Appeal details
Counselvise Citation
[2015] 120 COUNSELVISE.COM (IT) 9499 (ITAT-PUNE)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 8 month(s) 30 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
27-02-2015
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
A
Next Hearing Date
04-12-2014
Assessment Year
2008-2009
Appeal Filed On
28-05-2013
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.1176/PN/2013 (ASSESSMENT YEAR: 2008-09) M/S. SAB MILLER BREWERIES PVT. LTD., PLOT NO.99, MIDC, WALUJ, AURANGABAD, MAHARASHTRA. PAN: AAACR3140F . APPELLANT VS. THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE 1, AURANGABAD . RESPONDENT APPELLANT BY : SHRI R.R. VORA RESPONDENT BY : SMT. M.S. VERMA, CIT DATE OF HEARING : 04-12-2014 DATE OF PRONOUNCEMENT : 27-02-2015 ORDER PER SUSHMA CHOWLA, JM: THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE OR DER OF CIT, AURANGABAD, DATED 26.03.2013 RELATING TO ASSESSMENT YEAR 2008-0 9 AGAINST ORDER PASSED UNDER SECTION 263 OF THE INCOME-TAX ACT, 1961. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, ORDER PASSED BY THE LD.COMMISSIONER OF INCOME TAX ['LD.CI T'] IS BAD IN LAW AND VOID AB INITIO. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, LD. CIT GROSSLY ERRED IN EXERCISING HIS JURISDICTION FOR IN ITIATING PROCEEDINGS UNDER SECTION 263 OF THE ACT, SINCE THE REQUISITE ASSUMPT IONS OF JURISDICTION WERE LACKING IN THE PRESENT ORDER. DENIAL OF CARRY FORWARD OF UNABSORBED DEPRECIATION PERTAINING TO ASSESSMENT YEAR 1999-00 3. THAT THE LD. CIT GROSSLY ERRED ON FACTS AND IN L AW IN OBSERVING THAT ORDER PASSED BY THE LD. AO IN ALLOWING DEPRECIATION CLAIM ED FOR ASSESSMENT YEAR 1999-2000 IS ERRONEOUS AND PREJUDICIAL TO INTERESTS OF REVENUE. 3.1 THAT THE LD. CIT GROSSLY ERRED ON FACTS AND IN LAW IN NOT APPRECIATING THAT THE LD. AO PASSED THE ORIGINAL ASSESSMENT ORDE R AFTER MAKING DUE ENQUIRIES AND IN ACCORDANCE WITH HIS QUASI JUDICIAL POWERS CONFERRED UPON HIM ITA NO.1176/PN/2013 SAB MILLER BREWERIES PVT. LTD. 2 UNDER THE STATUTE AND THUS INITIATION OF PROCEEDING S UNDER SECTION 263 OF THE ACT IS WITHOUT JURISDICTION. 3.2 THAT THE LD. CIT GROSSLY ERRED ON FACTS AND IN LAW BY NOT APPRECIATING THE SETTLED PRINCIPLE THAT PROCEEDINGS INITIATED UN DER SECTION 263 OF THE ACT WERE NOT VALID SINCE LD. AO HAD DULY EXAMINED ALL T HE RECORDS PLACED ON RECORD AT THE TIME OF ASSESSMENT PROCEEDINGS. 3.3 THAT THE LD. CIT ERRED IN LAW IN NOT APPRECIATING THAT IF THE LD. AO ADOPTS ONE OF THE VIEWS PERMISSIBLE IN LAW AND IT H AS RESULTED IN LOSS TO REVENUE, OR WHERE TWO VIEWS ARE POSSIBLE AND THE AO HAS TAKEN ONE VIEW WITH WHICH CIT DOES NOT AGREE, IT CANNOT BE TREATED AS A N ERRONEOUS ORDER PREJUDICIAL TO THE INTERESTS OF REVENUE. 3.4 THAT THE LD. CIT GROSSLY ERRED ON FACTS AND IN LAW IN INITIATING PROCEEDINGS UNDER SECTION 263 OF THE ACT WITHOUT AP PRECIATING THAT THE ISSUE INVOLVED UNDER DISPUTE IS DEBATABLE AND THE LD. AO HAS TAKEN ONE OF THE TWO PLAUSIBLE VIEWS ON THE ISSUE INVOLVED. 3.5 THAT THE LD. CIT GROSSLY ERRED ON FACTS AND IN LAW IN INVOKING PROCEEDINGS UNDER SECTION 263 OF THE ACT AGAINST OR DER PASSED BY THE LD. AO WITHOUT APPRECIATING THAT THERE IS A MERE DIFFERENC E OF OPINION ON THE ISSUE UNDER DISPUTE BETWEEN THE LD. AO AND LD. CIT, WHICH IS CLEARLY NOT PERMISSIBLE TO INITIATE PROCEEDINGS UNDER SECTION 2 63 OF THE ACT. DEDUCTION OF MANAGEMENT LICENSE FEES 4. THAT THE LD. CIT ERRED IN SETTING ASIDE THE ORDE R OF ASSESSMENT ON THE ISSUE ASSESSMENT ON THE ISSUE OF MANAGEMENT LICENSE FEES WHICH IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTERESTS OF REVEN UE. 4.1 THAT THE LD. CIT GROSSLY ERRED ON FACTS AND IN LAW IN REMANDING BACK THE MATTER TO LD. AO FOR RE-VERIFICATION WITHOUT AR RIVING AT ANY CONCLUSION/FINDING THAT THE ORDER PASSED BY LD. AO IS ERRONEOUS AND PREJUDICIAL TO INTEREST OF THE REVENUE. 4.2 THAT THE LD. CIT GROSSLY ERRED ON FACTS AND IN LAW , IN DELEGATING THE POWERS GRANTED TO HIM UNDER SECTION 263 OF THE ACT TO THE LD. AO. 4.3 THAT THE LD. CIT GROSSLY ERRED ON FACTS AND IN LAW IN NOT APPRECIATING THAT THE PROCEEDINGS UNDER SECTION 263 OF THE ACT W ITHOUT BRINGING MATERIAL TO SUBSTANTIATE THAT THE ORDER PASSED BY THE LD. AO IS PREJUDICIAL AND ERRONEOUS TO INTEREST OF THE REVENUE. THE ABOVE GROUNDS OF APPEAL ARE WITHOUT PREJUDICE T O EACH OTHER. THAT THE APPELLANT RESERVES ITS RIGHT TO ADD, ALTER , AMEND, DELETE OR WITHDRAW ANY GROUND OF APPEAL EITHER BEFORE OR AT THE TIME O F HEARING OF THIS APPEAL. 3. THE ISSUE RAISED IN THE PRESENT APPEAL IS AGAINS T THE EXERCISE OF JURISDICTION BY THE CIT UNDER SECTION 263 OF THE ACT. 4. THE BRIEF FACTS OF THE CASE ARE THAT, THE ASSESS EE COMPANY WAS ENGAGED IN THE BUSINESS OF BREWING, PACKAGING, DISTRIBUTION AN D SALE OF BEER IN THE INDIAN MARKET. THE UNIT OF THE ASSESSEE WAS ESTABLISHED A T MIDC INDUSTRIAL AREA, WALUJ, AURANGABAD. IN THE YEAR UNDER CONSIDERATION, THE A SSESSEE HAD FURNISHED RETURN OF ITA NO.1176/PN/2013 SAB MILLER BREWERIES PVT. LTD. 3 INCOME DECLARING NIL INCOME. THE ASSESSING OFFICER HAD COMPLETED THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT ON 30.11.2010 AT AS SESSED INCOME OF RS.8,31,91,895/-. THE SAID INCOME WAS SET OFF AGAI NST THE BROUGHT FORWARD LOSSES AND UN-ABSORBED DEPRECIATION. 5. THE COMMISSIONER ON VERIFICATION OF THE ASSESSME NT RECORD WAS OF THE VIEW THAT, THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) OF THE ACT WAS BOTH ERRONEOUS AND PREJUDICIAL TO THE I NTERESTS OF REVENUE. SHOW CAUSE NOTICE UNDER SECTION 263 OF THE ACT WAS ISSUED TO T HE ASSESSEE IN WHICH, IT WAS ALLEGED THAT THE ASSESSEE HAD CLAIMED SET OFF OF CA RRIED FORWARD UN-ABSORBED DEPRECIATION OF RS.5,41,84,430/- RELATING TO ASSESS MENT YEAR 1999-2000 AGAINST THE INCOME IN THE FINANCIAL YEAR 2007-08, WHICH WAS NOT ALLOWABLE AS THE SAME HAD TO BE DEALT WITH IN LINE WITH THE PROVISIONS OF SECTION 3 2(2) OF THE ACT, APPLICABLE TO THE SAID YEAR. 6. ANOTHER SHOW CAUSE NOTICE WAS ISSUED TO THE ASSE SSEE DATED 25.07.2012 IN RESPECT OF MANAGEMENT / LICENSE FEES PAID BY THE AS SESSEE TO SABMILLER MANAGEMENT (IN) BV NETHERLANDS, AT RS.2,69,57,660/- . AS PER THE COMMISSIONER, THE SAID EXPENSES WERE NOT IN ACCORDANCE WITH THE B USINESS EXIGENCY AND HENCE WERE NOT ALLOWABLE UNDER SECTION 37(1) OF THE ACT F OR THE REASONS MENTIONED IN THE SHOW CAUSE NOTICE. THE ASSESSEE IN REPLY, RAISED P RELIMINARY OBJECTION AGAINST THE ISSUE OF NOTICE UNDER SECTION 263 OF THE ACT ON THE BASIS OF ASSUMPTION OF JURISDICTION. RELIANCE WAS PLACED ON SERIES OF DECISIONS, IN THIS REGARD. THE COMMISSIONER WAS OF THE VIEW THAT, THE FACTS OF THE PRESENT CASE WERE T OTALLY DIFFERENT FROM THOSE OF THE CASES RELIED UPON BY THE ASSESSEE. IT WAS FURTHER HELD BY THE COMMISSIONER THAT THE ASSESSING OFFICER HAD PASSED THE ORDER ON THE BASIS OF HYPOTHETICAL GROUND WITHOUT VERIFYING THE FACTS, THUS, INCORRECT CONCLUSION HAD BEEN DRAWN BY THE ASSESSING OFFICER WITHOUT APPLICATION OF MIND. THE COMMISSIO NER FURTHER PLACED RELIANCE ON THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN MAL ABAR INDUSTRIAL CO. LTD. VS. CIT (2000) 243 ITR 83 (SC) AND HELD THAT THE ORDER PASS ED BY THE ASSESSING OFFICER WAS BOTH ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVENUE. ITA NO.1176/PN/2013 SAB MILLER BREWERIES PVT. LTD. 4 7. WITH REGARD TO THE ISSUES RAISED IN THE SHOW CAU SE NOTICE ISSUED UNDER SECTION 263 OF THE ACT VIS--VIS THE SET OFF OF UN- ABSORBED DEPRECIATION RELATING TO ASSESSMENT YEAR 1999-2000 AGAINST THE TOTAL INCOME FOR THE YEAR UNDER CONSIDERATION, REFERENCE WAS MADE TO THE RATIO LAID DOWN BY THE MUMBAI BENCH OF THE TRIBUNAL IN DCIT VS. TIMES GUARANTY LIMITED, 131 TT J 257 (SB) (MUM). THE CONTENTION OF THE ASSESSEE WAS THAT IT HAD UN-ABSOR BED DEPRECIATION OF RS.5.30 CRORES RELATING TO ASSESSMENT YEAR 1999-2000 WHICH IS TO BE CARRIED FORWARD AND SET OFF AGAINST THE TOTAL INCOME OF THE YEAR UNDER CONS IDERATION. THE SECOND PLEA RAISED BY THE ASSESSEE WAS THAT, THE DECISION IN DCIT VS. TIMES GUARANTY LIMITED (SUPRA) WAS SUB-JUDICE BEFORE THE HONBLE BOMBAY HIGH COURT AND WHEN A QUESTION OF LAW HAD BEEN ADMITTED BY THE HONBLE HIGH COURT ON THE SUBJECT MATTER, THEN THE MATTER WAS DEBATABLE AND WAS NOT SUBJECT TO RECTIFICATION. 8. THE COMMISSIONER HELD THAT WHERE THE ISSUE IS DE BATABLE, THEN THE SAID ORDER CAN BE REVISED UNDER SECTION 263 OF THE ACT AS HELD IN CIT VS. M.M. KHAMBHATWALA (1992) 198 ITR 144 (GUJ). THE CIT FURTHER OBSERVED THAT THE PROVISIONS OF SECTION 32(2) OF THE ACT WERE AMENDED TWICE I.E. FIRST TIME IT WAS AMENDED BY THE FINANCE (NO.2) ACT, 1996 WITH EFFECT FROM 1.4.1997 AND SECO ND AMENDMENT TOOK PLACE BY THE FINANCE ACT, 2001 WITH EFFECT FROM 1.4.2002. THE S ECOND AMENDMENT IS NOTHING BUT IT IS REINFORCEMENT OF THE PROVISION AS EXISTING BEFOR E FIRST AMENDMENT OR BEFORE 1.4.1997. IT WAS FURTHER HELD BY THE COMMISSIONER THAT IN THE LIGHT OF THE DECISION OF SPECIAL BENCH OF THE TRIBUNAL, MUMBAI IN THE CASE O F TIMES GUARANTY, I AM OF THE CONSIDERED OPINION THAT THE UNABSORBED DEPRECIATION FOR A.Y. 1999-00 AMOUNTING TO RS.5,41,84,430/- CLAIMED AND SET OFF AGAINST THE BU SINESS INCOME FOR A.Y. 2008-09 IN THE COMPUTATION OF INCOME AND ACCORDINGLY ALLOWED B Y THE AO WHILE FINALIZING THE ASSESSMENT IS NOT ADMISSIBLE ONE AS PER THE PROVISI ONS OF SEC.32(2) APPLICABLE FOR A.Y. 1999-00 AND THEREFORE, THE UNABSORBED DEPRECIA TION FOR A.Y. 1999-00 AMOUNTING TO RS.5,41,84,430/- NEEDS TO BE DISALLOWED. ACCORD INGLY, THE AO IS DIRECTED TO DISALLOW THE CLAIM OF UNABSORBED DEPRECIATION TO TH E EXTENT OF RS.5,41,84,430/- WHILE GIVING EFFECT TO THIS ORDER. 9. THE SECOND ISSUE RAISED BY THE COMMISSIONER IN S HOW CAUSE NOTICE WAS WITH REGARD TO THE MANAGEMENT / LICENSE FEES PAID BY THE ASSESSEE TO SABMILLER ITA NO.1176/PN/2013 SAB MILLER BREWERIES PVT. LTD. 5 MANAGEMENT (IN) BV NETHERLANDS. THE SUBMISSIONS OF THE ASSESSEE IN THIS REGARD, WERE REPRODUCED BY THE COMMISSIONER, WHICH ARE BEIN G REFERRED BUT NOT REPRODUCED HERE FOR THE SAKE OF BREVITY. THE COMMISSIONER AFT ER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE OBSERVED AS UNDER:- THE SUBMISSIONS OF THE ASSESSEE HAVE BEEN DULY CONS IDERED. ON PERUSAL, IT IS NOTICED THAT THE LICENSE FEE PAID BY THE ASSESSE E IS GOVERNED BY THE AGREEMENT DATED 21 ST JANUARY, 2008 EXECUTED BETWEEN SKOL BREWERIES LIMITED (SOK) AND SABMILLER MANAGEMENT (IN) BV, WHI CH NEEDS VERIFICATION. FURTHER, THE CLARIFICATION LETTER DATED JANUARY, 6, 2012 OF SABMILLER MANAGEMENT (IN) BV ALSO REQUIRES VERIFICATION. ACC ORDINGLY, THE AO IS DIRECTED TO VERIFY THE ISSUE RAISED IN THE SHOW CAU SE NOTICE IN THE LIGHT OF DECISIONS RELIED UPON AND SUBMISSIONS MADE BY THE A SSESSEE, AFTER DUE VERIFICATION OF BOOKS OF ACCOUNTS AND OTHER DETAILS SUCH AS AGREEMENTS EXECUTED BY THE ASSESSEE. 10. THE ASSESSEE IS IN APPEAL AGAINST THE SAID INVO KING OF JURISDICTION BY THE COMMISSIONER UNDER SECTION 263 OF THE ACT. 11. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE A SSESSEE POINTED OUT THAT THE ASSESSEE WAS ENGAGED IN THE MANUFACTURE OF FOSTER B EER AND HAD CLAIMED THE SET OFF OF UN-ABSORBED LOSSES AND DEPRECIATION OF EARLIER Y EARS. IT WAS POINTED OUT BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THAT THERE WERE TWO ISSUES RAISED IN THE PRESENT APPEAL I.E. SET OFF OF UN-ABSORBED D EPRECIATION FOR ASSESSMENT YEAR 1999-2000 AGAINST THE PROFITS OF ASSESSMENT YEAR 20 08-09 AND FURTHER, THE PAYMENT OF MANAGEMENT FEES TO PARENT COMPANY. OUR ATTENTIO N WAS DRAWN TO THE FACTS SHEET PLACED AT PAGE 371 OF THE PAPER BOOK IN WHICH, THE SEQUENCE OF EVENTS WERE FURNISHED. THE LEARNED AUTHORIZED REPRESENTATIVE F OR THE ASSESSEE POINTED OUT THAT THE ISSUES ARISING IN THE PRESENT APPEAL ARE AS UND ER:- A. WHETHER THE ASSESSING OFFICER HAD PASSED THE OR DER UNDER SECTION 143(3) OF THE ACT WITHOUT APPLICATION OF MIND? B. WHETHER THE ASSESSING OFFICER HAD CONSIDERED THE ISSUE IN THE PROCEEDINGS UNDER SECTION 154 OF THE ACT? C. WHETHER THE DECISION OF DCIT VS. TIMES GUARANTY LTD., WAS CONSIDERED BY THE ASSESSING OFFICER BEFORE PASSING THE ASSESSMENT ORDER UNDER SECTION 143(3) OF THE ACT? D. WHETHER THE CIT HAS ERRED IN NOT CONSIDERING THE DECISION OF GUJARAT HIGH COURT IN GENERAL MOTORS INDIA PVT. LTD. VS. DC IT (2013) 354 ITR 244 (GUJ). 12. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE A SSESSEE DREW OUR ATTENTION TO THE REPLY FILED DURING THE COURSE OF ASSESSMENT PRO CEEDINGS PLACED AT PAGES 33 TO 36 ITA NO.1176/PN/2013 SAB MILLER BREWERIES PVT. LTD. 6 OF THE PAPER BOOK IN WHICH AT SERIAL NO.8, THE ASSE SSEE HAD FURNISHED THE DETAILS OF BROUGHT FORWARD BUSINESS LOSSES AND UNABSORBED DEPR ECIATION ALONG WITH THE COPIES OF DOCUMENTARY EVIDENCE SUBSTANTIATING THE DETAILS OF SAID BUSINESS LOSS AND UNABSORBED DEPRECIATION CARRIED FORWARD. THE DETAI LS OF THE SAID BROUGHT FORWARD BUSINESS LOSSES AND UNABSORBED DEPRECIATION EXPENSE S ARE PLACED AT PAGES 37 AND 38 OF THE PAPER BOOK. 13. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE A SSESSEE FURTHER POINTED OUT THAT THE ASSESSING OFFICER HAD ISSUED A NOTICE UNDE R SECTION 154 OF THE ACT WHICH IS PLACED AT PAGE 135 OF THE PAPER BOOK ALONG WITH REP LY OF THE ASSESSEE AT PAGES 136 TO 143 OF THE PAPER BOOK IN WHICH, IT WAS POINTED O UT THAT THE RATIO LAID DOWN BY THE MUMBAI BENCH OF THE TRIBUNAL IN DCIT VS. TIMES GUAR ANTY LTD. (SUPRA), WAS NOT APPLICABLE. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE FURTHER POINTED OUT THAT AT PAGE 144 OF THE PAPER BOOK, IS ENCLOSED THE COPY OF ORDER UNDER SECTION 154 OF THE ACT DROPPING THE SAID PROCEEDINGS. 14. IN RESPECT OF SECOND ISSUE I.E. LICENSE / MANAG EMENT FEES, THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE ISSUE WAS SET ASIDE TO THE ASSESSING OFFICER DESPITE ENQUIRY WAS MADE B Y THE ASSESSING OFFICER IN THE FIRST ROUND OF ASSESSMENT PROCEEDINGS. IT WAS FURT HER POINTED OUT BY HIM THAT THE ASSESSING OFFICER IN THE SET-ASIDE PROCEEDINGS, HAD NOT MADE ANY ADDITION. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT IN THE PRESENT CASE, THE ASSESSING OFFICER HAD CALLED FOR DETAILS AND APPLIED HIS MIND WHEREAS, THE COMMISSIONER HAS NOT APPLIED HIS MIND BEFORE ISSUE OF SHOW CAUSE NOTICE UNDER SECTION 263 OF THE ACT. ANOTHER CONTENTION RAISED BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE WAS THAT WHERE THE DETAILS WERE CALLED FOR AND EXAMINED BY THE ASSESSING OFFICER, WHETHER THE COMM ISSIONER COULD EXERCISE THE JURISDICTION UNDER SECTION 263 OF THE ACT. 15. THE NEXT CONTENTION OF THE LEARNED AUTHORIZED R EPRESENTATIVE FOR THE ASSESSEE THAT THE RECORD I.E. ASSESSMENT RECORD SHO WS THAT THE ISSUE HAD BEEN ELABORATELY CONSIDERED IN THE PROCEEDINGS UNDER SEC TION 154 OF THE ACT, THEN WHETHER THE COMMISSIONER COULD ON PERUSAL OF SUCH RECORD, E XERCISE THE JURISDICTION UNDER ITA NO.1176/PN/2013 SAB MILLER BREWERIES PVT. LTD. 7 SECTION 263 OF THE ACT. RELIANCE IN THIS REGARD, W AS PLACED ON THE RATIO LAID DOWN BY CHANDIGARH BENCH OF THE TRIBUNAL IN ITO VS. R.S. WA REHOUSING IN ITA NO.310/CHD/2011) AND IT WAS POINTED OUT THAT THE FA CTS OF THE PRESENT CASE WERE IDENTICAL TO THE FACTS OF THE CASE BEFORE CHANDIGAR H BENCH OF THE TRIBUNAL. 16. THE NEXT CONTENTION RAISED BY THE LEARNED AUTHO RIZED REPRESENTATIVE FOR THE ASSESSEE WAS THAT MERELY BECAUSE THERE WAS SPECIAL BENCH TRIBUNALS DECISION AGAINST THE ISSUE, CAN THE COMMISSIONER EXERCISES T HE JURISDICTION AND HOLD THE ASSESSMENT ORDER TO BE ERRONEOUS. IT WAS FURTHER P OINTED OUT BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THAT WHE RE REPLY HAD BEEN GIVEN BY THE ASSESSEE WHICH WAS ADMITTEDLY AGAINST THE DECISION OF SPECIAL BENCH OF THE TRIBUNAL, COULD THE ASSESSING OFFICERS ORDER SAID TO BE ERRO NEOUS, ESPECIALLY WHERE THE SPECIAL BENCH OF THE TRIBUNALS ORDER WAS REVERSED OR DIFFERED BY THE HONBLE GUJARAT HIGH COURT IN GENERAL MOTORS INDIA PVT. LTD. VS. DC IT (2013) 354 ITR 244 (GUJ). 17. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE A SSESSEE STATED THAT THE COMMISSIONER HAD FOLLOWED THE SPECIAL BENCH OF THE TRIBUNALS DECISION AFTER A PERIOD OF TWO YEARS AND CAN THE ORDER OF COMMISSION ER IN SUCH CIRCUMSTANCES, COULD BE SAID TO BE CORRECT. THEREAFTER, THE LEARNED AUT HORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THE AMENDMENTS MADE TO SECTION 32(2) OF THE ACT OVER PERIOD OF YEARS AND OUR ATTENTION WAS DRAWN TO THE DECISIO N OF SPECIAL BENCH OF THE TRIBUNAL IN TIMES GUARANTEE LTD. (SUPRA) AND SPECIAL REFEREN CE TO PAGE 338 OF THE PAPER BOOK. FURTHER, RELIANCE WAS PLACED IN GENERAL MOTO RS INDIA PVT. LTD. VS. DCIT (2013) 354 ITR 244 (GUJ) AND POINTED OUT THAT THERE WAS NO CONTRARY DECISION OF ANY HIGH COURT. IT WAS FURTHER POINTED OUT BY THE LEARNED A UTHORIZED REPRESENTATIVE FOR THE ASSESSEE THAT THE VIZAG BENCH OF THE TRIBUNAL IN JC IT VS. M/S. ALUFLUORIDE LTD., IN ITA NO.134/VIZAG/2013 (VIZAG TRIB) HAD CONSIDERED THE R ELIANCE PLACED UPON BY THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE ON DCIT VS. TIMES GUARANTEE LTD. (SUPRA) AND ALSO THE RATIOS LAID DOWN BY HONB LE MADRAS HIGH COURT IN CIT VS. PIONEER ASIA PACKING (P.) LTD., (2008) 170 TAXMAN 1 27 (MAD.) AND CIT VS. S&S POWER SWITCHGEAR LTD. (2009) 318 ITR 187 (MAD) AND ALSO THE CLAIM OF ASSESSEE. FURTHER, THE RELIANCE WAS PLACED ON THE RATIO LAID DOWN BY THE MUMBAI BENCH OF THE TRIBUNAL IN ACIT VS. ASSOCIATED CABLES PVT. LTD., I N ITA NO.5556/MUM/2012. ITA NO.1176/PN/2013 SAB MILLER BREWERIES PVT. LTD. 8 18. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE CONCLUDED BY STATING THAT QUERIES WERE RAISED IN THE ORIGINAL ASSESSMENT PROCEEDINGS WHICH WERE REPLIED TO BY THE ASSESSEE AND FURTHER, ISSUE WAS RAISED IN TH E PROCEEDINGS UNDER SECTION 154 OF THE ACT WHICH WERE ALSO REPLIED TO, WHETHER IN S UCH CIRCUMSTANCES, THE ORDER OF COMMISSIONER WAS SUSTAINABLE IN LAW, ALSO BECAUSE T HE ISSUE BEING SETTLED BY THE HIGH COURTS AND VARIOUS BENCHES OF THE TRIBUNAL, EV EN ON MERITS, THE ISSUE WAS IN FAVOUR OF THE ASSESSEE. FURTHER, THE ISSUE OF MANA GEMENT FEES HAS BEEN ACCEPTED BY THE ASSESSING OFFICER IN THE SET-ASIDE PROCEEDIN GS. IN THE SAID CIRCUMSTANCES, IT WAS STATED BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THAT THE COMMISSIONER THUS, HAD NOT APPLIED HIS MIND BEFORE ISSUE OF NOTICE OR THE ORDER AS TO WHY HE WAS SETTING ASIDE THE ISSUE. 19. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE POINTED OUT THAT THERE WERE TWO ISSUES BEFORE THE COMMISSIONER I.E. THERE WAS COMPLETE LACK OF ENQUIRY BY THE ASSESSING OFFICER AND COMPLETE LACK OF APPLICATION OF MIND BY THE ASSESSING OFFICER. IN SUCH CIRCUMSTANCES, THE PROV ISIONS OF SECTION 263 OF THE ACT WERE CLEARLY ATTRACTED. THE LEARNED DEPARTMENTAL R EPRESENTATIVE FOR THE REVENUE PLACED RELIANCE ON THE FOLLOWING DECISIONS:- I. DHARTI DREDGING & INFRASTRUCTURE LTD. VS. ADDL.C IT, (2013) 144 ITD 120 (HYD.) II. NINESTAR ENTERPRISES (P.) LTD. VS. ACIT (2013) 30 TAXMANN.COM 57 (HYD.) III. CIT VS. S&S POWER SWITCHGEAR LTD. (2009) 318 I TR 187 (MAD) IV. DCIT VS. TIMES GUARANTY LTD. (2010) 40 SOT 14 ( MUM.) (SB) V. CIT VS. PIONEER ASIA PACKING (P.) LTD., (2008) 1 70 TAXMAN 127 (MAD.) 20. IN REJOINDER, THE LEARNED AUTHORIZED REPRESENTA TIVE FOR THE ASSESSEE POINTED OUT THAT THE VIZAG BENCH OF THE TRIBUNAL IN JCIT VS . M/S. ALUFLUORIDE LTD. (SUPRA) HAD CONSIDERED ALL THE ABOVE SAID DECISIONS AND ALLOWED THE CLAIM OF THE ASSESSEE. 21. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. UNDER THE PROVISIONS OF SECTION 263 OF THE ACT, THE COMMISSIO NER IS EMPOWERED TO EXERCISE HIS JURISDICTION WHERE THE ASSESSMENT ORDER PASSED BY T HE ASSESSING OFFICER IS ERRONEOUS ITA NO.1176/PN/2013 SAB MILLER BREWERIES PVT. LTD. 9 AND IS ALSO PREJUDICIAL TO THE INTEREST OF REVENUE. BEFORE EXERCISING THE REVISIONARY POWER UNDER SECTION 263 OF THE ACT, THE COMMISSIONE R HAS TO COME TO A FINDING THAT THE ERRONEOUS ORDER PASSED BY THE ASSESSING OFFICER IS ALSO PREJUDICIAL TO THE INTEREST OF REVENUE. IN OTHER WORDS, BOTH THE CONDITIONS OF THE ORDER BEING ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE ARE TO BE FU LFILLED IN CASE THE COMMISSIONER WISHES TO EXERCISE THE JURISDICTION UNDER SECTION 2 63 OF THE ACT. THE COURTS HAVE TIME AND AGAIN DELIBERATED UPON THE ISSUE OF WHEN AND WH ERE THE ASSESSMENT ORDER CAN SAID TO BE ERRONEOUS AND SUCH ERRONEOUS ORDER IF IT HAS RESULTED IN ESCAPEMENT OF INCOME FROM BEING BROUGHT TO TAX, THEN SUCH ORDER I S PREJUDICIAL TO THE INTEREST OF REVENUE. THE HONBLE SUPREME COURT IN MALABAR INDU STRIES COMPANY LTD V CIT 243 ITR 83 (SC) HAS HELD AS UNDER:- 'THERE CAN BE NO DOUBT THAT THE PROVISION CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE ASSESSING OFFICER, IT IS ONLY WHEN AN ORDER IS ERRONEOUS THAT THE SECTION WI LL BE ATTRACTED. AN INCORRECT ASSUMPTION OF FACTS OR AN INCORRECT APPLICATION OF LAW WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOUS. IN THE SA ME CATEGORY FALL ORDERS PASSED WITHOUT APPLYING THE PRINCIPLES OF NATURAL J USTICE OR WITHOUT APPLICATION OF MIND. THE PHRASE 'PREJUDICIAL TO THE INTERESTS OF THE, RE VENUE' IS NOT AN EXPRESSION OF ART AND IS NOT DEFINED IN THE ACT. UNDERSTOOD IN ITS ORDINARY MEANING IT IS OF WIDE IMPORT AND IS NOT CONFINED TO LOSS OF TAX. THE HIGH COURT OF CALCUTTA IN DAWJEE DADABHOY AND CO. V. S. P. JAIN [1957] 31 ITR 872. THE HIGH COURT OF KARNATAKA IN CIT V. T. NARAYANA PAI [1975] 98 ITR 4 22, THE HIGH COURT OF BOMBAY IN CIT V. GABRIEL INDIA LTD. [1993] 203 ITR 108 AND THE HIGH COURT OF GUJARAT IN CIT V. SMT. MINALBEN S. PARIKH [1995] 21 5 ITR 81 TREATED LOSS OF TAX AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. MR. ABRAHAM RELIED ON THE JUDGMENT OF THE DIVISION BENCH OF THE HIGH COURT OF MADRAS IN VENKATAKRISHNA RICE COMPANY V. CIT [1987] 163 ITR 129 INTERPRETING 'PREJUDICIAL TO THE INTERESTS OF THE R EVENUE. 'THE HIGH COURT HELD (PAGE 138) : 'IN THIS CONTEXT, IT MUST BE REGARDED AS INVOLVING A CONCEPTION OF ACTS OR ORDERS WHICH ARE SUBVERSIVE OF THE ADMINIST RATION OF REVENUE. THERE MUST BE SOME GRIEVOUS ERROR IN THE ORDER PASSED BY THE INCOME-TAX OFFICER, WHICH MIGHT SET A BAD TREND OR PATTERN FOR SIMILAR ASSESSMENTS, WHICH ON A BROAD RECKONING, THE COMMISSIONER MIGHT THINK TO BE PREJUDICIAL TO THE INTERESTS OF REVENUE ADMINISTRATION.' IN OUR VIEW, THIS INTERPRETATION IS TOO NARROW TO MERIT ACCEPTANCE. THE SCHEME OF THE ACT I S TO LEVY AND COLLECT TAX IN ACCORDANCE WITH THE PROVISIONS OF THE ACT AND THIS TASK IS ENTRUSTED TO THE REVENUE. IF DUE TO AN ERRONEOUS ORDER OF THE INCOME -TAX OFFICER, THE REVENUE IS LOSING TAX LAWFULLY PAYABLE BY A PERSON, IT WILL CERTAINLY BE PREJUDICIAL TO THE INTERESTS OF THE REVENUE'. THE PHRASE 'PREJUDICIAL TO THE INTERESTS OF THE REV ENUE' HAS TO BE READ IN CONJUNCTION WITH AN ERRONEOUS ORDER PASSED BY THE A SSESSING OFFICER. EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF THE ASSESSING OFFICER CANNOT BE TREATED AS PREJUDICIAL TO THE INTERESTS OF THE R EVENUE. FOR EXAMPLE, WHEN AN INCOME-TAX OFFICER ADOPTED ONE OF THE COURSES PE RMISSIBLE IN LAW AND IT HAS RESULTED IN LOSS OF REVENUE ; OR WHERE TWO VIEW S ARE POSSIBLE AND THE INCOME-TAX OFFICER HAS TAKEN ONE VIEW WITH WHICH TH E COMMISSIONER DOES NOT AGREE, IT CANNOT BE TREATED AS AN ERRONEOUS ORDER P REJUDICIAL TO THE INTERESTS OF ITA NO.1176/PN/2013 SAB MILLER BREWERIES PVT. LTD. 10 THE REVENUE, UNLESS THE VIEW TAKEN BY THE INCOME-TA X OFFICER IS UNSUSTAINABLE IN LAW.' 22. IN THE FACTS OF THE PRESENT CASE, THE COMMISSIO NER WAS OF THE VIEW THAT THE CONCLUSION DRAWN BY THE ASSESSING OFFICER ON THE BA SIS OF WRITTEN SUBMISSIONS FILED BY THE ASSESSEE WAS WITHOUT APPLICATION OF MIND. I N VIEW THEREOF, THE ORDER WAS HELD TO BE BOTH ERRONEOUS AND PREJUDICIAL TO THE INTERES T OF REVENUE. THE COMMISSIONER THEREAFTER, REFERRED TO THE RATIO LAID DOWN BY THE SPECIAL BENCH OF MUMBAI TRIBUNAL IN DCIT VS. TIMES GUARANTEE LTD. (SUPRA) ON THE INTERP RETATION OF PROVISIONS OF SECTION 32(2) OF THE ACT AND OBSERVED THAT UN-ABSORBED DEPR ECIATION RELATING TO ASSESSMENT YEAR 1999-2000 CANNOT BE SET OFF AGAINST THE BUSINE SS INCOME OF ASSESSMENT YEAR 2008-09. THE COMMISSIONER HELD THAT IN VIEW OF THE PROVISIONS OF SECTION 32(2) OF THE ACT APPLICABLE FOR ASSESSMENT YEAR 1999-2000, THE U NABSORBED DEPRECIATION FOR ASSESSMENT YEAR 1999-2000 AMOUNTING TO RS.5,41,84,4 30/- NEEDS TO BE DISALLOWED. THE ASSESSING OFFICER WAS THUS, DIRECTED TO DISALLO W THE CLAIM OF UNABSORBED DEPRECIATION TO THE EXTENT OF RS.5.41 CRORES WHILE GIVING EFFECT TO THE ORDER OF COMMISSIONER. 23. IN RESPECT OF THE SECOND ISSUE RAISED VIS--VIS THE MANAGEMENT / LICENSE FEES PAID TO SAB MILLER MANAGEMENT (IN) BV NETHERLANDS, THE ISSUE WAS SET-ASIDE TO THE FILE OF ASSESSING OFFICER TO VERIFY THE ISSUE AND D ECIDE THE SAME. 24. IN THE APPEAL FILED BY THE ASSESSEE, THE OBJECT ION HAS BEEN RAISED AGAINST SUCH INVOKING OF JURISDICTION BY THE COMMISSIONER I N HOLDING THAT THE ORDER PASSED BY THE ASSESSING OFFICER WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE ON BOTH THE ACCOUNTS. AS THE VARIOUS COURTS HAVE HELD THE TWIN CONDITIONS OF THE ORDER BEING ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE ARE TO BE FULFILLED AND IN CASE ANY ONE OF THE CONDITIONS ARE NOT SO FULFILLED , THEN EVEN IF THE OTHER CONDITION IS FULFILLED, THE REVISIONARY POWERS CANNOT BE EXERCIS ED BY THE COMMISSIONER. 25. WE SHALL FIRST TAKE UP THE FIRST ISSUE OF SETTI NG OFF OF BROUGHT FORWARD UNABSORBED DEPRECIATION RELATING TO A.Y. 1999-2000 AGAINST THE BUSINESS INCOME FOR ASSESSMENT YEAR 2008-09. ITA NO.1176/PN/2013 SAB MILLER BREWERIES PVT. LTD. 11 26. THE CASE OF THE ASSESSEE BEFORE COMMISSIONER WA S THAT THE SAID SET OFF OF UNABSORBED DEPRECIATION CARRIED FORWARD FROM ASSESS MENT YEAR 1999-2000 COULD BE SET OFF AGAINST THE BUSINESS INCOME FOR ASSESSMENT YEAR 2008-09. RELIANCE IN THIS REGARD WAS PLACED ON THE RATIO LAID DOWN BY THE DEL HI BENCH OF TRIBUNAL IN JAI USHIN LTD. VS DCIT (2008) 117 TTJ (DEL) 330, WHEREIN IT W AS HELD THAT THE ISSUE RELATING TO SETTING OFF THE UNABSORBED DEPRECIATION OF ASSESSME NT YEAR 1999-2000 AGAINST THE INCOME FOR ASSESSMENT YEAR 2003-04 IS REQUIRED TO B E CONSIDERED AND DECIDED IN ACCORDANCE WITH THE PROVISIONS OF SE.32(2) AS AMEND ED W.E.F. 32(2) BY THE FINANCE ACT 2001 WHICH ARE APPLICABLE TO THAT YEAR. ANOTHER ASPECT RAISED BY THE ASSESSEE BEFORE THE COMMISSIONER WAS THAT THE DECISION IN DC IT VS. TIMES GUARANTY LIMITED (SUPRA) WAS HEARD BEFORE THE HONBLE BOMBAY HIGH CO URT AND A QUESTION OF LAW HAD BEEN ADMITTED BY THE HONBLE HIGH COURT AND WHERE T HE MATTER WAS DEBATABLE, IT WAS NOT SUBJECT TO RECTIFICATION. THE COMMISSIONER ON THE OTHER HAND, WAS OF THE VIEW THAT THE DECISION RELIED UPON BY THE ASSESSEE IN JA I USHIN LTD. VS DCIT (SUPRA) HAD BEEN CONSIDERED BY THE SPECIAL BENCH OF MUMBAI TRIB UNAL IN DCIT VS. TIMES GUARANTY LIMITED (SUPRA), VIDE ORDER DATED 30.06.20 10, WHEREIN IT WAS HELD THAT THE UNABSORBED DEPRECIATION RELATING TO ASSESSMENT YEAR 1997-98 TO 1990-00 IS TO BE DEALT WITH THE PROVISIONS OF SEC.32(2) AS APPLICABL E FOR A.Y. 1997-98 TO 1999-00. IN VIEW THEREOF, THE COMMISSIONER HELD THAT THE CASE L AW RELIED UPON BY THE ASSESSEE WAS NOT RELEVANT AND THE DECISION OF THE SPECIAL BE NCH OF MUMBAI TRIBUNAL IN DCIT VS. TIMES GUARANTY LIMITED (SUPRA) HAD TO BE APPLIE D. 27. THE HONBLE GUJARAT HIGH COURT IN GENERAL MOTOR S INDIA PVT. LTD. VS. DCIT (2013) 354 ITR 244 (GUJ) VIDE JUDGMENT DATED 23.08. 2012 HAD ELABORATED UPON THE ISSUE OF CLAIM OF UNABSORBED DEPRECIATION AND THE L AW APPLICABLE AND ALSO THE EFFECT OF AMENDMENT TO SECTION 32(2) OF THE ACT BY THE FIN ANCE ACT, 2001 AND IT WAS HELD THAT THE AMENDMENT MADE TO SECTION 32(2) OF THE ACT BY THE FINANCE ACT, 2001 WAS APPLICABLE FROM ASSESSMENT YEAR 2002-03 AND SUBSEQU ENT YEARS. IT WAS FURTHER HELD THAT ANY UNABSORBED DEPRECIATION AVAILABLE TO THE A SSESSEE ON THE FIRST DAY OF APRIL, 2002 WOULD BE DEALT IN ACCORDANCE WITH THE PROVISIO NS OF SECTION 32(2) OF THE ACT AS AMENDED BY THE FINANCE ACT, 2001 AND NOT BY THE PRO VISIONS OF SECTION 32(2) OF THE ACT AS IT STOOD BEFORE THE SAID AMENDMENT. IT WAS FURTHER HELD BY THE HONBLE GUJARAT ITA NO.1176/PN/2013 SAB MILLER BREWERIES PVT. LTD. 12 HIGH COURT THAT H AD THE INTENTION OF THE LEGISLATURE BEEN TO ALLOW T HE UNABSORBED DEPREDATION ALLOWANCE WORKED OUT IN THE ASSESSMENT YEAR 1997-98 ONLY FOR EIGHT SUBSEQUENT ASSESSMENT YEARS EVEN AFTER THE AMENDMEN T OF SECTION 32(2) BY THE FINANCE ACT, 2001, IT WOULD HAVE INCORPORATED A PRO VISION TO THAT EFFECT. 28. THE HONBLE GUJARAT HIGH COURT HAD CONSIDERED T HE ISSUE AT LENGTH AND HAD OBSERVED AS UNDER:- 30. THE LAST QUESTION WHICH ARISES FOR CONSIDERATI ON IS THAT WHETHER THE UNABSORBED DEPRECIATION PERTAINING TO THE ASSESSMEN T YEAR 1997-98 COULD BE ALLOWED TO BE CARRIED FORWARD AND SET OFF AFTER A P ERIOD OF EIGHT YEARS OR IT WOULD BE GOVERNED BY SECTION 32 AS AMENDED BY THE F INANCE ACT, 2001 ? THE REASON GIVEN BY THE ASSESSING OFFICER UNDER SECTION 147 IS THAT SECTION 32(2) OF THE ACT WAS AMENDED BY THE FINANCE (NO. 2) ACT O F 1996, WITH EFFECT FROM THE ASSESSMENT YEAR 1997-98 AND THE UNABSORBED DEPR ECIATION FOR THE ASSESSMENT YEAR 1997-98 COULD BE CARRIED FORWARD UP TO THE MAXIMUM PERIOD OF EIGHT YEARS FROM THE YEAR IN WHICH IT WAS FIRST COMPUTED. ACCORDING TO THE ASSESSING OFFICER, EIGHT YEARS EXPIRED IN THE ASSES SMENT YEAR 2005-06 AND ONLY TILL THEN, THE ASSESSEE WAS ELIGIBLE TO CLAIM UNABSORBED DEPRECIATION OF THE ASSESSMENT YEAR 1997-98 FOR BEING CARRIED FORWA RD AND SET OFF AGAINST THE INCOME FOR THE ASSESSMENT YEAR 2005-06. BUT THE ASS ESSEE WAS NOT ENTITLED FOR UNABSORBED DEPRECIATION OF RS.43,60,22,158 FOR THE ASSESSMENT YEAR 1997-98, WHICH WAS NOT ELIGIBLE FOR BEING CARRIED F ORWARD AND SET OFF AGAINST THE INCOME FOR THE ASSESSMENT YEAR 2006-07. 31. PRIOR TO THE FINANCE (NO. 2) ACT OF 1996 THE UN ABSORBED DEPRECIATION FOR ANY YEAR WAS ALLOWED TO BE CARRY FORWARD INDEFI NITELY AND BY A DEEMING FICTION BECAME ALLOWANCE OF THE IMMEDIATELY SUCCEED ING YEAR. THE FINANCE (NO. 2) ACT OF 1996 RESTRICTED THE CARRY FORWARD OF UNABSORBED DEPRECIATION AND SET-OFF TO A LIMIT OF EIGHT YEARS, FROM THE ASS ESSMENT YEAR 1997-98. CIRCULAR NO. 762, DATED FEBRUARY 18, 1998 (SEE [199 8] 230 ITR (ST.) 12), ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES (CBDT) IN THE FORM OF EXPLANATORY NOTES CATEGORICALLY PROVIDED, THAT THE UNABSORBED D EPRECIATION ALLOWANCE FOR ANY PREVIOUS YEAR TO WHICH FULL EFFECT CANNOT BE GI VEN IN THAT PREVIOUS YEAR SHALL BE CARRIED FORWARD AND ADDED TO THE DEPRECIAT ION ALLOWANCE OF THE NEXT YEAR AND BE DEEMED TO BE PART THEREOF. 32. SO, THE UNABSORBED DEPRECIATION ALLOWANCE OF TH E ASSESSMENT YEAR 1996-97 WOULD BE ADDED TO THE ALLOWANCE OF THE ASSE SSMENT YEAR 1997-98 AND THE LIMITATION OF EIGHT YEARS FOR THE CARRY FOR WARD AND SET OFF OF SUCH UNABSORBED DEPRECIATION WOULD START FROM THE ASSESS MENT YEAR 1997-98. 33. WE MAY NOW EXAMINE THE PROVISIONS OF SECTION 32 (2) OF THE ACT BEFORE ITS AMENDMENT BY THE FINANCE ACT, 2001. THE SECTION , PRIOR TO ITS AMENDMENT BY THE FINANCE ACT, 2001, READ AS UNDER : 'WHERE IN THE ASSESSMENT OF THE ASSESSEE FULL EFFEC T CANNOT BE GIVEN TO ANY ALLOWANCE UNDER CLAUSE (II) OF SUB-SECTION ( 1) IN ANY PREVIOUS YEAR OWNING TO THERE BEING NO PROFITS OR GAINS CHAR GEABLE FOR THAT PREVIOUS YEAR OR OWING TO THE PROFITS OR GAINS BEIN G LESS THAN THE ALLOWANCE, THEN, THE ALLOWANCE OR THE PART OF ALLOW ANCE TO WHICH EFFECT HAS NOT BEEN GIVEN (HEREINAFTER REFERRED TO AS UNAB SORBED DEPRECIATION ALLOWANCE), AS THE CASE MAY BE, (I) SHALL BE SET OFF AGAINST THE PROFITS AND GAINS, IF ANY, OF ANY BUSINESS OR PROFESSION CARRIED ON BY HIM AND ASSESS ABLE FOR THAT ASSESSMENT YEAR ; ITA NO.1176/PN/2013 SAB MILLER BREWERIES PVT. LTD. 13 (II) IF THE UNABSORBED DEPRECIATION ALLOWANCE CANNO T BE WHOLLY SET OFF UNDER CLAUSE (I), THE AMOUNT NOT SO SET OFF SHALL BE SET OFF FROM THE INCOME UNDER ANY OTHER HEAD, IF ANY, ASSESSABLE FOR THAT ASSESSMENT YEAR; (III) IF THE UNABSORBED DEPRECIATION ALLOWANCE CANN OT BE WHOLLY SET OFF UNDER CLAUSE (I) AND CLAUSE (II), THE AMOUN T OF ALLOWANCE NOT SO SET OFF SHALL BE CARRIED FORWARD TO THE FOLLOWING A SSESSMENT YEAR, AND (A) IT SHALL BE SET OFF AGAINST THE PROFITS AND GAI NS, IF ANY, OF ANY BUSINESS OR PROFESSION CARRIED ON BY HIM AND ASSESS ABLE FOR THAT ASSESSMENT YEAR ; (B) IF THE UNABSORBED DEPRECIATION ALLOWANCE CANNOT BE WHOLLY SO SETOFF, THE AMOUNT OF UNABSORBED DEPRECIATION AL LOWANCE NOT SO SET OFF SHALL BE CARRIED FORWARD TO THE FOLLOWING A SSESSMENT YEAR NOT BEING MORE THAN EIGHT ASSESSMENT YEARS IMMEDIATELY SUCCEEDING THE ASSESSMENT YEAR FOR WHICH THE AFORESAID ALLOWANCE W AS FIRST COMPUTED: PROVIDED THAT THE TIME LIMIT OF EIGHT ASSESSMENT YE ARS SPECIFIED IN SUB-CLAUSE (B) SHALL NOT APPLY IN CASE OF A COMP ANY FOR THE ASSESSMENT YEAR BEGINNING WITH THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE SAID COMPANY HAS BECOME A SICK INDUSTRIAL COMPANY UNDER SUB-SECTION (1) OF SECTION 17 OF THE SICK INDUSTRIAL COMPANY (SPECIAL PROVISIONS) ACT, 1985 (1 OF 1986), AND ENDING WITH THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR I N WHICH THE ENTIRE NET WORTH OF SUCH COMPANY BECOMES EQUAL TO OR EXCEE DS THE ACCUMULATED LOSSES. EXPLANATION.FOR THE PURPOSES OF THIS CLAUSE, 'NET WORTH' SHALL HAVE THE MEANING ASSIGNED TO IT IN CLAUSE (GA) OF S UB-SECTION (1) OF SECTION 3 OF THE SICK INDUSTRIAL COMPANIES (SPECIAL PROVISIONS) ACT, 1985.' 34. THE AFORESAID PROVISION WAS INTRODUCED BY THE F INANCE (NO.2) ACT, 1996, AND FURTHER AMENDED BY THE FINANCE ACT, 2000. THE PROVISION INTRODUCED BY THE FINANCE (NO. 2) ACT WAS CLARIFIED BY THE FINANCE MINISTER TO BE APPLICABLE WITH PROSPECTIVE EFFECT. 35. SECTION 32(2) OF THE ACT WAS AMENDED BY THE FIN ANCE ACT, 2001, AND THE PROVISION SO AMENDED READS AS UNDER : 'WHERE, IN THE ASSESSMENT OF THE ASSESSEE, FULL EFF ECT CANNOT BE GIVEN TO ANY ALLOWANCE UNDER SUB-SECTION (1) IN ANY PREVI OUS YEAR, OWING TO THERE BEING NO PROFITS OR GAINS CHARGEABLE FOR THAT PREVIOUS YEAR, OR OWING TO THE PROFITS OR GAINS CHARGEABLE BEING LESS THAN THE ALLOWANCE, THEN, SUBJECT TO THE PROVISIONS OF SUB-SECTION (2) OF SECTION 72 AND SUB- SECTION (3) OF SECTION 73, THE ALLOWANCE OR THE PAR T OF THE ALLOWANCE TO WHICH EFFECT HAS NOT BEEN GIVEN, AS THE CASE MAY BE , SHALL BE ADDED TO THE AMOUNT OF THE ALLOWANCE FOR DEPRECIATION FOR TH E FOLLOWING PREVIOUS YEAR AND DEEMED TO BE PART OF THAT ALLOWANCE, OR IF THERE IS NO SUCH ALLOWANCE FOR THAT PREVIOUS YEAR, BE DEEMED TO BE T HE ALLOWANCE OF THAT PREVIOUS YEAR, AND SO ON FOR THE SUCCEEDING PR EVIOUS YEARS.' 36. THE PURPOSE OF THIS AMENDMENT HAS BEEN CLARIFIE D BY THE CENTRAL BOARD OF DIRECT TAXES IN CIRCULAR NO. 14 OF 2001 (S EE [2001] 252 ITR (ST.) 65, 90). THE RELEVANT PORTION OF THE SAID CIRCULAR READ S AS UNDER : 'MODIFICATION OF PROVISIONS RELATING TO DEPRECIATIO N ITA NO.1176/PN/2013 SAB MILLER BREWERIES PVT. LTD. 14 30.1 CINDER THE EXISTING PROVISIONS OF SECTION 32 OF TH E INCOME- TAX ACT, CARRY FORWARD AND SET OFF OF UNABSORBED DE PRECIATION IS ALLOWED FOR EIGHT ASSESSMENT YEARS. 30.2 WITH A VIEW TO ENABLE THE INDUSTRY TO CONSERVE SUF FICIENT FUNDS TO REPLACE PLANT AND MACHINERY, SPECIALLY IN AN ERA WHERE OBSOLESCENCE TAKES PLACE SO OFTEN, THE ACT HAS DISP ENSED WITH THE RESTRICTION OF EIGHT YEARS FOR CARRY FORWARD AN D SET OFF OF UNABSORBED DEPRECIATION. THE ACT HAS ALSO CLARIFIED THAT IN COMPUTING THE PROFITS AND GAINS OF BUSINESS OR PROF ESSION FOR ANY PREVIOUS YEAR, DEDUCTION OF DEPREDATION UNDER S ECTION 32 SHALL BE MANDATORY. 30.3 UNDER THE EXISTING PROVISIONS, NO DEDUCTION FOR DEPRECIATION IS ALLOWED ON ANY MOTOR CAR MANUFACTUR ED OUTSIDE INDIA UNLESS IT IS USED (I) IN THE BUSINESS OF RUNN ING IT ON HIRE FOR TOURISTS, OR (II) OUTSIDE IN THE ASSESSEE'S BUSINES S OR PROFESSION IN ANOTHER COUNTRY. 30.4 THE ACT HAS ALLOWED DEPRECIATION ALLOWANCE ON ALL IMPORTED MOTOR CARS ACQUIRED ON OR AFTER 1ST APRIL, 2001. 30.5 THESE AMENDMENTS WILL TAKE EFFECT FROM THE 1ST APR IL, 2002, AND WILL, ACCORDINGLY, APPLY IN RELATION TO THE ASS ESSMENT YEAR 2002-03 AND SUBSEQUENT YEARS.' 37. THE CENTRAL BOARD OF DIRECT TAXES CIRCULAR CLAR IFIES THE INTENT OF THE AMENDMENT THAT IT IS FOR ENABLING THE INDUSTRY TO C ONSERVE SUFFICIENT FUNDS TO REPLACE PLANT AND MACHINERY AND ACCORDINGLY THE AME NDMENT DISPENSES WITH THE RESTRICTION OF EIGHT YEARS FOR CARRY FORWARD AN D SET OFF OF UNABSORBED DEPRECIATION. THE AMENDMENT IS APPLICABLE FROM THE ASSESSMENT YEAR 2002- 03 AND SUBSEQUENT YEARS. THIS MEANS THAT ANY UNABSO RBED DEPRECIATION AVAILABLE TO AN ASSESSEE ON THE 1ST DAY OF APRIL, 2 002 (THE ASSESSMENT YEAR 2002-03), WILL BE DEALT WITH IN ACCORDANCE WITH THE PROVISIONS OF SECTION 32(2) AS AMENDED BY THE FINANCE ACT, 2001, AND NOT BY THE PROVISIONS OF SECTION 32(2) AS IT STOOD BEFORE THE SAID AMENDMENT. HAD TH E INTENTION OF THE LEGISLATURE BEEN TO ALLOW THE UNABSORBED DEPREDATIO N; ALLOWANCE WORKED OUT IN THE ASSESSMENT YEAR 1997-98 ONLY FOR EIGHT SUBSE QUENT ASSESSMENT YEARS EVEN AFTER THE AMENDMENT OF SECTION 32(2) BY THE FI NANCE ACT, 2001, IT WOULD HAVE INCORPORATED A PROVISION TO THAT EFFECT. HOWEV ER, IT DOES NOT CONTAIN ANY SUCH PROVISION. HENCE, KEEPING IN VIEW THE PURPOSE OF THE AMENDMENT OF SECTION 32(2) OF THE ACT, A PURPOSIVE AND HARMONIOU S INTERPRETATION HAS TO BE TAKEN. WHILE CONSTRUING THE TAXING STATUTES, RULE O F STRICT INTERPRETATION HAS TO BE APPLIED, GIVING FAIR AND REASONABLE CONSTRUCTION TO THE LANGUAGE OF THE SECTION WITHOUT LEANING TO THE SIDE OF THE ASSESSEE OR THE REVENUE. BUT IF THE LEGISLATURE FAILS TO EXPRESS CLEARLY AND THE ASSESS EE BECOMES ENTITLED FOR A BENEFIT WITHIN THE AMBIT OF THE SECTION BY THE CLEA R WORDS USED IN THE SECTION, THE BENEFIT ACCRUING TO THE ASSESSEE CANNOT BE DENI ED. HOWEVER, CIRCULAR NO. 14 OF 2001 HAD CLARIFIED THAT UNDER SECTION 32(2), IN COMPUTING THE PROFITS AND GAINS OF BUSINESS OR PROFESSION FOR ANY PREVIOUS YE AR, DEDUCTION OF DEPRECIATION UNDER SECTION 32 SHALL BE MANDATORY. T HEREFORE, THE PROVISIONS OF SECTION 32(2) AS AMENDED BY THE FINANCE ACT, 2001, WOULD ALLOW THE UNABSORBED DEPRECIATION ALLOWANCE AVAILABLE IN THE ASSESSMENT YEARS 1997- 98, 1999-2000, 2000-01 AND 2001-02 TO BE CARRIED FO RWARD TO THE SUCCEEDING YEARS, AND IF ANY UNABSORBED DEPRECIATION OR PART T HEREOF COULD NOT BE SET OFF TILL THE ASSESSMENT YEAR 2002-03 THEN IT WOULD BE C ARRIED FORWARD TILL THE TIME IT IS SET OFF AGAINST THE PROFITS AND GAINS OF SUBSEQU ENT YEARS. 38. THEREFORE, IT CAN BE SAID THAT, CURRENT DEPRECI ATION IS DEDUCTIBLE IN THE 40 FIRST PLACE FROM THE INCOME OF THE BUSINESS TO W HICH IT RELATES. IF SUCH DEPRECIATION AMOUNT IS LARGER THAN THE AMOUNT OF TH E PROFITS OF THAT BUSINESS, THEN SUCH EXCESS COMES FOR ABSORPTION FROM THE PROF ITS AND GAINS FROM ANY OTHER BUSINESS OR BUSINESS, IF ANY, CARRIED ON BY T HE ASSESSEE. IF A BALANCE IS ITA NO.1176/PN/2013 SAB MILLER BREWERIES PVT. LTD. 15 LEFT EVEN THEREAFTER, THAT BECOMES DEDUCTIBLE FROM OUT OF INCOME FROM ANY SOURCE UNDER ANY OF THE OTHER HEADS OF INCOME DURIN G THAT YEAR. IN CASE THERE IS A STILL BALANCE LEFT OVER, IT IS TO BE TREATED A S UNABSORBED DEPRECIATION AND IT IS TAKEN TO THE NEXT SUCCEEDING YEAR. WHERE THERE I S CURRENT DEPRECIATION FOR SUCH SUCCEEDING YEAR THE UNABSORBED DEPRECIATION IS ADDED TO THE CURRENT DEPRECIATION FOR SUCH SUCCEEDING YEAR AND IS DEEMED AS PART THEREOF. IF, HOWEVER, THERE IS NO CURRENT DEPRECIATION FOR SUCH SUCCEEDING YEAR, THE UNABSORBED DEPRECIATION BECOMES THE DEPRECIATION AL LOWANCE FOR SUCH SUCCEEDING YEAR. WE ARE OF THE CONSIDERED OPINION T HAT ANY UNABSORBED DEPRECIATION AVAILABLE TO AN ASSESSEE ON THE 1ST DA Y OF APRIL, 2002 (THE ASSESSMENT YEAR 2002-03), WILL BE DEALT WITH IN ACC ORDANCE WITH THE PROVISIONS OF SECTION 32(2) AS AMENDED BY THE FINANCE ACT, 200 1. AND ONCE CIRCULAR NO. 14 OF 2001 CLARIFIED THAT THE RESTRICTION OF EIGHT YEARS FOR CARRY FORWARD AND SET OFF OF UNABSORBED DEPRECIATION HAD BEEN DISPENSED W ITH, THE UNABSORBED DEPRECIATION FROM THE ASSESSMENT YEAR 1997-98 UP TO THE ASSESSMENT YEAR 2001-02 GOT CARRIED FORWARD TO THE ASSESSMENT YEAR 2002-03 AND BECAME PART THEREOF, IT CAME TO BE GOVERNED BY THE PROVISIONS O F SECTION 32(2) AS AMENDED BY THE FINANCE ACT, 2001, AND WERE AVAILABLE FOR CA RRY FORWARD AND SET OFF AGAINST THE PROFITS AND GAINS OF SUBSEQUENT YEARS, WITHOUT ANY LIMIT WHATSOEVER. FOR THE AFORESAID REASONS, THIS WRIT PETITION SUCCE EDS AND IS ALLOWED. THE 41 NOTICE ISSUED UNDER SECTION 148 OF THE INC OME-TAX ACT, 1961, DATED MARCH 29, 2011, ANNEXURE A AND THE ASSESSMENT ORDER DATED DECEMBER 27, 2011, PASSED BY THE ASSESSING OFFICER ANNEXURE F RE SPECTIVELY TO THE WRIT PETITION ARE QUASHED. RULE IS MADE ABSOLUTE. THE PA RTIES SHALL BEAR THEIR OWN COSTS. 29. SIMILAR PROPOSITION HAS BEEN LAID DOWN BY THE H ONBLE GUJARAT HIGH COURT IN CIT VS. GUJARAT THEMIS BIOSYN LTD. (2014) 44 TAXMAN N.COM 204 (GUJ) VIDE JUDGMENT DATED 24.02.2014. THE VISAKHAPATNAM BENCH OF THE T RIBUNAL IN JCIT VS. M/S. ALUFLUORIDE LTD IN ITA NO.134/VIZAG/2013 RELATING T O ASSESSMENT YEAR 2007-08, VIDE ORDER DATED 05.03.2014 APPLYING THE RATIO LAID DOWN BY THE HONBLE GUJARAT HIGH COURT IN GENERAL MOTORS INDIA PVT. LTD. VS. DCIT (S UPRA), HELD THAT THE BENEFIT OF SET OFF OF UNABSORBED DEPRECIATION OF ASSESSMENT YEARS 1997-98 AND 1998-99 COULD BE ALLOWED AGAINST THE INCOME RELATING TO ASSESSMENT Y EAR 2007-08. IN APPLYING THE RATIO LAID DOWN BY THE HONBLE GUJARAT HIGH COURT, THE TRIBUNAL HELD THAT THE RELIANCE PLACED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE F OR THE REVENUE ON THE DECISION OF HYDERABAD BENCH OF THE TRIBUNAL IN DHARTI DREDGI NG & INFRASTRUCTURE LTD. VS. ADDL.CIT (SUPRA) & HONBLE MADRAS HIGH COURT IN CIT VS. PIONEER ASIA PACKING (P.) LTD., (SUPRA) AND CIT VS. S&S POWER SWITCHGEAR LTD. (SUPRA) WAS NOT CORRECT. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE BEFORE US HAD ALSO PLACED RELIANCE ON THE DECISIONS OF DHARTI DREDGING & INFR ASTRUCTURE LTD. VS. ADDL.CIT (SUPRA) AND FURTHER IN NINESTAR ENTERPRISES (P.) LTD. VS. A CIT (2013) 30 TAXMANN.COM 57 (HYD.) AND ALSO HONBLE MADRAS HIGH COURT IN CIT VS . PIONEER ASIA PACKING (P.) LTD., ITA NO.1176/PN/2013 SAB MILLER BREWERIES PVT. LTD. 16 (SUPRA) AND CIT VS. S&S POWER SWITCHGEAR LTD. (SUPR A). IN VIEW OF THE SAME BEING CONTRARY TO THE ONLY DECISION OF HONBLE GUJARAT HI GH COURT ON THE ISSUE FOR ALLOWANCE OF SET OFF OF BROUGHT FORWARD UNABSORBED DEPRECIATI ON RELATING TO ASSESSMENT YEAR 1999-2000 AGAINST THE INCOME ARISING IN THE YEAR UN DER APPEAL I.E. ASSESSMENT YEAR 2008-09 IS OVER RULED BY THE ONLY DECISION BROUGHT TO OUR NOTICE OF THE HONBLE GUJARAT HIGH COURT IN GENERAL MOTORS INDIA PVT. LTD. VS. DC IT (SUPRA). 30. ANOTHER ASPECT OF THE ISSUE IS THAT WHERE THERE IS ONLY JUDGMENT OF HIGH COURT THOUGH NOT JURISDICTIONAL HIGH COURT AND WHEN NO CO NTRARY HIGH COURTS DECISION WAS AVAILABLE ON THE ISSUE, THEN THE HIGH COURTS DECIS ION HAD TO BE FOLLOWED IN PREFERENCE TO THE DECISION OF SPECIAL BENCH OF THE TRIBUNAL. THIS WAS THE DECISION OF THIRD MEMBER IN THE CASE OF KANEL OIL & EXPORTS IND USTRIES LTD. REPORTED IN 126 TTJ 158 (AHM) (TM). 31. APPLYING THE RATIO LAID DOWN BY THE HONBLE GUJ ARAT HIGH COURT IN GENERAL MOTORS INDIA PVT. LTD. VS. DCIT (SUPRA) TO THE FACT S OF THE PRESENT CASE, THE ISSUE OF ALLOWABILITY OF UNABSORBED DEPRECIATION RELATING AS SESSMENT YEAR 1999-2000 AGAINST THE INCOME ARISING IN ASSESSMENT YEAR 2008-09 IS TO BE SET OFF AND CONSEQUENTLY, THE ORDER PASSED BY THE ASSESSING OFFICER IN THIS REGAR D CANNOT BE SAID TO BE PREJUDICIAL TO THE INTEREST OF REVENUE. CONSEQUENTLY, THE REVI SIONARY POWERS EXERCISED BY THE COMMISSIONER AGAINST THE ORDER OF ASSESSMENT WHICH IS NOT PREJUDICIAL TO THE INTEREST OF REVENUE, EVEN WHERE THE ORDER PASSED BY THE ASSE SSING OFFICER WAS ERRONEOUS, CANNOT BE EXERCISED, SINCE THE TWIN CONDITIONS HAVE NOT BEEN FULFILLED IN THE CASE. IN VIEW THEREOF, WE REVERSE THE DIRECTIONS OF THE COMM ISSIONER IN THIS REGARD AND UPHOLD THE ORDER OF ASSESSING OFFICER IN ALLOWING THE SET OFF OF UNABSORBED DEPRECIATION RELATING TO ASSESSMENT YEAR 1999-2000 AMOUNTING TO RS.5,41,84,430/- CLAIMED AGAINST THE BUSINESS INCOME FOR ASSESSMENT YEAR 200 8-09 IN COMPUTATION OF INCOME. THE DIRECTIONS OF THE COMMISSIONER IN THIS REGARD A RE THUS, REVERSED AND THE ORDER OF ASSESSING OFFICER IS RESTORED. 32. ANOTHER ISSUE RAISED BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE WAS THAT WHERE THE ISSUE RAISED BY THE COM MISSIONER IN SHOW CAUSE NOTICE HAS BEEN CONSIDERED BY THE ASSESSING OFFICER EVEN I N THE PROCEEDINGS UNDER SECTION ITA NO.1176/PN/2013 SAB MILLER BREWERIES PVT. LTD. 17 154 OF THE ACT, WHERE THE ASSESSING OFFICER HAD EXP RESSED HIS OPINION IN THIS REGARD, NO PROCEEDINGS UNDER SECTION 263 OF THE ACT CAN BE INITIATED IN SUCH CASE. RELIANCE IN THIS REGARD WAS PLACED UPON THE RATIO LAID DOWN BY LAID BY THE CHANDIGARH BENCH OF THE TRIBUNAL IN R.S. WAREHOUSING VS. ITO (SUPRA). 33. WE FIND THAT SIMILAR ISSUE BEFORE THE CHANDIGAR H BENCH OF THE TRIBUNAL IN R.S. WAREHOUSING VS. ITO (SUPRA) WHEREIN, IT WAS HELD AS UNDER:- 23. IN THE FACTS OF THE PRESENT CASE BEFORE US THE ASSESSEE HAD RECEIVED A NOTICE U/S 154 OF THE ACT IN VIEW OF THE AUDIT OBJE CTION ON THE ISSUE OF ASSESSABILITY OF THE INCOME UNDER THE HEAD ''INCOME FROM PROPERTY/INCOME FROM BUSINESS'. THE REPLY OF THE ASSESSEE WAS FILED BEFORE ISSUE OF SHOW CAUSE NOTICE U/S 263 OF THE ACT. IN THE ABOVE SAID REPLY THE ASSESSEE HAD EXPLAINED THE FACTUAL ASPECTS OF ITS CASE AND ALSO THE ASPECT OF HAVING RECEIVED SUBSIDY FROM NABARD IN THE WAREHOUSING ACT IVITIES CARRIED OUT. ADMITTEDLY, NO SUBSIDY IS RECEIVABLE WHERE THE ASSE SSEE HAS RENTED OUT ITS PREMISES AND THE INCOME IS ASSESSABLE AS INCOME FRO M PROPERTY. ONLY IN CASE AS THE ASSESSEE IS ENGAGED IN THE BUSINESS ACTIVITI ES, THERE IS A QUESTION, OF LIABILITY OF SUBSIDY OF CARRYING OUT SUCH PRESCRIBE D BUSINESS ACTIVITIES. FURTHER WE FIND THAT WAREHOUSING CHARGES RECEIVED BY THE AS SESSEE WERE NOT CONSTANT BUT WERE VARIABLE DEPENDING UPON THE QUANTITY OF ST OCK STORED IN ITS PREMISES. EVEN THE LEASE AGREEMENT REFERRED TO THE RATE OF RE NT BEING LINKED TO THE QUANTITY OF STOCK AND NOT FIXED MONTHLY RENT. FURTH ER THE ASSESSEE IS TO KEEP THE GODOWN IN ITS PERFECT CONDITION AS THE SAID PRE MISES ARE BEING USED FOR STORING PERISHABLE ITEMS, WHICH REQUIRE AN EXTRA CA RE. 24. THE HON'BLE SUPREME COURT IN CIT VS. RALSON IND USTRIES LTD. [(288 ITR 322 (SC)}(SUPRA) HAVE LAID DOWN THE PROPOSITION THA T THE INITIATION BY THE CIT OF PROCEEDINGS FOR REVISION U/S 263 OF THE ACT CANN OT BE HELD TO HAVE BECOME BAD ONLY BECAUSE AN ORDER FOR RECTIFICATION WAS PAS SED BY THE ASSESSING OFFICER U/S 154 OF THE ACT. THE LEARNED D.R. FOR TH E REVENUE HAD PLACED RELIANCE ON THE ABOVE SAID PROPOSITION LAID DOWN BY THE APEX COURT. HOWEVER, WE FIND THAT THE LEARNED A.R. FOR THE ASSESSEE HAD REFERRED TO THE PROCEEDINGS OF RECTIFICATION U/S 154 OF THE ACT UNDER WHICH REP LY WAS GIVEN BY THE ASSESSEE WHICH IN TURN BECOMES RECORD FOR THE PURPOSE OF EXP LANATION TO SECTION 263 OF THE ACT. 25. IN VIEW OF THE TOTALITY OF FACTS AND CIRCUMSTAN CES AND THE EXPLANATION FILED BY THE ASSESSEE IN REPLY TO THE N OTICE, WE FIND MERIT IN THE ALTERNATE PLEA RAISED BY THE ASSESSEE THAT I N VIEW OF THE INFORMATION BEING AVAILABLE ON RECORD, THE CIT COUL D NOT EXERCISE THE JURISDICTION U/S 263 OF THE ACT. WE SET ASIDE THE O RDER OF THE CIT AND ALLOW THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE. 34. FOLLOWING THE ABOVE SAID RATIO, WE FIND MERIT I N THE ALTERNATE PLEA RAISED BY THE ASSESSEE THAT IN VIEW OF THE INFORMATION BEING AVAI LABLE ON RECORD THOUGH IN THE PROCEEDINGS UNDER SECTION 154 OF THE ACT, THE COMMI SSIONER COULD NOT EXERCISE THE JURISDICTION UNDER SECTION 263 OF THE ACT. WE SET- ASIDE THE ORDER OF COMMISSIONER ON THIS GROUND ALSO. ITA NO.1176/PN/2013 SAB MILLER BREWERIES PVT. LTD. 18 35. NOW, COMING TO THE SECOND ISSUE RAISED BY THE C OMMISSIONER IN THE PROCEEDINGS UNDER SECTION 263 OF THE ACT IN RELATIO N TO THE MANAGEMENT / LICENSE FEES PAID TO SABMILLER MANAGEMENT (IN) BV NETHERLANDS. THE SAID ISSUE WAS RESTORED BACK TO THE FILE OF ASSESSING OFFICER TO DECIDE THE SAME AFTER VERIFYING THE SUBMISSIONS OF THE ASSESSEE AND DUE VERIFICATION OF THE BOOKS OF ACCOUNT AND OTHER DETAILS. 36. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE A SSESSEE POINTED OUT THAT IN THE SET-ASIDE PROCEEDINGS, THE ASSESSING OFFICER HA D ALLOWED THE CLAIM OF THE ASSESSEE IN THE ORDER PASSED UNDER SECTION 143(3) R .W.S. 263 OF THE ACT AND NO ADDITION HAS BEEN MADE ON THIS ACCOUNT. IN VIEW OF THE ORDER OF ASSESSING OFFICER IN ALLOWING THE CLAIM OF ASSESSEE IN SET-ASIDE PROCEED INGS AND PASSING THE ORDER UNDER SECTION 143(3) R.W.S. 263 OF THE ACT, THE ISSUE RAI SED IN THE PRESENT APPEAL AGAINST THE EXERCISE OF JURISDICTION OF COMMISSIONER UNDER SECT ION 263 OF THE ACT HAS BECOME INFRUCTUOUS AND THE SAME IS DISMISSED. 37. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED ON THIS 27 TH DAY OF FEBRUARY, 2015. SD/- SD/- (G.S. PANNU) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 27 TH FEBRUARY, 2015. GCVSR COPY OF THE ORDER IS FORWARDED TO: - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT, AURANGABAD; 4) THE DR A BENCH, I.T.A.T., PUNE; 5) GUARD FILE. BY ORDER //TRUE COPY// ASSISTANT REGISTRAR I.T.A.T., PUNE
Mehul