ACIT, Circle - 5, Kolkata, Kolkata V. M/s. Essel Mining & Industries Ltd., Kolkata

ITA 1242/KOL/2010

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 70513 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2013
• Appeal Filed By: Department
• Bench Allotted: C
• Assessment Year: 2002-2003
• Appeal Filed On: 16-06-2010
• Court: TRIBUNAL
• Department Lawyers: V A RAJU
• Assessee Lawyers: S BHATTACHARY A
• Keywords: Depreciation; Rectification of order; Bad and doubtful debts; Difference of opinion; Unabsorbed depreciation; Change of opinion
• Section: 143(3); 80HHC; 154

Judgement Text

, C , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA () BEFORE , /AND . . . . ' '' ''# '#'# '#, $% ) [BEFORE SHRI MAHAVIR SINGH, JM & SHRI ABRAHAM P. GEORGE, AM] & & & & / I.T.A NO. 1242/KOL/2010 '( )* '( )* '( )* '( )*/ // / ASSESSMENT YEAR: 2002-03 ASSISTANT COMMISSIONER OF INCOME-TAX, VS. M/S. ESS EL MINING & INDUSTRIES LTD. CIRCLE-5, KOLKATA. (PAN: AAACE6607L) (,- /APPELLANT ) (./,-/ RESPONDENT ) DATE OF HEARING: 11.12.2013 DATE OF PRONOUNCEMENT: 19.12.2013 FOR THE APPELLANT: SHRI V. A. RAJU, SR. DR FOR THE RESPONDENT: SHRI S. BHATTACHARYA $0 / ORDER PER SHRI MAHAVIR SINGH, JM: THIS APPEAL BY REVENUE IS ARISING OUT OF ORDER OF C IT(A)-VI, KOLKATA IN APPEAL NO. 1065/CIT(A)-VI/KOL/CIR-5/09-10 DATED 12.03.2010. A SSESSMENT WAS FRAMED BY ACIT, CIRCLE- 5, KOLKATA U/S. 154/254/251/143(3) OF THE INCOME-TA X ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2002-03 VIDE HIS ORDER DA TED 06.05.2009. 2. THE ONLY ISSUE IN THIS APPEAL OF REVENUE IS AGAI NST THE ORDER OF CIT(A) CANCELLING THE RECTIFICATION ORDER PASSED BY AO U/S. 154 OF THE AC T. FOR THIS, REVENUE HAS RAISED FOLLOWING TWO GROUNDS: 1. THAT THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON FACTS IN CANCELLING THE RECTIFICATION ORDER PASSED BY THE AO U/S. 154 AS THE ASSESSING O FFICER HAS FOLLOWED THE DIRECTION OF CIT(A) IN CALCULATING DEDUCTION U/S. 80HHC BY RECTI FYING THE EARLIER ORDER IN WHICH A MISTAKE APPARENT FROM THE RECORD WAS COMMITTED WH ILE GIVING APPEAL EFFECT TO THE SAID ORDER. 2. THAT THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON FACTS, AS RECTIFYING THE ORDER TO FOLLOW THE DIRECTION OF LD. CIT(A) FALLS WITHIN THE DEFINITION OF MISTAKE APPARENT FROM THE RECORD AND COULD NOT BE CONSIDERED AS CHANGE OF O PINION. 3. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ORIGI NAL ASSESSMENT WAS COMPLETED U/S. 143(3) OF THE ACT BY ACIT, CIRCLE-5, KOLKATA DATED 28.03.2005 IN WHICH DEDUCTION U/S. 80HHC OF THE ACT WAS THE SUBJECT MATTER. AGGRIEVED, AGAINST THE DIS ALLOWANCE OF DEDUCTION U/S. 80HHC OF THE 2 ITA NO.1242/K/2010 ESSEL MINING & INDUSTRIES LTD., AY:2002-03 ACT, ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO I N THE FIRST ROUND HAS DIRECTED THE AO TO RECOMPUTE THE DEDUCTION U/S. 80HHC OF THE ACT AND T HE RELEVANT DIRECTIONS READS AS UNDER: WITH THIS OBSERVATION, I DIRECT THE AO TO COMPUTE THE DEDUCTION U/S. 80HHC BY TAKING THE TOTAL TURNOVER (EXPORT AND DOMESTIC BOTH) OF IRON O RE UNIT SITUATED IN ORISSA. HE IS ALSO DIRECTED TO DETERMINE THE GROSS TOTAL INCOME AFTER SETTING OFF THE UNABSORBED BUSINESS LOSS AND UNABSORBED DEPRECIATION. THUS, THIS ISSUE IS D ECIDED PARTLY IN FAVOUR OF THE APPELLANT. 4. THE AO AT THE VERY FIRST INSTANCE WHILE GIVING A PPEAL EFFECT TO THE ORDER OF CIT(A) U/S. 251 OF THE ACT DETERMINED THE TOTAL INCOME BY COMPU TING THE DEDUCTION U/S. 80HHC OF THE ACT VIDE ORDER DATED 30.05.2006 AS UNDER: LESS: DEDUCTION U/S. 80HHC IS ALLOWED FOR THE IRO N ORE UNIT SITUATED IN ORISSA AS PER DIRECTION OF THE LD. CI T(A) ON THE BASIS OF FORM NO. 10CCAC FILED ALONG WITH THE RETU RN OF INCOME. RS.5,87,28,126/- SUBSEQUENTLY, THE AO ISSUED NOTICE U/S. 154 OF THE ACT AND ACCORDING TO HIM, THERE IS A MISTAKE IN COMPUTATION OF DEDUCTION U/S. 80HHC OF THE ACT. THE ASSESSEE REPLIED VIDE PETITION DATED 20.03.2009 STATING THAT THERE IS NO REQUIREMENT OF ANY RECTIFICATION U/S. 154 OF THE ACT AS THE DEDUCTION U/S. 80HHC OF THE ACT HAS RIGHTLY BEEN AL LOWED BY THE AO. THE AO WHILE GIVING APPEAL EFFECT TO THE ORDER OF CIT(A) ALLOWED DEDUCT ION U/S. 80HHC OF THE ACT AT RS.5,87,28,125/- AS AGAINST ORDER WITHDREW DEDUCTIO N U/S. 80HHC OF THE ACT AT RS.5,52,48,070/-. AGGRIEVED, ASSESSEE PREFERRED AP PEAL BEFORE CIT(A), WHO IN HIS APPELLATE ORDER ALLOWED THE CLAIM OF THE ASSESSEE BY OBSERVIN G AS UNDER: I HAVE GONE THROUGH THE SUBMISSION OF THE APPELLAN T AND ALSO THE ORDER OF THE AO. THE AO ON THE PLEA THAT THE DIRECTION OF THE CIT(A) COU LD NOT BE ALLOWED WHILE PASSING THE ORDER U/S 251, RECTIFIED THE ORDER U/S 154 AND COMP UTED THE DEDUCTION U/S 8OHHC. THE APPELLANT SUBMITTED THAT THE DEDUCTION U/S 8OHHC WA S CORRECTLY COMPUTED IN THE ORDER PASSED U/S 251 ON THE BASIS OF AUDIT REPORT GIVEN I N FORM NO. 10CCAC. THE A.O. IN THE ORDER UNDER APPEAL CONSIDERED THE TOTAL TURNOVER OF THE BUSINESS INCLUDING THE MISCELLANEOUS INCOME TO DETERMINE THE PROFIT ELIGIB LE FOR CALCULATION OF DEDUCTION U/S 80HHC. AS SEEN FROM THE RECORDS, THE AO COMPUTED TH E DEDUCTION ALLOWABLE U/S 80HHC BY ADOPTING THE FIGURES OF TURNOVER AND THE INCOME 90% OF WHICH WERE TO BE REDUCED FROM THE BUSINESS PROFIT, DIFFERENT FROM THE FIGURE S AS ACCEPTED BY HIS PREDECESSOR WHILE PASSING ORDER U/S 251, CANNOT BE TAKEN AS A MISTAKE APPARENT FROM RECORD. AS HELD BY THE SUPREME COURT IN THE CASE OF T.S. BALARAM, ITO VS. VOLCART BROS. 82, ITR 50 (SC) 1970 THE CHANGE OF OPINION OF THE AO BEING ON DEBATABLE POINT, THERE COULD NOT BE ANY SCOPE FOR PASSING AN ORDER OF RECTIFICATION U/S 154. THE SUPREME COURT HELD THAT MISTAKE FROM THE RECORD MUST BE AN OBVIOUS AND PATENT MISTAKE AN D NOT SOMETHING WHICH CAN BE ESTABLISHED BY A LONG DRAWN PROCESS OF REASONING ON POINTS ON WHICH THERE MAY BE CONCEIVABLY TWO OPINONS. THE A/R RELIED ON FURTHER JUDGMENT IN THE CASE OF CIT VS. ADYAR GATE HOTEL LTD. [2007-TIOL-408-HC-MAD-IT] AND CIT VS. INDIA NIPPON ELECTRICALS LTD. [2007-TIOL-374-HC-MAD-IT]. L HAVE GONE THROUGH THE JUDICIAL DECISIONS AND RELY ING ON THE SUPREME COURTS DECISION AND THE ABOVE REFERRED MADRAS HIGH COURT DECISION. L HOLD THE ORDER OF RECTIFICATION 3 ITA NO.1242/K/2010 ESSEL MINING & INDUSTRIES LTD., AY:2002-03 PASSED BY THE A.O. U/S 154 IS AGAINST THE LAW AND A CCORDINGLY IS CANCELLED. THESE GROUNDS OF APPEAL ARE ALLOWED. AND ALSO ON MERITS AS UNDER: THESE GROUNDS ARE DISPOSED OFF ON MERITS BECAUSE OF ACADEMIC INTEREST. THE AO IN HIS RECTIFICATION ORDER CNSIDERED THE OTHER INCOMES AG GREGATING TO RS. 1,91,10,721 ALONG WITH AMOUNTS OF SALES FOR TURNOVER. THE AFORESAID OTHER INCOMES COMPRISED OF UNCLAIMED BALANCES WRITTEN OFF, BAD DEBTS RECOVERED , INTEREST RECEIVED AND MISCELLANEOUS OTHER INCOMES. THE LD. A/R WAS ASKED TO PRODUCE THE DETAILS OF MISCELLANEOUS INCOMES AND THE SAME WAS EXAMINED. TA KING INTO CONSIDERATION THE DEDUCTION U/S 80HHC EXPLANATION (BAA) FROM THE TOT AL PROFIT OF THE MINING BUSINESS 90% OF CERTAIN SPECIFIED INCOMES WAS REQUIRED TO BE REDUCED. IN CLAUSE 1OF THE ABOVE REFERRED EXPLANATION (BAA) THE INCOMES 90% OF WHICH WAS TO BE REDUCED, ARE SPECIFIED. IT WAS ONLY THE INTEREST OF RS.27,92,354/- THAT COULD BE REDUCED WHICH WAS ALREADY DONE BY THE APPELLANT AS SEEN FROM THE CERTIFICATE U/S 10CC AC. EVEN ON MERITS THE RECTIFICATION DONE BY THE A.O. IS NOT AS PER LAW. AGGRIEVED, REVENUE IS IN APPEAL BEFORE US. 5. IT IS A FACT THAT THE AO WHILE GIVING APPEAL EFF ECT TO THE ORDER OF CIT(A) U/S. 251 OF THE ACT DATED 30.05.2006 ALLOWED DEDUCTION U/S. 80HHC O F THE ACT AND THAT DEDUCTION WAS ALLOWED ON THE BASIS OF FORM NO. 10CCAC AS WELL AS IN VIEW OF THE DIRECTION OF CIT(A). THE AO HAS TAKEN RECOURSE TO THE RECTIFICATION PROCEEDINGS AS HE WANTED TO COMPUTE THE TURNOVER AND COMPUTATION OF TURNOVER IS A HIGHLY DEBATABLE ISSUE AS THE ASSESSEE IN ORIGINAL ALLOWANCE I.E. GIVING APPEAL EFFECT TO THE ORDER OF CIT(A) HAS GIV EN HIS OPINION, WHICH HE CANNOT RECTIFY WHILE ACTING U/S. 154 OF THE ACT. ONCE THIS IS A POSITIO N, WE ARE OF THE VIEW THAT THE CIT(A) HAS RIGHTLY QUASHED THE RECTIFICATION PROCEEDINGS CARRI ED OUT BY THE AO U/S. 154 OF THE ACT. WE CONFIRM THE SAME. APPEAL OF REVENUE IS DISMISSED. 6. IN THE RESULT, APPEAL OF REVENUE IS DISMISSED. 7. ORDER IS PRONOUNCED IN THE OPEN COURT ON 19 TH DEC., 2013. SD/- SD/- . . . . ' '' ''# '#'# '# , $% , (ABRAHAM P. GEORGE) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 19TH DECEMBER, 2013 12 '3' 4 JD.(SR.P.S.) 4 ITA NO.1242/K/2010 ESSEL MINING & INDUSTRIES LTD., AY:2002-03 $0 5 . 6$ )7- COPY OF THE ORDER FORWARDED TO: 1 . ,- / APPELLANT ACIT, CIRCLE-5, KOLKATA 2 ./,- / RESPONDENT M/S. ESSEL MINING & INDUSTRIES LTD., 10, CAMAC STREET, KOLKATA-700 017. 3 . 0' ( )/ THE CIT(A), KOLKATA 4. 5. 0' / CIT KOLKATA <= .' / DR, KOLKATA BENCHES, KOLKATA / ./ TRUE COPY, $0'>/ BY ORDER, ' /ASSTT. REGISTRAR .