TCFC FINANCE LTD, MUMBAI V. ITO WD 3(3)(3), MUMBAI

ITA 1172/MUM/2012

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1043 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-04-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 17-09-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 21-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR A K NAYAK LD
• Assessee Lawyers: SANJIV M SHAH; JAY BHANSALI LD ARS
• Keywords: Additional evidence; Bad and doubtful debts; Revised return
• Section: 143(3); 115JB; 154

Judgement Text

ITA NO.1172 &1173/M/2014 TCFC FINANCE LIMITED ASSESSMENT YEARS-2005-06 & 2006-07 IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI , BEFORE SHRI SAKTIJIT DEY, JM AND SHRI MANOJ KUMAR AGGARWAL, AM I.T.A. NO.1172 /MUM/2014 & I.T.A. NO.1173 /MUM/2014 ( ASSESSMENT YEARS: 2005-06 & 2006-07) TCFC FINANCE LIMITED 502, RAHEJA CHAMBERS, NARIMAN POINT MUMBAI 400 021 VS. INCOME TAX OFFICER WARD 3(3)(3) MUMBAI ! ' PAN/GIR NO. AAACR-2710-H ( !# APPELLANT ) : ( $%!# RESPONDENT ) !# & APPELLANT BY : SHRI SANJIV M. SHAH & SHRI JAY BHANSALI, LD. ARS $%!# & / RESPONDENT BY : DR. A.K. NAYAK, LD. DR ' DATE OF HEARING : 27/04/2017 ()* / DATE OF PRONOUNCEMENT : 28/04/2017 ITA NO.1172 &1173/M/2014 TCFC FINANCE LIMITED ASSESSMENT YEARS-2005-06 & 2006-07 2 O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THESE ARE TWO APPEALS BY ASSESSEE FOR ASSESSMENT YEARS [AY] 2005- 06 & 2006-07 WHICH ASSAILS SEPARATE ORDER OF LD. CO MMISSIONER OF INCOME TAX (APPEALS)-7, [CIT(A)], MUMBAI AND SINCE THE SAM E ARE BY ONE ASSESSEE FOR TWO DIFFERENT AYS, WE DISPOSE-OFF THE SAME BY W AY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. FIRST, WE TAKE UP ITA NO. 1173/M12 FOR AY 2006-07 WHICH ASSAILS ORDER OF LD. CIT(A) QUA MISTAKE IN COMPUTATION OF BOOK PROFIT U/S 115JB. 2. BRIEFLY STATED, THE ASSESSEE, BEING RESIDENT COR PORATE ASSESSEE, WAS SUBJECTED TO AN ASSESSMENT U/S 143(3) OF THE INCOME TAX ACT, 1961 FOR IMPUGNED AY VIDE ASSESSING OFFICER [AO] ORDER DATED 18/11/2008 WHEREIN THE TOTAL INCOME OF THE ASSESSEE WAS DETERMINED AT RS.2 4,73,570/- UNDER NORMAL PROVISIONS AND RS.6,87,01,534/- U/S 115JB AFTER CER TAIN ADJUSTMENTS AND DISALLOWANCES AS AGAINST RETURNED INCOME OF RS. NIL FILED BY THE ASSESSEE ON 29/11/2006. THE ASSESSEE IS AGGRIEVED BY MISTAKE MA DE BY HIM IN COMPUTATION OF BOOK PROFIT U/S 115JB IN VIEW OF THE FACT THAT WHILE ARRIVING AT THE BOOK PROFIT, IT ADDED BACK THE PROVISION FOR TA XATION IN THE FIGURES OF PROFIT AS PER PROFIT & LOSS ACCOUNT, WHICH IN FACT, WAS BE FORE PROVISION FOR TAXATION AND HENCE THE SAME HAS RESULTED INTO ERRONEOUS INCR EASE IN BOOK PROFITS TO THE EXTENT OF PROVISION FOR TAXATION. THE AO ALSO T OOK THE BOOK PROFITS AS PER ASSESSEES COMPUTATION. AGGRIEVED, THE ASSESSEE, INTER-ALIA, C ONTESTED THE SAME BEFORE LD. CIT(A) WHO REJECTED THE SAME ON THE PREMISES THAT IT WAS ASSESSEES OWN MISTAKE AND DID NOT SPRING OUT OF TH E AOS ORDER APPEALED AGAINST. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFOR E US. ITA NO.1172 &1173/M/2014 TCFC FINANCE LIMITED ASSESSMENT YEARS-2005-06 & 2006-07 3 3. THE LD. COUNSEL FOR ASSESSEE [AR], WHILE DRAWING OUR ATTENTION TO DOCUMENTS PLACED IN THE PAPER BOOK , HAS CONTENDED THAT THERE IS NO DISPUTE AS TO FACT THAT AN ERRONEOUS CALCULATIONS HAVE OCCU RRED IN THE COMPUTATION OF BOOK PROFITS AND THE JUSTICE DEMANDS THAT CORRECT B OOK PROFITS AS PER LAW ARE COMPUTED. THE ASSESSEE MADE EFFORT TO GET THE MISTA KE RECTIFIED BY FILING RECTIFICATION APPLICATION U/S 154 VIDE LETTERS DATE D 27/12/2008 AND REMINDERS DATED 22/02/2010 & 23/04/2010, THE COPIES OF WHICH WERE PLACED BEFORE US. HOWEVER, THE SAME WERE NOT DISPOSED-OFF BY THE REVE NUE TILL DATE. THE LD. DR CONTENDED THAT THE ASSESSEE HIMSELF MADE A MISTAKE IN COMPUTATION OF INCOME AND THEREFORE, THE PROPER REMEDY FOR THE SAM E WAS TO PERUSE HIS RECTIFICATION APPLICATIONS. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED COMPUTATION OF INCOME AND FINANCIAL STATEMENTS OF THE ASSESSEE PLA CED IN THE PAPER BOOK. A QUICK GLANCE AT THE CALCULATION OF BOOK PROFITS LEN DS SUPPORTS TO THE CONTENTIONS OF THE ASSESSEE THAT AN ERROR HAS CERTA INLY CREPT INTO THE COMPUTATION OF BOOK PROFITS AS THE ASSESSEE HAS ADD ED PROVISION FOR TAXATION OF RS.54.73 LACS IN THE FIGURES OF PROFIT, WHICH IN FACT, WERE ALREADY BEFORE TAXATION AND THE ERROR HAS RESULTED INTO OVERSTATEM ENT OF BOOK PROFIT TO THE EXTENT OF RS.54.73 LACS. THE ASSESSEE RIGHTLY FILED THE RECTIFICATION APPLICATIONS AS WAY BACK AS IN THE YEAR 2008 BUT WE REGRET TO NOTE THAT THE SAME HAS NOT BEEN DISPOSED-OFF TILL DATE. IT IS LEG ALLY WELL SETTLED PRINCIPLE THAT THE REVENUE SHOULD NOT OBTAIN UNDUE / UNFAIR ADVANT AGE OF ASSESSEES MISTAKE / IGNORANCE. THEREFORE, WHILE ALLOWING THE ASSESSEE S APPEAL FOR STATISTICAL PURPOSES, WE DIRECT THE REVENUE TO DISPOSE-OFF THE CITED RECTIFICATION APPLICATIONS FILED BY THE ASSESSEE WITHIN A PERIOD OF 30 DAYS FROM THE DATE OF THIS ORDER. ITA NO.1172 &1173/M/2014 TCFC FINANCE LIMITED ASSESSMENT YEARS-2005-06 & 2006-07 4 5. NOW, WE TAKE UP ITA NO. 1172/M/2014 WHICH IS APP EAL FOR AY 2005-06 WHERE THE ASSESSEE IS AGGRIEVED BY CERTAIN DISALLOW ANCES AND MISTAKES. FACTS QUA THE FIRST GROUND ARE THAT THE ASSESSEE HAS BEEN ASS ESSED AT RS.14,89,774/- U/S 143(3) AFTER DISALLOWANCE, INTER-ALIA , OF ADVANCES WRITTEN OFF AS BAD DEBTS FOR RS.31.00 LACS. THE SAME WAS CONTES TED BEFORE LD. CIT(A) ON THE PREMISES THAT THE ASSESSEE WAS IN MONEY LEND ING BUSINESS AND THEREFORE, THE SAME WAS ALLOWABLE TO THE ASSESSEE. HOWEVER, LD.CIT(A) REJECTED THE SAME ON THE GROUND THAT THE ASSESSEE F AILED TO PROVE THAT THE SAID DEBT WAS PART OF ASSESSEES INCOME IN ANY PREV IOUS YEAR AS PER SECTION 36(2). THE LD. AR, BY PLACING ADDITIONAL EVIDENCES IN THE PAPER BOOK CONTENDED THAT THE ASSESSEE WAS AN NON-BANKING FINA NCIAL COMPANY [ NBFC] REGISTERED ENTITY AND MONEY LENDING WAS THE BUSINES S OF THE ASSESSEE AND THEREFORE, ADVANCES WRITTEN OFF WERE IN THE ORDINAR Y COURSE OF ASSESSEES BUSINESS AND HENCE, ALLOWABLE. THE LD. AR FURTHER C ONTENDED THAT THE ASSESSE HAD SUFFICIENT EVIDENCES IN HIS POSSESSION TO SUBSTANTIATE HIS CLAIM IN THIS REGARD AND IN THE INTEREST OF JUSTICE, THE MAT TER BE RESTORED BACK TO LD. AO. THE LD. DR RAISED NO OBJECTION TO THE SAME AND THEREFORE, WITHOUT DELVING MUCH DEEPER INTO THE MATTER, WE RESTORE THE GROUND NO. 1 OF ASSESSEES APPEAL TO THE FILE OF AO FOR FRESH ADJUD ICATION. THE GROUND STANDS ALLOWED FOR STATISTICAL PURPOSES. 6. SIMILAR CONTENTIONS HAVE BEEN RAISED FOR GROUND NO 2 WHICH IS RELATED WITH COMPUTATION OF LONG TERM CAPITAL LOSS [LTCL] I NCURRED BY THE ASSESSEE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSEE FILED A REVISED CALCULATION OF LTCL ON ACCOUNT OF SALE OF CERTAIN S HARES WHICH RESULTED INTO INCREASE IN LONG TERM CAPITAL LOSS BY RS.37,20,693/ -. HOWEVER, THE LD. AO, RELYING UPON THE DECISION IN GOETZ INDIA LTD. [284 ITR 323] REJECTED THE SAME, IT BEING A NEW CLAIM. THE LD. CIT(A) CONFIRMED THE SAME ON THE SAME ANALOGY ITA NO.1172 &1173/M/2014 TCFC FINANCE LIMITED ASSESSMENT YEARS-2005-06 & 2006-07 5 AND AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US BY WAY OF GROUND NO.2. THE ASSESSEE PLACED RELIANCE ON VARIOUS JUDICIAL PR ONOUNCEMENT TO CONTEND THAT THE ASSESSEE MADE A MISTAKE IN COMPUTATION OF LONG TERM CAPITAL LOSS IN THE RETURN OF INCOME, NEVERTHELESS, THE SAME COU LD BE ENTERTAINED BY THE TRIBUNAL AND THEREFORE, IN THE INTEREST OF JUSTICE, THE SAME MAY BE ALLOWED IN FAVOR OF THE ASSESSEE, SUBJECT TO DUE VERIFICATION. THE LD. DR CONTESTED THAT SAME ON THE GROUND THAT THE SAME COULD BE ADMITTED ONLY BY WAY OF FILING REVISED RETURN OF INCOME. HOWEVER, TAKING SAME VIEW , WE DEEM IT FIT TO RESTORE THE MATTER BACK TO THE FILE OF AO TO RE-ADJUDICATE THE SAME WITH A DIRECTION TO THE ASSESSEE TO SUBSTANTIATE HIS CLAIM FORTHWITH IN THIS REGARD. ACCORDINGLY, THIS GROUND STANDS ALLOWED FOR STATISTICAL PURPOSES . 7. GROUND NO. 3 IS RELATED WITH COMPUTATION OF BOOK PROFIT U/S 115JB. THE ASSESSEE IS AGGRIEVED BY NON-ADJUDICATION OF ADDITI ONAL GROUNDS OF APPEAL RAISED BY ASSESSEE BEFORE LD. CIT(A) WHO REJECTED T HE SAME ON THE ERRONEOUS PREMISES THAT THE SAME WAS CONSEQUENTIAL IN NATURE AND FURTHER THE SAME DID NOT EMANATE FROM AOS ORDER. THE LD. A R, WHILE DRAWING OUR ATTENTION TO THE ADDITIONAL GROUND OF APPEAL, CONTE NDED THAT THE ASSESSEE RAISED ADDITIONAL GROUND OF APPEAL REGARDING COMPUT ATION OF BOOK PROFIT U/S 115JB VIS--VIS AMOUNT WITHDRAWN FROM PROVISION MAD E IN EARLIER YEARS AND CREDITED TO PROFIT & LOSS ACCOUNT AS PER EXPLANATIO N-1. HOWEVER, THE LD. CIT(A) REJECTED THE SAME BY ERRONEOUSLY CONCLUDING THAT THE SAME WAS CONSEQUENTIAL IN NATURE IN RELATION TO GROUND NO. 6 AND DID NOT EMANATE FROM THE ORDERS OF LD. AO. A PRIMA FACIE PERUSAL OF GROUND NO.6 RAISED BY THE ASSESSEE BEFORE LD. CIT(A) REVEALS THAT THE SAME WA S RELATED WITH DIMINUTION IN VALUE OF SHARES WHICH, IN FACT, WAS NOT, CONNECT ED WITH ADDITIONAL GROUND OF APPEALS RAISED BY THE ASSESSEE. THEREFORE, THIS ISS UE IS ALSO RESTORED BACK TO ITA NO.1172 &1173/M/2014 TCFC FINANCE LIMITED ASSESSMENT YEARS-2005-06 & 2006-07 6 THE FILE OF AO FOR RE-ADJUDICATION. THIS GROUND OF ASSESSEES APPEAL ALSO STANDS ALLOWED FOR STATISTICAL PURPOSES. 8. IN NUTSHELL, BOTH THE ASSESSEES APPEAL STANDS A LLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH APRIL, 2017. SD/- SD/- (SAKTIJIT DEY) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER +' MUMBAI; DATED : 28.04.2017 SR.PS:- THIRUMALESH COPY OF THE ORDER FORWARDED TO : 1. !# / THE APPELLANT 2. $%!# / THE RESPONDENT 3. / THE CIT(A) 4. / CIT CONCERNED 5. , - $ . .* +' / DR, ITAT, MUMBAI 6. - /0 1 ' GUARD FILE ! / BY ORDER, ' !# $ (DY./ASSTT. REGISTRAR) +' / ITAT, MUMBAI