M/s. Astra Zeneca Pharma India Ltd., Bangalore V. Joint Commissioner of Income Tax, Bangalore

ITA 1224/BANG/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 5573 (ITAT-BANGALORE)
• Duration Of Justice: 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 24-05-2011
• Assessment Year: 1996-1997
• Appeal Filed On: 11-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HARSHA PRAKASH CITIIDR
• Assessee Lawyers: C P RAMASWAMY
• Keywords: Depreciation; Period of limitation
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NO.1224/BANG/2010 ASSESSMENT YEAR : 1996-97 M/S. ASTRA ZENECA PHARMA INDIA LTD., P.B. NO.2483, OFF BELLARY ROAD, HEBBAL, BANGALORE 560 024. : APPELLANT VS. THE JOINT COMMISSIONER OF INCOME TAX, (LTU), BANGALORE. : RESPONDENT APPELLANT BY : SHRI C.P. RAMASWAMY, C.A. RESPONDENT BY : SHRI HARSHA PRAKASH, CIT-II(DR) O R D E R PER A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER THIS APPEAL IS FILED BY THE ASSESSEE AGGRIEVED BY THE ORDER OF THE CIT (APPEALS) IN ITA NO.26/CIT (A)/LTU/09-10 DA TED 30.8.2010 FOR THE A.Y. 1996-97. 2. THE ASSESSEE HAS RAISED SIX GROUNDS IN ITS APPEA L, WHEREIN GROUND NO.1, 5 & 6 ARE GENERAL IN NATURE AND DOES NOT SURV IVE FOR ADJUDICATION. ITA NO.1224/BANG/10 PAGE 2 OF 9 3. IN GROUND NO.2, THE ASSESSEE HAS CHALLENGED THAT THE IMPUGNED ASSESSMENT IS BARRED BY LIMITATION, WHILE AS GROUND NO.3 & 4 PERTAINS TO DEPRECIATION ON LEASED ASSETS. 4. LET US EXAMINE GROUND NO.2 WHICH IS REPRODUCED H EREIN BELOW BEFORE VENTURING INTO THE OTHER GROUNDS. IMPUGNED REASSESSMENT BARRED BY LIMITATION . A) THE LEARNED CIT (APPEALS) ERRED IN HOLDING THAT THE IMPUGNED REASSESSMENT DATED 15-12-2009 COMPLETED U/ S. 143(3) R/W. SECTION 254 IS NOT BARRED BY LIMITATION. SHE OUGHT TO HAVE ANNULLED THE IMPUGNED REASSESSMENT AS THE SAME IS B ARRED BY LIMITATION IN TERMS OF THE SECOND PROVISO TO SUB-SE CTION (2A) OF SECTION 153. B) THE LEARNED CIT (APPEALS) FAILED TO APPRECIATE THAT THE HONBLE ITAT COMPLETELY SET ASIDE THE ISSUE RELATIN G TO DEPRECIATION FOR A DE NOVO ENQUIRY BY ASSESSING OFFICER VIDE ITS ORDER DATED 31.07.2006 IN ITA NO.511/BANG/1999 AND CONSEQUENTLY THE LEARNED CIT (APPEALS) ERRED IN HOL DING THAT THE IMPUGNED REASSESSMENT ORDER WAS AN ORDER GIVING EFFECT TO THE ORDER OF THE HONBLE ITAT . 5. THE ORIGINAL ASSESSMENT ORDER WAS DATED 26.3.199 9 DETERMINING THE TOTAL INCOME AT RS.8,38,38,080 AS AGAINST THE RETUR NED INCOME OF RS.1,96,82,930. THE MAIN DIFFERENCE BETWEEN THE AS SESSED AND RETURNED INCOME AROSE OUT OF DIFFERENCE ON ACCOUNT OF DEPREC IATION ON POLLUTION CONTROL EQUIPMENTS AND ADDITIONS ON THE AMOUNT OF I NTEREST ADVANCED TO MADHYA PRADESH STATE ELECTRICITY BOARD. THE ASSESS EES APPEAL AGAINST THE ORIGINAL ASSESSMENT ORDER WAS PARTLY ALLOWED BY THE CIT(APPEALS). THE LD. CIT(A) HAD IN FACT FULLY ALLOWED THE CLAIM OF D EPRECIATION ON THE POLLUTION CONTROL EQUIPMENT WHICH WAS TAKEN ON HIRE PURCHASE SCHEME FINANCED BY WIPRO. THE DEPARTMENT CARRIED THE MATTER BEFORE TH E ITAT, BANGALORE ITA NO.1224/BANG/10 PAGE 3 OF 9 BENCH IN ITA NO.511/BANG/1999 WHEREIN THE MATTER WA S SENT BACK TO THE LD. AO WITH THE FOLLOWING OBSERVATIONS: 12. WE HAVE PERUSED THE SUBMISSIONS OF THE ASSESSEE, THE PAPER BOOK ETC., FROM WHICH IT COULD BE DERIVED WHETHER THE ASSESSEE HAS RECEIVED FROM MPSEB AN AMOUNT TO THE E XTENT OF 85% OF THE COST OF THE EQUIPMENT. THEREFORE, OBVIO USLY, THE COMMISSIONER OF INCOME-TAX (A) HAS ACCEPTED THE ARG UMENTS OF THE ASSESSEE OF ITS FACE VALUE. THE VARIOUS CIRCUM STANCES AS EXISTING IN THE INSTANT CASE GO TO RAISE A LOT OF D OUBT IN THE ENTIRE TRANSACTION. HOWEVER, ONE ASPECT THAT IS ABSENT IN THE INSTANT CASE IS THE ENQUIRY FROM THE STATE ELECTRICITY BOARD WIT H REFERENCE TO THE SALE INVOICE RAISED ON THE ASSESSEE, THE LEASE AGREEMENT ENTERED INTO WITH THE ASSESSEE, PAYMENT OF 20% OF R S.4.93 CRORES TO THE ASSESSEE AND THE ANSWER TO THE QUESTION WHET HER THE ASSESSEE RECEIVED 85% OF RS.4.93 CRORES OR NOT. WE ARE, THEREFORE, OF THE VIEW THAT THE MATTER REQUIRES REE XAMINATION AT THE LEVEL OF THE ASSESSING OFFICER. THE DECISIONS OF THE SPECIAL BENCH (SUPRA) AND THE JURISDICTIONAL HIGH COURT (SU PRA) WOULD HAVE TO BE EXAMINED WITH REFERENCE TO THE FACTS OF THE CASE AND WHETHER THE FACTS OF THE CARE ARE IDENTICAL OR OTHE RWISE. LIKEWISE, THE DECISION OF THE ORISSA HIGH COURT (SUPRA) WOULD ALSO HAVE TO BE EXAMINED IN PARALLEL WITH THE FACTS OF THE CASE OF THE ASSESSEE. THE VARIOUS OBSERVATIONS MADE BY US ABOVE HAVE TO B E TREATED AS PASSING REFERENCES AND NOT NECESSARILY A CONCLUSION HAVING ANY BINDING EFFECT ON THE ASSESSING OFFICER. THESE OBSERVATIONS HAVE BEEN SO MADE IN APPRECIATION OF T HE MATTERS AS THEY ARE. SINCE ADDITIONAL INFORMATION WAS NECESSA RY AND ENQUIRY WAS ALSO NECESSARY WITHOUT WHICH, AS HELD BY THE OR ISSA HIGH COURT, IT WOULD BE A CASE OF CONCLUSION ARRIVED AT ON SURMISES AND BASELESS EVIDENCES. THE ASSESSING OFFICER SHALL ALLOW THE ASSESSEE SUFF ICIENT OPPORTUNITY IN THIS REGARD. HE MAY ALSO CALL FOR C OMPLETE INFORMATION FROM MPSEB IN THIS REGARD AND PROVIDE A COPY TO THE ASSESSEE. 13. IN THE RESULT, THE APPEAL IS TREATED AS ALLOWED IN PART FOR STATISTICAL PURPOSES. 6. PURSUANT TO THE DECISION OF THE TRIBUNAL, THE LD . ASSESSING OFFICER PASSED AN ASSESSMENT ORDER COMPLYING WITH THE DECIS ION OF THE TRIBUNAL. ITA NO.1224/BANG/10 PAGE 4 OF 9 BEFORE THE LD. CIT(A), IT WAS CONTENDED BY THE ASSE SSEE THAT THE TRIBUNAL HAD SET ASIDE THE ASSESSMENT, THEREFORE THE LD. AO OUGHT TO HAVE PASSED THE ORDER WITHIN THE TIME LIMIT PROVIDED IN SECTION 153(2A) OF THE ACT. SINCE THE ORDER WAS PASSED BEYOND THE TIME STIPULATED U/S . 153(2A) OF THE ACT, THE ASSESSMENT ORDER IS NOT MAINTAINABLE. THE REVE NUE CONTESTED THAT THE TRIBUNAL HAD NOT SET ASIDE THE ORDER OF THE LD. AO BUT HAD PASSED AN ORDER WITH CERTAIN DIRECTIONS. THEREFORE, TIME LIMIT STI PULATED UNDER SECTION 153(3) OF THE ACT IS APPLICABLE AND THE ORDER BY THE LD. A O IS WELL WITHIN THE TIME LIMIT. 7. THE LD. CIT(A) HELD THE ISSUE IN FAVOUR OF THE R EVENUE. THE FINDINGS OF THE LD. CIT(A) IS EXTRACTED HEREINBELOW FOR REFE RENCE: 5. ON A CAREFUL CONSIDERATION OF THE APPELLANTS S UBMISSIONS, AN IN-DEPTH ANALYSIS OF THE DECISIONS OF THE SPECIA L BENCH, THE JURISDICTIONAL HIGH COURT AND THAT OF THE ORISSA HI GH COURT AS WELL AS A THOROUGH EXAMINATION OF THE FACTS GATHERE D AS A RESULT OF ENQUIRIES CONDUCTED BY THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT IS ABSOLUTELY IMPERATIVE TO HIGHLIG HT THE FOLLOWING SALIENT FACTS:- I) FIRSTLY, WITH REGARD TO THE GROUND RAISED ON TH E TECHNICAL ISSUE NAMELY, THAT THE ASSESSMENT ORDER WAS BARRED BY LIMITATION IN TERMS OF THE SECOND PROVISO TO SUB-SECTION (2A) OF SEC. 153, IT IS PERTINENT TO NOTE THAT SEC. 153(2A) SPEAKS OF A N ORDER OF FRESH ASSESSMENT IN PURSUANCE OF AN ORDER UNDER SECTION 2 50 OR SECTION 254 OR SECTION 263 OR SECTION 264, SETTING ASIDE OR CANCELING AN ASSESSMENT. IN THE INSTANT CASE, IT IS QUITE APPA RENT THAT THE HONBLE ITAT DID NOT SET ASIDE THE ENTIRE ASSESSMEN T FOR A DE NOVO EXAMINATION BUT ONLY DIRECTED THE AO TO LOOK INTO CERTAIN ASPECTS AND CAUSE CERTAIN ENQUIRIES TO BE MADE. CO NSEQUENTLY, IT IS QUITE CLEAR THAT THE ORDER PASSED BY THE AO CONS EQUENT ON SUCH DIRECTIONS CANNOT BE HELD TO BE A FRESH ASSESSMENT ORDER. IT IS ALSO QUITE APPARENT THAT WHAT WAS PASSED WAS AN ORDER GI VING EFFECT TO THE ORDER OF THE HONBLE ITAT WHEREIN THE AO CONDUC TED ENQUIRIES WITH MPSEB IN ACCORDANCE WITH THE DIRECTI ONS OF THE HONBLE ITAT AND GAVE CERTAIN FACTUAL FINDINGS AFTE R GIVING DUE OPPORTUNITY TO THE APPELLANT. TO REITERATE, NO FRE SH ASSESSMENT ITA NO.1224/BANG/10 PAGE 5 OF 9 ORDER WAS PASSED. HENCE, THE QUESTION OF THE ASSES SMENT ORDER BEING BARRED BY LIMITATION U/S. 153(2A) DOES NOT AR ISE. IN THE CIRCUMSTANCES, I AM UNABLE TO ACCEPT THE APPELLANT S ARGUMENTS IN THIS REGARD. GROUND 2 THEREFORE FAILS. 8. THE LD. AR SUBMITTED BEFORE US THAT PARA 12 & 13 OF THE ORDER PASSED BY THE TRIBUNAL DATED 31.7.2006 EXTRACTED HE REINABOVE MERELY MENTIONS THAT THE ENTIRE ISSUE IS SENT BACK TO THE LD. AO TO PASS FRESH ORDERS IN ACCORDANCE WITH LAW. THERE WAS NO SPECIF IC FINDING OR SPECIFIC DIRECTION WITHIN THE SCOPE SET OUT IN SECTION 153(3 ) OF THE ACT. THE TRIBUNAL HAD ALLOWED THE APPEAL IN PART FOR STATISTICAL PURP OSE WHICH CLEARLY STANDS TO PROVE THAT IT WAS A CASE OF SET ASIDE WITH RESPECT TO CERTAIN ISSUES IN THE APPEAL. LD. AR FURTHER SUBMITTED THAT THE ORDER O F ITAT DATED 31.7.2006 WAS RECEIVED BY THE COMMISSIONER OF INCOME TAX WELL BEFORE 31.3.2007. CONSEQUENTLY TIME BARRING DATE FOR REASSESSMENT IN TERMS OF SECOND PROVISION OF SECTION 153(2A) WAS 31.12.2007. THEREF ORE, THE IMPUGNED REASSESSMENT ORDER PASSED ON 15.12.2009 IS BARRED B Y LIMITATION AND THEREFORE LIABLE TO BE ANNULLED. 9. LD. DR SUPPORTED THE DECISION OF THE LD. CIT(A) AND PRAYED THAT SINCE THE TRIBUNAL HAD PASSED THE ORDER WITH A DIRE CTION, PROVISIONS OF SECTION 153(3) IS ATTRACTED, HENCE THE ASSESSMENT O RDER IS VALID AND MAY BE UPHELD. 10. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE MOOT QUESTION ARISING FROM THE FACTS A ND CIRCUMSTANCES OF THIS CASE WITH RESPECT TO THE ISSUE OF LIMITATION IS WHI CH RELEVANT SECTION OF THE ITA NO.1224/BANG/10 PAGE 6 OF 9 ACT IS APPLICABLE? I.E., SECTION 153(2A) OR 153(3)? . BOTH THE SECTIONS ARE REPRODUCED BELOW FOR REFERENCE: 153. (2A) NOTWITHSTANDING ANYTHING CONTAINED IN SU B-SECTIONS (1), (1A), (1B) AND (2), IN RELATION TO THE ASSESSM ENT YEAR COMMENCING ON THE 1 ST DAY OF APRIL, 1971, AND ANY SUBSEQUENT ASSESSMENT YEAR, AN ORDER OF FRESH ASSESSMENT UNDER 250 OR SECTION 254 OR SECTION 263 OR SECTION 264, SETTING ASIDE OR CANCELING AN ASSESSMENT, MAY BE MADE AT ANY TIME BE FORE THE EXPIRY OF ONE YEAR FROM THE END OF THE FINANCIAL YE AR IN WHICH THE ORDER UNDER SECTION 250 OR SECTION 254 IS RECEIVED BY THE CHIEF COMMISSIONER OR COMMISSIONER OR, AS THE CASE MAY BE , THE ORDER UNDER SECTION 263 OR SECTION 264 IS PASSED BY THE C HIEF COMMISSIONER OR COMMISSIONER. .. PROVIDED FURTHER THAT WHERE THE ORDER UNDER SECTION 254 IS RECEIVED BY THE CHIEF COMMISSIONER OR COMMISSIONER OR, AS THE CASE MAY BE, THE ORDER UNDER SECTION 263 OR SECTION 264 IS PASSED BY THE COMMISSIONER ON OR AFTER THE 1 ST DAY OF APRIL, 2005, THE PROVISIONS OF THIS SUB-SECTION SHALL HAVE EFFECT AS IF FOR THE WORDS ONE YEAR THE WORDS NINE MONTHS HAD BEEN SUBSTIT UTED: (3) THE PROVISIONS OF SUB-SECTION (1), 1(A), (1B) AND (2) SHALL NOT APPLY TO THE FOLLOWING CLASSES OF ASSESSMENTS, REASSESSMENTS AND RECOMPUTATIONS WHICH MAY, SUBJECT TO THE PROVIS IONS OF SUB- SECTION (2A), BE COMPLETED AT ANY TIME (I) .. (II) WHERE THE ASSESSMENT, REASSESSMENT OR RECOMPUTATION IS MADE ON THE ASSESSEE OR ANY PERSON IN CONSEQUENCE OF OR TO GIVE EFFECT TO ANY FINDING OR DIRECTION CONTAINED IN AN ORDER UNDER SECTION 250, 254, 260, 262, 263 OR 264 OR IN AN ORDER OF ANY COURT IN A PROCEEDING OTHERWISE THAN BY WAY OF APPEAL OR REFERENCE UNDER THIS ACT; (III) WHERE, THE CASE OF A FIRM, AN ASSESSMENT IS MADE ON A PARTNER OF THE FIRM IN CONSEQUENCE OF AN ASSESSMENT MADE ON THE FIRM UNDER SECTION 147. ITA NO.1224/BANG/10 PAGE 7 OF 9 11. SECTION 153(3) REFERS TO FINDING OR DIRECTION . THOUGH BOTH THE REVENUE AND THE ASSESSEE HAVE REFERRED VARIOUS CASE LAWS, THE MOST APPROPRIATE ONE WOULD BE RAJINDER NATH V. CIT, DELHI (120 ITR 14). THE HONBLE APEX COURT HAS CLEARLY HELD AS FOLLOWS: (II) THAT THE OBSERVATION THAT THE ITO WAS FREE TO TAKE ACTION TO ASSESS THE EXCESS IN THE HANDS OF THE CO-OWNERS COULD NOT BE DESCRIBED AS A DIRECTION. A DIRECTION BY A STATU TORY AUTHORITY WAS IN THE NATURE OF AN ORDER REQUIRING POSITIVE CO MPLIANCE. WHEN IT WAS LEFT TO THE OPTION AND DISCRETION OF TH E ITO WHETHER OR NOT TO TAKE ACTION IT COULD NOT BE DESCRIBED AS A DIRECTION. (III) .. THE EXPRESSIONS FINDING AND DIRECTION IN S. 1 53(3) ARE LIMITED IN MEANING. A FINDING GIVEN IN AN APPEAL, REVISION OR REFERENCE ARISING OUT OF AN ASSESSMENT MUST BE A FI NDING NECESSARY FOR THE DISPOSAL OF THE PARTICULAR CASE, THAT IS TO SAY, IN RESPECT OF THE PARTICULAR ASSESSEE AND IN RELATION TO THE PARTICULAR ASSESSMENT YEAR. TO BE A NECESSARY FINDING, IT MUS T BE DIRECTLY INVOLVED IN THE DISPOSAL OF THE CASE. IT IS POSSIB LE IN CERTAIN CASES THAT IN ORDER TO RENDER A FINDING IN RESPECT OF A, A FINDING IN RESPECT OF B MAY BE CALLED FOR. FOR INSTANCE, WHER E THE FACTS SHOW THAT THE INCOME CAN BELONG EITHER TO A OR B AN D TO NO ONE ELSE, A FINDING THAT IT BELONGS TO B OR DOES NOT BE LONG TO B WOULD BE DETERMINATIVE OF THE ISSUE WHETHER IT CAN BE TAX ED AS AS INCOME. A FINDING RESPECTING B IS INITIALLY INVOLV ED AS A STEP IN THE PROCESS OF REACHING THE ULTIMATE FINDING RESPEC TING A. IF, HOWEVER, THE FINDING AS TO AS LIABILITY CAN BE DIR ECTLY ARRIVED AT WITHOUT NECESSITATING A FINDING IN RESPECT OF B, TH EN A FINDING MADE IN RESPECT OF B IS AN INCIDENTAL FINDING ONLY. IT IS NOT A FINDING NECESSARY FOR THE DISPOSAL OF THE CASE PERT AINING TO A. AS REGARDS THE EXPRESSION DIRECTION IN S. 153(3)( II) OF THE ACT, IT IS NOW WELL SETTLED THAT IT MUST BE AN EXPR ESS DIRECTION NECESSARY FOR THE DISPOSAL OF THE CASE BEFORE THE A UTHORITY OR COURT. IT MUST ALSO BE A DIRECTION WHICH THE AUTHO RITY OR COURT IS EMPOWERED TO GIVE WHILE DECIDING THE CASE BEFORE IT . THE EXPRESSIONS FINDING AND DIRECTION IN S. 153(3)( II) MUST BE ACCORDINGLY CONFINED. SECTION 153(3)(II) IS NOT A PROVISION ENLARGING THE JURISDICTION OF THE AUTHORITY OR COUR T. ITA NO.1224/BANG/10 PAGE 8 OF 9 12. ON A PLAIN READING OF THE CONCLUDING PARA IN TH E TRIBUNALS DECISION, IT IS APPARENT THAT THE TRIBUNAL HAD SET ASIDE CERT AIN ISSUES BACK TO THE FILE OF THE LD. ASSESSING OFFICER WITH CERTAIN OBSERVATI ONS. THE DIRECTION IS TO CALL FOR COMPLETE INFORMATION AND PASS APPROPRIATE ORDER . THUS THE DIRECTION IS NOT IN THE NATURE REQUIRING POSITIVE COMPLIANCE. DR AWING STRENGTH FROM THE RULING OF THE HONBLE APEX COURT EXTRACTED HEREINAB OVE; WE ARE OF THE OPINION THAT THE TRIBUNAL HAS NOT PASSED AN ORDER W ITH ANY FINDINGS OR DIRECTIONS AS CONTEMPLATED IN SECTION 153(3) OF THE ACT. RATHER, IT IS A JUST CASE TO INVOKE SECTION 153(2A) OF THE ACT WITH RESP ECT TO THE ISSUE ON LIMITATION. 13. FURTHER PERUSING THE FACTS, WE FIND THAT THE:- (A) DATE OF TRIBUNAL ORDER IS :- 31 ST JULY, 2006, (B) DATE OF RECEIPT OF THE ORDER BY THE CIT IS :- 6 /10/2006 ( AS VERIFIED FROM THE REGISTRY.) (C) DATE OF THE ASSESSMENT ORDER PURSUANT TO ITAT O RDER : 15.12.2009. (D) DATE BEFORE WHICH THE AO HAS TO PASS THE ORDER AS PER SECTION 153(2A) :- 31/03/2008 IT IS APPARENT FROM THE ABOVE THAT THE ORDER PASSED BY THE LD. AO IS MUCH BEYOND THE PERIOD OF LIMITATION AS PROVIDED U/S.153 (2A) OF THE ACT, AND THEREFORE THE ORDER OF LD. AO IS BARRED BY LIMITATI ON. SINCE WE HAVE DECIDED THE ISSUE AGAINST THE REVENUE ON LIMITATION, WE DO NOT FIND IT NECESSARY TO LOOK INTO THE MERITS OF THE CASE. IT IS ORDERED ACC ORDINGLY. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ITA NO.1224/BANG/10 PAGE 9 OF 9 PRONOUNCED IN THE OPEN COURT ON THIS 31 ST DAY OF MAY, 2011. SD/- SD/- ( SMT. P. MADHAVI DEVI ) (A. MOHAN ALANKAMONY ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 31 ST MAY, 2011. DS/- COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE (1+1) BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.