Deputy Commissioner of Income-tax, V. Hindustan Antibiotics Ltd., Pune

ITA 1121/PUN/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 0576 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 22-12-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 23-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HITENDRA NINAWE
• Assessee Lawyers: ASHOK KOTHARI
• Keywords: Depreciation; Unabsorbed depreciation
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE , !', $ % BEFORE MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KEDIA, AM ITA NO.1121/PN/2014 ASSESSMENT YEAR : 2007-08 THE DY. COMMISSIONER OF INCOME TAX, CIRCLE 9, PUNE. . APPELLANT VS. HINDUSTAN ANTIBIOTICS LTD., MUMBAI-PUNE ROAD, PIMPRI, PUNE 411 018. PAN : AAACH5155L . RESPONDENT / APPELLANT BY : SHRI HITENDRA NINAWE / RESPONDENT BY : SHRI ASHOK KOTHARI / DATE OF HEARING : 22.12.2015 / DATE OF PRONOUNCEMENT: 30.12.2015 & / ORDER PER PRADIP KUMAR KEDIA, AM : THE CAPTIONED APPEAL FILED BY THE REVENUE IS AGAINS T THE ORDER OF CIT(A)-V, PUNE DATED 18.02.2014 RELATING TO ASSESSM ENT YEAR 2007-08 PASSED UNDER SECTION 143(3) R.W.S. 263 OF THE INCOME-TAX A CT, 1961 (IN SHORT THE ACT). 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW THE LD. CIT(A) WAS JUSTIFIED IN HOLDING THAT LIMITATION OF 8 YEARS FOR CARRY FORWARD AND SET OFF WOULD NO LONGER APPLY TO THE UNABSORBED DEPRECI ATION THAT AROSE DURING A.Y. 1997-98 TO 2001-02, WHEN SECTION 32(2) OF THE ACT A S APPLICABLE DURING THE PERIOD 1997 TO 2002 DOES NOT PROVIDE FOR A MECHANISM TO AD D THE UNABSORBED DEPRECIATION TO THE ALLOWANCE U/S 32(1) OF THE FOLLOWING PREVIOU S YEAR AND THERE IS NO EXPRESS PROVISION IN THE LAW TO ADD IT TO THE FOLLOWING YEA RS ALLOWANCE U/S 32(1) OF THE ACT. 2. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTE R ANY OF THE ABOVE GROUNDS OF APPEAL. 2 ITA NO.1121/PN/2014 3. BRIEFLY STATED, THE RELEVANT FACTS CONCERNING TH E ISSUES INVOLVED ARE THAT THE ASSESSEE COMPANY IS A PUBLIC SECTOR ENTERPRISE ENGAGED IN MANUFACTURING OF PHARMACEUTICALS AND DRUGS. THE ASSESSEE FILED ITS RETURN OF INCOME FOR A.Y. 2007-08 ON 17.03.2009 DECLARING LOSS OF RS.33,66,81 ,931/-. THE CASE WAS SELECTED FOR SCRUTINY AND ORDER UNDER SECTION 143(3 ) WAS PASSED ON 23.12.2009 ON A TOTAL LOSS OF RS.86,61,76,064/-. SUBSEQUENTLY , IT WAS NOTICED THAT UNABSORBED DEPRECIATION FOR A.Y. 1997-98 TO 2001-02 AMOUNTING TO RS.87,08,64,394/- WAS WRONGLY ALLOWED. ACCORDINGLY , THE ORDER PASSED UNDER SECTION 143(3) WAS SET-ASIDE UNDER SECTION 263 OF T HE ACT. THEREAFTER, ORDER UNDER SECTION 143(3) R.W.S. 263 OF THE ACT WAS PASS ED ON 30.07.2012, IN WHICH BROUGHT FORWARD DEPRECIATION FOR A.YS. 1997-98 TO 2 004-05 AMOUNTING TO RS.87,08,64,394/- WAS WITHDRAWN. 4. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER PASSED UNDER SECTION 143(3) R.W.S. 263 OF THE ACT, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). 5. THE CIT(A) PROVIDED REQUISITE RELIEF TO THE ASSE SSEE AGAINST WHICH THE REVENUE IS IN APPEAL BEFORE US. 6. IN THE COURSE OF HEARING, THE LD. AUTHORIZED REP RESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ORDER PASSED UNDER SECT ION 263 OF THE ACT DATED 29.03.2012 WHICH RESULTED IN FRESH ASSESSMENT PROCE EDINGS AND PRESENT APPEAL FOR ADJUDICATION CONSEQUENT THERETO HAS BEEN CANCEL LED BY THE PUNE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE VIDE ITA NO.104 4/PN/2012 RELATING TO ASSESSMENT YEAR 2007-08, ORDER DATED 29.01.2015. A CCORDINGLY, THE ASSESSMENT ORDER OF THE ASSESSING OFFICER AND THE A PPELLATE ORDER OF THE CIT(A) AGAINST WHICH THE REVENUE IS IN APPEAL BEFOR E US DOES NOT SURVIVE AND IS RENDERED NONEST . 7. WE NOTICE THAT THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF THE ASSESSEE IN ITA NO.1044/PN/2012 (SUPRA) HAS CANCELL ED THE ACTION OF THE CIT(A) UNDER SECTION 263 OF THE ACT. THE RELEVANT OPERATIVE PARA OF THE ORDER 3 ITA NO.1121/PN/2014 OF THE TRIBUNAL IN ASSESSEES OWN CASE (SUPRA) IS R EPRODUCED HEREUNDER FOR READY REFERENCE :- 6. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS RELIE D ON BY BOTH THE SIDES. WE FIND THE LD.CIT INVOKED JURISDICTION U/S.263 ON THE GROU ND THAT THE AO IN THE ORDER PASSED U/S.143(3) HAS ALLOWED EXCESS SET OFF OF UNA BSORBED DEPRECIATION TO THE EXTENT OF RS.87,08,64,394/- FOR A.Y. 2007-08. ACCORDING T O LD. CIT, THE UNABSORBED DEPRECIATION PERTAINING TO THE A.YRS. 1974-75 TO 19 96-97 CANNOT BE CARRIED FORWARD MORE THAN 8 YEARS, I.E. BEYOND A.Y. 2004-05 IN THIS CASE. WE FIND THE ORDER U/S.143(3) HAS BEEN PASSED FOR A.Y. 2006-07 DETERMI NING THE UNABSORBED DEPRECIATION AND BUSINESS LOSS THAT HAS TO BE CARRI ED FORWARD THE DETAILS OF WHICH ARE ALREADY GIVEN AT PARA 4 OF THE IMPUGNED ORDER. THEREFORE, THE MISTAKE, IF ANY, HAS CREPT IN THE ORDER FOR A.Y. 2006-07 AND CERTAIN LY NOT IN THE ORDER FOR A.Y. 2007- 08. THE AO HAS SIMPLY FOLLOWED THE ORDER OF HIS PR EDECESSOR GIVING EFFECT TO THE QUANTUM OF BROUGHT FORWARD LOSS TO BE SET OFF FROM THE INCOME OF THE CURRENT YEAR. THEREFORE, THE ORDER FOR THE IMPUGNED ASSESSMENT YE AR CANNOT BE SAID TO BE ERRONEOUS ALTHOUGH IT MAY BE PREJUDICIAL TO THE INT EREST OF THE REVENUE. IT HAS BEEN HELD IN VARIOUS JUDICIAL DECISIONS THAT FOR ASSUMIN G JURISDICTION U/S.263 BY THE LD.CIT, THE TWIN CONDITIONS, I.E. (A) ORDER IS ERRO NEOUS AND (B) ORDER IS PREJUDICIAL TO THE INTEREST OF THE REVENUE MUST BE SATISFIED. IN THE INSTANT CASE, SINCE THE UNABSORBED BUSINESS LOSS AND UNABSORBED DEPRECIATIO N LOSS WHICH HAS TO BE CARRIED FORWARD FOR SUBSEQUENT YEARS HAS BEEN QUANTIFIED IN THE ORDER PASSED U/S.143(3) DATED 31-12-2008 FOR A.Y. 2006-07 AND SINCE THE AO HAS SIMPLY FOLLOWED THAT ORDER WHILE GIVING SET OFF OF UNABSORBED DEPRECIATION LOS S FOR THE A.Y. 2007-08, THEREFORE, THE ORDER IN OUR OPINION CANNOT BE SAID TO BE ERRON EOUS. THEREFORE, THE TWIN CONDITIONS ARE NOT SATISFIED. UNDER THESE CIRCUMST ANCES, WE ARE OF THE CONSIDERED OPINION THAT IT IS NOT A FIT CASE FOR ASSUMING JURI SDICTION U/S.263 OF THE I.T. ACT. WE ACCORDINGLY CANCEL THE ORDER PASSED U/S.263. THE G ROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY ALLOWED. 8. IN VIEW OF THE AFORESAID ORDER OF THE TRIBUNAL, THE APPEAL OF THE REVENUE IS RENDERED INFRUCTUOUS AND ACCORDINGLY GROUND RAIS ED BY THE REVENUE IS DISMISSED. 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED ON THIS 30 TH DAY OF DECEMBER, 2015. SD/- SD/- ( SUSHMA CHOWLA ) ( PRADIP KUMAR KEDIA ) / JUDICIAL MEMBER $ / ACCOUNTANT MEMBER PUNE ; DATED : 30 TH DECEMBER, 2015. 4 ITA NO.1121/PN/2014 & ' ()* +*( / COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-V, PUNE; 4) THE CIT-V, PUNE; 5) THE DR B BENCH, I.T.A.T., PUNE; 6) GUARD FILE. &, / BY ORDER , ' # //TRUE COPY// $ %& # '( / SR. PRIVATE SECRETARY ) '* , / ITAT, PUNE