INCOME TAX OFFICER, PUNE V. M/S. HOTEL SURYA PVT.LTD, PUNE

MA 310/PUN/2022

AI Insights

The case involves the Income Tax Department's attempt to reinstitute an appeal against Hotel Surya Pvt. Ltd. concerning the Assessment Year 2008-09, initially dismissed by the ITAT due to low tax effect. The Department argued that the case should be reconsidered under the exceptions provided in CBDT Circular No. 3/2018, specifically relating to audit objections. However, the Tribunal noted that the exceptions cited by the Department were no longer applicable due to amendments in later Circulars (No. 5/2024 and 9/2024), which removed the audit objection clause as a ground for appeal. Consequently, the Tribunal dismissed the Miscellaneous Application, affirming the dismissal of the original appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 28961 (ITAT-PUNE)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 19-03-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARVIND DESAI
• Assessee Lawyers: SANKET JOSHI; RAJDEEP
• Keywords: Retrospective amendment; Depreciation; Tax effect; Audit objection
• Section: 143(3); 254(2); 115JB

Judgement Text

" आयकर अपीलीय अधिकरण “ए”न्यायपीठ पुणे में । IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, PUNE BEFORE MS. ASTHA CHANDRA, JUDICIAL MEMBER AND SHRI DIPAK RIPOTE, ACCOUNTANT MEMBER आयकर अपील सं. / MA No.310/PUN/2022 (Arising out of ITA No.118 /PUN/2017) धििाारण वर्ा / Assessment Year: 2008-09 ITO, Ward – 11(1), Pune Vs. Hotel Surya Pvt. Ltd., 1202/3, Apte Rd., Shivajinagar, Near Mahatma Phule Museum, Pune - 411004 PAN : AAACH6199L अपीलार्थी /Applicant प्रत्यर्थी / Respondent Assessee by : Shri Sanket Joshi & Rajdeep A. Dikonda Department by : Shri Arvind Desai, Date of hearing : 03-01-2025 Date of Pronouncement : 19-03-2025 आदेश / ORDER PER ASTHA CHANDRA, JM : This Miscellaneous Application (“MA”) of the Revenue seeks to reinstitute the appeal of the Department in ITA No.118/PUN/2017 for the Assessment Year (“AY”) 2008-09 which has been dismissed vide the Tribunal’s Order dated 27.07.2018 under the provisions of section 254(2) of the Income- Tax Act, 1961 (the “Act”). 2. The Revenue has raised the following grounds in the Miscellaneous application which are as under :- “The assessee company i.e. Hotel Surya Pvt. Ltd. is engaged in the business of lodging, boarding, running restaurant and permit room. In this case the return of income was e-filed on 30/09/2008 declaring total income of Rs.2,63,530/. The return was subsequently revised on 03/03/2009 declaring loss of (-) Rs.15,27,438/- showing income from business of lodging, boarding, running restaurant and permit room. The case was selected for scrutiny under CASS for the reason of the \"examination of refund claim specifically with respect to advance tax paid\". The AO passed order u/s 143(3) dated 29.12.2010 by assessing total income of Rs. 16,50,080/. Further the case was reopened u/s 147 of the 1.T. Act, for verification of depreciation written back (as claimed in earlier year on revalued asset) in P & L a/c amounting to Rs. 85,86,430/. The AO passed an order u/s 143(3) r.w.s. 147 on 28/03/2014 by making an addition to the book profit of Rs. 85,86,430/-. Hence, the book profit was revised to Rs. 1,74,32,918/-. 2 M.A. No. 310/PUN/2022 (Arising out of ITA No.118/PUN/2017), AY 2008-09 Issue: As per the appellate order the learned CIT(A) has allowed a grounds No. 3 out of three grounds raised by the appellant. The AG Audit has raised audit query of short levy of tax u/s 115JB on account of non inclusion of depreciation return back of Rs. 85,86,430/- which was credited to the P & L appropriation account. The objection raised by RAP was accepted by the department because an amount of Rs. 85,86,430/ credited to profit and loss appropriation account was on account of difference in depreciation of earlier years which had arisen due to difference in the rates of depreciation as per Income Tax Act, and Companies Act, 1956. The assessee has written back the excess amount of depreciation claimed in year. However, it has transferred the excess claim written back to the P & L appropriation account without including the same in the Book Profit for A.Y. 2007- 08. Therefore, the assessee was required to compute the book profit either in the earlier year or during the current year. The consecutive amount of book profit was however, quantified in the year under consideration. 2. Being aggrieved with the assessment order, assessee filed an appeal before Ld. CITIA), Pune, The Ld. CIT(A) vide order dated 24.10.2016 partly allowed the appeal. However, he allowed ground no.3 of the assesses as per Form No. 35 of grounds of appeal (copy enclosed). Being aggrieved with the order of the Ld.CIT(A), the Department filed appeal before the Hon'ble ITAT. 3. Decision of Hon'ble ITAT The ITAT, \"A\" Bench, Pune vide No. order in ITA No. 118/PUN/2016 dated 27.07.2018 has dismissed the appeal of the department observing low tax effect as per the CBDT circular No.3 of 2018 dated 11.07.2018. The ITAT vide his order stated \"The CBDT vide Circular No.3 of 2018 has revised the monetary limits for filing of appeals by the Department before the Tribunal with retrospective effect. The Hon'ble ITAT further stated that revenue shall be liberty to approach the Tribunal for re-institution of appeals, if the requisite material is brought to show that appeals are protected by the exception prescribed in para 10 of the circular(supra). 4. In view of Para 10 of Circular No. 03/2018 issued by the CBDT on 11/07/2018 the four conditions are as under. (a) Where the Constitutional validity of the provisions of an Act or Rule are under challenge, or (b) Where Board's order, Notification, Instruction or Circular has been held to illegal or ultra vires or (c) Where Revenue Audit Objection in the case has been accepted by the department\". (d) Where the additions relates to undisclosed foreign assets/bank accounts.. 4.1 The present case falls under condition 10(c) of the exception of circular No. 03 of 2018 dated 11/07/2018. 5. Pray before Hon'ble ITAT, Pune Bench through Miscellaneous Appeal The Hon'ble ITAT has dismissed the appeal of the Department observing low tax effect as prescribed in the CBDT circular No.3 of 2018 dated 11.07.2018. In this case, the AG Audit has raised audit query of short levy of tax u/s 115JB on account of non inclusion of depreciation return back of Rs.85,86,430/- which was credited to the P & L appropriation account. The objection raised by RAP was accepted by the department because an amount of Rs. 85,86,430/ credited to profit and loss appropriation account was on account of difference in depreciation of earlier years which had arisen due to difference in the rates of depreciation as per Income Tax Act, and Companies Act, 1956. The assessee has written back the excess amount of depreciation claimed in year under consideration. However, 3 M.A. No. 310/PUN/2022 (Arising out of ITA No.118/PUN/2017), AY 2008-09 it has transferred the excess claim written back to the P & L appropriation account without including the same in the Book Profit for A.Y.2007-08. Therefore, the assessee was required to compute the book profit either in the earlier year or during the current year. The consecutive amount of book profit was however, quantified in the year under consideration. It is therefore, humbly prayed to your Honour that the appeal filed by the Department vide appeal No.118/PUN/2016 dated 27.07.2018 may kindly be reinstated. 6. In view of the above facts, this miscellaneous application is filed u/s 254(2) of the Income Tax Act, requesting the Humble 1.T.A.T. to re-institute the appeal of the Department. Authorization of Pr. Commissioner of Income-tax-1, Pune bearing No. 3089 dated 31/01/2019 directing to file Miscellaneous Application u/s 254(2) of the Income-tax Act, 1961 against the order of ITAT, \"A\" Bench, Pune's order in ITA No. 118/PUN/2016 dated 27/07/2018 is enclosed herewith.” 3. At the outset, the Ld. DR submitted that the Department is now not pressing the contentions raised in the present MA because the exceptions carved out in the CBDT Circular No. 3/2018 dated 11.07.2018 has been superseded by the exceptions contained in the recent Circular No. 5/2024 dated 15.03.2024 read with Circular No. 9/2024 dated 17.09.2024, vide which the exception clause on audit objection has been removed. 4. The Ld. AR, in view of the above submission of the Ld. DR, submitted that there is no error in the order of the Tribunal far less the error of apparent nature. 5. We have heard the Ld. Representative of the parties and perused the material available on record as well as the CBDT Circulars (supra) referred to by the Ld. DR. We find that the Tribunal had dismissed the aforesaid appeal of the Revenue in ITA No. 118/PUN/2017 as non-maintainable on account of low tax effect in the light of the CBDT Circular No. 3/2018 dated 11.07.2018. The contention of the Revenue in the present MA pertains to the claim that the assessee’s case is covered by the exception clause in Para 10(c) of the CBDT Circular No. 3/2018 dated 11.07.2018. We find that the recent CBDT Circular No. 5/2024 read with Circular No. 9/2024 which has superseded Circular No. 3/2018 does not contain an exception where the Revenue’s audit objection has been accepted by the Department. Thus, the audit objection clause as an exception is not applicable to the impugned appeal under consideration by virtue of the revised exceptions provided in the latest Circular No. 5/2024 dated 15.03.2024 read with Circular No. 9/2024 dated 17.09.2024. Consequently, the contention raised by the Revenue in the present MA has no substance on merits. We, therefore, find no reason to interfere with the 4 M.A. No. 310/PUN/2022 (Arising out of ITA No.118/PUN/2017), AY 2008-09 Tribunal’s Order in ITA No. 118/PUN/2017 dated 27.07.2018 and dismiss the MA filed by the Revenue. 6. In the result, this Miscellaneous Application of the Revenue is dismissed. Order pronounced in the open court on 19th March, 2025. Sd/- Sd/- (Dr. Dipak P. Ripote) (Astha Chandra) ACCOUNTANT MEMBER JUDICIAL MEMBER पुणे / Pune; दिन ांक / Dated : 19th March, 2025. आदेश की प्रधिधलधप अग्रेधर्ि / Copy of the Order forwarded to : 1. अपील र्थी / The Appellant. 2. प्रत्यर्थी / The Respondent. 3. The Pr. CIT concerned. 4. दिभ गीय प्रदिदनदि, आयकर अपीलीय अदिकरण, “ए” बेंच, पुणे / DR, ITAT, “A” Bench, Pune. 5. ग र्ड फ़ इल / Guard File. //सत्य दपि प्रदि// True Copy// आिेश नुस र / BY ORDER, िररष्ठदनजीसदचि / Sr. Private Secretary आयकरअपीलीयअदिकरण ,पुणे/ ITAT, Pune "