DCIT, Circle-1(1), Hyderabad V. M/s AP Industrial Infrastructure Corporation Ltd, Hyderabad

ITA 1334/HYD/2014

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7719 (ITAT-HYDERABAD)
• Duration Of Justice: 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-12-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2003-2004
• Appeal Filed On: 21-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D SUDHAKAR RAO
• Keywords: Depreciation
• Section: 263; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA.NO.1334/HYD/2014 ASSESSMENT YEAR 2003-2004 DCIT, CIRCLE 1(1) HYDERABAD. VS. M/S. A.P. INDUSTRIAL INFRASTRUCTURE CORPORATION LTD., HYDERABAD-29. PAN AABCA9029K (APPELLANT) (RESPONDENT) FOR REVENUE : MR. D. SUDHAKAR RAO FOR ASSESSEE : -NONE- DATE OF HEARING : 03.12.2014 DATE OF PRONOUNCEMENT : 29.12.2014 ORDER PER B. RAMAKOTAIAH, A.M. THIS IS A REVENUE APPEAL AGAINST THE ORDER OF LD. CIT(A)-II, HYDERABAD DATED 07.05.2014. REVENUE HAS RAISED A GROUND STATING THAT LD. CIT(A) HAS ERRED IN DELETIN G DISALLOWANCES ON ACCOUNT OF DEPRECIATION AND SEC. 4 0(A)(IA) ON THE REASON THAT THE ORDER UNDER SECTION 263 PASSED BY LD. CIT WAS SET ASIDE BY ITAT AND SO THE CONSEQUENTIAL ORDE R DOES NOT SURVIVE. 2. EVEN THOUGH NOTICE WAS SENT TO ASSESSEE, ASSESS EE WAS NOT REPRESENTED EITHER IN PERSON OR THROUGH ANY AUTHORISED REPRESENTATIVE. THE CASE WAS DECIDED EX- PARTE AFTER HEARING THE LEARNED CIT(DR). 2 ITA.NO.1334/HYD/2014 M/S. AP INDUSTRIAL INFRASTRUCTURE CORPN. LTD., HYDE RABAD 3. BRIEFLY STATED, ASSESSEE IS A PUBLIC SECTOR UNDERTAKING IN THE BUSINESS OF DEVELOPMENT OF INDUS TRIAL INFRASTRUCTURE. ORIGINALLY, THE SCRUTINY ASSESSMENT WAS COMPLETED ON 31.12.2009. SUBSEQUENTLY, LD. CIT UNDE R SECTION 263 DATED 19.03.2012 SET ASIDE THE ASSESSMENT WITH A DIRECTION TO EXAMINE THE ALLOWANCE OF DEPRECIATION WHICH WAS ALREADY CLAIMED AS EXEMPTION, AS APPLICATION OF INC OME UNDER THE PROVISIONS OF SECTION 11. HOWEVER, LD. CIT ALSO DIRECTED THAT AFTER EXAMINING, ASSESSEE SHOULD BE ALLOWED EX EMPTION UNDER SECTION 11 FOLLOWING THE ORDERS OF ITAT. IN THE CONSEQUENTIAL PROCEEDINGS, A.O. DISALLOWED DEPRECIA TION TO THE EXTENT OF RS.2,81,02,656 AND ALSO MADE A FRESH ISSU E OF SECTION 40(A)(IA) OF RS.10,96,18,725, WHICH WAS NOT SUBJECT MATTER OF ORDER UNDER SECTION 263. ITAT VIDE ITS ORDER IN ITA.NO.811/HYD/2012 DATED 18.09.2013 HAD QUASHED TH E ORDERS OF LD. CIT UNDER SECTION 263 HOLDING THAT TH E ORDER OF AO WAS NOT ERRONEOUS AND THEREFORE, LD. CIT DOES NO T HAVE JURISDICTION TO REVISE ORDER UNDER 263. CONSEQUENT TO THAT, LD. CIT(A) IN THESE APPEAL PROCEEDINGS HELD THAT THE IM PUGNED ORDER BEING CONSEQUENTIAL IN NATURE, DOES NOT EXIST . HE ALSO FURTHER OBSERVED THAT A.O. TRAVELLED BEYOND THE JUR ISDICTION OF ORDER UNDER 263, BY MAKING DISALLOWANCE UNDER SECTI ON 40(A)(IA) WHICH IS NOT SUBJECT MATTER OF ORDER UNDE R 263. HE RELIED ON VARIOUS PRECEDENTS AS QUOTED IN PARA 3.1 WHICH ARE AS UNDER : (I) CIT VS. HH SRI RANA VARMA (1993) 203 ITR 398 (KARNATAKA) (II) CIT VS. HINDUSTAN COCONUT OIL MILL (2002) 255 ITR 428 (CAL.) (III) SURENDRA OVERSEAS VS. CIT (1979) 120 ITR 872 (CAL.) 3 ITA.NO.1334/HYD/2014 M/S. AP INDUSTRIAL INFRASTRUCTURE CORPN. LTD., HYDE RABAD (IV) CIT VS. D.N. DOSANI (2006) 280 ITR 275 (GUJ.) THEREFORE, THE LD. CIT(A) ALLOWED APPEAL OF ASSESSE E. REVENUE IS AGGRIEVED. 4. AFTER CONSIDERING THE FACTS OF THE CASE AND VAR IOUS DOCUMENTS, AND THE ARGUMENTS OF LEARNED CIT D.R. WE UPHOLD THE ORDER OF LD. CIT(A). AS SEEN FROM THE ORDER UND ER SECTION 263, WHILE DIRECTING THE A.O. TO EXAMINE THE ALLOWA NCE OF DEPRECIATION, LD.CIT ALSO DIRECTED THE A.O. TO GRAN T EXEMPTION UNDER SECTION 11, AS THE ASSESSEE IS ENJOYING THE B ENEFIT OF REGISTRATION UNDER SECTION 12A. HOWEVER, A.O. DISAL LOWED CERTAIN AMOUNTS AND TREATED THEM AS INCOME. WITHOUT ANY DISCUSSION, HE RESTRICTED THE EXEMPTION UNDER SECTI ON 11 TO THE ORIGINAL INCOME DETERMINED IGNORING THE ADDITIONS M ADE TO THE COMPUTATION OF INCOME. THIS ACTION OF A.O. ITSELF C ANNOT BE SUPPORTED BY ANY MEANS. NOT ONLY THAT, A.O. ALSO TR AVELLED BEYOND THE ISSUE ON WHICH ORDER WAS SET ASIDE BY MA KING DISALLOWANCE UNDER SECTION 40(A)(IA) TO AN EXTENT O F RS.10.96 CRORES, THEREBY, UNNECESSARILY RAISING DEMAND IN TH IS CASE. BE THAT AS IT MAY, SINCE THE ORDER UNDER 263 PASSED BY CIT WAS SET ASIDE BY ITAT, THE CONSEQUENTIAL PROCEEDING DOE S NOT SURVIVE. THERE IS NO MERIT IN REVENUE GROUNDS AND A CCORDINGLY, THEY ARE DISMISSED. 5. IN THE RESULT, APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29.12.2014. SD/- SD/- (SAKTIJIT DEY) (B.RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED 29 TH DECEMBER, 2014 VBP/- 4 ITA.NO.1334/HYD/2014 M/S. AP INDUSTRIAL INFRASTRUCTURE CORPN. LTD., HYDE RABAD COPY TO 1. DCIT, CIRCLE 1(1), 4 TH FLOOR, AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD. 2. M/S. AP INDUSTRIAL INFRASTRUCTURE CORPORATION LTD., H.NO.5-9-58/B, 6 TH FLOOR, PARISRAM BHAVAN, FATEH MAIDAN ROAD, HYDERABAD 29. 3. CIT(A)-II, HYDERABAD 4. CIT-I, HYDERABAD 5. D.R. ITAT B BENCH, HYDERABAD.