Prize Petroleum Co. Ltd., New Delhi V. ACIT, New Delhi

ITA 1034/DEL/2011

• Counselvise Citation: 103420114 RSA 2011
• Duration Of Justice: 1 year(s) 9 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 30-05-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 24-02-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S K UPADHYAYA
• Keywords: Business income; Depreciation; Business expenditure; Revised return; Unabsorbed depreciation
• Section: 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F : NEW DELHI BEFORE SHRI I. C. SUDHIR, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUN TANT MEMBER ITA NO. 1034/DEL/2011 ASSESSMENT YEAR: 2005- 2006 PRIZE PETROLEUM CO. LTD. V S. ACIT C/O KAPIL GOEL ADV. CIRCLE-14(1), ROOM NO. 415, A-1/25 SECTOR 15, ROHINI C.R. BUILDING, NEW DELHI 110 085 NEW DELHI (PAN AACCP1395E) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI KAPIL GOEL, ADVOCATE RESPONDENT BY : SHR I S.K. UPADHYAYA, SR. DR DATE OF HEARING : 28-08-2012 DATE OF PRONOUNCEMENT : ORDER PER I.C. SUDHIR, JUDICIAL MEMBER THE ASSESSEE HAS QUESTIONED FIRST APPELL ATE ORDER ON THE FOLLOWING GROUNDS :- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, LEARNED CIT-A ERRED IN NOT QUASHING THE IMPUGNED R ECTIFICATION ORDER PASSED BY LD AO BEING BASED ON A NOTICE ISSUED U/S 154 MECHANICALLY AND ARBITRARILY, THAT IS WITHOUT ANY APPLICATION OF MIN D. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, LEARNED CIT-A ERRED IN NOT QUASHING THE IMPUGNED RECTIFICAT ION ORDER PASSED BY LD AO BEING SEEKING TO RECTIFY 'INTIMATION' , AS HELD BY JURISDICTIONAL DELHI BENCH OF ITAT IN CASE OF HARI PRAKASH GUPTA 133 IT J 372. ITA NO. 1034/DEL/2011 2 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, LEARNED CIT-A ERRED IN NOT QUASHING THE IMPUGNED RECTIFICAT ION ORDER PASSED BY LD AO BEING SEEKING TO RECTIFY 'INTIMATION' , AS THE O RDER PASSED U/S 154 IS TIME BARRED. 4. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LEARNED CIT-A ERRED IN NOT QUASHING THE IMPUGNED RECTIFICAT ION ORDER PASSED BY LD AO ALLEGEDLY SEEKING TO RECTIFY AN APPARENT MIS TAKE, WHICH WAS OTHERWISE DEBATABLE AND REQUIRED FULL INVESTIGATION AND HENCE BEYOND THE SCOPE OF SECTION 154 AS HELD BY SC RULING IN CASE O F OF T S BALARAM, ITO VS. VOLKART BROS & ORS (1971) 82 ITR 50. 5. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LEARNED CIT-A ERRED IN NOT HOLDING THAT ASSESSEE'S CLAIM AS TO SET OFF OF ALLOWABLE BROUGHT FORWARD BUSINESS LOSS AGAINST INCOME EMERGI NG FROM WRITE-BACK OF EXCESS PROVISIONS OF BUSINESS EXPENDITURE (RS.13 ,32,118: UNDOUBTEDLY BUSINESS INCOME U/S 41{ 1)) AND OTHER INTEREST INCO ME IS PERFECTLY IN ACCORDANCE WITH LAW. 6. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, LEARNED CIT-A ERRED IN NOT APPRECIATING THAT LD AO'S RELIAN CE ON SC ORDER IN CASE OF GOETZE 284 ITR 323 IS NOT ONLY MISPLACED, ON PRE SENT FACTS, BUT ALSO THE SAME RESTRICTS THE POWER OF LD AO AND NOT THE P OWER OF LD CIT- A/APPELLATE AUTHORITY. 7. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, LEARNED CIT-A ERRED IN NOT APPRECIATING THAT IN SUBJECT YEA R THERE WAS BROUGHT FORWARD UNABSORBED DEPRECIATION (RS 30,35,697) WHIC H WAS TAKEN TO NEXT YEAR (AY 06-07) WAS SUFFICIENT ENOUGH TO BE SET OFF AGAINST ALLEGED 'OTHER SOURCES' INCOME (RS 25,27,157) IN CURRENT YEAR, U/ S 32(2) OF THE I NCOME TAX ACT, 1961 AND HENCE SUBJECT RECTIFICATION IS BA D IN LAW. 2. WE FIND THE MAIN GRIEVANCE OF THE APPELLAN T IS THAT THE LD. CIT(A) HAS ERRED IN NOT QUASHING THE IMPUGNED RECTIFICATION O RDER PASSED BY THE AO U/S 154 OF THE ACT. IN SUPPORT THE LD. AR CONTENDED THAT TH E ISSUE I.E SUBJECT MATTER OF RECTIFICATION IS A DEBATABLE QUESTION. HENCE PROVIS IONS LAID DOWN U/S 154 HAS BEEN WRONGLY INVOKED. HE SUBMITTED THAT THE INTERES T EARNED ON THE FIXED DEPOSIT WAS CLOSELY CONNECTED WITH THE BUSINESS OF THE ASSESSEE AND SHALL QUALIFY BUSINESS INCOME BUT IN THE RETURN OF INCOME FILED B Y THE ASSESSEE IT WAS ITA NO. 1034/DEL/2011 3 MISTAKENLY SHOWN AS INCOME FROM OTHER SOURCES. IT W AS POINTED OUT TO THE AO BUT THE AO DENIED THE CLAIM ON THE BASIS OF DECISIO N OF HONBLE SUPREME COURT IN THE CASE OF GOETZE (INDIA) VS. CIT 284 ITR 323 (SC) HOLDING THAT A FRESH CLAIM BEFORE THE AO CAN BE MADE ONLY BY FILING A REVISED RETURN NOT OTHERWISE. THE LD. CIT(A) FAILED TO APPRECIATE THAT SUCH PLEA CANNOT B E RAISED BEFORE THE APPELLATE AUTHORITIES AND IF THE INTEREST EARNED ON FDR WAS B USINESS INCOME LD. CIT(A) SHOULD HAVE ALLOWED THE SAME QUASHING THE ORDER PAS SED U/S 154 OF THE ACT BY THE AO. HE PLACED RELIANCE ON THE FOLLOWING DECISIO NS :- 1. M/S. GREEN AGRO PACK (P) LTD. VS. CIT, ITA NO. 3112/2005 (KAR.SC) 2. CIT VS. JINDAL STAINLESS LTD ITA NO. 1500/2010 (DEL-HC) 3. CIT VS. JAYPEE DSC VENTURES LTD. ITA 357/2010 (DELHI HIGH COURT) 4. CIT VS. M/S. SOMARASA DISTILLERIES PVT. LTD. I TA NO. 5064/2010 (KAR. HIGH COURT) 3. THOUGH IN GROUND NO. 3 THE ASSESSEE HAS QUES TIONED VALIDITY OF ORDER PASSED U/S 154 OF THE ACT AS BARRED BY THE TIME LIM IT. NO ARGUMENT HAS BEEN ADVANCED BY THE LD. AR ON THIS ISSUE. 4. LD. DR ON THE OTHER HAND TRIED TO JUSTIFY THE ORDERS OF THE AUTHORITY BELOW. 5. HAVING GONE THROUGH THE ORDERS OF THE AUTHORI TIES BELOW, THE DECISIONS RELIED UPON AND THE MATTER AVAILABLE ON RECORD, WE DO NOT FIND SUBSTANCE IN THE ABOVE CONTENTION OF THE LD. AR, ESPECIALLY WHEN BEF ORE THE AO DURING THE COURSE OF PROCEEDINGS U/S 154 OF THE ACT AND IN RESPONSE T O THE NOTICE ISSUED U/S 154/155 OF THE ACT THE ASSESSEE ITSELF VIDE ITS REP LY DATED 10.8.2010 (REPRODUCED ITA NO. 1034/DEL/2011 4 IN THE ORDER U/S 154/155 OF THE ACT) HAS ADMITTED T HAT THE INTEREST WAS EARNED ON THE SURPLUS FUND PLACED IN SHORT TERM FIXED DEPO SIT. FOR A READY REFERENCE THE RELEVANT EXTRACTS OF THE ABOVE SUBMISSION IS REPROD UCED HEREUNDER :- SIR WE WOULD LIKE TO MENTION HERE THAT THE COMPANY IS ENGAGED IN THE BUSINESS OF OIL & GAS EXPLORATION AND OTHER RELATED SERVICES. IN CASE THE FUNDS ARE PROCURED FOR BUSINESS OPERATIONS BUT COUL D NOT UTILIZED DUE TO FOR SHORT PERIOD, THE SAME ARE PLACED IN SHORT TERM FIXED DEPOSITS AND EARNED INTEREST IS CREDITED, WHICH IS ALSO PART OF THE BUSINESS OPERATIONS & WHILE FILING THE RETURN OF INCOME. COMPANY HAS MIST AKENLY DECLARED THE INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES. TH EREFORE, WE REQUEST YOU TO KINDLY CONSIDER THE SAME AS INCOME FROM BUSI NESS AND PROFESSION AND ALLOW US THE SET OFF AGAINST THE CARRIED FORWAR D OF BUSINESS LOSS. 6. THE DECISIONS RELIED UPON BY THE LD. AR ARE ALSO NOT HELPFUL TO THE ASSESSEE DUE TO DISTINGUISHABLE FACTS THEREIN. IN T HE CASE OF M/S. GREEN AGRO PACK (P) LTD. VS. CIT (SUPRA), THE INTEREST WAS EAR NED OUT OF THE FIXED DEPOSITS MADE ON ACCOUNT OF THE DEPOSIT FOR OBTAINING LETTER OF CREDIT OR FOR BANK GUARANTEE AND WAS FOR THE BUSINESS PURPOSE AND OUT OF THE BUSINESS COMPULSION. THE INTEREST EARNED THEREIN WAS NOT ON ACCOUNT OF A NY SURPLUS FUND BEING DEPOSITED IN THE FIXED DEPOSIT AS IS THE CASE OF TH E PRESENT ASSESSEE BEFORE US. LIKEWISE IN THE CASE OF CIT VS. JAYPEE DSC VENTURES LTD. (SUPRA) THE ASSESSEE HAS FURNISHED PERFORMANCE GUARANTEE IN FAVOUR OF NH AI TO GET THE CONTRACT AWARDED IN ITS FAVOUR AND TO PROCURE THE SAID GUARA NTEE AND ASSESSEE HAS KEPT THE AMOUNT IN A FIXED DEPOSIT IN THE BANK FOR THAT PURPOSE. UNDER THESE CIRCUMSTANCES THE INTEREST EARNED IN THE PRESENT CA SE ON SURPLUS DEPOSIT HAS RIGHTLY BEEN TREATED BY THE ASSESSEE IN ITS RETURN OF INCOME AS INCOME FROM OTHER SOURCES AND THE ADJUSTMENT OF THE SAID INCOME FROM OTHER SOURCES WITH ITA NO. 1034/DEL/2011 5 BROUGHT FORWARD LOSS WAS MISTAKE FROM RECORD IN THE ORDER PASSED U/S 143(1) OF THE ACT WHICH HAS BEEN RIGHTLY RECTIFIED BY THE AO INVOKING THE PROVISIONS OF SECTIONS 154 OF THE ACT. CERTAINLY IT WAS NOT A DEB ATABLE ISSUE HENCE THE DECISION IN THE CASE OF CIT VS. M/S SOMARASA DISTILLERIES PV T. LTD. RELIED UPON BY THE LD. AR IS NOT HELPFUL TO THE ASSESSEE. THE OTHER DECISI ONS AS MENTIONED IN THE GROUNDS OF APPEAL AND RELIED UPON BY THE LD. AR ARE ALSO HAVING DISTINGUISHABLE FACTS HENCE ARE NOT RELEVANT IN THE PRESENT APPEAL. UNDER THESE CIRCUMSTANCES WE DO NOT FIND INFIRMITY IN THE ORDER U/S 154 OF TH E ACT BY THE AO WHICH HAS BEEN RIGHTLY UPHELD BY THE LD. CIT(A). THE GROUNDS ARE T HUS REJECTED. 7. IN THE RESULT APPEAL IS DISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COUR T ON 27.11.2012. SD/- SD/- (T.S. KAPOOR) ( I.C. SU DHIR ) ACCOUNTANT MEMBER JUDI CIAL MEMBER DATE 27.11.2012 *VEENA COPY OF ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER DEPUTY REGISTRAR, ITAT