Iridium Technologies (India ) Pvt. Ltd, Trivandrum V. The Deputy Commissioner of Income Tax, Trivandrum

ITA 120/COCH/2009

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 0847 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 11 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2011
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 24-02-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 11-03-2009
• Court: TRIBUNAL
• Department Lawyers: S C SONKAR
• Assessee Lawyers: K GEORGE PHILIPCAAR
• Keywords: Depreciation; Unabsorbed depreciation; Set aside
• Section: 115JB; 139(5); 143(1); 154; 2

Judgement Text

IN THE INCOME TAX APPELLAT E TRIBUNAL COCHIN BEN CH, COCHIN BEFORE S/SHRI N.VIJAYAKUMARAN, JM AND SANJAY AR ORA, AM I.T.A. NO. 120/COCH/2009 ASSESSMENT YEAR : 2006-2007 IRIDIUM TECHNOLOGIES (INDIA) PVT. LTD., 233-235, NILA, TECHNOPARK CAMPUS, KARIYAVATTOM, TRIVANDRUM-695 581. [PAN: AAACI 6272K] VS. THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-1(1), TRIVANDRUM (ASSESSEE -APPELLANT) (REVENUE- RESPONDENT) ASSESSEE BY SHRI K.GEORGE PHILIP,CA-AR REVENUE BY SHRI S.C.SONKAR, CIT- DR O R D E R PER SANJAY ARORA, AM: THIS APPEAL BY THE ASSESSEE IS ARISING OUT OF THE ORDER BY THE COMMISSIONER OF INCOME- TAX (APPEALS)-I, TRIVANDRUM (CIT(A) FOR SHORT) DA TED 10.12.2008, AND THE ASSESSMENT YEAR (A.Y.) UNDER REFERENCE IS 2006-07. 2.1 THE APPEAL RAISES A SINGLE ISSUE, AND FOR WHICH IT WOULD BE NECESSARY TO DELINEATE THE BACKGROUND FACTS OF THE CASE. THE ASSESSEE FUR NISHED ITS RETURN OF INCOME FOR THE YEAR ON 28.11.2005 AT A `BOOK PROFIT OF ` 6424608/-, DETERMINING ITS TAX LIABILITY U/S. 115JB AT ` 540631/-, WHICH STOOD PAID BY WAY OF SELF-ASSESSMEN T TAX. THE SAME STOOD PROCESSED U/S. 143(1) OF THE INCOME-TAX ACT, 1961 (`THE ACT HEREINAFTER) VIDE INTIMATION DATED 24.9.2007, ASSESSING ITS INCOME UNDER THE REGULAR P ROVISIONS OF THE ACT AT THE RETURNED AMOUNT OF BOOKPROFIT, DETERMINING THE ASSESSEES L IABILITY ON ACCOUNT OF TAX AND INTEREST THEREON AT ` 2611355/- , SO THAT THE BALANCE ` 2070723/- ( ` 2611355/- ` 540632/-) WAS ASCERTAINED AS PAYABLE BY IT, AND WHICH STOOD, AS I T APPEARS, RECOVERED BY ADJUSTING THE AMOUNT/S DUE TO THE ASSESSEE. THE ASSESSEE VIDE ITS LETTER DATED 15.4.2008 MOVED AN APPLICATION U/S. 154 OF THE ACT, BRINGING FORTH THE FACT THAT ITS INCOME UNDER THE REGULAR ITA.NO.120 /COCH/2009 2 PROVISIONS OF THE ACT, I.E., AFTER ADJUSTMENT OF TH E DEPRECIATION FOR THE YEAR, WAS AT ` 5393428/-, AS AGAINST ITS NET PROFIT (AS PER THE PR OFIT AND LOSS ACCOUNT FOR THE YEAR) AT ` 6424608/-. HOWEVER, AS IT HAD BROUGHT FORWARD UNABS ORBED BUSINESS LOSSES AS WELL AS UNABSORBED DEPRECIATION ALLOWANCE, I.E., FROM THE P RECEDING YEARS, AT A TOTAL OF ` 170.03 LAKHS, THE ENTIRE INCOME OF ` 53.93 LAKHS STOOD ADJUSTED BY IT AGAINST THE BROUGH T FORWARD UNABSORBED LOSS AND, ACCORDINGLY, THE INCOME UNDER THE REGULAR PROVISIONS OF THE ACT STOOD RETURNED AT NIL. SCHEDULE 8 TO THE RETURN, WH ICH STOOD FILED ELECTRONICALLY, BORE THE YEAR-WISE DETAILS OF THE SAID UNABSORBED LOSS AND U NABSORBED DEPRECIATION, I.E., AS PER THE REGULAR PROVISIONS OF THE ACT. THE SAME STOOD ALSO REPORTED PER THE AUDIT REPORT U/S. 44AB OF THE ACT, WHICH BEARS THE REQUIREMENT FOR SP ECIFYING THE SAID DETAILS. HOWEVER, DUE TO TECHNICAL REASONS; THIS YEAR BEING THE FIRST YEAR FOR UPLOADING THE RETURN ELECTRONICALLY, THE DETAILS MENTIONED IN SCHEDULE 8 (TO THE RETURN), STOOD NOT CARRIED OVER TO THE OTHER SCHEDULES AND COLUMNS OF THE RETURN. THE DELETION OF THE DEMAND (AT ` 20.71 LAKHS) AND AMENDING THE INTIMATION ACCORDINGLY WAS, THEREFORE, PRAYED FOR. 2.2 AS IT APPEARS, NO ORDER U/S. 154 STOOD PASSED P URSUANT TO THE ASSESSEES APPLICATION. THE ASSESSEE, NEVERTHELESS, PREFERRED AN APPEAL AGAINST THE INTIMATION BEFORE THE FIRST APPELLATE AUTHORITY ON 28.4.2008, RAISING THE SAID ISSUE. IT FURTHER RELIED ON THE DECISION IN THE CASE OF CIT VS. MAHALAKSHMI SUGAR MILLS CO. LTD . (1986) 160 ITR 920 (SC). THE LD. CIT(A), HOWEVER, DENIED THE ASSESSEE S CLAIM. THIS WAS AS IN HER VIEW, ADMITTEDLY, THE LOSS REPORTED PER SCHEDULE 8 TO THE RETURN OF INCOME (ROI) STOOD NOT REPRODUCED IN OR CARRIED OVER TO THE OTHER RELEVANT SCHEDULES AND COLUMNS OF THE RETURN, FILED ELECTRONICALLY. THE SUBSEQUENT HARD-COPY THER EOF, WHICH IS TOWARD CORRECTING ANY OMISSION WHICH MAY HAVE OCCURRED DURING ELECTRONIC TRANSMISSION OF DATA, ALSO DID NOT BEAR THE SAID CLAIM, I.E., PER THE OTHER RELEVANT S CHEDULES AND COLUMNS OF THE ROI. THE ASSESSING OFFICER (AO) IS UNDER THE EXTANT LAW OBLI GED TO ADMIT THE INCOME REFLECTED IN THE RETURN WITHOUT DISTURBING OR DOUBTING THE AUTHE NTICITY OF THE PARTICULARS FILED IN THE RETURN EXCEPT FOR PRIMA FACIE ADJUSTMENT AS PER THE PROVISIONS OF THE ACT, I.E., HE COULD NOT TAKE COGNIZANCE OF ANY CLAIM NOT REFLECTED IN T HE ROI. IN ANY CASE, THE REMEDIAL ACTION DID NOT LIE AT THE FIRST APPELLATE STAGE. AC CORDINGLY, THE ASSESSEES APPEAL STOOD DISMISSED. AGGRIEVED, THE ASSESSEE IS IN APPEAL. ITA.NO.120 /COCH/2009 3 3. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. 3.1 THE FIRST AND THE MOOT QUESTION IN THE INST ANT CASE WOULD BE WHETHER THE ASSESSEE HAS MADE A VALID CLAIM IN RESPECT OF BROUGHT FORWAR D BUSINESS LOSS AT ` 5393428/- (IN TERMS OF SECTION 72 OF THE ACT) OR NOT ? IN OUR VIEW, THE ANSWER IS IN THE AFFIRMATIVE. IT HAS SPECIFIED THE DETAILS OF THE BROUGHT FORWARD LOSS A ND DEPRECIATION ALLOWANCE FOR THE PRECEDING YEARS PER SCHEDULE 8 TO THE ROI. THE SAI D SCHEDULE IS AS MUCH A PART OF THE ROI AS THE OTHER SCHEDULES AND COLUMNS OF THE ROI T O WHICH THE SAID IMPUGNED LOSS AND ALLOWANCE DID NOT GET CARRIED OVER DUE TO TECHNICAL FAILURE. THE SAID CLAIM ALSO FINDS REFLECTION IN THE COMPUTATION OF INCOME ENCLOSED AL ONG WITH AND FORMING PART OF THE ROI. NOT SO CONSIDERING WOULD MAKE THE RETURN INTERNALLY INCONSISTENT, AND WHICH COULD AT BEST LEAD TO THE INFERENCE OF THE RETURN BEING DEFECTIVE , BORE AS DID A CLERICAL OMISSION APPARENT FROM THE FACE OF THE RETURN, WHICH THOUGH WE CONSIDER AS SAVED BY SECTION 292B OF THE ACT. THE SUBSEQUENT HARD COPY THEREOF, WHICH HAS TO BE FURNISHED TO THE REVENUE, IS ONLY A REPLICA OF THAT FILED ORIGINALLY, AS CLAR IFIED BY THE LD. AR, I.E., ITS PRINTOUT, AND IS NOT TOWARD RECTIFYING AN OMISSION OR MAKING CLAIM(S ) OMITTED TO HAVE BEEN MADE PER THE SAME, AS STATED BY THE LD. CIT(A). THE SAME COULD O NLY FORM THE SUBJECT MATTER OF REVISION THROUGH A FRESH RETURN U/S. 139(5) OF THE ACT. THE ASSESSEES CLAIM TO THE EXTENT OF ` 53.93 LAKHS STANDS THUS VALIDLY MADE PER ITS ROI. THE BALANCE CLAIM (FOR ` 1031180/- ); THE ASSESSEES INCOME BEING ASSESSED AT ` 64.25 LAKHS, IS ON ACCOUNT OF DEPRECIATION ALLOWANCE U/S. 32(1) OF THE ACT. THE CLAIM BEING F OR THE CURRENT YEAR DOES NOT FIND REFLECTION IN SCHEDULE 8, WHICH IS ONLY A STATEMENT OF BROUGHT FORWARD LOSSES & ALLOWANCES FROM THE PRECEDING YEARS. THE REASON FO R THE NON-ADMISSION OF THE SAME IS NOT CLEAR, EVEN AS THE SAME ALSO FINDS CLEAR MENTIO N IN THE COMPUTATION OF TAXABLE INCOME. THE INTIMATION U/S. 143(1) ALSO DOE NOT BEAR ANY EX PLANATION FOR THE NON-GRANT OF THE CURRENT YEAR DEPRECIATION AT THE CLAIMED AMOUNT, AS AGAINST THE BOOK DEPRECIATION. THE IMPUGNED ORDER IS ALSO SILENT IN THE MATTER. THE DE TAILS IN RESPECT OF THIS CLAIM, AS IN THE CASE OF BROUGHT FORWARD CLAIMS, ARE REQUIRED TO BE SPECIFIED IN THE AUDIT REPORT U/S. 44AB OF THE ACT, ALSO FORMING PART OF THE ROI. UNDER THE CIRCUMSTANCES, THERE BEING NO CONTRARY CLAIM, IT HAS TO PRESUMED THAT THE ASSESSE ES RETURN WAS INTERNALLY CONSISTENT AS ITA.NO.120 /COCH/2009 4 REGARDS THIS CLAIM. IN SUM, THE ASSESSEES ROI FOR THE YEAR BEARS THE CLAIMS FOR ` 10.31 LAKHS AND ` 53.93 LAKHS U/SS. 32(1) AND 72 OF THE ACT RESPECTIV ELY. 3.2 NEXT, WE COME TO THE PURVIEW OF THE AO IN RESPE CT OF A RETURN FURNISHED U/S. 139(1). THE SAME, WITH EFFECT FROM 1.6.2001, OBLIG ES HIM TO PROCESS THE SAME BY EFFECTING, INTER ALIA , THE ADJUSTMENTS BY WAY OF CORRECTING ANY INCORREC T CLAIM IF THE CORRECT CLAIM IS APPARENT FROM THE INFORMATION IN T HE RETURN. WHETHER THE SAID ADJUSTMENT HAS THE EFFECT OF ENHANCING OR REDUCING THE INCOME RETURNED IS AN ALTOGETHER DIFFERENT MATTER; THE PREMISE OF THE SAME BEING TO MAKE THE R ETURN INTERNALLY CONSISTENT. REFERENCE FOR THE PURPOSE BE MADE TO THE EXPLANATION TO SECTION 143(1), WHICH DEFINES THE SCOPE OF THE EXPRESSION AN INCORRECT CLAIM APPARENT FROM ANY INFORMATION IN THE RETURN OCCURRING IN SECTION 143(1) (A) (II). THE SAID ENA BLING POWER, SPECIFICALLY PROVIDED TO THE AO BY THE STATUTE, AFFIRMS OUR UNDERSTANDING AND FI NDING (PER THE PRECEDING PARA) THAT A RETURN OF INCOME HAS TO BE CONSTRUED AS THE SUM OF ITS COMPOSITE PARTS, I.E., AS A SINGLE DOCUMENT, EVEN THOUGH COMPRISING OF SEVERAL PARTS, SO THAT IT HAS TO BE NECESSARILY CONSIDERED AND REGARDED AS A WHOLE, HARMONIZING/COR RECTING ANY INTERNAL INCONSISTENCY THEREIN AS SUCH, THOUGH WE HAVE FOUND THE ASSESSEE TO HAVE PREFERRED THE IMPUGNED CLAIM VALIDLY PER ITS ROI, EVEN ASSUMING IT AS NOT (WHICH IN OUR VIEW WOULD BE TAKING A HYPERTECHNICAL VIEW OF THE MATTER, NOT WARRANTED BY LAW), THE SAME BEING INCONSISTENT WITH THE INFORMATION IN THE RETURN, AO WAS OBLIGED TO MAKE THE REQUISITE CORRECTION/S. WE ARE NOT IN AGREEMENT WITH THE FINDING OF THE LD. CI T(A) THAT THE ADJUSTMENT SOUGHT FOR, I.E., ASSUMING SO, WAS OUTSIDE THE JURISDICTION OF THE AO U/S. 143(1). AS SUCH, EITHER WAY, THE REVENUE HAS NO CASE. HERE IT MAY ALSO BE PERTI NENT TO ADD THAT ANY INCORRECT CLAIM BY THE ASSESSEE PER ITS RETURN, I.E., WHICH IS OUTSIDE THE SCOPE OF ADJUSTMENT(S) PERMISSIBLE U/S. 143(1), COULD BE RECTIFIED BY THE REVENUE BY R ESORT TO S. 154 OF THE ACT. 4. IN VIEW OF THE FOREGOING, WE SET ASIDE THE ORDER OF THE LD. CIT(A), AND DIRECT THE AO TO PROCESS THE ASSESSEES RETURN BY TAKING COGNI ZANCE OF THE IMPUGNED CLAIMS AND DETERMINE ITS CARRY FORWARD BUSINESS LOSS AND DEPRE CIATION ALLOWANCE (YEAR-WISE), AS WELL AS THE TAX (INCLUDING CONSEQUENTIAL INTEREST) LIABI LITY FOR THE YEAR, AS PER LAW, REFUNDING, ITA.NO.120 /COCH/2009 5 CONSEQUENTLY, ANY DEMAND PAID BY THE ASSESSEE (INCL UDING THAT, IF ANY, ADJUSTED BY THE REVENUE) FOR THE YEAR IN EXCESS THEREOF, IN ACCORDA NCE WITH LAW. WE DECIDE ACCORDINGLY. 5. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. SD/- SD/- (N.VIJAYAKUMARAN) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: ERNAKULAM DATED: 07TH MARCH, 2011 GJ COPY TO: 1. IRIDIUM TECHNOLOGIES (INDIA) PVT. LTD., 233-235, NILA, TECHNOPARK CAMPUS, KARIYAATTOM, TRIVANDRUM - 695 581. 2. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-1( 1), TRIVANDRUM. 3. THE COMMISSIONER OF INCOME-TAX (APPEALS)-I, TRIV ANDRUM 4. THE COMMISSIONER OF INCOME-TAX, TRIVANDRUM. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE. BY ORDER (ASSIST ANT REGISTRAR) ITA.NO.120 /COCH/2009 6