ASST CIT 14(1)(2), MUMBAI V. GODREJ SARA LEE LTD, MUMBAI

ITA 118/MUM/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3603 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-08-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2005-2006
• Appeal Filed On: 07-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: FALEE H BILIMORIA AR
• Keywords: Rectification of order; Period of limitation; Time period of passing order
• Section: 143(3); 115JB

Judgement Text

, INCOME-TAX APPELLATE TRIBUNAL -GBENCH MUMBAI , , , BEFORE S/SHRI RAJENDRA,ACCOUNTANT MEMBER AND RAM LAL NEGI,JUDICIAL MEMBER ./ITA/118/MUM/2015, /ASSESSMENT YEARS: 2005-06 ACIT- 14(1)(2) ROOM NO.460, 4 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400 020. VS. M/S. GODREJ SARA LEE LTD. (NOW AMALGAMATED INTO GODREJ CONSUMER PRODUCTS LTD.) PIROJSHAH NAGAR, EASTERN EXPRESS HIGHWAY,MUMBAI-400 079. PAN:AAACT 1921 C ( /APPELLANT ) ( / RESPONDENT) REVENUE BY: SHRI K.V. VISPUTE-DR ASSESSEE BY: SHRI FALEE H. BILIMORIA-AR / DATE OF HEARING: 22.08.2016 / DATE OF PRONOUNCEMENT: 22.08.2016 ,1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA, AM - CHALLENGING THE ORDER,DATED 09/10/2014, OF THE CIT( A)-21,MUMBAI, THE ASSESSING OFFICER(AO)HAS FILED THE PRESENT APPEAL. THE EFFECTIVE GROUND OF APPEAL IS ABOUT QUESTIONING THE ORDER OF THE AO, PASSED U/S.154 OF THE ACT,ON 1 7/01/2014. 2. ASSESSEE-COMPANY,ENGAGED IN THE BUSINESS OF MANUFAC TURING/MARKETING OF MOSQUITO REPELLENT,MATS, COILS ETC., FILED ITS RETURN OF INC OME ON 27/10/205, DECLARING INCOME AT RS. NIL.THE AO COMPLETED THE ASSESSMENT, U/S.143 (3) OF THE ACT, ON 28/11/2008, DETERMINING THE INCOME OF THE ASSESSEE AT RS. 6.46 CRORES UNDER THE NORMAL PROVISIONS AND AT RS.40.89 CRORES UNDER THE MAT PROVISIONS(U/S.115 JB OF THE A CT).AGGRIEVED BY THE 143(3) ORDER OF THE AO,THE ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRS T APPELLATE AUTHORITY (FAA). AN ORDER GIVING EFFECT TO THE ORDER OF THE FAA WAS PASSED ON 12/10/2011,REVISING THE TOTAL INCOME OF THE ASSESSEE AT RS.3.05 LAKHS UNDER NORMAL PROVISIO NS AND AT RS.40.89 CRORES U/S.115JB. ON VERIFICATION OF THE RECORDS,THE AO HELD THAT THE ASSESSEE HAD DEBITED AN AMOUNT OF RS.4.08 CRORES UNDER THE HEAD PROVISION FOR DIMINUTION IN THE VALUE OF INVESTMENT,THAT IT DID NOT ADD BACK THE SAID INCOME TO THE BOOK PROFIT, THAT PROVI SION FOR DIMINUTION OF VALUE OF INVESTMENT WAS NOT AN ASSET AND LIABILITY,THAT IT WAS NOT AN A LLOWABLE DEDUCTION, THAT SAME WAS TO BE ADDED BACK TO THE TOTAL BOOK PROFIT, THAT THE SAID MISTAKE WAS APPARENT FROM THE RECORD. HE ISSUED A NOTICE U/S.154 OF THE ACT INTIMATING THE A SSESSEE ABOUT THE PROPOSED RECTIFICATION. THE ASSESSEE CONTENDED BEFORE HIM THAT THERE WAS NO MISTAKE APPARENT FROM THE RECORD. 118/M/15-GODREJ SARA LEE 2 HOWEVER, THE AO DID NOT AGREE WITH THE ASSESSEE AND HELD THAT SUBCLAUSE(I) TO EXPLANATION 1 TO SUBSECTION(2) OF SECTION 115 JB WAS SUBSTITUTED WITH EFFECT FROM 01/04/2001,THAT THE AMOUNT OF RS.4.08 CRORES HAD TO BE ADDED BACK TO TH E NET PROFIT OF THE ASSESSEE TO ARRIVE AT THE BOOK PROFIT.ACCORDINGLY,HE ADDED SUM OF RS.4.08 CRO RES WHILE THE COMPUTING THE BOOK PROFIT. 3. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST A PPELLATE AUTHORITY (FAA), CHALLENGING ORDER PASSED BY THE AO U/S.154 OF THE ACT AND ARGUE D THAT THE RECTIFICATION ORDER WAS BARRED BY TIME AND WAS VOID AB INITIO. AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE AN D THE ORDERS PASSED BY THE AO, THE FAA HELD THAT THE AO HAD ISSUED NOTICE U/S.154 THAT WAS RECEIVED BY THE ASSESSEE ON 02/04/2012, THAT THE RECTIFICATION ORDER WAS PASSED ON 17/01/20 14, THAT IN THE ORIGINAL ASSESSMENT THERE WAS NO ADDITION OF SECTION 115 JB,THAT DURING THE A PPELLATE PROCEEDINGS THIS ISSUE WAS NOT RAISED BEFORE HIM,THAT FOR COUNTING THE LIMITATION PERIOD DATE TO BE RECOGNISED WAS DATE ON WHICH THE ORIGINAL ASSESSMENT WAS PASSED, THAT THE ORDER U/S.154 HAD TO BE PASSED WITHIN FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR IN WHICH THE ORIGINAL ASSESSMENT ORDER WAS COMPLETED. ACCORDINGLY, HE HELD THAT ORDER PASSED B Y THE AO ON 17/01/2014 WAS BARRED BY LIMITATION. 4. DURING THE COURSE OF HEARING BEFORE US, THE DEPARTM ENTAL REPRESENTATIVE (DR) RELIED UPON THE CASE OF TONY ELECTRONICS LTD. (320 ITR 378) OF THE HONORABLE DELHI HIGH COURT. THE AUTHORISED REPRESENTATIVE(AR)RELIED UPON THE ORDER OF THE FAA AND REFERRED TO THE CASES OF SEKSARIA COTTON MILLS LTD.(124ITR 570);KIRLOSKAR SY STEMS LTD.(220TAXMANN 1); POONJABHAI VANMALIDAS (114ITR38);SHRI NAVDURGA BANSAL COLD STO RAGE & ICE FACTORY(45 TAXMANN.COM 447);GAUTAM CHAND JAIN(45SOT 61(JAB)(SMC);SYNDICATE BANK (65ITD 141); PRECOTT MILLS LTD.(178 TAXMANN 15);VIJAYA BANK (323ITR166) AND YO KOGAWA INDIA LTD. (204 TAXMANN 305).HE STATED THAT THE ACTIVATION ORDER WAS TIME-B ARRED AND HENCE WAS RIGHTLY QUASHED BY THE FAA. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT, WHILE COMPLETING THE ORIGINAL ASSESSMENT, THE AO HAD DETE RMINED BOOK PROFIT OF THE ASSESSEE AT RS.40.89 CRORES,THAT THE ASSESSEE HAD PREFERRED AN APPEAL BEFORE THE FAA AGAINST THE ORDER OF THE AO PASSED U/S.143 (3) OF THE ACT,THAT IN THE AP PEAL IT HAD NOT AGITATED THE ISSUE OF 115 JB OF THE ACT,THAT IT HAD CHALLENGED THE ADDITIONS MAD E BY THE AO UNDER THE NORMAL PROVISIONS, THAT THE MATTER HAD TRAVELLED UP TO THE TRIBUNAL, T HAT NEITHER IN THE ORDER OF THE FAA NOR IN THE 118/M/15-GODREJ SARA LEE 3 ORDER OF THE TRIBUNAL THE ISSUE OF COMPLETION OF BO OK PROFIT WAS DELIBERATED UPON. IN THE CIRCUMSTANCES THE ORDER PASSED BY THE AO ON 28/11/2 008 COULD BE RECTIFIED UP TO 31/03/2013. THE AO HAD PASSED THE RECTIFICATION ORDER IN THE MO NTH OF JANUARY, 2014. CLEARLY, THE ORDER OF THE AO WAS BARRED BY LIMITATION.WE FIND THAT IN THE CASE OF TONY ELECTRONICS LIMITED (SUPRA),THE HONBLE DELHI HIGH COURT DECIDED THE IS SUE IN FAVOUR OF THE DEPARTMENT CONSIDER -ING THE PECULIAR FACTS OF THAT CASE.IN THAT CASE T HE AO HAD MADE CERTAIN ADDITIONS U/S.143(3) OF THE ACT THAT WERE CHALLENGED BEFORE THE FAA.THE AO HAD PASSED ORDER GIVING EFFECT TO THE ORDER OF THE FAA.THEREFORE, THE HONBLE COURT HAD H ELD THAT ONCE AN APPEAL AGAINST THE ORDER PASSED BY AN AUTHORITY WAS DECIDED BY AN APPELLATE AUTHORITY THE ORDER OF THE SAID AUTHORITY WOULD MERGE IN THE ORDER OF THE FAA.HOWEVER, IN THE CASE UNDER CONSIDERATION, AS STATED EARLIER,ISSUE OF COMPUTATION U/S. 115JB WAS NEVER A DJUDICATED UPON.FIRST FOUR CASES RELIED UPON BY THE ASSESSEE SUPPORT THE VIEW TAKEN BY US.E VEN ON MERITS,WE FIND THAT THE ISSUE STANDS DECIDED IN FAVOUR OF THE ASSESSEE AS HELD BY THE HON'BLE SUPREME COURT IN CASE OF VIJAYA BANK (SUPRA).HENCE,IN OUR OPINION, THE ORDER OF THE FAA DOES NOT SUFFER FROM ANY LEGAL INFIRMITY.CONFIRMING HIS ORDER,WE DECIDE THE EFFECTIVE GROUND OF APPEAL AGAINST THE AO. AS A RESULT APPEAL FILED BY THE AO STANDS DISMISSED . . ORDER PRONOUNCED IN TH E OPEN COURT ON 22 ND ,AUGUST,2016. 22 ! , 2016 SD/- SD/- ( / R.L.NEGI ) ( '# / RAJENDRA ) $! / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED :22.08.2016. JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR G BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.