M/s Wipro GE Medical System Pvt. Ltd., Bangalore V. DCIT,

ITA 1034/BANG/2008

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0558 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 3 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 07-09-2009
• Assessment Year: 1995-1996
• Appeal Filed On: 28-07-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JACINTA ZIMIK VASHAI
• Assessee Lawyers: B K MANUNATH
• Keywords: Rectification of order; Period of limitation
• Section: 143(3); 80HHC; 154; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE A BENCH, BANGALORE BEFORE SHRI K.K.GUPTA, AM AND SHRI SHAILENDRA KUMAR YADAV, JM ITA NO.1034(BANG.)/2008 (ASSESSMENT YEAR : 1995-96) M/S WIPRO GE MEDICAL SYSTEMS PVT.LTD., PLOT NO.4, KADUGODI INDUSTRIAL AREA, BANGALORE APPELLANT VS THE DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-1(3), BANGALORE RESPONDENT APPELLANT BY : SHRI B.K.MANUNATH REVENUE BY : SMT JACINTA ZIMIK VASHAI O R D E R PER SHRI SHAILENDRA KUMAR YADAV, JM ; THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE OR DER OF CIT(A). HUBLI DATED 12-08-2008 WHEREIN THE ORDER PASSED U/S 15 4 OF THE IT ACT HAS BEEN OPPOSED. 2. ACCORDING TO ASSESSEE, THE AO COMPLETED THE ASSESSME NT ORDER U/S 143(3) OF THE IT ACT AFTER MAKING CERTAIN ADDITIONS ON 24-03-1998. TH EREAFTER, THE COMPANY FILED AN APPEAL AGAINST THE ASSESSMENT ORDER BEFORE THE CIT(A( WHICH WAS DISPOSED OFF ON 22-02-2001. THE AO PASSED NE CESSARY ORDERS GIVING EFFECT TO THE APPELLATE ORDER. THE ASSESSEE COMPAN Y FILED APPEAL BEFORE THE ITAT AGAINST THE ORDER OF CIT(A) WHICH WAS DISPOSED O FF ON 08-07-2003. CONSEQUENTIAL ORDER GIVING EFFECT TO THE ORDER OF ITAT WA S PASSED ON 18-08- 2003. LATER ON A NOTICE PURPORTEDLY U/S 154 OF THE ACT DATED 22-01-2004 WAS ISSUED SEEKING RECTIFICATION OF THE ORDER GIVING EFFECT TO THE CIT(A) PASSED ITA NO.1034(B)/09 2 ON 12-07-2001, WHEREIN THE AO PROPOSED THE FOLLOWING MIST AKES FOR RECTIFICATION. AS PER SCHEDULE 13, RS.12,10,75,364/- HAS BEEN CREDITED TO P & L ACCOUNT AND INCLUDED IN THE BUSINESS PROFITS, WHICH COMPRISES OF SERVICE CHARGES OF RS.9,89,89,462/- AGENCIES COMMISSION OF RS.1,17,20,534/- AND SUNDRY INCOME OF RS.1,03,65,368/. IT IS PROPOSED TO EXCLUDE 90% OF THE ABOVE RECEIPTS FROM BUSINESS PROFITS WHILE WORKING OUT RELIEF U/S 80HHC, AS THEY DO NOT HAVE ANY ELEMENT OF TURNOVER IN THEM. 3. ACCORDINGLY TO ASSESSEE AS PER SCHEDULE-13 RS.12,10 ,75,364/- HAS BEEN CREDITED TO P & L ACCOUNT AND INCLUDED IN THE BUSIN ESS PROFITS, WHICH COMPRISES OF SERVICE CHARGES OF RS.9,89,89,462/- AGENCY CO MMISSION OF RS.1,17,20,534/- AND SUNDRY INCOME OF RS.1,03,65,368/-. HE PR OPOSED TO EXCLUDE 90% OF THE ABOVE RECEIPTS FROM BUSINESS PROFITS WH ILE WORKING OUT RELIEF U/S 80HHC AS THEY DO NOT HAVE ANY ELEMENT OF TURN OVER IN THEM. THE ASSESSEE COMPANY FILED ITS OBJECTION TO THE PROPOSED RE CTIFICATION ON 12-07- 2004. AFTER A GAP OF NINE MONTHS, THE AO HAS PASSED AN ORDER U/S 154 ON 10- 05-2005. ACCORDING TO LEARNED AR, IN THE SAID RECTIFICATION ORDER THE AO HAS ACCEPTED ASSESSEES CONTENTION WITH REGARD TO SERVICE CHARGES, AGENCIES COMMISSION AND INTEREST RECEIPTS THAT THERE IS NO MISTAKE WHICH REQUIRES TO BE RECTIFIED. HOWEVER, 90% OF MISCELLANEOUS INCOME OF RS.47,66,982/ - AND RECOMPUTED THE DEDUCTION U/S 80HHC AT RS.1,30,99,798/- A S AGAINST THE CLAIM ALLOWED OF RS.1,38,05,115/- IN THE ASSESSMENT ORDER PA SSED U/S 143(3) OF THE IT ACT. IN THE RECTIFICATION NOTICE, IT WAS PROPOSED TO AMEND MISTAKES IN THE ORDER DATED 12-07-2001 IN THE ORDER PASSED U/S 1 54, THE ORDER DATED 18- ITA NO.1034(B)/09 3 08-2003 HAS BEEN AMENDED. IN THIS REGARD, IT WAS SUBMIT TED THAT THERE IS NO MISTAKE TO BE RECTIFIED EITHER IN THE ORDER DATED 12-07 -2001 OR 18-08-2003 AS THEY ARE ONLY CONSEQUENTIAL ORDERS GIVING EFFECT TO THE O RDERS OF THE HIGHER AUTHORITIES AND THE MISTAKE PURPORTEDLY RECTIFIED BY THE AO DOES NOT ARISE FROM THESE ORDERS. ACCORDING TO LEARNED AR FOR THE ASSE SSEE THE ORDER PASSED U/S 154 IS BARRED BY LIMITATION AS THE ORIGINAL ASSESSMENT ORDER WAS PASSED ON 24-03-1998 WHICH ORDER ALONE CAN BE RECTIFIED, IF THERE IS A NY MISTAKE BEFORE 31-03-2002. ACCORDING TO LEARNED AR THE PRESENT ORDE R IS WITHOUT JURISDICTION AND NO APPARENT MISTAKE WHICH REQUIRES TO BE RECTIFIED AS THE ISSUE OF DISALLOWANCE OF 90% OF MISCELLANEOUS INCOME IS DEBATABLE ISSUE , SINCE IN THE SUBSEQUENT YEARS THE DISALLOWANCE MADE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE. THE AO ERRED IN ASSUMING JURISDICTION U/S 154 OF THE IT ACT TO DISALLOW 90% OF MISCELLANEOUS INCOME AND THEREBY DISTURBING T HE DEDUCTION ALLOWED U/S 80HHC OF THE IT ACT IN THE ASSESSMENT ORDE R PASSED U/S 143(3). IT WAS ALSO REITERATED THAT THE ASSESSMENT PASSED U/S 154 IS BARRED BY LIMITATION AND REQUIRES TO BE QUASHED. THE AO ERRED IN P ASSING THE ORDER U/S 154, WHEN THERE WAS NO MISTAKE REQUIRES RECTIFICATION IN TH E ORDER DATED 18- 08-2003 AND THERE WAS ONLY CONSEQUENTIAL ORDER AND TH E MISTAKE DOES NOT ARISE FROM THAT ORDER. SO THE SAME SHOULD BE QUASHED. ON THE OTHER HAND, LEARNED DR SUPPORTED THE ORDER OF AUTHORITIES BELOW. 4. AFTER GOING THROUGH THE MATERIAL AND THE RIVAL SUBMISSIO NS WE ARE NOT INCLINED TO CONCUR WITH THE FINDINGS OF THE CIT(A), BECAUSE O RIGINAL ASSESSMENT ORDER WAS PASSED ON 24-03-1998 WHICH WOULD BE RECTIFIED IF THERE WAS ANY MISTAKE THAT TOO WITHIN FOUR YEARS. HERE, IN THIS CASE, NO TICE PURPORTEDLY ISSUED U/S 154 OF THE IT ACT ON 18-08-2003, SEEKING REC TIFICATION OF THE ORDER ITA NO.1034(B)/09 4 GIVING EFFECT TO THE CIT(A) WAS PASSED ON 12-07-2001. THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF M/S KOTHARI INDUSTRIAL CORPORAT ION LTD., VS AGRICULTURAL INCOME-TAX OFFICER (1998) 230 ITR 306, IN PRINCIPA L HELD THAT PERIOD OF LIMITATION FOR RECTIFICATION PROCEEDINGS ON A ISSUE WILL HAVE TO BE CALCULATED FROM DATE OF ORIGINAL ORDER. WE ALSO FIND THAT THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF M/S SARAN ENGINEERING CO., LTD., VS CIT(1983) 143 ITR 765 (ALL.) HAS TAKEN SIMILAR VIEW THAT TIME LIMIT STARTS FROM THE DATE OF ORIGINAL ORDER. IN VIEW OF THE ABOVE, WE HOLD THAT RECTIFICATION SOUGH T BY THE AO IS BARRED BY LIMITATION, ACCORDINGLY THE PROCEEDINGS ARISING OUT OF THAT ARE LIABLE TO BE QUASHED. WE DO SO. SINCE WE ARE DECIDING T HE MATTER ON LIMITATION, OTHER ARGUMENTS GOES ACADEMIC. 5. IN THE RESULT, THE APPEAL FILED B THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE (K.K.GUPTA) (SHAILENDRA KUMAR YADAV) ACCOUNTANTMEMBER JUDICIAL MEMBER PLACE: BANGALORE DATED: 2009 AM* COPY TO : 1. THE ASSESSEE 2. THE REVENUE 3. CIT(A) 4. CIT 5. DR 6. GF(BLORE) 7. GF(DELHI) BY ORDER AR, ITAT, BANGALORE