ACIT, Circle -16(1), Hyderabad V. M/s Nasa Continental Exporters Pvt. Ltd., Hyderabad

CO 3/HYD/2012

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 7399 (ITAT-HYDERABAD)
• Duration Of Justice: 4 month(s) 4 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 08-06-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2003-2004
• Appeal Filed On: 03-02-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAODR
• Assessee Lawyers: K A SAI PRASAD
• Keywords: Reopening of assessment

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER AND SHRI D.KARUNAKARA RAO, ACCOUNTANT MEMBER ITA NO.1734/HYD/2011 : ASSESSMENT YEAR 2003 -04 ASSTT . COMMISSIONER OF INCOME - TAX, CIRCLE 16(1), HYDERABAD (APPELLANT) V/S M/S NASA CONTINENTAL E X PORTERS P. LTD., HYDERABAD ( PAN - AAACN 7004 N ) (RESPONDENT) C.O. NO.3/HYD/2012 (IN ITA NO.1734/HYD/2011) : ASSESSMENT YEAR 2003-04 M/S. NASA CONTINENTAL EXPORTERS P. LTD., HYDERABAD ( PAN - AAACN 7004 N ) (CROSS OBJECTOR) V/S ASSTT. COMMISSIONER OF INCOME - TAX, CIRCLE 16(1), HYDERABAD (RESPONDENT) ASSESSEE BY :SHRI K.A.SAIPRASAD DEPARTMENT BY : SHRI M.S.RAO(DR) DATE OF HEARING 30.5.2012 DATE OF PRONOUNCEMENT 08.06.2012 O R D E R PER D.KARUNAKARA RAO, ACCOUNTANT MEMBER: THIS APPEAL BY THE REVENUE AND THE CROSS OBJECTIO N BYTE HA SEE ARE DIRECTED AGAINST THE ORDER OF THE CIT(A) V, HYDERABAD DATED 22.7.2011 FOR THE ASSESSMENT YEAR 2003-04. ITA NO.1734/HYD/2011 : ASSESSMENT YEAR 2003-04 2. EFFECTIVE GROUNDS OF THE REVENUE IN LTHIS APPEA L READ AS FOLLOWS- 1. THE CIT(A) ERRED IN DELETING THE ADDITION OF RS.7,2 2,32,678/- MADE U/S. 41(1) OF THE I.T. ACT, BEING WAIVER OF INTERES T PAYABLE TO ICICI BANK ON ACCOUNT OF ONE TIME SETTLEMENT(OTS). ITA NO.1734/HYD/2011 M/S NASA CONTINENTAL EXPORTERS P. LTD., HYDERABAD 2 2. THE CIT(A) FAILED TO APPRECIATE THE FACT THAT IN TH E ABSENCE OF RETURNS OF INCOME FOR EARLIER YEARS I.E. FROM 1994-95 TO 20 03-04 THE INTEREST HAS TO BE TREATED AS CHARGED TO THE PROFIT & LOSS A CCOUNT AS PER THE ACCOUNTS MAINTAINED AND THE SAME IS DEEMED TO HAVE BEEN ALLOWED. 3. THE OBSERVATIONS OF THE CIT(A) THAT UNPAID INTEREST CANNOT BE BROUGHT WITHIN THE AMBIT OF SECTION 115JA OF THE AC T IS NOT CORRECT FOR THE REASON THAT PROFIT & LOSS ACCOUNT FOR A.Y. 2003 -04 SHOWS THE FIGURE OF RS.7,22,32,678/- AS PRIOR PERIOD ADJUSTM ENT. THIS ITEM HAS BEEN BROUGHT INTO THE P&L ACCOUNT AS PER THE AC COUNTING STANDARDS PRESCRIBED AS PER THE COMPANIES ACT. THE PROFIT & LOSS ACCOUNT FOR A.Y. 2003-04 SHOWS PROFIT AFTER TAXES A S RS.6,76,09,634/- 4. THE CIT(A) OUGHT TO HAVE APPRECIATED THE FACT THAT THE A.O. HAS NOT MADE ANY ADJUSTMENTS TO THE PROFIT AFTER TAXES AS D EPICTED IN THE PROFIT & LOSS ACCOUNT OF THE COMPANY FOR A.Y. 2003- 04. 3. WE HEARD THE PARTIES AND PERUSED THE IMPUGNED ORDERS OF THE LOWER AUTHORITIES AND OTHER MATERIAL AVAILABLE ON R ECORD. THE ONLY ISSUE INVOLVED IN THE APPEAL OF THE REVENUE IS WITH REGAR D TO ADJUSTMENT TO BE MADE WHILE COMPUTING BOOK PROFIT UNDER S.115JA OF T HE ACT ON ACCOUNT OF WAIVER OF INTEREST PAYABLE TO ICICI BANK ON ACCOUNT OF ONE TIME SETTLEMENT. IT HAS BEEN BROUGHT TO OUR NOTICE BY T HE LEARNED COUNSEL FOR THE ASSESSEE AT THE OUTSET THAT THIS ISSUE COVERED BY THE FOLLWOIGN DECISIONS OF THE TRIBUNAL- (A) ORDER DATED 17.2.2012 IN ITA NO.840/HYD/2011; S.A. NO.188/HYD/2011 AND M.A. NO.253/HYD/2011 IN THE CAS E OF M/S. VISTA PHARMACEUTICALS LTD., HYDERABAD V/S. DY. COMMISSIONER OF INCOME-TAX CIRCLE 3(3), HYDERABAD F OR ASSESSMENT YEAR 2006-07, TO WHICH ONE OF US, J.M., IS A PARTY. (B) ORDER DATED 4.5.2012 IN ITA NO.1207/HYD/2010 FOR ASSESSMENT YEAR 2007-08 IN THE CASE OF DY. COMMISSI ONER OF INCOME-TAX, CIRCLE 3(1), HYDERABAD V/S. M/S. SANGH I SPINNERS INDIA LTD., HYDERABAD, TO WHICH ONE OF US, A.M., IS A PARTY. ITA NO.1734/HYD/2011 M/S NASA CONTINENTAL EXPORTERS P. LTD., HYDERABAD 3 THE LEARNED DEPARTMENTAL REPRESENTATIVE DID NOT CON TROVERT THIS POSITION, THOUGH HE STRONGLY RELIED ON THE ORDER OF THE ASSESSING OFFICER. ON GOING THROUGH THE ORDERS OF THE TRIBUNAL IN THE ABOVE CASES, WE FIND THAT SIMILAR ISSUE OF ADJUSTMENT TO BE MADE IN RESP ECT OF INTEREST WAIVER, WHILE COMPUTING BOOK PROFITS IN TERMS OF S.115JB, H AS COME UP FOR CONSIDERATION IN THOSE MATTERS. IN THIS VIEW OF THE MATTER, WE FEEL IT JUST AND PROPER TO SET ASIDE THE IMPUGNED ORDER OF THE C IT(A) AND RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO DECIDE THE ISSUE AFRESH IN STRICTLY IN ACCORDANCE WITH THE VIE W TAKEN BY THE TRIBUNAL IN THE AFORESAID MATTERS AFTER DUE VERIFICATION OF THE FACTS OF THE CASE VIS- -VIS THE FACTS CONSIDERED BY THE TRIBUNAL IN THE C ASES CITED SUPRA. THE ASSESSING OFFICER SHALL GIVE A SPECIFIC FINDING ON WHETHER THE INTEREST WAIVED IN QUESTION WAS EARLIER CLAIMED AS DEDUCTIO N IN THE PAST YEARS. HE SHALL PASS SPEAKING ORDER IN ACCORDANCE WITH LAW AFTER GIVING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 4. IN THE RESULT, REVENUES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ASSESSEES C.O. NO.3/HYD/2012 (IN ITA NO.1734/HYD/2011) : ASSESSMENT YEAR 2003-04 5. THE ONLY GROUND OF THE ASSESSEE IN THE C.O. READS AS FOLLOWS- THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS) IS NOT JUSTIFIED IN HOLDING THAT THE ASSESSMENT WAS VALID LY REOPENED. 6. AT THE TIME OF HEARING, NO SPECIFIC ARGUMENTS H AVE BEEN ADVANCED ON THE ISSUE RAISED IN THE CROSS-OBJECTION , WHICH RELATES TO VALIDITY OF REOPENING OF ASSESSMENT. IT MAY BE SO IN VIEW OF THE LIKELY COVERED NATURE OF THE ISSUE INVOLVED IN THE REVENUE S APPEAL, WHICH MAY FOR THAT REASON BE DISMISSED. IN THE CIRCUMSTANCE S, THE ADJUDICATION OF ITA NO.1734/HYD/2011 M/S NASA CONTINENTAL EXPORTERS P. LTD., HYDERABAD 4 THIS LEGAL ISSUE IS MERELY AN ACADEMIC EXERCISE. T HEREFORE, THE SAME IS DISMISSED AS ACADEMIC. 7. IN THE RESULT, ASSESSEES CROSS-OBJECTION IS DISMISSED. 8. TO SUM UP, REVENUES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES AND ASSESSEES CROSS OBJECTION IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 08 JUNE, 2 012 SD/- SD/- ( ASHA VIJAYARAGHAVAN) ( D.KARUNAKARA RAO) JUDICIAL MEMBER. ACCOUNTANT MEMBER. DT/- 08 JUNE, 2012 COPY FORWARDED TO: 1. M/S NASA CONTINENTAL EXPORTERS P. LTD., 6 - 3 - 351. 2 ND FLOOR, ROAD NO.1, BANJARA HILLS, HYDERABAD 2. 3. ASSTT. COMMISSIONER OF INCOME-TAX CIRCLE 16(1), HY DERABAD COMMISSIONER OF COMMISSIONER OF INCOME-TAX(APPEALS) V HYDERABAD 4 . COMMISSIONER OF INCOME - TAX I V , HYDERABAD 5. DEPARTMENTAL REPRESENTATIVE ITAT, HYDERABAD B.V.S.