IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘F’: NEW DELHI BEFORE, SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER AND SHRI VIMAL KUMAR, JUDICIAL MEMBER ITA No.3210/Del/2019 (ASSESSMENT YEAR 2015-16)

Date of Hearing 16/04/2024 Date of Pronouncement 26/04/2024

ORDER

PER S.RIFAUR RAHMAN, AM:

This appeal has been filed by the Assessee against the order of Learned Commissioner of Income Tax (Appeals)-9, New Delhi [“Ld. CIT(A”, for short], dated 25/01/2019 for Assessment Year

2018-19.

2. The revised grounds raised by the Assessee are as under: “1. On the facts and circumstances of the case and in law, Ld. CIT(A) has erred in confirming the action of determining the Appellant's book profits at Rs.1,62,27,467/- as against book loss of Rs.2,15,89,896/- declared by the appellant without appreciating the fact that demerger profit of Rs. 3,78,17,363 is a capital profit and need not be treated as profit from business operations and credited to the profit or loss account of the current year.

2. On the facts and circumstances of the case and in law, Ld. CIT(A) has failed to appreciate the fact that Rs 3,78,17,363 added by the Learned AO represents inter-company loan taken from parent entity (i.e., the transferee company) which has been cancelled pursuant to transfer of demerged business undertaking.

3. On the facts and circumstances of the case, and in law Ld. CIT(A) has erred in law and in confirming the act of AO of charging interest u/s 234B and 234C on the appellant.

4. On the facts and circumstances of the case and in law, LD. CIT(A) has erred in passing the appellate order in the name of non-existent company.

5. That the above grounds are mutually exclusive and are without prejudice to each other.

6. That the appellant craves the leave to add, modify, amend, or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other.”

3. At the time of hearing, the Ld. AR of the assessee submitted that the issue involved in Grounds No.1 & 2 are similar issue relating to book profit u/s 115JB of the Income Tax Act, 1961 (‘the Act’ for short) and Ground No.3 is consequential in nature, however, requested for direction u/s 234B and 234C of the Act.

4. With regard to Ground No.4, the Ld. AR submitted that the assessee is not pressing this ground. Accordingly, Ground No.4 is dismissed as not pressed.

5. With regard to Ground Nos.5 & 6 are general in nature, accordingly not adjudicated.

6. Coming to the consolatory issue of book profit u/s 115JB of the Act in Ground Nos. 1 & 2, the relevant facts are, the assessee filed its return of income on 29/09/2015 declaring a returned loss of Rs.2,42,36,110/-. The case was selected for limited scrutiny through CASS and notices u/s 143(2) and 142(1) were issued and served upon the assessee. Subsequently, the case was converted to complete scrutiny from limited scrutiny after obtaining proper approval.

7. The assessee is engaged in the business of providing messaging products and services and value added services for various communication media like GSM, CDMA and TDMA telecom networks, WI-FI Network Wide Networks and Local Area Network etc. In response to the various notices, the Ld. AR of the assessee attended and submitted the relevant information as called for. During the course of assessment proceedings, the Assessing Officer observed from the Notes No.21 of the financial statement submitted by the assessee. In the above said note No.21, the assessee has declared the treatment in its books of accounts for the demerger.

The same was reproduced for the sake of convenience:

“In the books of Demerged Company i) On the Scheme becoming effective and with effect from the Appointed Date, the book value of assets and liabilities of Mobilit