Idhayam Hospitals Erode Ltd., Erode V. DCIT, Coimbatore

CO 172/CHNY/2012

• Counselvise Citation: [2013] 122 COUNSELVISE.COM (IT) 8487 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 1 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 01-04-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 01-04-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 30-10-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: T BANUSEKAR
• Assessee Lawyers: SUNEEL VERMA IRS
• Keywords: Depreciation; Unabsorbed depreciation
• Section: 43B; 143(3); 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI BEFORE DR. O.K.NARAYANAN, VICE-PRESIDENT AND SHRI S.S.GODARA, JUDICIAL MEMBER ITA NO.1052(MDS)/2012 & C.O. NO.172(MDS)/2012 ASSESSMENT YEAR : 2007-08 THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE I, ERODE. VS. M/S.IDHAYAM HOSPITALS ERODE LIMITED, 15, PALANIAPPA STREET, ERODE-638 009. PAN AABCI5858G. (APPELLANT) ( RESPONDENT/CROSS OBJECTOR) APPELLANT BY : SHRI SUNEEL VERM A, IRS, CIT RESPONDENT BY : SHRI T.BANUSEKAR, C.A . DATE OF HEARING : 1 ST APRIL, 2013 DATE OF PRONOUNCEMENT : 1 ST APRIL, 2013 O R D E R PER DR.O.K.NARAYANAN, VICE PRESIDENT THE APPEAL IS FILED BY THE REVENUE. THE CROSS OB JECTION IS FILED BY THE ASSESSEE. THE RELEVANT ASSESSMENT YEAR IS 2007- 08. THE APPEAL AND THE CROSS OBJECTION ARE DIRECTE D AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS)-II AT - - ITA 1052 OF 12 & CO 172 OF 12 2 COIMBATORE, DATED 20-1-2012 AND ARISE OUT OF THE AS SESSMENT COMPLETED UNDER SECTION 143(3) OF THE INCOME-TAX AC T, 1961. 2. IN THE APPEAL FILED BY THE REVENUE, THE ONLY GR OUND RAISED IS THAT THE COMMISSIONER OF INCOME-TAX(APPEA LS) OUGHT TO HAVE OBSERVED THAT ON THE WAIVER OF PRINCIPAL INCLU DING INTEREST, THE BENEFIT HAS TO BE REWORKED BY THE ASSESSEE-COMP ANY PROPORTIONATELY ON THE BASIS OF PRINCIPAL AND INTER EST PAYMENT. 3. THIS GROUND OF THE REVENUE RELATES TO AN AMOUNT OF ` 81,96,000/- PERTAINING TO INTEREST ON TERM LOAN RE LEVANT TO THE ASSESSMENT YEAR 2006-07. THIS AMOUNT WAS IN FACT D ISALLOWED UNDER SECTION 43B OF THE INCOME-TAX ACT, 1961IN THE STATEMENT OF TOTAL INCOME FILED BY THE ASSESSEE FOR THE EARLIER ASSESSMENT YEAR 2006-07, BECAUSE IT WAS NOT ACTUALLY PAID. TH EREAFTER, THE LIABILITY OF THE ASSESSEE WITH THE BANK WAS SETTLED , RESULTING IN WAIVER OF BOTH CAPITAL AND INTEREST. WHEN THE ASSE SSEE HAS CREDITED THE AMOUNT OF INTEREST WAIVED IN THE PROFI T AND LOSS ACCOUNT, THE ASSESSING OFFICER TREATED IT AS THE IN COME OF THE ASSESSEE. IN FIRST APPEAL, THE COMMISSIONER OF INCO ME- - - ITA 1052 OF 12 & CO 172 OF 12 3 TAX(APPEALS) FOUND THAT THE ASSESSEE HAD NEVER CLAI MED THE AMOUNT OF ` 81,96,000/- AS AN ITEM OF EXPENDITURE IN COMPUTING THE INCOME OF THE EARLIER ASSESSMENT YEAR 2006-07. THE ASSESSEE ITSELF HAS DISALLOWED AND ADDED BACK THE S AID AMOUNT AS IT WAS TO BE DISALLOWED UNDER SECTION 43B OF THE ACT FOR THE REASON THAT THE INTEREST AMOUNT WAS NOT ACTUALLY PA ID. ONCE THE ASSESSEE HAS NOT MADE ANY SUCH CLAIM OF DEDUCTION A T ALL FOR THE ASSESSMENT YEAR 2006-07, THE COMMISSIONER OF INCOME - TAX(APPEALS) HELD THAT THE SAID AMOUNT WAIVED BY TH E BANK CANNOT BE TREATED AS THE INCOME OF THE ASSESSEE FOR THE IMPUGNED ASSESSMENT YEAR 2007-08. 4. WE FIND THAT THE COMMISSIONER OF INCOME- TAX(APPEALS) HAS RIGHTLY HELD SO. HE HAS OBSERVED THAT THE ASSESSEE HAVING CREDITED THE ENTIRE WAIVER AMOUNT T O THE PROFIT AND LOSS ACCOUNT AS INCOME, THE INTEREST COULD BE B ROUGHT TO TAX ONLY IF IT WAS CLAIMED BY THE ASSESSEE AS AN EXPEND ITURE IN THE EARLIER YEAR. IN FACT, THE AMOUNT OF WAIVER OF INT EREST IS ` 51,36,633/-. THE REVENUE SOUGHT TO TAX THE SAID A MOUNT AS THE INCOME OF THE IMPUGNED ASSESSMENT YEAR. WE FIN D THAT THE - - ITA 1052 OF 12 & CO 172 OF 12 4 COMMISSIONER OF INCOME-TAX(APPEALS) HAS RIGHTLY HEL D THAT THE DISALLOWANCE OF ` 51,36,633/- CANNOT BE SUSTAINED. WE UPHOLD HIS ORDER IN THIS REGARD. 5. THE APPEAL FILED BY THE REVENUE IS LIABLE TO BE DISMISSED. 6. IN THE CROSS OBJECTION FILED BY THE ASSESSEE, I T IS THE CASE THAT THE COMMISSIONER OF INCOME-TAX(APPEALS) H AS FAILED TO APPRECIATE THAT THE LOWER OF THE AGGREGATE TOTAL OF THE BROUGHT FORWARD UNABSORBED DEPRECIATION AND BUSINESS LOSS H AS TO BE TAKEN WHILE DETERMINING THE BOOK PROFIT UNDER SECTI ON 115JB OF THE ACT. ANYHOW, THE LEARNED CHARTERED ACCOUNTANT APPEARING FOR THE ASSESSEE SUBMITTED AT THE TIME OF HEARING T HAT THE CROSS OBJECTION IS NOT PRESSED BY THE ASSESSEE. THEREFOR E, THE CROSS OBJECTION IS ALSO LIABLE TO BE DISMISSED. 7. BUT, BEFORE CONCLUDING THE HEARING THE LEARNED CHARTERED ACCOUNTANT BROUGHT ANOTHER RELEVANT ISSUE BEFORE THE BENCH. THE LEARNED CHARTERED ACCOUNTANT SUBMITTED THAT IN - - ITA 1052 OF 12 & CO 172 OF 12 5 PARAGRAPH 3.4 OF HIS ORDER THE COMMISSIONER OF INCO ME- TAX(APPEALS) HAS STATED THE DETAILS OF UNABSORBED D EPRECIATION AND CARRIED FORWARD BUSINESS LOSS CONSIDERED BY THE ASSESSING OFFICER IN THE CONTEXT OF THE ASSESSMENT COMPLETED FOR THE ASSESSMENT YEAR 2006-07. THE LEARNED CHARTERED ACC OUNTANT SUBMITTED THAT THE FIGURES STATED IN THE ORDER OF T HE COMMISSIONER OF INCOME-TAX(APPEALS) ARE NOT CORRECT AND THE CORRECT AMOUNTS OF UNABSORBED DEPRECIATION AND CARR IED FORWARD BUSINESS LOSS ARE TO BE ADOPTED FOR THE PURPOSE OF ASSESSMENT. 8. WE FIND THAT IT IS NOT NECESSARY FOR THE TRIBUN AL TO ADJUDICATE ON THAT ISSUE. THE ASSESSEE MAY WELL PR EFER A RECTIFICATION PETITION BEFORE THE COMMISSIONER OF I NCOME- TAX(APPEALS) AND EXPLAIN THE POSITION BEFORE HIM. IT IS WITHIN THE POWERS OF THE COMMISSIONER OF INCOME-TAX(APPEALS) T O TAKE APPROPRIATE DECISION IN THE LIGHT OF THE DETAILS FU RNISHED BY THE ASSESSEE AND RECTIFY THE MISTAKE, IF ANY. THEREFOR E, THE MISTAKE POINTED OUT BY THE LEARNED CHARTERED ACCOUNTANT IS LEFT OPEN TO BE DECIDED BY THE COMMISSIONER OF INCOME-TAX(APPEAL S) IF THE ASSESSEE SO DESIRES TO FILE ANY RECTIFICATION BEFOR E HIM. - - ITA 1052 OF 12 & CO 172 OF 12 6 9. IN RESULT, THE APPEAL FILED BY THE REVENUE AND THE CROSS OBJECTION FILED BY THE ASSESSEE ARE DISMISSED . ORDERS PRONOUNCED IN THE OPEN COURT AT THE TIME O F HEARING ON MONDAY, THE 1 ST OF APRIL, 2013 AT CHENNAI. SD/- SD/- (S.S.GODARA) (DR. O.K.NARAYANAN) JUDICIAL MEMBER VICE-PRESIDENT CHENNAI, DATED, THE 1 ST APRIL, 2013. V.A.P. COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR 6. GF.