays for quashing the impugned orders dated 30.11.2015 and 20.2.2015, Annexures P.1 and P.2 passed by respondent No.2 in recomputing the book profit for the purpose of Minimum Alternate Tax (MAT) under Section 115JB of the Income Tax Act, 1961 (in short, “the Act”) by increasing the book profit by making an addition of amount of Rs.253.87 crores as depreciation in the profit and loss account.
2. A few facts relevant for the decision of the controversy involved as narrated in the petition may be noticed. The petitioner company Cairn India Limited is a resident company incorporated under the Erstwhile Companies Act, 1956 on 21.8.2006. It is listed on Bombay and National Stock Exchange of India. It is engaged in the business of surveying, prospecting, drilling and exploring, acquiring, developing, producing, maintaining, refining, storing, trading/supplying, transporting, marketing, distributing, importing, exporting and generally dealing in minerals, oils, petroleum, gas and related byproducts and other activities incidental to the above. As part of its business activities, the petitioner company also holds interests in its subsidiary companies which have been granted rights to explore and develop oil exploration blocks in India. The petitioner company entered into production sharing contracts (PSCs) in respect of certain blocks/oil and gas fields. In the revised return filed by the petitioner company on 26.3.2013, it declared total income of Rs.417,20,94,924/- as per the provisions of the Act and adjusted book profit of Rs.3505,76,69,697/- under section 115JB of the Act. The return was processed under section 143(1) of the Act. The case was selected for scrutiny under the Act. During the course of assessment proceedings, a reference was made by the Assessing Officer to the Transfer Pricing Officer (TPO) for determining Arm's length Price (ALP) under Section 92CA(3) of the Act in respect of international transactions undertaken by the petitioner during the assessment year in question. Vide order dated 22.1.2015, the TPO proposed adjustment of Rs.171,44,78,562/- under Section 92CA(3) of the Act. The petitioner filed various letters before the Assessing Officer. The Assessing Officer in the draft assessment order dated 20.2.2015, Annexure P.2 in addition to accepting the adjustments made by the TPO also proposed an adjustment of Rs.1,89,67,74,272/- to total income computed under the provisions of the Act. Further, an amount of Rs.2,69,22,99,920/- was adjusted to book profits under section 115JB of the Act. The petitioner is only challenging action of respondent No.1 in proposing to increase book profit by Rs.253,87,76,138/- as a result of recomputation of book profit for the purpose of MAT under section 115JB of the Act Thereafter, the petitioner filed objections to the legality of the draft assessment order before the Dispute Resolution Panel I, New Delhi (DRP) i.e. respondent No.2 on 20.3.2015. Respondent No.2 vide order dated 30.11.2015, Annexure P.1 under Section 144C(5) of the Act upheld the computation of book profit for the purpose of MAT made by the Assessing Officer under section 115JB of the Act in the draft assessment order. Hence the instant writ petition by the petitioner.
3. We have heard learned counsel for the petitioner.
4. A perusal of the averments made in the petition shows that before passing the assessment order, a reference was made to the TPO by the Assessing Officer for determining ALP under section 92CA(3) of the Act in respect of international transactions undertaken by the petitioner during the assessment year in question. Section 144C of the Act lays down the procedure to be followed by the Assessing Officer before he can pass a final assessment order. The DRP on receipt of objections by the assessee under section 144C(2) of the Act issues directions under section 144C(5) of the Act to the Assessing Officer to enable him to complete the assessment. In the
