M/s. Orient Abrasive Ltd., New Delhi V. ACIT, New Delhi

ITA 1144/DEL/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5476 (ITAT-DELHI)
• Duration Of Justice: 11 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 23-01-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 27-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KEYUR PATEL SENIOR
• Keywords: Speculation loss; Right to appeal; Revised return
• Section: 139(5); 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E : NEW DELHI) BEFORE SMT. DIVA SINGH, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO.1144/DEL./2013 (ASSESSMENT YEAR : 2009-10) M/S. ORIENT ABRASIVE LIMITED, VS. ACIT, CIRCLE 13 (1), 1307, CHIRANJIV TOWER, NEW DELHI. 43, NEHRU PLACE, NEW DELHI 110 019. (PAN : AAACO0221C) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI TARANDEEP SINGH, CA REVENUE BY : SHRI KEYUR PATEL, SENIOR DR ORDER PER B.C. MEENA, ACCOUNTANT MEMBER : THIS APPEAL FILED BY THE ASSESSEE EMANATES FROM THE ORDER OF LD. CIT (APPEALS)-XVI, DELHI DATED 17.12.2012. THE GROUNDS OF APPEAL RAISED ARE REPRODUCED AS UNDER:- 1. ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-XVI, NEW DELHI HAS ERRED IN LAW AND ON FACTS IN UPHOLDING THE DEDUCTIO N RS.1,63,03,900/- IN RESPECT OF THE PROFIT OF THE PO WER PLANT U/S 80 IA. THE ACTION OF THE LEARNED CIT (A)-XVI IS IL LEGAL AND BASED ON SURMISES AND CONJECTURES. 2. ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE AN D IN LAW, HON'BLE CIT (A) HAS ERRED IN LAW IN IGNORING THE JU DGMENT PASSED BY THE HON'BLE COURTS IN THE CASE OF M/S. JU TE ITA NO.1144/DEL./2013 2 CORPORATION OF INDIA LTD. VS. CIT AND ANOTHER [(199 1) 187 ITR 0688 SC] CIT VS. M/S. PURTHI BROKERS AND SHAREHOLDE RS PVT. LTD. (2012-TIOL-489-HC-MUM-IT). ACIT VS. M/S. NHK SPRING INDIA LTD. (ITA NO.285/DEL/2012). 3. THAT NO REASONABLE OPPORTUNITY OF HEARING WAS GR ANTED TO THE ASSESSEE. 4. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, MODIFY OR ALTER GROUNDS OF APPEAL BEFORE THE APPEAL IS DECIDE D. 2. WHILE PLEADING ON BEHALF OF THE ASSESSEE, THE LD . AR SUBMITTED THAT THE ASSESSEE HAS FILED ORIGINAL RETURN OF INCOME ON 30. 09.2009 AND WHICH WAS SUBSEQUENTLY REVISED ON 28.03.2011. THE REVISION O F THE RETURN WAS MADE ON ACCOUNT OF THREE REASONS WHICH WERE (I) TO ADD BACK AN AMOUNT OF RS.4,70,09,917/- BEING NOTIONAL LOSS ON DERIVATIVE CONTRACTS CLAIMED AS DEDUCTION IN THE ORIGINAL RETURN; (II) TO CLAIM A D EDUCTION OF RS.1,63,03,900/- IN RESPECT OF THE PROFIT OF THE POWER PLANT U/S 80I A; AND (III) TO CLAIM CREDIT OF AN AMOUNT OF RS.65 LACS DEPOSITED AS SELF ASSESSMEN T TAX ON 30.04.2010. LD. AR SUBMITTED BEFORE US THAT THERE WAS AN ERROR WHIL E FILING THE REVISED RETURN AND THE ASSESSEE HAS TRIED TO REMOVE THE ERROR BY C ONTACTING THE E.FILING ADMINISTRATOR. LD. AR HAS SUBMITTED THE E.MAIL GENE RATED IN THIS REGARD. HE FURTHER SUBMITTED THAT EVEN THE ASSESSEE CAN CLAIM THE DEDUCTION U/S 80IA BY WAY OF FILING THE REVISED COMPUTATION OF INCOME IN VIEW OF THE VARIOUS DECISIONS OF HON'BLE HIGH COURTS INCLUDING THE JURI SDICTIONAL HIGH COURT IN ITA NO.1144/DEL./2013 3 THE CASE OF CIT VS. SAM GLOBAL SECURITIES LTD. REPO RTED IN [2013] 38 TAXMANN.COM 129 (DELHI). LD. AR SUBMITTED A COPY O F THIS ORDER BEFORE US. 3. ON THE OTHER HAND, LD. DR RELIED ON THE ORDERS O F THE AUTHORITIES BELOW. 4. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE. THE MAIN ISSUE INVOLVED IN THE APPEAL IS NOT ALLOWING 80IA CLAIM IN RESPECT OF THE PROFIT OF POWER PLANT BY RELYING ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF GOETZE (INDIA) LTD. VS. CIT 284 ITR 323. THE CIT (A) HA S ALSO REJECTED THE CLAIM OF THE ASSESSEE BY HOLDING THAT CLAIM U/S 80IA CANN OT BE ALLOWED BY FILING A LETTER DURING THE ASSESSMENT PROCEEDINGS. THE CIT (A) WAS ALSO OF THE VIEW THAT SUCH CLAIM CAN BE ALLOWED ONLY BY WAY OF FILIN G A REVISED RETURN OF INCOME U/S 139(5) OF THE ACT WHICH THE ASSESSEE HAS NOT DONE. SIMILAR ISSUE HAS COME UP BEFORE THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. SAM GLOBAL SECURITIES LTD., CITED SUPRA, WHEREI N THE HON'BLE HIGH COURT HAS SUSTAINED THE DIRECTION OF THE TRIBUNAL TO RECO NSIDER THE MATTER ON MERITS BY THE ASSESSING OFFICER. AFTER HEARING, WE FIND T HAT THE FACTS OF BOTH THE CASES ARE SIMILAR. THE CLAIM HAS BEEN MADE DURING THE ASSESSMENT PROCEEDINGS BUT NOT BY WAY OF FILING REVISED RETURN . THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF SAM GLOBAL SECURITIES LTD. HAS DECIDED THE ISSUE BY HOLDING AS UNDER :- 2. IT IS AN ACCEPTED POSITION THAT THE ASSESSEE HA D NOT CLAIMED THE SAID DEDUCTION OR BUSINESS LOSS IN THE RETURN OF INCOME FILED ON 31 ST OCTOBER, 2001, DECLARING TAXABLE INCOME OF RS. 1,72,910/-. SUBSEQUENTLY, NOTICE FOR SCRUTI NY ITA NO.1144/DEL./2013 4 ASSESSMENT UNDER SECTION 143(2)(II) WAS ISSUED. DUR ING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE RESPONDEN T-ASSESSEE HAD FILED REVISED COMPUTATION OF INCOME VIDE LETTER DATED 12 TH JANUARY, 2004, CLAIMING THAT DIVIDEND OF RS. 80,48, 977/- FROM THE UNITS OF MUTUAL FUND WAS EXEMPT UNDER SECTION 1 0(33) OF THE ACT AND LOSS ON SALE OF UNITS AMOUNTING TO RS.8 5,18,583/- WAS A BUSINESS LOSS AND NOT SPECULATIVE LOSS. 3. THE CLAIMS WERE REJECTED BY THE ASSESSING OFFICE R ON THREE GROUNDS THAT THE RESPONDENT-ASSESSEE HAD NOT FILED A REVISED RETURN WITHIN THE TIME ALLOWED UNDER SECTIO N 139(5) OF THE ACT; DIVIDEND WAS RECEIVED FROM SUN F&C MUTUAL FUND, WHICH WAS NOT INCLUDED IN THE SPECIFIED LIST OF MUT UAL FUNDS APPROVED BY SEBI; AND AS THE ASSESSEE WAS DEALING W ITH SHARES, INCOME/LOSS FROM SHARES/UNITS WAS SPECULATI VE LOSS AND NOT BUSINESS LOSS. 4. CIT (APPEALS) DISMISSED THE APPEAL OF THE ASSESS EE, BUT ON REMAND THE MATTER WAS RESTORED TO THE FIRST APPE LLATE AUTHORITY. THEREUPON, VIDE ORDER DATED 16 TH FEBRUARY, 2009, CIT (APPEALS) HELD THAT SUN F&C MUTUAL FUND WAS DUL Y APPROVED MUTUAL FUND UNDER SECTION 10(23D). HE OBSE RVED THAT DIVIDEND FROM THE UNITS OF MUTUAL FUND WAS EXE MPT UNDER SECTION 10 (35)(A). SIMILARLY WITH REGARD TO THE L OSS, HE OBSERVED THAT UNITS OF MUTUAL FUNDS WERE SOLD AND N OT SHARES, AND THEREFORE, THE ADVERSE EFFECT OF EXPLANATION TO SECTION 73 WAS NOT APPLICABLE. RELIANCE WAS PLACED UPON DECISI ON OF THE SUPREME COURT IN APOLLO TYRES LTD. VS. CIT, (2002) 255 ITR 283 (SC). INSPITE OF THE SAID OBSERVATIONS, THE CIT (APPEALS) DID NOT ALLOW THE APPEAL ON THE GROUND THAT THE ASS ESSEE HAD NOT FILED A REVISED RETURN WITHIN THE TIME ALLOWED UNDER SECTION 139(5) OF THE ACT, BUT HAD ONLY FILED A REVISED COMPUTATION. 5. THE TRIBUNAL HAS REVERSED THE SAID FINDINGS AFTE R REFERRING TO THE FACTUAL MATRIX. REFERENCE WAS MADE TO THE DE CISION OF THE SUPREME COURT IN CIT VS. MR. P. FIRM, (1965) 56 ITR 67 (SC) AND CIRCULAR NO.114 XL-35 OF 1955 ISSUED BY TH E CENTRAL BOARD OF DIRECT TAXES ON 11 TH APRIL, 1955, THAT AN OFFICER MUST NOT TAKE ADVANTAGE OF IGNORANCE OF THE ASSESSEE AS TO HIS RIGHTS. JUDGMENT OF THE SUPREME COURT IN GOETZE INDIA LTD. (SUPRA) WAS DISTINGUISHED ON THE GROUND THAT THE SAID CASE WAS LIMITED ITA NO.1144/DEL./2013 5 TO THE POWER OF THE ASSESSING AUTHORITY AND DID NOT IMPINGE UPON THE POWER OF THE TRIBUNAL. THE MATTER WAS REMA NDED TO THE ASSESSING OFFICER TO CONSIDER THE CASE ON MERIT S AND DECIDE ACCORDINGLY. 6. IN COMMISSIONER OF INCOME TAX VS. JAI PARABOLIC SPRINGS LTD., [2008] 306 ITR 42 (DELHI), A DIVISION BENCH OF THIS COURT MADE REFERENCE TO THE FOLLOWING PASSAGE FROM NATIONAL THERMAL POWER CO. LTD. VS. CIT, [1998] 229 ITR 383 (SC):- THE POWER OF THE TRIBUNAL IN DEALING WITH APPEALS IS THUS EXPRESSED IN THE WIDEST POSSIBLE TERMS. THE PU RPOSE OF THE ASSESSMENT PROCEEDINGS BEFORE THE TAXING AUTHORITIES IS TO ASSESS CORRECTLY THE TAX LIABILIT Y OF AN ASSESSEE IN ACCORDANCE WITH LAW. WE DO NOT SEE ANY REASON TO RESTRICT THE POWER OF THE TRIBUNAL UNDER SECTION 254 ONLY TO DECIDE THE GROUNDS WHICH ARISE FROM THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEAL S). BOTH THE ASSESSES AS WELL AS THE DEPARTMENT HAVE A RIGHT TO FILE AN APPEAL/CROSS-OBJECTIONS BEFORE THE TRIBU NAL. WE FAIL TO SEE WHY THE TRIBUNAL SHOULD BE PREVENTED FROM CONSIDERING QUESTIONS OF LAW ARISING IN ASSESS MENT PROCEEDINGS ALTHOUGH NOT RAISED EARLIER. 7. REFERENCE WAS ALSO MADE TO AN EARLIER DECISION O F THE SUPREME COURT IN JUTE CORPORATION OF INDIA LTD. VS. CIT, [1991] 187 ITR 688(SC), WHEREIN IT HAS BEEN HELD AS UNDER:- AN APPELLATE AUTHORITY HAS ALL THE POWERS WHICH TH E ORIGINAL AUTHORITY MAY HAVE IN DECIDING THE QUESTIO N BEFORE IT SUBJECT TO THE RESTRICTIONS OR LIMITATION S, IF ANY, PRESCRIBED BY THE STATUTORY PROVISIONS. IN THE ABSE NCE OF ANY STATUTORY PROVISION, THE APPELLATE AUTHORITY IS VESTED WITH ALL THE PLENARY POWERS WHICH THE SUBORDINATE AUTHORITY MAY HAVE IN THE MATTER. THERE IS NO GOOD REASON TO JUSTIFY CURTAILMENT OF THE POWER OF THE APPELLATE ASSISTANT COMMISSIONER IN ENTERTAINING AN ADDITIONAL GROUND RAISED BY THE ASSESSED IN SEEKING MODIFICATION OF THE ORDER OF ASSESSMENT PASSED BY T HE INCOME TAX OFFICER. THIS COURT FURTHER OBSERVED THA T THERE MAY BE SEVERAL FACTORS JUSTIFYING THE RAISING OF A ITA NO.1144/DEL./2013 6 NEW PLEA IN AN APPEAL AND EACH CASE HAS TO BE CONSI DERED ON ITS OWN FACTS. THE APPELLATE ASSISTANT COMMISSIO NER MUST BE SATISFIED THAT THE GROUND RAISED WAS BONA F IDE AND THAT THE SAME COULD NOT HAVE BEEN RAISED EARLIE R FOR GOOD REASONS. THE APPELLATE ASSISTANT COMMISSIONER SHOULD EXERCISE HIS DISCRETION IN PERMITTING OR NOT PERMITTING THE ASSESSED TO RAISE AN ADDITIONAL GROU ND IN ACCORDANCE WITH LAW AND REASON. THE SAME OBSERVATIO NS WOULD APPLY TO APPEALS BEFORE THE TRIBUNAL ALSO. 8. DECISION IN THE CASE OF GOETZE (INDIA) LTD. (SUP RA) WAS DISTINGUISHED IN JAI PARABOLIC SPRINGS LTD. (SUPRA) IN THE FOLLOWING WORDS:- IN GOETZE (INDIA) LTD. VS. CIT [2006] 284 ITR 323 (SC) WHEREIN DEDUCTION CLAIMED BY WAY OF A LETTER BEFORE THE ASSESSING OFFICER, WAS DISALLOWED ON THE GROUND THAT THERE WAS NO PROVISION UNDER THE ACT TO MAKE AMENDMENT IN THE RETURN WITHOUT FILING A REVIS ED RETURN. APPEAL TO THE SUPREME COURT, AS THE DECISIO N WAS UPHELD BY THE TRIBUNAL AND THE HIGH COURT, WAS DISMISSED MAKING CLEAR THAT THE DECISION WAS LIMITE D TO THE POWER OF THE ASSESSING AUTHORITY TO ENTERTAIN C LAIM FOR DEDUCTION OTHERWISE THAN BY A REVISED RETURN, A ND DID NOT IMPINGE ON THE POWER OF THE TRIBUNAL. 9. IN CIT VS. NATRAJ STATIONERY PRODUCTS (P) LTD., (2009) 312 ITR 222 RELIANCE PLACED ON GOETZE (INDIA) LTD. (SUPRA) BY THE REVENUE WAS REJECTED, AS THE ASSESSEE HAD NOT M ADE ANY NEW CLAIM BUT HAD ASKED FOR RE-COMPUTATION OF DED UCTION UNDER SECTION 80-IB. THE SAID DECISION MAY NOT BE S QUARELY APPLICABLE BUT THE COURTS HAVE TAKEN A PRAGMATIC VI EW AND NOT THE TECHNICAL VIEW AS WHAT IS REQUIRED TO BE DETERM INED IS THE TAXABLE INCOME OF THE ASSESSEE IN ACCORDANCE WITH T HE LAW. IN THIS SENSE, ASSESSMENT PROCEEDINGS ARE NOT ADVERSAR IAL IN NATURE. 10. IN COMMISSIONER OF INCOME TAX VS. ROSE SERVICES APARTMENT INDIA P. LTD., [2010] 326 ITR 100 (DELHI) RELYING UPON THE DECISION OF THE SUPREME COURT IN NATIONAL THERMAL POWER CO. LTD. (SUPRA), A DIVISION BENCH OF THIS CO URT REJECTED THE PLEA OF THE REVENUE THAT THE TRIBUNAL COULD NOT HAVE ITA NO.1144/DEL./2013 7 ENTERTAINED THE PLEA, HOLDING THAT THE TRIBUNAL WAS EMPOWERED TO DEAL WITH THE ISSUE AND WAS ENTITLED TO DETERMIN E THE CLAIM OF LOSS, IF AT ALL, UNDER ONE SECTION/PROVISION OR THE OTHER. 11. DECISION IN GOETZE (INDIA) LTD. (SUPRA) WAS AGA IN RELIED UPON BY THE REVENUE IN CIT VS. JINDAL SAW PIPES LTD ., [2010] 328 ITR 338 (DELHI) BUT THE CONTENTION WAS NOT ACCE PTED, OBSERVING THAT THE TRIBUNALS JURISDICTION IS COMPR EHENSIVE AND ASSIMILATES ISSUES IN THE APPEAL FROM THE ORDER OF THE IT (APPEALS) AND THE TRIBUNAL HAS THE DISCRETION TO AL LOW A NEW GROUND TO BE RAISED. 12. IN VIEW OF THE AFORESAID DISCUSSION, WE ARE NOT INCLINED TO INTERFERE WITH ORDER PASSED BY THE TRIBUNAL. THE APPEAL IS DISMISSED. KEEPING IN VIEW THE DECISION OF HON'BLE JURISDICTIO NAL HIGH COURT, WE ARE INCLINED TO ACCEPT THE PLEA OF THE ASSESSEE AND RES TORE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER TO BE DECIDED ON MERITS IN RE SPECT OF THE CLAIM OF THE ASSESSEE U/S 80IA. WE ORDER ACCORDINGLY. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON THIS 30 TH DAY OF JANUARY, 2014. SD/- SD/- (DIVA SINGH) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 30 TH DAY OF JANUARY, 2014/TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-XVI, DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.