Paharpur Cooling Towers Limited, Kolkata V. PCIT, Central-I, Kolkata, Kolkata

ITA 1096/KOL/2017

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 1772 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2011-2012
• Appeal Filed On: 17-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR P K SRIHARI
• Keywords: Depreciation; Additional depreciation; Set aside
• Section: 143(3); 115JB; 263; 63; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C, BENC H KOLKATA BEFORE SHRI A.T.VARKEY, JM &DR. A.L.SAINI, AM ./ITA NO.1096/KOL/2017 ( / ASSESSMENT YEAR:2011-12) PAHARPUR COOLING TOWERS LIMITED PAHARPUR HOUSE, 8/1/B, DIAMOND HARBOUR ROAD, KOLAKTA-700027. VS. PR. CIT, CENTRAL-1, KOLKATA ./ ./PAN/GIR NO.: AABCP 8017 C (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI NAVIN VERMA, FCA RESPONDENT BY :DR. P. K. SRIHARI, CIT DR / DATE OF HEARING : 19/09/2019 /DATE OF PRONOUNCEMENT : 11/12/2019 / O R D E R PER DR. A. L. SAINI: THE CAPTIONED APPEAL FILED BY THE ASSESSEE, PERTAI NING TO ASSESSMENT YEAR 2011-12, IS DIRECTED AGAINST THE ORDER PASSED BY TH E PR. COMMISSIONER OF INCOME TAX, CENTRAL-1, KOLKATA, UNDER SECTION 263 OF THE I NCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 24.03.2017. 2. IN THIS APPEAL, THE ASSESSEE HAS CHALLENGED THE CORRECTNESS OF THE ORDER PASSED BY THE LD PR. CIT, CENTRAL-1, KOLKATA U/S 263 OF THE A CT. PAHARPUR COOLING TOWERS LTD. ITA NO.1096/KOL/2017 ASSESSMENT YEAR:2011-12 PAGE | 2 3.WHEN THIS APPEAL WAS CALLED OUT FOR HEARING, LEAR NED COUNSEL FOR THE ASSESSEE INVITED OUR ATTENTION TO THE ORDER DATED 31.01.2018 , PASSED BY THE DIVISION BENCH OF JAIPUR TRIBUNAL IN THE CASE OF M/S ARL INFRATECH LTDIN ITA NO.404/JP/2016FOR THE ASSESSMENT YEAR 2012-13 WHEREBY THE ISSUE THAT ORDER PASSED BY THE ASSESSING OFFICER IS NOT PREJUDICIAL TO THE INTERES T OF REVENUE WHEN THE MINIMUM ALTERNATE TAX (MAT) U/S 115JB OF THE ACT PAYABLE BY ASSESSEE IS MORE THAN THE TAX LIABILITY PAYABLE UNDER NORMAL PROVISION, HAS BEEN DISCUSSED AND ADJUDICATED IN FAVOUR OF ASSESSEE. THE LD COUNSEL SUBMITTED BEF ORE US THAT IT IS SETTLED PROPOSITION OF LAW THE COMMISSIONER CAN INVOKE THE PROVISION OF SECTION 263 OF THE ACT ONLY WHEN THE TWIN CONDITIONS BEING THE ORD ER OF THE ASSESSING OFFICER IS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE ARE SATISFIED. IN THE CASE IN HAND FOR THE SAKE OF ARGUMENT EVEN IF THE O RDER OF THE ASSESSING OFFICER IS CONSIDERED AS ERRONEOUS BUT THE SAME IS NOT PREJUDI CIAL TO THE INTEREST OF THE REVENUE SO FAR AS THE CLAIM OF HIGHER DEPRECIATION IS CONCERNED AS THE INCOME OF THE ASSESSEE WOULD BE COMPUTED U/S 115JB AND THE TA X LIABILITY UNDER MINIMUM ALTERNATE TAX(MAT) IS STILL MORE THAN THE NORMAL CO MPUTATION OF INCOME.LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE PRESENT APPEAL IS SQUARELY COVERED BY THE AFORESAID ORDER OF THE TRIBUNAL, A COPY OF WHIC H WAS ALSO PLACED BEFORE THE BENCH. 4.LEARNED DEPARTMENTAL REPRESENTATIVE NEVERTHELESS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 5. WE SEE NO REASONS TO TAKE ANY OTHER VIEW OF TH E MATTER THAN THE VIEW SO TAKEN BY THE DIVISION BENCH OF JAIPUR TRIBUNAL INTHE CASE OF M/S ARL INFRATECH LTDIN ITA NO.404/JP/2016FOR THE ASSESSMENT YEAR 2012-13 V IDE ORDER DATED 31.01.2018 IN THIS ORDER, THE TRIBUNAL HAS INTER A LIA OBSERVED AS FOLLOWS: 3. IT IS PERTINENT TO NOTE THAT THE ASSESSING OFFI CER WHILE COMPLETED THE ASSESSMENT U/S 143(3) OF THE ACT HAS MADE AN ADDITI ON OF RS. 19,126/- ON ACCOUNT OF EXCESS STOCK FOUND DURING THE COURSE OF SURVEY P ROCEEDINGS IN THE NORMAL COMPUTATION OF INCOME. HOWEVER, THE TAX WAS CHARGED ON THE BOOK PROFIT U/S PAHARPUR COOLING TOWERS LTD. ITA NO.1096/KOL/2017 ASSESSMENT YEAR:2011-12 PAGE | 3 115JB OF THE ACT COMPUTED AT RS. 9,01,53,202/- AND THEREFORE, EVEN IF THE CLAIM OF HIGHER/ADDITIONAL DEPRECIATION IS DISALLOWED THERE WILL BE NO EFFECT ON THE TAX LIABILITY AS THE AO HAS COMPUTED THE TOTAL INCOME A S PER THE PROVISIONS OF SECTION 115JB AND CHARGED MAT ON THE SAME. THEREFORE, WE FI ND THAT THE CLAIM OF HIGHER DEPRECIATION ON THE ENERGY SAVING EQUIPMENTS AS WEL L AS POLLUTION CONTROL EQUIPMENTS IS NOT GOING TO EFFECT THE REVENUE WHEN THE INCOME OF THE ASSESSEE WAS ASSESSED U/S 115JB AND MAT WAS CHARGED. EVEN IF THE CLAIM WAS DISALLOWED IF THE HIGHER DEPRECIATION CLAIM WAS DISALLOWED THE TAX LI ABILITY UNDER MAT WAS STILL HIGHER THAN THE NORMAL COMPUTATION. IT IS SETTLED P ROPOSITION OF LAW THE COMMISSIONER CAN INVOKED THE PROVISION OF SECTION 2 63 OF THE ACT ONLY WHEN THE TWIN CONDITIONS BEING THE ORDER OF THE ASSESSING OF FICER IS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE ARE SATI SFIED. IN THE CASE IN HAND FOR THE SAKE OF ARGUMENT EVEN IF THE ORDER OF THE ASSESSING OFFICER IS CONSIDERED AS ERRONEOUS BUT THE SAME IS NOT PREJUDICIAL TO THE IN TEREST OF THE REVENUE SO FAR AS THE CLAIM OF HIGHER DEPRECIATION IS CONCERNED AS TH E INCOME OF THE ASSESSEE WOULD BE COMPUTED U/S 115JB AND THE TAX LIABILITY UNDER M AT IS STILL MORE THAN THE NORMAL COMPUTATION OF INCOME. THE LD. DR HAS FAIRLY ADMITTED THIS FACT THAT EVEN AFTER DISALLOWANCE OF THE CLAIM OF HIGHER DEPRECIAT ION THE TAX LIABILITY UNDER MAT WOULD BE HIGHER THAN THE NORMAL COMPUTATION. FURTHE R, THIS ISSUE OF HIGHER/ADDITIONAL DEPRECIATION IS NOT RECURRING IN NATURE AND LIMITED TO THE YEAR UNDER CONSIDERATION. ACCORDINGLY, IN VIEW OF THE AB OVE FACTS AND CIRCUMSTANCES OF THE CASE WE ARE OF THE CONSIDERED OPINION THAT ONCE THE CONDITION OF PREJUDICIAL TO THE INTEREST OF THE REVENUE IS NOT SATISFIED THEN T HE LD. CIT IS NOT JUSTIFIED IN REVISING THE ORDER OF THE ASSESSING OFFICER PASSED U/S 143(3) OF THE ACT HENCE, WE SET ASIDE THE IMPUGNED ORDER PASSED U/S 263 OF THE ACT. 6. WE HEARD BOTH THE PARTIES AND CAREFULLY GONE THROU GH THE SUBMISSION PUT FORTH ON BEHALF OF THE ASSESSEE ALONG WITH THE DOCUMENTS FURNISHED AND THE CASE LAWS RELIED UPON, AND PERUSED THE FACT OF THE CASE INCLU DING THE FINDINGS OF THE LD CIT(A) AND OTHER MATERIALS AVAILABLE ON RECORD. WE NOTE THAT FIRST OF ALL LET US EXAMINE THE TAX LIABILITY UNDER THE NORMAL PROVISIO N OF THE ACT AND UNDER SECTION 115JBMINIMUM ALTERNATE TAX. (A). COMPUTATION OF TAX LIABILITY UNDER NORMAL PROV ISIONS OF I.T.ACT AMOUNT (RS.) AMOUNT AMOUNT (RS.) TOTAL INCOME AS PER ORDER U/S 154 /143(3) DATED 14.08.2015 1,24,35,94,229 ADD: ADDITIONAL DEPRECIATION AS DISCUSSED AT PARA NO. 4 ABOVE 1,93,20,000 TOTAL INCOME 1,26,29,17,229 TAX LIABILITY 42,93,91,857 PAHARPUR COOLING TOWERS LTD. ITA NO.1096/KOL/2017 ASSESSMENT YEAR:2011-12 PAGE | 4 COMPUTATION OF TAX LIABILITY UNDER U/S 115JB-MAT BOOK PROFIT AS PER ORDER U/S 154 / 143(3) DATED 14.08.2015 2,68,51,68,595 TAX LIABILITY 53,51,67,527 FROM THE ABOVE TWO TABLES, WE NOTE THAT THE TAX LIA BILITY OF THE ASSESSEE UNDER THE NORMAL PROVISIONS OF I.T ACT COMES AT RS. 42,93,91, 857/-(AFTER ADJUSTING THE DISPUTED AMOUNT BY LD PCIT), WHEREAS THE TAX LIABIL ITY U/S 115JB-MAT COMES TO THE TUNE OF RS. 53,51,67,527/- WHICH IS MORE THAN N ORMAL INCOME TAX LIABILITY. AS PER THE SCHEME OF THE ACT, THE ASSESSEE IS SUPPOSED TO PAY THE INCOME TAX AS PER MINIMUM ALTERNATE TAX UNDER SECTION 115JB OF THE AC T TO THE TUNE OF RS. 53,51,67,527/-, WHICH IS MORE THAN THE TAX LIABILIT Y COMPUTED UNDER THE NORMAL PROVISION OF THE ACT AT RS.42,93,91,857/-. IF FOR T HE TIME BEING, WE PRESUME THAT THE ISSUE DISCUSSED BY THE LD. PCIT IS CORRECT AND AFTER GIVING THE EFFECT OF THE ISSUE RAISED BY THE LD. PCIT, EVEN THEN THE TAX LIA BILITY UNDER THE NORMAL PROVISION WOULD BE BELOW THAN THE TAX LIABILITY U/S 115JB OF THE ACT THEREFORE THERE IS NO LOSS TO THE REVENUE. THEREFORE, WE CAN CONCLUDE THAT THE ORDER OF THE ASSESSING OFFICER MAY BE ERRONEOUS BUT IT IS NOT PREJUDICIAL TO THE I NTEREST OF THE REVENUE. 7. IN ORDER TO EXERCISE THE JURISDICTION U/S 263 OF THE ACT, THE LD PCIT NEEDS TO SATISFY TWO CONDITIONS NAMELY, I) THE ORDER IS ERRO NEOUS AND II) THE ORDER IS PREJUDICIAL TO THE INTEREST OF REVENUE. IN THE ASSE SSEE`S CASE UNDER CONSIDERATION ONE OF THE CONDITIONS PREJUDICIAL TO THE INTEREST OF THE REVENUE IS NOT SATISFIED THEREFORE THE ORDER PASSED BY THE LD. PCIT NEEDS TO BE QUASHED.AS THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE D ECISION OF THE DIVISION BENCH, INTHE CASE OF M/S ARL INFRATECH LTDIN ITA NO.404/JP /2016FOR THE ASSESSMENT YEAR 2012-13 VIDE ORDER DATED 31.01.2018AND THERE I S NO CHANGE IN FACTS AND LAW AND THE REVENUE IS UNABLE TO PRODUCE ANY MATERIAL T O CONTROVERT THE AFORESAID FINDINGS OF THE DIVISION BENCH (SUPRA). WE FIND NO REASON TO INTERFERE IN THE SAID ORDER OF THE DIVISION BENCH, THEREFORE, RESPECTFULL Y FOLLOWING THE JUDGMENT OF THE DIVISION BENCH WE CONCLUDE THAT ORDER PASSED BY THE ASSESSING OFFICER IS NOT PAHARPUR COOLING TOWERS LTD. ITA NO.1096/KOL/2017 ASSESSMENT YEAR:2011-12 PAGE | 5 PREJUDICIAL TO THE INTEREST OF REVENUE, HENCE WE QU ASH THE ORDER OF LD PCIT UNDER SECTION 263 OF THE ACT. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE COURT ON 11.12.2019 SD/- ( A.T.VARKEY ) SD/- (A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / DATE: 11/12/2019 ( SB, SR.PS ) COPY OF THE ORDER FORWARDED TO: 1. PAHARPUR COOLING TOWERS LIMITED 2. PR. CIT, CENTRAL-1, KOLKATA 3. C.I.T(A)- 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATABENCHES, KOLKATA. 6. GUARD FILE. TRUE COPY BY ORDER ASSIST ANT REGISTRAR ITAT, KOLKA TA BENCHES