M/s ACC Rio Tinto Exploration Ltd., New Delhi V. DCIT, New Delhi

CO 59/DEL/2011

• Counselvise Citation: [2011] 122 COUNSELVISE.COM (IT) 6397 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 21 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 26-08-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 23-08-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 07-03-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ANUSHA KHURANA SENIOR
• Keywords: Bonafide belief; Reasonable cause; Condonation of delay
• Section: 148

Judgement Text

BEFORE THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH A, NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO.6007/DEL.2010 (ASSESSMENT YEAR : 2001-02) DCIT, CIRCLE 1 (1), VS. M/S. ACC RIO TINTO EXPLOR ATION LTD., NEW DELHI. UNIT NO.103A, RIGHT WING, 3 RD FLOOR, THE CAPITAL COURT PLOT NO.S1 AT LSC, MUNIRKA PHASE III, NEW DELHI. (PAN NO.AABCA1913A) CO NO.59/DEL/2011 (IN ITA NO.6007/DEL.2010) (ASSESSMENT YEAR : 2001-02) M/S. ACC RIO TINTO EXPLORATION LTD., VS. DCIT, CIRC LE 1 (1), (PRESENTLY KNOWN AS RIO TINTO EXPLORATION NEW DELH I. INDIA PRIVATE LIMITED) UNIT NO.103A, RIGHT WING, 3 RD FLOOR, THE CAPITAL COURT PLOT NO.S1 AT LSC, MUNIRKA PHASE III, NEW DELHI. (PAN NO.AABCA1913A) (APELLANT) (RESPONDENT) ASSESSEE BY : SHRI SALIL KAPOOR, ADVOCATE DEPARTMENT BY : SHRI ANUSHA KHURANA, SENIOR DR O R D E R PER B.C. MEENA, ACCOUNTANT MEMBER : THIS APPEAL FILED BY THE REVENUE AND CROSS OBJECTIO N FILED BY THE ASSESSEE ARISE OUT OF THE ORDER OF THE CIT (APPEALS)-IV, NEW DELHI DATED 19.10.2010. THE GROUNDS OF APPEAL TAKEN BY THE REVENUE IN THE APPEAL ARE AS UNDER :- 1. THE LD. CIT (A) HAS ERRED ON FACTS AND IN LAW I N ALLOWING BUSINESS LOSS WHILE HOLDING THAT BUSINESS OF THE AS SESSEE HAD ITA NO.6007/DEL/2010 CO NO.59/DEL/2011 2 COMMENCED DURING THE YEAR UNDER CONSIDERATION AND T HAT PROVISIONS OF SECTION 3L5E WOULD NOT BE APPLICABLE, IGNORING T HAT THERE WAS NO COMMENCEMENT OF BUSINESS AS ASSESSEE HAD NOT REACHE D A STAGE WHERE ANY REVENUE COULD BE GENERATED AND IT WAS IN THE STAGE OF EXPLORATION ONLY. 2. THE APPELLANT CRAVES LEAVE FOR RESERVING THE RIG HT TO AMEND, MODIFY, ALTER, ADD OR FOREGO ANY GROUND(S) OF APPEA L AT ANY TIME BEFORE OR DURING THE HEARING OF THIS APPEAL. THE GROUNDS TAKEN IN THE CROSS OBJECTION BY THE ASS ESSEE READ AS UNDER:- 1. THAT THE HON'BLE COMMISSIONER OF INCOME TAX (AP PEALS)-IV [CIT(A)] HAS ERRED IN FACTS AND IN LAW OF THE CAS E IN UPHOLDING THE LEGAL VALIDITY OF INITIATION OF REASSESSMENT PROCEE DINGS BY THE LEARNED DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 1 (1), NE W DELHI (DCIT). 2. THAT THE HON'BLE CIT (A) HAS ERRED IN FACTS AND IN LAW OF THE CASE IN UPHOLDING LEARNED DCITS ACTION OF TREATING INTEREST INCOME OF RS.551,750 AS INCOME FROM OTHER SOURCES INSTEA D OF PROFITS & GAINS FROM BUSINESS OR PROFESSION. 2. THE RETURN OF INCOME FILED ON 22.10.2001 DECLARI NG LOSS OF RS.300,52,260/-. IN THE LIMITED SCRUTINY, THE LOSS WAS ASSESSED AT A REDUCED LOSS OF RS.138,72,104/- THEREAFTER, THE CASE WAS REOPENED U/S 148 ON 30.6.2 004 BY ISSUING NOTICE U/S 148. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF PROSPECT ING EXPLORATION OF ORES AND MINERALS AND DURING THE FINANCIAL YEAR, THE ASSESSE E HAS CHANGED ITS ACCOUNTING POLICY IN RESPECT OF TREATMENT GIVEN TO EXPLORATION EXPEND ITURE AND THE EXPENSES WERE NOT CAPITALIZED AND THE EXPENDITURE WAS CHARGED TO PROF IT & LOSS ACCOUNT. IN THE LIMITED SCRUTINY ORDER, THE AO HELD THAT COMPANY HAS NOT CO MMENCED ITS BUSINESS DURING THE RELEVANT PREVIOUS YEAR, THEREFORE, THE EXPENSES INC URRED HAVE TO BE CAPITALIZED. THE ASSESSEE HAS SHOWN THE INCOME FROM INTEREST ON FDR AND EARNING ON ACCOUNT OF FOREIGN EXCHANGE FLUCTUATION ONLY. THE AO HELD THA T THE ASSESSEES CASE FALLS UNDER THE PROVISIONS OF SECTION 35E. THE ASSESSEE CONTEN DED THAT THE PROVISIONS OF SECTION 35E ARE NOT APPLICABLE TO THE CASE OF THE ASSESSEE. LD. AR SUBMITTED THAT THIS ISSUE ITA NO.6007/DEL/2010 CO NO.59/DEL/2011 3 HAS BEEN DECIDED BY THE HON'BLE DELHI HIGH COURT IN THE ASSESSEES OWN CASE IN ITA NO.547 OF 2009 IN ORDER DATED 28 TH JANUARY, 2010 FOR THE YEAR 2001-02 ITSELF WHEREIN THE HON'BLE HIGH COURT HAS HELD AS UNDER :- 7. GOING THROUGH THE OBJECTS OF THE ASSESSEE COMP ANY AND THE PERMISSION GRANTED BY THE FIPB, THE TRIBUNAL, I N OUR VIEW RIGHTLY SO, CAME TO THE CONCLUSION THAT THE ASSESSEE WAS NO T IN THE BUSINESS OF MINING ORES OR MINERALS AND THAT IT WAS ONLY IN THE BUSINESS OF PROSPECTING OR EXPLORING THE ORES AND MINERALS. CO NSEQUENTLY, THE ARGUMENT OF THE ASSESSING OFFICER, THAT THE ASSESSE E HAD NOT COMMENCED ITS BUSINESS, WAS HELD TO BE INCORRECT. WE AGREE WITH THIS CONCLUSION, WHICH IS BASED PURELY ON THE FACTS OF T HE PRESENT CASE. SINCE THE ISSUE IS COVERED BY THE DECISION OF JURIS DICTIONAL HIGH COURT WE FIND NO FAULT IN THE ORDER OF THE CIT (A) AND WE DISMISS TH IS GROUND OF REVENUES APPEAL. 3. GROUND NO.2 OF REVENUES APPEAL IS GENERAL IN NA TURE AND DOES NOT REQUIRE ANY ADJUDICATION. 4. THERE WAS A DELAY IN FILING THE CROSS OBJECTION. THE APPLICATION SUBMITTED BY THE ASSESSEE FOR CONDONATION OF DELAY BY STATING TH AT ASSESSEE WAS UNDER THE BONAFIDE BELIEF THAT THE LEGAL GROUND DECIDED BY THE CIT (A) AGAINST THE ASSESSEE CAN BE CHALLENGED BEFORE THE ITAT AS PER THE APPELLATE CRI MINAL RULES BUT LATER ON ASSESSEE GOT THE ADVISE THAT RELIEF MAY NOT BE POSSIBLE BY C LAIMING THE SAME UNDER RULE 27 OF APPELLATE TRIBUNAL RULES. LEARNED AR SUBMITTED THA T THIS WAS THE REASON FOR FILING THE CROSS OBJECTION BEYOND PERMITTED TIME AND PLEAD ED TO CONDONE THE DELAY. LEARNED DR SUBMITTED THAT IT CANNOT BE A REASONABLE GROUND FOR DELAY AND PLEADED TO DISMISS CROSS OBJECTION IN LIMINE. 5. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE AND IN OUR CONSIDERED VIEW, THE ASSESSEES BELIEF FOR GRANTING RELIEF OR NOT, CANNO T BE A REASONABLE CAUSE FOR CONDONATION OF THE DELAY IN FILING THE CROSS OBJECT ION. THEREFORE, WE DISMISS THE CROSS OBJECTION FILED BY THE ASSESSEE IN LIMINE. ITA NO.6007/DEL/2010 CO NO.59/DEL/2011 4 6. THE LEARNED AR FOR THE ASSESSEE ALSO SUBMITTED T HAT ON THE GROUND OF THE VALIDITY OF THE INITIATION OF REASSESSMENT PROCEEDI NGS, THE ASSESSEE SEEKS RELIEF BY INVOKING THE RULE 27 OF INCOME TAX APPELLATE TRIBUN AL RULES. WE HAVE DISMISSED THE REVENUES APPEAL AND CONFIRMED THE RELIEF GRANT ED BY CIT (A), THEREFORE, THIS PLEA OF ASSESSEE ALSO BECOMES INFRUCTUOUS. WE DISMISS THE SAME 7. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED AND THE CROSS OBJECTION FILED BY THE ASSESSEE ALSO STANDS DISMISS ED IN LIMINE. ORDER PRONOUNCED IN THE OPEN COURT ON THE 26 TH DAY OF AUGUST, 2011. SD/- SD/- (I.P. BANSAL) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : THE 26 TH DAY OF AUGUST, 2011 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT (A)-IV, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR/ITAT