ISC Investment & Finance Pvt Ltd., CHENNAI V. DCIT, CHENNAI

CO 119/CHNY/2015

• Counselvise Citation: [2016] 112 COUNSELVISE.COM (IT) 4041 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 14 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 22-06-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 04-04-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 08-10-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: T BANUSEKAR
• Assessee Lawyers: H KABILA
• Keywords: Reopening of assessment; Depreciation; Revised return; Unabsorbed depreciation; Capital Gains
• Section: 143(3); 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , B B ENCH, CHENNAI . . . , . , & BEFORE SHRI N.R.S.GANESAN, JUDICIAL MEMBER AND SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NO.1826/MDS/2015 & C.O.NO.119/MDS/2015 (IN ITA NO.1826/MDS/2015) ( / ASSESSMENT YEAR: 2006-07) THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE-2(2), CHENNAI-600 034. VS M/S. ISC INVESTMENT & FINANCE PVT.LTD., 5, MEZZANINE FLOOR, THAPAR HOUSE, 37, MONTIETH ROAD, EGMORE, CHENNAI-8. PAN: AAACI6337B ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MS. H.KABILA, JCIT /RESPONDENT BY : MR. T.BANUSEKAR, C.A /DATE OF HEARING : 7 TH APRIL , 2016 /DATE OF PRONOUNCEMENT : 22 ND JUNE, 2016 / O R D E R PER A. MOHAN ALANKAMONY, AM: THE APPEAL AND THE CROSS OBJECTION ARE FILED BY THE REVENUE AND THE ASSESSEE RESPECTIVELY AGGRIEVED BY THE ORDERS OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-6, CHENNAI DATED 03.02.2015 IN ITA NO.135 /CIT(A)-6/2013-14 PASSED UNDER SECTION 143(3) R.W.S 147 & 250(6) OF THE ACT. 2. THE REVENUE HAS RAISED SEVERAL GROUNDS IN ITS AP PEALS, HOWEVER, THE CRUX OF THE ISSUE IS AS FOLLOWS:- 2 ITA NO.1826/MDS/2015 & & C.O.NO.45/MDS/2013 THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN DIRECTING THE LEARNED ASSESSING OFFICER TO ALLOW SET OFF AND BROUGHT FORWARD DEPRECIATION LOSS FROM THE ASSESSMENT YEAR PRIOR TO 2002-03 AGAINST LONG TERM CAPITAL GAINS OF THE ASSESSEE FOR THE RELEVANT ASSESSMENT YEAR. 3. IN THE CROSS OBJECTION THOUGH THE ASSESSEE HAS R AISED THREE GROUNDS, THE CRUX OF THE ISSUE IS THAT:- THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN SUSTAINING THE ORDER OF THE LEARNED ASSESSING OFFICER FOR REOPENING OF ASSESSMENT UNDER SECTION 147 OF THE ACT FOR THE RELEVANT ASSESSMENT YEAR. 4. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY IS ENGAGED IN THE BUSINESS OF SOFTWARE DEVELOPMENT ELECTRONIC TRANSFER - TRANSACTION PROCESSING SERVIC E, FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2006-07 O N 29.11.2006 DECLARING TOTAL INCOME OF ` 58,51,94,650/-. SUBSEQUENTLY, THE ASSESSEE FILED REVISED RETURN ON 26.02.2008 DECLARING INCOME OF ` 57,35,87,615/-. SUBSEQUENTLY THE CASE WAS SELECTED FOR SCRUTINY AND THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF T HE ACT 3 ITA NO.1826/MDS/2015 & & C.O.NO.45/MDS/2013 ON 19.12.2008 ASSESSING THE LONG TERM CAPITAL GAIN AT ` 60,34,20,510/-. THEREAFTER, THE LEARNED ASSESSING O FFICER ONCE AGAIN REOPENED THE ASSESSMENT BY ISSUE OF NOTI CE UNDER SECTION 148 OF THE ACT TO THE ASSESSEE ON 28. 03.2013. DURING THE COURSE OF THE RELEVANT ASSESSMENT PROCEE DINGS, THE LEARNED ASSESSING OFFICER NOTICED THAT THE ASSE SSEE IN ITS COMPUTATION STATEMENT HAD SET OFF UNABSORBED DEPREC IATION PERTAINING TO THE ASSESSMENT YEARS 1998-99 TO 2003- 04 AGAINST THE LONG TERM CAPITAL GAIN. SINCE THE CARRI ED FORWARD OF DEPRECIATION LOSS COULD BE SET OFF ONLY UPTO THE ASSESSMENT YEAR 2001-02, THE LEARNED ASSESSING OFFICER DENIED THE SAME IN THE RELEVANT ASSESSMENT YEAR. BEFORE THE LEARNED ASSESSING OFFICER THE ASSESSEE HAD MADE THE FOLLOWI NG SUBMISSIONS:- IN CONNECTION WITH THIS AUTHORITY'S RELIANCE ON THE DECISION OF THE MUMBAI SPECIAL , THE TRIBUNAL IN THE CASE OF DCLT VS TIMES GUARANTYLTD (2010) 4 ITR (TRIB) 2010, WE DRAW THE ATTENTION OF THIS AUTHORITY TO THE DECISION OF THE HON 'BLE HIGH COURT OF 1 THE CASE OF GENERAL MOTORS INDIA LTD VS. DCLT (2013) 257 CTR (GUJ.) 123 WHEREIN IT AS FOLLOWS: AMENDMENT TO SECTION 32(2) BY THE FINANCE ACT 2001 IS APPLICABLE FROM AY 2002-03 AND SUBSEQUENT YEARS. THIS MEANS THAT ANY UNABSORBED DEPRECIATION AVAILABLE TO AN 4 ITA NO.1826/MDS/2015 & & C.O.NO.45/MDS/2013 ASSESSEE ON 01.04.2002 (ASSESSMENT YEAR 2002-03)WILL BE DEALT WITH THE PROVISIONS OF SECTION 32(2) AS AMENDED BY THE FINANCE ACT 2001 AND NOT BE THE PROVISIONS OF SECTION 32(2) AS IT STOOD BEFORE THE SAID AMENDMENT. THEREFORE, UNABSORBED DEPRECIATION FROM AY 1997-98 UP TO 2001-02 GOT CARRIED FORWARD TO THE AY 2002-03 BECAME PART THEREOF WHICH CAME TO BE GOVERNED BY THE PROVISIONS OF SECTION 32(2) AS AMENDED BY THE FINANCE ACT 2001 AND WAS AVAILABLE FOR CARRY FORWARD AND SET OFF AGAINST THE PROFITS AND GAINS OF SUBSEQUENT YEARS WITHOUT ANY LIMIT WHATSOEVER IN THE ASSESSMENT YEAR 2006-07' HE HAS ALSO ENCLOSED A COPY OF THE ORDER ISSUED BY THE HON'BLE ITAT, 'A' BENCH, CHENNAI IN ITA NO.952/MDS/2012 FOR THE AY 2008-09 IN THE CASE OF SHRI A AMBOIRAM VS. DCLT IN WHICH THE HONBLE TRIBUNAL HAS 'RESPECTFULLY FOLLOWED THE ORDER OF HON'BLE GUJARAT HIGH COURT CITED SUPRA, REJECTED THE SUBMISSION OF ID DR AND ALLOWED THE GROUND OF THE APPEAL OF THE ASSESSEE. 5. ON APPEAL, THE LEARNED COMMISSIONER OF INCOME TA X (APPEALS) FOLLOWING THE DECISION OF THE HONBLE GUJ ARAT HIGH COURT IN THE CASE OF GENERAL MOTORS INDIA LTD. VS. DCIT REPORTED IN 257 CTR 123 DIRECTED THE LEARNED ASSESS ING OFFICER TO ALLOW THE CLAIM OF THE ASSESSEE, AGAINST WHICH THE REVENUE IS IN APPEAL BEFORE US. 6. AT THE OUTSET, WE FIND THAT THE ISSUE IS SQUAREL Y COVERED BY THE DECISION OF THE MUMBAI SPECIAL BENCH IN THE CASE OF 5 ITA NO.1826/MDS/2015 & & C.O.NO.45/MDS/2013 DCIT VS. TIMES GUARANTY LTD.(2010) REPORTED IN 4 IT R (TRIB 2010), THE HONBLE HIGH COURT OF GUJARAT IN THE CAS E OF GENERAL MOTORS INDIA LTD. VS. DCIT REPORTED IN 257 CTR 123 AND THE CHENNAI BENCH OF THE TRIBUNAL IN ITA NO.1952/MDS/2012 FOR THE ASSESSMENT YEAR 2008-09. A S POINTED OUT BY THE LEARNED ASSESSEES REPRESENTATIV E BEFORE THE LEARNED ASSESSING OFFICER WHICH IS EXTRACTED HEREINABOVE. THE LEARNED ASSESSING OFFICER HAD MAD E THE ADDITION ONLY ON THE GROUND THAT THE AFORESAID DECI SIONS WERE NOT ACCEPTED BY THE DEPARTMENT AND THEY ARE IN APPE AL BEFORE HIGHER JUDICIAL FORUM. THIS VIEW OF THE LEAR NED ASSESSING OFFICER IS NOT APPRECIABLE. THEREFORE, F OLLOWING THE ABOVE MENTIONED DECISIONS AND TAKING NOTE OF SECTIO N 71(2) OF THE ACT, WE HEREBY DIRECT THE LEARNED ASSESSING OFFICER TO ALLOW THE CLAIM OF SET OFF & CARRY FORWARD OF DEPRE CIATION AGAINST THE LONG TERM CAPITAL GAIN OF THE ASSESSEE IN THE RELEVANT ASSESSMENT YEAR. 7. SINCE WE HAVE DECIDED THE APPEAL OF THE REVENUE ON MERITS AND DISMISSED THE SAME, WE DO NOT FIND IT NE CESSARY TO 6 ITA NO.1826/MDS/2015 & & C.O.NO.45/MDS/2013 ADJUDICATE THE CROSS OBJECTION RAISED BY THE ASSESS EE IN REGARD TO REOPENING OF THE ASSESSMENT WHICH IS ONLY ACADEMIC. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED AND THE CROSS OBJECTION OF THE ASSESSEE IS ALSO DIS MISSED AS INDICATED HEREIN ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON THE 22 ND JUNE, 2016 SD/- SD/- ( . . . ) ( . ) (N.R.S.GANESAN) ( A.M OHAN ALANKAMONY ) # % / JUDICIAL MEMBER % / ACCOUNTANT MEMBER # /CHENNAI, ( /DATED 22 ND JUNE, 2016 SOMU *+ ,+ /COPY TO: 1. APPELLANT 2. RESPONDENT 3. - () /CIT(A) 4. - /CIT 5. + 1 /DR 6. /GF