- (1.) HEARD learned counsel for the parties.
(2.) FOLLOWING substantial question of law was framed at the time of admission of this appeal: "Whether on the facts and in the circumstances of the case the Ld. ITAT was not justified in directing to cancel the direction of Commissioner of Income Tax to the assessing Officer to reduce the eligible profit, by Rs.12,20,590/- for computing deduction allowable under Section 32AB of Income Tax Act." The detail facts may not be necessary in view of the brief question involved and it will suffice to state that by exercising power under Section 263 of the Income Tax Act, 1961, the Commissioner of Income Tax directed the A.O. to modify the assessment made by him and further directed to recalculate deduction under Section 32 AB after finding correct "eligible profit". He is also directed to reduce the eligible profit worked out by him by Rs.12,20,590/-. The above order was challenged by the assessee before ITAT, Patna Bench, Patna but by brief order dated 22.01.1999, ITAT again passed the order as under: "The A.O. is, therefore, directed to verify the above computation given by the ld. Counsel for the assessee in course of hearing before us showing the correct deduction permissible under Section 32 AB and allow the admissible deduction as per law. The direction of the CIT to the AO to reduce the eligible profit by Rs.12,20,590/- is hereby cancelled."
(3.) LEARNED counsel for the revenue submitted that the Tribunal had committed serious error of law by setting aside the direction issued by the CIT to the AO to reduce the eligible profit by Rs.12,20,590/- as such direction is contrary to what has been held by the Tribunal itself in its own order. According to learned counsel for the revenue, the Tribunal itself held that: "According to Section 32 AB the profit as per the P. & L. Account is required to be reduced by any amount or amounts withdrawn from the reserves of provisions if such amounts are credited to the Profit & Loss Account". Thus, the Tribunal held that there is no qualification mentioned in the Section that the reserves or provisions should have been created after Section 32 AB had come in to operation. There is no dispute about the fact that the amount withdrawn from the reserves or provisions had been credited to the Profit and Loss Account. Therefore, the amount withdrawn from the reserves or provisions credited to the Profit and Loss Account had to be deducted from the profit as per the Profit & Loss Account to arrive at the eligible profit for granting the relief u/s 32 AB of the Act and thereafter held that the direction of the CIT in his order u/s 263 to the AO to reduce the eligible profit worked out by the AO by Rs.12,20,590/- shall not appear to be correct. We are of the considered opinion that the Tribunal also directed the AO to consider the provisions of Section 32 AB and thereafter consider in the light of the said provisions to examine the statement of the Account given by the assessee which has been quoted in para-4 of the order of the Tribunal itself. But it appears that from the language it may be inferred that whatever assessee has stated before the Tribunal has been accepted to be correct and therefore, the operative part of the order of Tribunal appears to be erroneous as it itself has directed the AO to verify the above computation given by the counsel for the assessee whereas thereafter it has been observed that whatever computation has been given by the counsel for the assessee before the Tribunal is a correct computation. Therefore, this tax appeal is disposed of with direction to the AO to decide the matter in accordance with law under Section 32 AB by verifying the computation given by the assessee and by applying the law and may find out the correct computation uninfluenced by the order of the Tribunal or CIT, Appeals. The AO shall decide the matter preferably within a period of three months from the date of receipt of a copy of this order after giving opportunity to the parties.;