DCIT CEN CIR 8(3) ERSTWHILE DCIT CC 46, MUMBAI V. JSW STEEL LTD, MUMBAI

ITA 1338/MUM/2015

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 9203 (ITAT-MUMBAI)
• Duration Of Justice: 6 year(s) 5 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: J
• Assessment Year: 2006-2007
• Appeal Filed On: 05-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Retrospective amendment; Capital receipt; Revised return; Reassessment proceedings; Capital expenditure
• Section: 143(3); 153A; 234B; 14A; 115JB; 153C; 12; 11; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA (AM) & SHRI AMARJIT SINGH (JM) ITA NO.875/MUM/2015 (ASSESSMENT YEAR: 2006-07) JSW STEEL LTD. JSW CENTRE, BKC COMPLEX MUMBAI-400 051 VS. DCIT, CC-46 6 TH FLOOR, AAYKAR BHAWAN M.K.ROAD, MUMBAI-400 020 PAN/GIR NO. AAACJ4323N (ASSESSEE) : (REVENUE) & ITA NO.1338/MUM/2015 (ASSESSMENT YEAR: 2006-07) DCIT, CC-8(3) [ERSTWHILE DCIT,CC-46] ROOM NO.659, 6 TH FLOOR, AAYKAR BHAWAN M.K.ROAD, MUMBAI-400 020 VS. JSW STEEL LTD. JSW CENTRE, BKC COMPLEX MUMBAI-400 051 PAN/GIR NO. AAACJ4323N (REVENUE) : (ASSESSEE) ASSESSEE BY : SHRI GAURAV KABRA REVENUE BY : SHRI RAJESH KUMAR DATE OF HEARING : 01.06.2021 DATE OF PRONOUNCEMENT : 10 .08.2021 O R D E R PER SHAMIM YAHYA, A. M.: THESE CROSS APPEALS BY THE REVENUE AND THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS)-47, MUMBAI (LD.CIT(A) FOR SHORT) DATED 01.12.2014 AND PERTAIN TO THE ASSE SSMENT YEAR (A.Y.) 2006-07. 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE REA D AS UNDER: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE DCIT IN NOT ALLOWING T HE EXCLUSION OF THE SALES TAX SUBSIDY OF RS.36,15,49,828/- FROM THE BOOK PROFITS FOR THE PURPOSE OF MAT COMPUTATION. 2 JSW STEEL LTD. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE CIT(A) ERRED IN HOLDING THAT THE APPELLANT WAS NOT PERMITTED TO RAI SE A FRESH CLAIMING THE SEARCH ASSESSMENT PROCEEDINGS. 3. BRIEF FACTS OF THE ISSUES ARE THAT THE AFORESA ID CLAIM OF EXCLUSION OF THE SALES TAX SUBSIDY OF RS. 36,15,49,828/- FROM THE BOOK PROFITS FOR THE PURPOSE OF MAT COMPUTATION WAS NOT MADE BY THE ASSESSEE UNDER ORIG INAL ASSESSMENT U/S143(3) OF THE I.T.ACT. DURING ASSESSMENT PROCEEDINGS U/S.153A OF THE I.T.ACT ASSESSEE DID NOT MAKE ANY SUCH CLAIM IN THE RETURN FILED. HOWEVER, T HE ASSESSEE CLAIMED BEFORE THE LD.CIT(A) THAT THIS CLAIM WAS MADE TO THE AO DURING THE COURSE OF ASSESSMENT, WHICH IS NOT CONSIDERED BY THE AO IN HIS ASSESSMENT ORDER. LD.CIT(A) DID NOT FIND AFORESAID CLAIM MAINTAINABLE. HE WAS OF THE OPINION THAT FIRSTLY THE CLAIM HAS NOT BEEN MADE BY WAY OF REVISED RETURN, HENCE HONBLE SUPREM E COURT DECISION IN THE CASE OF GOETZE(I) LTD. 284 ITR 323 IS APPLICABLE. FURTHERMO RE, LD. CIT(A) FOUND THAT AS HELD BY HONBLE RAJASTHAN HIGH COURT IN THE CASE OF JAI STEEL INDIA VS ACIT 259 CTR 281 THAT THE PROVISIONS OF SECTIONS 153A TO 153C CANNOT BE INTERPRETED TO BE A FURTHER INNINGS FOR THE AO AND/OR ASSESSEE. HENCE, HE FOUND THAT THE CLAIM WAS NOT MAINTAINABLE HENCE HE DISMISSED THE CLAIM. THE ORDE R OF LD.CIT(A) IN THIS REGARD IS AS UNDER:- I FIND THAT THE APPELLANT HAD NEVER MADE CLAIM OF R EDUCTION OF SALES TAX INCENTIVE FROM BOOK PROFIT DURING ORIGINAL ASSESSME NT OR APPELLATE PROCEEDINGS. THE CLAIM HAS BEN RAISED FOR THE FIRST TIME DURING THE REASSESSMENT PROCEEDINGS U/S 153A. IN THE CASE OF GOETZE(I) LTD VS CIT 284 ITR 323(SC) , IT HAS BEEN HELD BY HON'BLE SUPREME COURT THAT CLAIMS OF DEDUCTION BEFORE AO CAN BE ALLOWED TO BE MADE BY FILING A REVISED RETURN. THE APPELLANT HAD OPPORTUN ITY TO DO SO DURING THE ORIGINAL ASSESSMENT PROCEEDINGS. EVEN OTHERWISE, A LEGAL G ROUND COULD HAVE BEEN RAISED BEFORE APPELLATE AUTHORITIES, WHICH THE APPELLANT F AILED TO EXERCISE AND ASSESSMENT PROCEEDINGS CAME TO BE FINAL. HON'BLE RAJASTHAN HIG H COURT HAS HELD IN THE CASE OF JAI STEEL INDIA VS ACIT 259 CTR 281 THAT THE PROVIS IONS OF SECTIONS 153A TO 153C CANNOT BE INTERPRETED TO BE A FURTHER INNINGS FOR T HE AO AND/OR ASSESSEE BEYOND PROVISIONS OF SECTIONS 139 (RETURN OF INCOME), 139( 5) (REVISED RETURN OF INCOME), 147 (INCOME ESCAPING ASSESSMENT) AND 263 (REVISION OF O RDERS) OF THE ACT THE SEARCH ASSESSMENT PROCEEDINGS IN CASES WHERE ORIGINAL AS SESSMENTS HAVE ACHIEVED FINALITY CANNOT BE LEFT OPEN TO ASSESSEE TO TAKE ADVANTAGE O F RAISING FRESH CLAIMS WHICH WORLD NOT HAVE BEEN AVAILABLE TO IT HAD THERE BEEN NO SEA RCH ACTION. THIS GROUND OF APPEAL IS THEREFORE DISMISSED. 4. AGAINST THE ABOVE ORDER, THE ASSESSEE IS IN APPE AL BEFORE US. 3 JSW STEEL LTD. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED TH E RECORD. LD. COUNSEL OF THE ASSESSEE POINTED OUT THAT ASSESSEE HAS ALSO RAISED AN ADDITIONAL GROUNDS READ AS UNDER:- 1 ) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WEL L AS IN LAW, THE LEARNED ASSESSING OFFICER HAS ERRED IN MAKING THE ADDITIONS IN -ASSESSMENT ORDER PASSED U/S. 143(3) R.W.S 153A OF THE INCOME TAX ACT, 1961, WHIC H IS NOT AN ABATED ASSESSMENT, WITHOUT ANY INCRIMINATING WERE FOUND DURING THE COU RSE OF SEARCH. APPELLANT SUBMITS THAT THIS GROUND WAS NOT RAISED B EFORE THE LD. COMMISSIONER OF INCOME TAX (APPEAL), BUT SINCE THE ABOVE GROUND IS PURELY LEGAL IN NATURE HENCE APPELLANT IS ENTITLE TO RAISE THE SAME FIRST TIME B EFORE THE HON'BLE TRIBUNAL AS HELD BY THE SUPREME COURT IN CASE OF NATIONAL THERMAL POWER CO. LTD. VS. CIT(229 ITR 383). 6. REFERRING TO THE ABOVE, LD. COUNSEL OF THE ASS ESSEE CONTENDED THAT THIS DISALLOWANCE IS NOT PERMISSIBLE AS THIS WAS NOT AN ABATED ASSESSMENT AND NO INCRIMINATING MATERIAL WAS FOUND ON THIS ISSUE. FU RTHERMORE, HE SUBMITTED THAT ON MERITS SIMILAR ISSUE WAS DECIDED BY THE ITAT IN FAV OUR OF THE ASSESSEE IN ASSESSEES OWN CASE FOR AY 2006-07 IN THE COURSE OF APPEAL AGA INST THE REGULAR ASSESSMENT. 7. PER CONTRA LD. DR SUBMITTED THAT THERE IS NO I SSUE OF ANY INCRIMINATING MATERIAL ON THIS ISSUE AS THIS IS NOT SOMETHING WHICH THE AO H AS ADDED. HE SUBMITTED THAT ASSESSEE HAS DULY ADDED SALES TAX SUBSIDY OF RS. 36 ,15,49,828/- IN THE PROFIT AND LOSS ACCOUNT AND IT HAS BEEN FORMED PART OF BOOK PROFIT. HE SUBMITTED THAT AS PER MANDATE SECTION 115JB, THE ASSESSEE HAS CORRECTLY NOT DEDUC TED THE SAME FROM BOOK PROFIT. NOW IN THE COURSE OF ASSESSMENT U/S 153A, THE ASSES SEE IS MAKING A CLAIM THAT ALSO WITHOUT ANY REVISED RETURN. FURTHERMORE, HE SUBMITT ED THAT SINCE IT IS NON ABATED ASSESSMENT, ASSESEE IS NOT ENTITLED TO RAISE A FRES H CLAIM IN TERMS OF HONBLE RAJASTHAN HIGH COURT DECISION CITED ABOVE. 8. UPON CAREFUL CONSIDERATION, WE NOTE THAT THIS ISSUE OF CLAIM OF THE ASSESSEE THAT THE SALES TAX SUBSIDY BEING A CAPITAL RECEIPT SHO ULD BE REDUCED FROM BOOK PROFIT COMPUTATION U/S 115JB WAS SUBJECT MATTER OF ASSESSE ES APPEAL WITH ITAT IN THE COURSE OF REGULAR ASSESSMENT FOR AY 2006-07. THE AS SESSEE HAD RAISED THIS ISSUE BY WAY OF CO AND ITAT HAS DULY DECIDED THIS ISSUE IN F AVOUR OF ASSESSEE. HOWEVER, THE 4 JSW STEEL LTD. PRESENT CASE BEFORE US IS ASSESSMENT U/S 153A OF T HE ACT PURSUANT TO SEARCH AND ASSESEE IS HIMSELF CLAIMING THAT THIS IS A CASE OF NON ABATED ASSESSMENT. IT IS NOTED THAT ASSESSEE HAS NOT MADE ANY SUCH CLAIM IN THE RETURN FILED PURSUANT TO NOTICE U/S 153A OF THE ACT. IT HAS ALSO NOT FILED ANY REVISED RETUR N IN THIS REGARD. THE CLAIM WAS REJECTED BY LD.CIT(A) ON THE TOUCHSTONE OF HONBLE RAJASTHAN HIGH COURT DECISION CITED ABOVE THAT IN CASE OF NON ABATED ASSESSMENT F RESH CLAIM CANNOT BE ALLOWED. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD.CIT(A) . HENCE, WE UPHOLD THE SAME. 9. THE GROUNDS OF APPEAL RAISED BY THE REVENUE REA D AS UNDER: 1. 'WHETHER IN THE FACTS AND CIRCUMSTANCES OF T HE CASE AND IN LAW, THE LD. CIT(A) IS JUSTIFIED IN DIRECTING THE ASSESSING OFFICER TO DEL ETE THE ADDITIONS ON THE ISSUES ON WHICH RELIEF HAS ALREADY BEEN GRANTED BY CIT(A) BAN GALORE IN ORIGINAL APPEAL PROCEEDINGS.' 2. 'WHETHER IN THE FACTS AND CIRCUMSTANCES OF T HE CASE AND IN LAW, THE LD. CIT(A) IS JUSTIFIED IN ALLOWING DEPRECIATION TO THE ASSESSEE COMPANY ON THE LOSS INCURRED ON CANCELLATION OF FOREIGN CURRENCY FORWARD CONTRACTS. ' 3. 'WHETHER IN THE FACTS AND CIRCUMSTANCES OF T HE CASE AND IN LAW, THE LD. CIT(A) IS JUSTIFIED IN ALLOWING CONSEQUENTIAL DEPRECIATION OF RS. 4,47,62,874/- IN RESPECT OF LOSS OF RS. 39,78,92,211 /- INCURRED DURING FY 2004-05 O N CANCELLATION OF FORWARD CONTRACT CONSIDERED AS CAPITAL EXPENDITURE AS PER C IT(A)'S ORDER 4. 'WHETHER IN THE FACTS AND CIRCUMSTANCES OF T HE CASE AND IN LAW THE LD. CIT(A) IS JUSTIFIED IN DIRECTING THE AO TO CONSIDER THE INCRE ASED WRITTEN DOWN VALUE OF THE ASSETS RECEIVED FROM THE MERGED COMPANIES THEREBY ALLOWING THE DEPRECIATION OF RS. 6,81,27,607/-.' 5. 'WHETHER IN THE FACTS AND CIRCUMSTANCES OF T HE CASE AND IN LAW, THE LD. CIT(A) IS JUSTIFIED IN DIRECTING THE AO TO TREAT THE SALES TA X INCENTIVE / CONCESSION OF RS. 36,15,49,828/- AS CAPITAL RECEIPT.' 6. 'WHETHER IN FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A) IS JUSTIFIED IN DIRECTING THE AO TO TREAT THE SALES TA X INCENTIVE / CONCESSION OF RS. 36,15,49,828/- AS CAPITAL RECEIPT.' 7. 'WHETHER IN THE FACTS AND CIRCUMSTANCES OF T HE CASE AND IN LAW, THE LD. CIT(A) IS JUSTIFIED IN DELETING THE ADDITION MADE BY THE ASSE SSING OFFICER U/S. 14A FOR THE PURPOSE OF COMPUTING BOOK PROFIT U/S. 115JB OF THE ACT' 8. 'WHETHER IN THE FACTS AND CIRCUMSTANCES OF T HE CASE AND IN LAW, THE LD. CIT(A) IS JUSTIFIED IN DIRECTING THE ASSESSING OFFICER TO RE- COMPUTE THE BOOK PROFIT U/S. 115JB OF THE ACT BY REDUCING THE AMOUNT TRANSFERRED TO DE BENTURE REDEMPTION RESERVE.' 5 JSW STEEL LTD. 9. 'WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CJT(A) IS JUSTIFIED IN DIRECTING THE ASSESSING OFFICER TO RE-COMPUTE THE INTEREST U/S. 234B CASTED ON THE ASSESSEE COMPANY DUE TO RETROSPECTIVE AMENDMENT RELYING ON THE DECISION OF THE HON'BLE ITAT, MUMBAI IN THE CASE OF JSW ENERGY LTD. FOR AY 2006- 07 IGNORING THE FACT THAT THE DEPARTMENT HAS NOT AC CEPTED THE DECISION AND FILED APPEAL WITH HON'BLE HIGH COURT ON THIS ISSUE WHICH IS PEND ING.' 10. 'WHETHER IN THE FACTS AND CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LD. CIT(A) IS JUSTIFIED IN DIRECTING THE ASSESSING OFFICER TO RE- COMPUTE INTEREST U/S. 234C ON THE BASIS OF RETURNED INCOME INSTEAD OF THE INCOME DECL ARED IN THE RETURN OF INCOME FILED IN RESPONSE TO NOTICE U/S. 153A RELYING ON THE DECI SION OF HON'BLE ITAT, MUMBAI IN THE CASE OF JSW ENERGY LTD. FOR AY 2006-07 IGNORING THE FACT THAT THE DEPARTMENT HAS NOT ACCEPTED THE DECISION AND FILED APPEAL WITH HON 'BLE HIGH COURT ON THIS ISSUE WHICH IS PENDING.' 10. AT THE OUTSET, ON THIS ISSUE LD. COUNSEL OF T HE ASSESSEE SUBMITTED THAT ALL THE ISSUES RAISED ARE COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF ITAT IN THE APPEAL AGAINST CIT(A) ORDER IN ORIGINAL PROCEEDINGS U/S.143(3). HE SUBMITTED THAT LD.CIT(A) HAS FOLLOWED EARLIER APPELLATE ORDER, WH ICH HAS BEEN DULY APPROVED BY THE ITAT. 11. ON CAREFUL CONSIDERATION, WE NOTE THAT THE AO HAS A SPECIFICALLY MADE ONLY ONE ADDITION IN THE COURSE OF PRESENT ASSESSMENT, WHICH RELATES TO COMPUTATION OF BOOK PROFIT WHICH READS AS UNDER:- ONE OF THE ADJUSTMENTS TO BE MADE WHILE COMPUTING THE BOOK PROFIT U/S. 115JB IS TO INCREASE THE NET PROFIT AS PER P & L A/C. BY THE AM OUNT(S) OF EXPENDITURE RELATABLE TO ANY INCOME TO WHICH [SEC 10 (OTHER THAN PROVISIONS CONTAINED IN CLAUSE (38 THEREOF) OR SECTION 11 OR SECTION 12 APPLY]. IT IS OBSERVED THA T WHILE COMPUTING THE TOTAL INCOME UNDER THE NORMAL PROVISIONS OF THE ACT, ASSESSEE HA S CONSIDERED EXPENDITURE U/S. 14A AT RS.10,06,722/- AS RELATABLE TO EXEMPT DIVIDEND I NCOME. HOWEVER, WHILE COMPUTING THE BOOK PROFIT U/S. 115JB, THE SAME EXPENDITURE IS NOT ADDED BACK TO THE BOOK PROFIT. ACCORDINGLY, WHILE WORKING OUT BOOK PROFIT U/S. 115 JB, ADJUSTMENT IN RESPECT OF EXPENDITURE U/S. 14AOFRS, 10,06, 722/- IS ALSO BEIN G MADE. 12. FURTHER, WE NOTE THAT HE HAS REPEATED THE AD DITIONS MADE IN ORIGINAL ASSESSMENT BY OBSERVING THAT THE RELIEF ALLOWED BY CIT(A) ON T HIS ISSUE IN SUBJECT MATTER OF APPEAL BEFORE ITAT AND HENCE, HE IS RETAINING THE S AME. LD.CIT(A) HAS GRANTED THE 6 JSW STEEL LTD. RELIEF ON ALL THOSE ISSUES, ON WHICH CIT(A) HAS GR ANTED RELIEF IN ORIGINAL ASSESSMENT ORDER. HE HAS HELD THAT HE IS RESTORING ALL THE RE LIEFS GRANTED BY THE CIT(A). ON THIS ISSUE OF 14A DISALLOWANCE, LD.CIT(A) ADJUDICATED TH IS ISSUE BY HOLDING THAT NO INCRIMINATING MATERIAL WAS FOUND ON THIS ISSUE DURI NG SEARCH AND HE HAS FOLLOWED JURISDICTION HIGH COURT DECISION IN THE CASE OF CIT VS MURLI AGRO PRODUCTS IN ITA 36 OF 2009 VIDE ORDER DATED 29/10/2010 AND SPECIAL BE NCH OF ITAT IN THE CASE OF ALL CARGO GLOBAL LOGISTICS 137 ITD 287. 13. WE NOTE THAT THE ITAT HAS DULY GRANTED RELIEF ON THE ISSUES, WHICH WERE RAISED IN EARLIER ROUND IN THE NORMAL ASSESSMENT U/S 143(3) V IDE ORDER DATED 29/11/2019 [112 TAXMANN.COM 55] IN ASSESSEES OWN CASE. HENCE, ON A LL THOSE ISSUES RELIEF GRANTED BY THE LD.CIT(A) DOES NOT NEED TO BE INTERFERE. HENCE, WE UPHOLD THE SAME. MOREOVER, THIS BEING AN UNABATED ASSESSMENT PURSUANT TO NOTIC E U/S 153A, HENCE, ADDITION MADE BY THE AO ARE NOT WITH REFERENCE TO ANY COGENT MATE RIAL FOUND IN SEARCH. HENCE, ASSESSMENT U/S 153A ON THOSE ISSUES IS BAD ON THIS COUNT TOO. 14. ON THE ISSUE OF DISALLOWANCE MADE U/S 14A FO R THE PURPOSE OF 115JB, WE NOTE THAT LD.CIT(A) IS CORRECT IN HOLDING THAT THE SAME IS NOT SUSTAINABLE AS NO INCRIMINATING MATERIAL WAS FOUND DURING SEARCH AS THIS IS NON ABATED ASSESSMENT. HENCE, WE UPHOLD THE ORDER OF LD.CIT(A) OF THIS ISS UE. 15. AS REGARDS GROUND NO.9 AND 10 ABOVE IN THE GR OUNDS ITSELF REVENUE HAS ACCEPTED THAT THE ISSUES ARE COVERED IN FAVOUR OF THE ASSESS EE BY THE ITAT DECISION FOR AY 2006-07 AND THAT REVENUE HAS FILED AN APPEAL BEFORE THE HIGH COURT. WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF LD.CIT(A) S DECISION. ACCORDINGLY, WE UPHOLD THE ORDER OF LD.CIT(A) ON ALL ISSUES. 16. IN THE RESULT, BOTH APPEALS ARE DISMISSED. 7 JSW STEEL LTD. ORDER PRONOUNCED IN THE OPEN COURT ON 10 .08.2021 SD/- SD/- (AMARJIT SINGH) (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNT ANT MEMBER MUMBAI; DATED : 10.08.2021 THIRUMALESH , SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT - CONCERNED 5. DR, ITAT, MUMBAI 6. GUARD FILE BY ORDER, (DY./ASSTT. REGISTRAR) ITAT, MUMBAI