DCIT 7(2)(1), MUMBAI V. MAHINDRA GESCO DEVELOPES LTF, MUMBAI

ITA 13/MUM/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6811 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2003-2004
• Appeal Filed On: 04-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T A KHAN
• Assessee Lawyers: PRASAD BAPAT
• Keywords: Rectification of order
• Section: 115JB; 154

Judgement Text

, INCOME-TAX APPELLATE TRIBUNAL -BBENCH MUMBAI , , BEFORE S/SH.RAJENDRA,ACCOUNTANT MEMBER AND AMARJIT SINGH,JUDICIAL MEMBER ./I.T.A./13/MUM/2016, /ASSESSMENT YEAR: 2003-04 ACIT-7(2)(1) ROOM NO.573, 5TH FLOOR, AAYAKAR BHAVAN M.K. ROAD, MUMBAI-400 020. VS. MAHINDRA GESCO DEVELOPERS LTD. (NOW KNOWN AS MAHINDRA LIFESPACE DEVELOPERS LTD.) MAHINDRA TOWERS, 5TH FLOOR, ROAD NO.13, WORLI, MUMBAI-400 018. PAN:AAACG 8904 C ( /APPELLANT ) ( / RESPONDENT) / REVENUE BY: SHRI T.A. KHAN-CIT-DR /ASSESSEE BY: SHRI PRASAD BAPAT / DATE OF HEARING: 01/06/2018 / DATE OF PRONOUNCEMENT: 01/06/2018 ,1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) , - PER RAJENDRA, AM - CHALLENGING THE ORDER DATED 19/10/2015 OF THE CIT(A )-13, MUMBAI,THE ASSESSING OFFICER (AO)HAS FILED THE PRESENT APPEAL.ASSESSEE-COMPANY F ILED ITS RETURN OF INCOME ON 28/11/2003, DECLARING TOTAL LOSS OF RS.3,12,20,237/-.THE AO COMPLETED THE ASSESSMEN T ON 28/02/2005, DETERMINING THE INCOME OF THE ASSESSEE AT RS.27,97, 50,140/-. EFFECTIVE GROUND OF APPEAL IS ABOUT DELETING OF PEN ALTY LEVIED BY THE AO,U/S. 271(1)(C)OF THE ACT. BRIEF FACTS: 2. IN THIS MATTER,ASSESSMENT U/S.143(3) OF THE ACT WAS COMPLETED IN THIS CASE ON 28.02. 2005.WHILE COMPUTING THE INCOME UNDER NORMAL PROVIS IONS OF THE ACT,THE AO DISALLOWED PROVISION ON ACCOUNT OF IMPAIRMENT OF ASSETS AND AL SO PROVISION FOR DIMINUTION IN VALUE OF INVESTMENT APART FROM VARIOUS OTHER ADDITIONS/DISAL LOWANCE AND COMPUTED THE TOTAL INCOME AT .27,49,50,140/-.HE DID NOT COMPUTE THE BOOK PROFITS U/S.115JB OF THE ACT,WHILE COMPLETING THE ASSESSMENT U/S.143(3)OF THE ACT ON 28.02.2005. THE ASSESSEE PREFERRED APPEAL BEFORE THE LD.CIT(A) AND ALSO THE TRIBUNAL.THE TRIBUNAL,BY ITS ORDER DATED 30.06.2011,PARTLY ALLOWED THE APPEAL OF THE ASSESSEE AND REVENUES APPEALS WE RE DISMISSED IN ITA.S/4291/MUM/2007, 5658/ MUM/2007 & 4129/MUM/2007,DATED 30. 06.2011. SUBSEQUENTLY,ON 06.01.2012 AN ORDER WAS PASSED BY T HE AO FOR GIVING EFFECT TO THE ORDER TRIBUNAL,WHEREIN HE DETERMINED THE INCOME OF THE AS SESSEE AT RS. NIL AS PER THE NORMAL PROVISIONS OF THE ACT.HE,IN HIS ORDER,COMPUTED AND ACCEPTED THE BOOK PROFITS U/S. 115JB AT ITA NO.13/M/16-MAHINDRA GESCO DEVELOPERS LTD. (NOW MAHINDRA LIFE SPACE DEVELOPERS LTD.) 2 .5,48,71,162/-.LATER ON,HE ISSUED A RECTIFICATION-N OTICE TO THE ASSESSEE.THE ASSESSEE OBJECTED TO THE PROPOSAL OF THE AO STATING THAT SUCH AN ADJU STMENT COULD NOT BE MADE U/S. 154 OF THE ACT BY RECTIFYING THE ORDER GIVING EFFECT TO THE TR IBUNAL ORDER.THE ASSESSEE CONTENDED THAT THERE IS NO MISTAKE APPARENT ON RECORD IN THE ORDER PASSED GIVING EFFECT TO THE TRIBUNAL ORDER SINCE THIS ISSUE IS NOT EMANATING FROM THE TRIBUNAL ORDER, AND THE CONSEQUENTIAL ORDER PASSED GIVING EFFECT TO THE TRIBUNAL IS IN ACCORDANCE WITH LAW AND THERE IS NO MISTAKE CREPT IN. HOWEVER, THE AO PASSED ORDER U/S.154 ON 14.03.2013 RECTIFYING THE ORDER PASSED GIVING EFFECT TO THE TRIBUNAL ORDER BY ADDING BACK THE PRO VISION FOR DIMINUTION IN VALUE OF ASSETS AND PROVISION FOR DIMINUTION IN VALUE OF INVESTMENTS AN D COMPUTED THE BOOK PROFITS AT .21,03, 86,222/-OBSERVING THAT THERE IS A MISTAKE APPARENT ON RECORD IN PASSING THE ORDER GIVING EFFECT TO THE TRIBUNAL ORDER AS PROVISIONS OF SECTION 115J B WERE AMENDED BY FINANCE ACT 2008 W.E.F 01.04.2001 REQUIRING ADDITION OF THE AMOUNT O R AMOUNTS SET ASIDE AS PROVISION FOR DIMINUTION IN THE VALUE OF ANY ASSET TO THE BOOK PR OFITS. ASSESSEE PREFERRED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY (FAA)AND HE QUASHED THE O RDER PASSED BY THE AO,FOLLOWING THE DECISION OF THE TRIBUNAL IN THE CASE OF M/S WEIZMAN N LIMITED ITA/768/MUM/2012, 742/MUM/2012 AND 770/MUM/2012 DATED 31.10.2013,WHER EIN AN IDENTICAL ISSUE WAS DECIDED BY THE TRIBUNAL. IN THE MEANWHILE,THE AO INITIATED PENALTY PROCEEDIN GS INVOKING THE PROVISIONS OF SECTION 271(1)(C)OF THE ACT.THE FAA DELETED THE PENALTY. 3 .BEFORE US,THE DEPARTMENTAL REPRESENTATIVE(DR)STATE D THAT THERE WAS NO JUSTIFICATION IN DELETING THE PENALTY LEVIED BY THE AO,THAT ADMISSIO N OF AN APPEAL BY THE HONBLE HIGH COURT COULD NOT BE BASIS FOR DELETING PENALTY,THAT IT WAS A CASE OF FURNISHING INACCURATE PARTICULARS. HE RELIED UPON THE CASES OF PRAKASH S VYAS(272 CTR 353),EMBLEM FASHION WEAR EXPORTS (P.)LTD.(83 TAXMANN.COM 28)AND SHREE GOPAL HOUSING & PLANTATION CORPORATION, MUMBAI( IT APPEAL NO. 701 OF 2015 OF THE HONBLE MUMBAI HIG H COURT). THE AUTHORISED REPRESENTATIVE(AR)STATED THAT THE TR IBUNAL HAD HELD THAT THE ORDER PASSED BY THE AO UNDER SECTION 154 OF THE ACT WAS BAD IN LAW. HE ALSO REFERRED TO THE CIRCULAR NO.25 OF 2015,DTD. 31.12.2015.HE STATED THAT THE AO WAS NOT JUSTIFIED IN LEVYING PENALTY,THAT THE FAA HAD RIGHTLY DELETED THE PENALTY. 4.WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE MATERIAL BEFORE US.WE FIND THAT ORIGINAL ORDER WAS COMPLETED,U/S.143(3)OF THE ACT,T HAT THE MATTER TRAVELLED UP TO THE TRIBUNAL AND IT DISMISSED THE APPEAL FILED BY THE AO AND PAR TLY ALLOWED THE APPEAL OF THE ASSESSEE,AS STATED EARLIER.WHILE GIVING EFFECT TO THE ORDER OF THE TRIBUNAL,THE AO FINALISED THE INCOME OF ITA NO.13/M/16-MAHINDRA GESCO DEVELOPERS LTD. (NOW MAHINDRA LIFE SPACE DEVELOPERS LTD.) 3 THE ASSESSEE AT RS.5.48 CRORES, AS PER THE PROVISIO NS OF SECTION 115JB OF THE ACT.LATER ON THE AO ISSUED A NOTICE U/S.154 OF THE ACT AND DETERMINE D THE INCOME OF THE ASSESSEE AT RS.21.03 CRORES AS PER THE PROVISIONS OF SECTION 115JB OF TH E ACT.THE TRIBUNAL,ON 21/03/2018, DISMISSING THE APPEAL,FILED BY THE AO,HAD HELD THAT HE WAS NOT AUTHORISED TO MAKE ADDITION OF MAT INCOME U/S.154 OF THE ACT,WHILE GIVING APPEAL E FFECT TO ORDER OF THE TRIBUNAL.AS THE ORIGINAL RECTIFICATION ORDER PASSED BY THE AO HAS B EEN QUASHED BY THE TRIBUNAL,SO, THE PENALTY ORDER WOULD NOT SURVIVE.OTHERWISE ALSO,THE PENALTY IS NOT LEVIABLE IN MAT MATTERS FOR THE YEAR UNDER CONSIDERATION IN LIGHT OF THE CIRCULAR N O.25 OF 2015(SUPRA),ISSUED BY THE CBDT. SO,WE DECIDE THE EFFECTIVE GROUND OF APPEAL AGAINST THE AO. AS A RESULT,AP PEAL FILED BY THE AO STANDS DISMISSED. !'#$%&' . ORDER PRONOUNCED IN THE OPEN COURT ON 1 ST JUNE,2018. $( ) % 1 , 2018 SD/- SD/- ( / AMARJIT SINGH ) ( / RAJENDRA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; /DATED : 01 .0 6 .2018. JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR B BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.