ITO -32(1)(1), MUMBAI V. BRIJESH RAITHATHA , MUMBAI

ITA 100/MUM/2021

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 0743 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-07-2021
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 08-02-2021
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: GURBINDER SINGH
• Keywords: Depreciation; Search and seizure; Set aside
• Section: 143(3); 153A; 40(a)(ia); 22; 263; 132

Judgement Text

. IN THE INCOME TAX APPELLATE TRIBUNAL , G BENCH MUMBAI BEFORE : SHRI M.BALAGANESH, A CCOUNTANT M EMBER & SHRI PAVAN KUMAR GADALE , JUDICIAL MEMBER MA NO.100/MUM/2021 (ARISING OUT OF ITA NO.5722 /MUM/ 20 15) ( ASSESSMENT YEAR : 2007 - 08 ) M/S . WELSPUN CORP LIMITED WELSPUN HOUSE 7 TH FLOOR, B - WING KAMLA MILLS COMPOUND SENAPATI BAPAT MARG LOWER PAREL MUMBAI 400 013 VS. DCIT, CENTRAL CIRCLE - 22 ROOM NO.465, 4 TH FLOOR AAYKAR BHAWAN M.K.ROAD, MUMBAI 400 020 PAN/GIR NO. AAACW0744L (APPELLANT ) .. (RESPONDENT ) ASSESSEE BY SHRI RAJIV KHANDELWAL REVENUE BY SHRI GURBINDER SINGH DATE OF HEARING 09 / 07 /202 1 DATE OF PRONOUNCEMENT 14 / 07 /202 1 / O R D E R PER M. BALAGANESH (A.M) : BY VIRTUE OF THIS MISCELLANEOUS APPLICAT ION, THE ASSESSEE SEEKS TO MODIFY CERTAIN PORTIONS OF THE TRIBUNAL ORDER PASSED IN ITA NO. 5370 & 5722/MUM/2015 FOR A.Y.2007 - 08 DATED 30/12/2019. 2. THE ASSESSEE IN ITS MISCELLANEOUS APPLICATION HAD POINTED OUT THE FOLLOWING MISTAKES APPARENT FROM RECORD. M A NO . 100/MUM/2021 M/S. WELSPUN CORP LTD. 2 2.1 (A) THE HONOURABLE TRIBUNAL HAS DISPOSED OF GROUND OF APPEAL NO 4 OF THE REVENUE IN PARA NOS 22 TO 24 OF THE ORDER. THE SAID GROUND OF APPEAL IS REPRODUCED BELOW FOR READY REFERENCE . 'ON THE FACTS AND IN THE CIRCUMSTANCES THE CASE AND IN LAW THE LD .CIT(A) ERRED IN DELETING THE ADDITION ON ACCOUNT OF DEPRECIATION ON FIXED ASSETS U/S.40A(IA) READ WITH ACTION 37 IN RESPECT OF CAPITALIZATION OF PROFESSIONAL FEES CAPITALISED OF CERTAIN EXPENSES FCCB PREMIUM AND FCCB ISSUE EXPENSES.' (B) THE APPLI CANTS SUBMIT THAT DURING THE COURSE OF HEARING, THE AUTHORISED REPRESENTATIVE OF THE APPLICANTS SUBMITTED THAT THE ISSUE AS REGARDS THE DEPRECIATION IS ALREADY DECIDED IN VIEW OF THE ORDERS OF THE TRIBUNAL IN THE APPLICANTS' OWN CASE FOR INCOME - TAX A SSESSMENT YEAR 2005 - 06 IN ITA NO 3375/MUM/2010 (APPEAL RE ORDER UNDER SECTION 263) AND ITA NO 5371/MUM/2015 (APPEAL RE ORDER UNDER SECTION 143(3) R.W.S. 153A), AND THAT THE DEPRECIATION ON THE SAME ASSETS IS ALLOWED IN THAT YEAR BY ORDER UNDER SECTION 143 ( 3) DATED 30.08.2007; HOWEVER, THE HONOURABLE TRIBUNAL IN PARA 24 OF THE IMPUGNED ORDER REJECTED THE SAID SUBMISSIONS ON THE GROUND THAT THE SAID ORDERS OF THE TRIBUNAL DELETED THE ADDITION ON TECHNICAL GROUNDS AND DID NOT DISCUSS THE CASE ON MERITS. THE AP PLICANTS SUBMIT THAT EVEN THOUGH IN THE EARLIER YEAR THE DISALLOWANCE OF DEPRECIATION IS DELETED ON TECHNICAL GROUNDS, THE FACT IS THAT THE DEDUCTION FOR DEPRECIATION IS ALLOWED ON THE SAME FIXED ASSET IN THAT YEAR BY ORDER UNDER SECTION 143(3) DATED 30.08 .2007 PASSED PRIOR TO THE ORDER UNDER SECTION 143(3) R.W.S. 1 53A OF THE ACT AND HENCE, THE DEPRECIATION OUGHT TO BE ALLOWED FOR THE YEAR UNDER REFERENCE; HENCE A MISTAKE APPARENT FROM RECORD. (C) FURTHER, THE HONOURABLE TRIBUNAL HAS SET ASIDE THE ISSUE TO THE ASSESSING OFFICER BY HOLDING IN PARA 25 THAT, 'WE ARE OF THE CONSIDERED VIEW THAT THE ISSUE NEEDS TO GO BACK TO THE FILE OF LD. AO FOR VERIFICATION OF FACTS WITH REGARD TO APPLICABILITY OF PROVISION OF SECTION 40(A)(IA) OF THE INCOME TAX ACT, 1961. ' (D) THE APPLICANTS SUBMIT THAT THE HONOURABLE TRIBUNAL OUGHT NOT TO HAVE SET ASIDE THE ISSUE TO THE ASSESSING OFFICER IN AS MUCH AS THE ASSESSING OFFICER HAS ALREADY DECIDED ON THE ISSUE OF SECTION 40(A)(IA) IN THE ASSESSMENT ORDER AND IT WOULD BE A FUTILE EXERCISE IN SENDING THE MATTER BACK TO HIM, WITH NO NEW FACTS COMING ON RECORD. SECTION 40(A)(IA) IS A LEGAL ISSUE DECIDED BY THE ASSESSING OFFICER WHICH WAS BEFORE THE HONOURABLE TRIBUNAL. THE APPLICANTS THUS, SUBMIT THAT THE HONOURABLE TRIBUNAL OU GHT TO NOT HAVE SENT THE MATTER BACK TO THE ASSESSING OFFICER FOR FRESH ADJUDICATION. 2.2 (A) THE HONOURABLE TRIBUNAL HAS DISPOSED OF GROUNDS OF APPEAL NOS 5 AND 6 OF THE REVENUE (THOUGH MENTIONED AS 6 AND 7) IN PARA NOS 25 AND 26 OF THE IMPUGNED ORDER. T HE S AID GROUNDS OF APPEAL ARE REPRODUCED BELOW FOR READY REFERENCE - M A NO . 100/MUM/2021 M/S. WELSPUN CORP LTD. 3 5. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN DELETING THE ADDITION BY WAY OF DISALLOWING FCCB PREMIUM. ' 6. ''ON THE FACTS AND IN THE CIRCUMS TANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN DELETING THE ADDITION BY WAY OF DISALLOWING DEPRECIATION IN RESPECT OF FCCB PREMIUM FIRST DEBITED TO PRE - OPERATIVE EXPENSES AND THEREAFTER CAPITALIZED IN THE FIXED ASSETS ' (B) THE APPLICANTS SUBMIT TH AT DURING THE COURSE OF HEARING, THE AUTHORISED REPRESENTATIVE OF THE APPLICANTS ARGUED THE AFORESAID TWO GROUNDS OF APPEAL SEPARATELY. PLEASE NOTE THAT THE GROUND OF APPEAL NO 5 IS RAISED BY THE REVENUE IN RESPECT OF CIT(A) DELETING THE DISALLOWANCE OF PR OVISION OF RS 25,88,10,856 FOR FCCB PREMIUM MADE DURING THE YEAR UNDER REFERENCE, WHEREAS GROUND OF APPEAL NO 6 IS RAISED IN RESPECT OF CIT(A) DELETING THE DISALLOWANCE OF DEPRECIATION OF RS 15,86,610 ON FCCB PREMIUM CAPITALISED IN EARLIER YEARS. AS SUCH, THE APPLICANTS SUBMIT THAT THE ISSUES ARE SEPARATE AND DISTINCT; HOWEVER, THE HONOURABLE TRIBUNAL WHILE DISPOSING OF THE GROUNDS IN PARA 25 AND 26 OF THE IMPUGNED ORDER, TREATED THE SAME AS INTERRELATED AND APPLIED SAME SET OF FACTS TO BOT H THE GROUNDS AND DISPOSED OF THE SAME; FACTS RELATING TO BOTH THE GROUNDS ARE ENTIRELY DIFFERENT AND HENCE, A MISTAKE APPARENT FROM RECORD. (C) IT WOULD NOT BE OUT OF PLACE TO MENTION THAT THE DEDUCTION FOR DEPRECIATION IS ALLOWED ON THE SAME FIXED ASSET IN INCOME - TAX ASSESSMENT YEAR 2005 - 06 BY ORDER UNDER SECTION 143(3) DATED 30.08.2007 AND HENCE, THE DEPRECIATION OUGHT TO BE ALLOWED FOR THE YEAR UNDER REFERENCE 2.3. THE HONOURABLE TRIBUNAL ON PAGE NOS 34 AND 35 ON MULTIPLE OCCASIONS HAS MENTIONED ASSES SMENT YEAR AS '2014 - 15' WHICH OUGHT TO HAVE BEEN ''2008 - 09' AND HENCE, A MISTAKE APPARENT FROM RECORD 3. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT ORIGINAL ASSESSMENT FOR A.Y.2005 - 06 WAS COMPLETED U/S.143 (3) OF THE ACT ON 30/08/2007 WHEREIN DEPRECIATION ON FIXED ASSETS IN RESPECT OF ITEMS FALLING U/S.40(A)(IA) R.W.S. 37(1); DEPRECIATION ON CAPITALIZATION OF PROFESSIONAL FEES; DEPRECIATION ON CAPITALIZATION OF CERTAIN EXPENSES; DEPRECIATION ON CAPITALIZATIO N OF FCCB PREMIUM AND CAPITALIZATION OF FCCB ISSUE EXPENSES WERE DULY ALLOWED BY THE LD. AO. THEREAFTER, THIS ASSESSMENT WAS SOUGHT TO BE REVISED BY THE LD. CIT U/S.263 OF THE ACT. THIS TRIBUNAL HAD QUASHED SECTION 263 ORDER M A NO . 100/MUM/2021 M/S. WELSPUN CORP LTD. 4 PASSED BY THE LD. CIT VIDE TRIB UNAL ORDER IN ITA NO.3375/MUM/2010 DATED 03/07/2015 . LATER, P URSUANT TO THE SEARCH AND SEIZURE ACTION U/S 132 OF THE ACT CARRIED OUT IN THE PREMISES OF THE ASSESSEE ON 13/10/2010, AN ASSESSMENT WAS FRAMED U/S.143(3) R.W.S. 153A OF THE ACT FOR A.Y.2005 - 06 W HEREIN THE AFORESAID DEPRECIATION HAD BEEN SOUGHT TO BE DISALLOWED BY THE LD. AO. THIS SEARCH ASSESSMENT WAS THE SUBJECT MATTER OF SECOND APPEAL TO THIS TRIBUNAL AND THIS TRIBUNAL IN ITA NO.5371/MUM/2015 HAD QUASHED THE SEARCH ASSESSMENT ON TECHNICAL GROUN D THAT THE LD. A O DID NOT POSSESS ANY INCRIMINATING MATERIAL TO DISTURB THE UNABATED ASSESSMENT I.E. A.Y.2005 - 06. BY THIS PROCESS, THE ORIGINAL ASSESSMENT ORDER FRAMED U/S.143(3) OF THE ACT FOR A.Y.2005 - 06 DATED 30/08/2007 ULTIMATELY SURVIVES, WHEREIN DEPR ECIATION ON FIXED ASSETS WAS DULY ALLOWED TO THE ASSESSEE. 3.1. THE YEAR BEFORE US IS A.Y.2007 - 08 WHEREIN THE DEPRECIATION ON FIXED ASSETS IS REQUIRED TO BE ALLOWED ONLY AS CONSEQUENTIAL EFFECT OF DEPRECIATION ALREADY ALLOWED BY THE LD. AO IN THE A.Y.2005 - 06. 3.2. WE FIND THAT THIS TRIBUNAL WHILE ADJUDICATING GROUND NO.4 OF THE APPEAL OF THE REVENUE FROM PARA S 22 - 24 OF ITS ORDER HAD ERRONEOUSLY STATED THAT DEPRECIATION ON EXPENDITURE COVERED U/S.40(A)(IA) OF THE ACT WHICH WAS CAPITALIZED IS REQUIRED TO BE R E - VERIFIED BY THE LD. AO IN THIS A SSESSMENT Y EAR I.E. A.Y.2007 - 08. WE FIND THAT NO EXPENDITURE WAS PER SE INCURRED DURING THE YEAR RELATING TO THIS ISSUE AND HENCE, THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT COULD NOT BE MADE APPLICABLE FOR A.Y.2007 - 08 . WE FIND THAT DIRECTIONS OF THIS TRIBUNAL TO EXAMINE THE ALLOWABILITY OF EXPENSES U/S.40(A)(IA) OF THE ACT FOR A.Y.2007 - 08 WOULD ONLY RESULT IN IMPOSSIBILITY OF PERFORMANCE ON THE PART OF ASSESSEE IN AS MUCH AS NO EXPENDITURE WAS INCURRED BY TH E ASSESSEE IN A.Y.2007 - 08 M A NO . 100/MUM/2021 M/S. WELSPUN CORP LTD. 5 THEREOF. THE EXPENDITURE FALLING WITHIN THE AMBIT OF SECTION 40(A)(IA) HAD BEEN INCURRED BY THE ASSESSEE IN A.Y.2005 - 06 ON WHICH DEPRECIATION IS ALREADY ALLOWED BY THE LD. AO IN A.Y.2005 - 06. HENCE, THE A.Y.2007 - 08 IS ONLY CONSEQUE NTIAL YEAR OF ALLOWING DEPRECIATION ON FIXED ASSETS AND EXPENSES FALLING UNDER 40(A)(IA) OF THE ACT. HENCE, WE ARE INCLINED TO MODIFY FINDING RECORDED BY THIS TRIBUNAL IN RESPECT OF THIS ISSUE AND ACCORDINGLY, PARA 24 OF THE TRIBUNAL ORDER STANDS MODIFIED AS UNDER: - 24. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ISSUE IS WITH REGARD TO DISALLOWANCES OF DEPRECIATION ON FIXED ASSETS, IN RESPECT OF CERTAIN EXPENDITURE CAPITALIZED FOR NON DEDUCTION OF TAX AT S OURCE WAS CONSIDERED IN AY 2005 - 06 IN U/S 263 PROCEEDINGS IN ITA NO. 3375/MUM/2010. WE, FURTHER NOTED THAT ALTHOUGH, THE TRIBUNAL HAS QUASHED 263 PROCEEDINGS, BUT NOT DISCUSSED THE ISSUE ON MERITS. SUBSEQUENTLY, IN 153A ASSESSMENTS, THE LD. AO HAS MADE SIM ILAR ADDITIONS. BUT, THE ITAT HAS DELETED SAID ADDITIONS IN ITA NO. 5371/MUM/2015, ON TECHNICAL GROUND WITHOUT DISCUSSING THE ISSUES ON MERITS. THEREFORE, IT IS NECESSARY TO EXAMINE THE ISSUE ON MERITS, WHETHER THE CLAIM OF THE ASSESSEE WITH REGARD TO DEPR ECIATION ON FIXED ASSETS, IN RESPECT OF THAT EXPENDITURE FOR NON DEDUCTION OF TAX AT SOURCE IS IN ACCORDANCE WITH LAW. BU T WE FIND THAT THIS ASPECT HAS ALREADY BEEN EXAMINED AND DEPRECIATION THEREOF IS ALLOWED IN A.Y.2005 - 06 BY THE LD. AO. THEREFORE, WE AR E OF THE CONSIDERED VIEW THAT THIS ISSUE NEEDS TO GO BACK TO THE FILE OF THE LD. AO FOR GIVING CONSEQUENTIAL EFFECT ON ALLOWING DEPRECIATION IN A.Y.2007 - 08 IN ACCORDANCE WITH LAW. (EMPHASIS SUP PLIED BY US) 4. THE NEXT MISTAKE POINTED OUT BY THE ASSESSEE IN THE ORDER OF THIS TRIBUNAL WAS THAT THIS TRIBUNAL HAD IN PARA 25 & 26 HAD ONLY ADJUDICATED GROUND NO.5 OF THE REVENUE. BUT THE SAME HAD BEEN ERRONEOUSLY MENTIONED AS GROUND NO.6 & 7 IN PARA 25. ON VERIFICATION OF THE GROUNDS FILED BY THE REVENUE AND ON PERUSAL OF THE TRIBUNAL ORDER TOGETHER WITH THE ORDER OF THE LD. CIT(A) AND THE GROUNDS RAISED BY THE ASSESSEE BEFORE THE LD. CIT(A), WE FIND THAT THIS TRIBUNAL SHOULD HAVE MENTIONED M A NO . 100/MUM/2021 M/S. WELSPUN CORP LTD. 6 ONLY GROUND NO.5 IN PARA 25 & 26 INSTEAD OF GROUND NO. 6 & 7. HENCE, REF ERENCE TO GROUND NO. 6 & 7 IN PARA 25 AND PARA 26 SHOULD BE READ AS GROUND NO.5 ONLY. 5. WE ALSO FIND THAT GROUND NO. 6 RAISED BY THE REVENUE IS SIMILAR TO GROUND NO.4 RAISED BY THE REVENUE AND HENCE, NO SEPARATE ADJUDICATION OF GROUND NO.6 IS REQUIRED. THE GROUND NO. 4 IS ALREADY ADJUDICATED BY THIS TRIBUNAL. 6. THE REFERENCE TO A.Y.2014 - 15 IN PARA 25 AND 26 OF THE ORDER HAD TO BE READ AS A.Y.2008 - 09 AS IT IS THE CLAIM OF THE ASSESSEE THAT IT HAD OFFERED TO TAX THE SUBJECT MENTIONED PROVISION ONLY IN A .Y.2008 - 09. THIS MISTAKE WAS RIGHTLY POINTED OUT BY THE LD. AR BEFORE US WHICH WAS FAIRLY AGREED BY THE LD. D R BEFORE US. HENCE, WE HOLD THAT REFERENCE OF A.Y.2014 - 15 MADE IN PARA 25 & 26 SHOULD BE READ AS A.Y.2008 - 09. ALL OTHER CONTENTS OF THE TRIBUNAL OR DER SHALL REMAIN INTACT. 7. IN THE RESULT, MISCELLANEOUS APPLICATION OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 14 / 07 /202 1 BY WAY OF PROPER MENTIONING IN THE NOTICE BOARD. SD/ - ( PAV AN KUMAR GADALE ) SD/ - ( M.BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 14 / 07 / 2021 KARUNA , SR.PS M A NO . 100/MUM/2021 M/S. WELSPUN CORP LTD. 7 COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUM BAI 6. GUARD FILE. //TRUE COPY//