MJSJ Coal Limited, Angul V. ITO, Ward-1(3), Bhubaneswar

ITA 140/CTK/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 6092 (ITAT-CUTTACK)
• Duration Of Justice: 2 year(s) 3 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 07-04-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SAAD KIDWAI
• Assessee Lawyers: K K BAL S K BEHERA ARS
• Keywords: Capital asset; Opportunity of being heard; Assessment record; Capital receipt; Set aside
• Section: 263

Judgement Text

P A G E 1 | 7 IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE SHRI CHANDRA MOHAN GARG , JUDICIAL MEMBER AND LAXMI PRASAD SAHU, ACCOUNTANT MEMBER ITA NO .140 /CTK/201 7 ASSESSMENT YEAR : 2012 - 13 MJSJ COAL LIMITED, AT/PO: BALANDA, TALCHER, ANGUL. VS. ITO, WARD 1(3), BHUBANESWAR PAN/GIR NO. AAGCM 1095 E (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI K .K.BAL/ S .K. BEHERA, ARS REVENUE BY : SHRI SAAD KIDWAI , DR DATE OF HEARING : 01 / 0 8 / 201 9 DATE OF PRONOUNCEMENT : 05 / 0 8 / 201 9 O R D E R PER C.M.GARG,JM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE PCIT, - 1, BHUBANESWAR DATED 22.2.2017 FOR THE ASSESSMENT YEAR 2012 - 13. 2. IN THIS APPEAL, THE ASSESSEE HAS CHALLENGED THE ORDER OF THE PR. CIT EXERCISING REVISIONAL POWER U/S.263 OF THE ACT. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF THE LOWER AUTHORITIES, INTER ALIA, PAPER BOOK SUBMITTED BY THE ASSESSEE AND O THER RELEVANT ORDERS PLACED ON THE RECORD OF THE TRIBUNAL. 4. LD A.R. SUBMITTED THAT THE IMPUGNED ORDER PASSED BY PR. CIT U/S.263 OF THE ACT IS ARBITRARY, ILLEGAL AND WITHOUT JURISDICTION IN THE FACTS AND ITA NO.140/CTK/2017 ASSESSMENT YEAR : 2012 - 13 P A G E 2 | 7 CIRCUMSTANCES OF THE CASE. THEREFORE, SAME MAY KIN DLY BE QUASHED. FURTHER, LD A.R. SUBMITTED THAT PR. CIT HAS ERRED IN EXERCISING REVISIONAL POWER AVAILABLE U/S.263 OF THE ACT WITHOUT HAVING JURISDICTION AS THE COMPLETED ASSESSMENT CANNOT BE TINKERED ON THE GROUND THAT ORDER HAS NOT BEEN PASSED IN ACCORD ANCE WITH THE DECISION OF THE HONBLE SUPREME COURT. LD A.R. SUBMITTED THAT THE ASSESSEE HAS SUBMITTED ALL RELEVANT DOCUMENTARY EVIDENCES AND DOCUMENTS, ETC BEFORE THE ASSESSING OFFICER DURING ASSESSMENT PROCEEDINGS WHICH WERE CONSIDERED AND PERUSED BY TH E AO BEFORE FRAMING ASSESSMENT ORDER. THEREFORE, ORDER CANNOT BE ALLEGED AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE EMPOWERING THE PR. CIT FOR EXERCISING REVISIONAL JURISDICTION U/S.263 OF THE ACT. LD A.R. VEHEMENTLY POINTED OUT THAT PR. CIT HAS ERRED IN TREATING THE INTEREST ACCRUED TO THE ASSESSEE ON SHARE CAPITAL INFUSED FOR THE SPECIFIC PURPOSE, HAVING INEXTRICABLY LINKED WITH THE ACQUISITION OF CAPITAL ASSET AND THE SAME IS NOT REVENUE RECEIPT BUT CAPITAL RECEIPTS. LD A.R. SUBMITTED THAT THE ASSESSING OFFICER HAS COMPLETED THE ASSESSMENT PROCEEDINGS BY ACCEPTING ONE OUT OF THE TWO POSSIBLE VIEWS AVAILABLE BEFORE HIM. THEREFORE, ASSESSMENT ORDER CANNOT BE ALLEGED AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. PLACING C OPY OF THE ITAT ORDER DATED 31.8.2018 IN ASSESSEES OWN APPEALS FOR THE ASSESSMENT YEARS 2011 - 12, 2013 - 14 AND 2014 - 15, LD A.R. SUBMITTED THAT PR. CIT HAS PICKED UP THE ISSUE OF INTEREST O N BANK DEPOSITS WHICH WERE SHOWN BY THE ASSESSEE IN THE BALANCE SHEET ITA NO.140/CTK/2017 ASSESSMENT YEAR : 2012 - 13 P A G E 3 | 7 UNDER THE HEAD OTHER CURRENT ASSETS. LD A.R. STRENUOUSLY CONTENDED THAT THIS ISSUE HAS BEEN DECIDED BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE FOR EARLIER AND SUBSEQUENT ASSESSMENT YEAR S BY HOLDING THAT INTEREST EARNED BY THE ASSESSEE SHOULD NOT BE TREATED AS INCOME FROM OTHER SOURCES AND THE CLAIM OF THE ASSESSEE HAS BEEN ALLOWED BY THE TRIBUNAL FOR ALL THREE ASSESSMENT YEARS I.E, PRECEDING ASSESSMENT YEAR 2011 - 12 AND SUBSEQUENT ASSESSM ENT YEARS I.E. 2013 - 14 & 2014 - 15. LD A.R. SUBMITTED THAT IN VIEW OF ABOVE FACTUAL POSITION, THE IMPUGNED ORDER U/S.263 OF THE ACT MAY KINDLY BE QUASHED. 5. REPLYING TO ABOVE, LD D.R. STRONGLY SUPPORTED THE ACTION OF THE PR. CIT AND SUBMITTED THAT THE ASSE SSING OFFICER HAS NOT MADE ANY ENQUIRY ON THE ISSUE OF INTEREST ON BANK DEPOSIT WHICH WAS SHOWN BY THE ASSESSEE IN THE BALANCE SHEET UNDER THE HEAD OTHER CURRENT ASSETS. THEREFORE, THE LD PR. CIT WAS RIGHT IN INVOKING THE REVISIONAL POWER AVAILABLE TO HI M U/S.263 OF THE ACT. LD D.R. ALSO SUBMITTED THAT WHEN THERE IS NO ENQUIRY ON A PARTICULAR ISSUE THEN THE ORDER HAS TO BE ALLEGED AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. LD D.R. SUBMITTED THAT PR. CIT HAS PASSED ORDER ON 22.2.2017 WH EREAS THE TRIBUNAL ORDER FOR EARLIER AND SUBSEQUENT ASSESSMENT YEARS IN ASSESSEES CASE WAS PASSED ON 31.8.2018. THEREFORE, THIS ORDER HAS NO BEARING WHILE EXERCISING REVISIONAL POWER U/S.263 OF THE ACT BY THE PR. CIT. ITA NO.140/CTK/2017 ASSESSMENT YEAR : 2012 - 13 P A G E 4 | 7 6. PLACING REJOINDER TO ABOVE, LD A. R. SUBMITTED THAT IN VIEW OF THE DECISION OF THE TRIBUNAL DATED 31.8.2018 (SUPRA), THE FINDINGS ARRIVED AT BY THE PR. CIT IN THE IMPUGNED ORDER BECOMES PERVERSE AND HENCE, SAME MAY KINDLY BE QUASHED. 7. ON CAREFUL CONSIDERATION OF RIVAL SUBMISSIONS, FIRST OF ALL WE MAY POINT OUT THAT ON BEING ASKED BY THE BENCH, LD A.R. , IN ALL FAIRNESS, SUBMITTED THAT ALTHOUGH THE ASSESSMENT ORDER DATED 25.3.2015 WAS PASSED U/S.143(3) OF THE ACT BUT THERE IS NO ENQUIRY BY THE ASSESSING OFFICER ON THE ISSUE OF INTEREST OF B ANK DEPOSITS WHICH WERE PICKED UP BY PR.CIT FOR INVOKING THE JURISDICTION OF SECTION 263 OF THE ACT. IT IS ALSO NOT IN DISPUTE THAT PR. CIT HAS PASSED THE IMPUGNED ORDER U/S.263 OF THE ACT ON 22.2.2017 WHEREAS THE TRIBUNAL ORDER IN ASSESSEES OWN APPEALS WAS PASSED SUBSEQUENTLY ON 31.8.2018, WHEREIN, IN PARA 12, THE TRIBUNAL ON THE ISSUE OF INTEREST ON SHORT TERM FIXED DEPOSIT DECIDED WITH THE FOLLOWING OBSERVATIONS: 12. WE FIND THAT THE FUNDS OF THE ASSESSEE COMPANY KEPT IN THE SHORT TERM FIXED DEPOSITS OUT OF THE SHARE CAPITAL AMOUNT AND NOT ANY SURPLUS ARISING OUT OF THE RUNNING BUSINESS, THE INTEREST EARNED ON FUNDS PRIMARILY BROUGHT FOR INFUSION IN THE BUSINESS ACTIVITY CANNOT BE TERMED AS INCOME FROM OTHER SOURCES, WHEREAS THE INTEREST INCOME ON BAN K DEPOSITS EARNED BY THE ASSESSEE COMPANY TO COMMENCEMENT OF ITS BUSINESS IS IN THE NATURE OF CAPITAL RECEIPT AND ACCORDINGLY BE SET OFF AGAINST PRE - OPERATIVE EXPENSES. WE CONSIDERING THE JUDICIAL PRECEDENCE AND THE FACTS AND CIRCUMSTANCES OF THE PRESENT C ASE, ARE OF THE SUBSTANTIVE OPINION THAT IF THE ASSESSEE COMPANY RECEIVES ANY AMOUNT WHICH IS INEXTRICABLY LINKED WITH THE PROCESS OF SETTING UP ITS PLANT AND MACHINERY, SUCH RECEIPTS WILL GO TO REDUCE THE COST OF ITS ASSETS. HENCE SUCH RECEIPTS ARE CAPITA L IN NATURE AND CANNOT BE TAXED AS INCOME UNDER INCOME FROM OTHER SOURCES. THE ASSESSEE COMPANY WAS FORMED TO SET UP A MINING PROJECT AND THE PROCESS OF SETTING UP WAS GOT DELAYED AND DEPOSITS OF SHARE CAPITAL AMOUNT RECEIVED FROM THE SHARE APPLICANTS WITH THE BANK IN THE FORM OF FIXED DEPOSITS FOR SHORT TERM, IS TO BE CONSIDERED AS INEXTRICABLY LINKED WITH THE PROCESS OF SETTING OF ITS PLANT AND MACHINERY. ACCORDINGLY, WE HOLD THAT THE INTEREST EARNED BY THE ASSESSEE SHOULD NOT BE TREATED AS INCOME FROM O THER ITA NO.140/CTK/2017 ASSESSMENT YEAR : 2012 - 13 P A G E 5 | 7 SOURCES AND WE ALLOW THE GROUNDS OF APPEAL OF THE ASSESSEE. THEREFORE, THE APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2011 - 2012 IS ALLOWED. 8. IN VIEW OF ABOVE, WE CLEARLY OBSERVE THAT THE TRIBUNAL HAS TAKEN A VIEW ON THE ISSUE OF INTEREST EARNED B Y THE ASSESSEE ON SHORT TERM FIXED DEPOSIT IN FAVOUR OF THE ASSESSEE BUT THIS ORDER OF THE TRIBUNAL WAS NOT IN EXISTENCE WHEN THE LD PR. CIT INVOKED POWERS U/S.263 OF THE ACT AND PASSED THE IMPUGNED ORDER REVISING THE ASSESSMENT. 9. B E THAT AS IT MAY, THE SUBSEQUENT TRIBUNAL ORDER DEFINES FAVOURS THE ASSESSEES STAND ON THE ISSUE OF INTEREST EARNED BY THE ASSESSEE FROM SHORT TERM FIXED DEPOSIT BUT WHILE EVALUATING THE LEGALITY OF THE REVISIONAL ORDER PASSED BY PR CIT U/S.263 OF THE ACT, THE TRIBUNAL ORDER (SUPRA) CANNOT BE TAKEN INTO CONSIDERATION AS HAS BEEN PASSED ANTI - DATED. 10. IT HAS ALSO BEEN BROUGHT TO OUR NOTICE BY LD A.R. THAT THE ASSESSING OFFICER HAS MADE ADDITION IN THE REASSESSMENT ORDER PASSED IN PURSUANCE TO THE IMPUGNED ORDER OF PR. CIT U/S.263 OF THE ACT, WHEREIN, ADDITION HAS BEEN MADE IN THE HANDS OF THE ASSESSEE. LD A.R. INFORMED THE BENCH THAT THE APPEAL OF THE ASSESSEE IS PENDING BEFORE THE CIT(A). 11. IN VIEW OF FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, WE ARE OF THE VIEW THAT PR. CIT HAS PROCEEDED TO INVOKE THE POWERS AVAILABLE TO HIM U/S.263 OF THE ACT AND AFTER PERUSAL OF THE ASSESSMENT RECORDS, HE FOUND THAT THERE WAS NO ENQUIRY BY THE ASSESSING OFFICER ON THE ISSUE OF INTEREST EARNED BY THE ASSESSEE ON SHORT TERM FIXED DEPOSIT WITH THE BANK. ITA NO.140/CTK/2017 ASSESSMENT YEAR : 2012 - 13 P A G E 6 | 7 THEREAFTER, LD PR. CIT ISSUED NOTICE U/S.263 OF THE ACT AND AFTER CONSIDERING THE REPLY OF THE ASSESSEE AND AFTER ALLOWING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE, PASSED THE IMPUGNED ORDER BY HOLDING THAT THE ASSESSING OFFICER HAS FAILED TO BRING TO TAX THE INTEREST RECEIVED AS INCOME OF THE ASSESSEE FROM OTHER SOURCES AND, THUS, THE ASSESSMENT ORDER IS SET ASIDE TO THE FILE OF THE AO ON THE ABOVE ISSUE W ITH A DIRECTION TO EXAMINE SAME AFRESH AND DO THE ASSESSMENT DENOVO. THESE FINDINGS AND OBSERVATIONS OF PR. CIT IN THE ORDER DATED 22.2.2017 ARE QUITE CORRECT AND IN ACCORDANCE WITH THE MANDATE OF SECTION 263 OF THE ACT AS THERE WAS NO ENQUIRY BY THE AO O N THE ISSUE OF INTEREST EARNED BY THE ASSESSEE ON SHORT TERM FIXED DEPOSIT WITH THE BANK. THEREFORE, PR. CIT WAS RIGHT IN HOLDING THAT THE ORDER OF THE AO IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE COGNIZANCE OF THE SUBSEQUENT ORDER DATED 31.8.2018 OF THE TRIBUNAL (SUPRA) WAS NOT PRACTICALLY POSSIBLE AS THIS ORDER WAS NOT IN EXISTENCE WHEN PR. CIT PASSED THE IMPUGNED REVISIONAL ORDER. CON SEQUENTLY, WE HOLD THAT THE PR. CIT WAS RIGHT IN REVISING THE ASSESSMENT ORDER DATED 25.3.2015 P ASSED U/S.143(3) OF THE ACT AND DIRECTING THE AO TO PASS THE DENOVO ASSESSMENT ORDER ON THE SAID ISSUE. 12. SO FAR AS THE FINDINGS RECORDED BY THE TRIBUNAL DATED 31.8.2019 AT PARA 12 IS CONCERNED, THESE FINDINGS MAY BE CONSIDERED BY THE REVENUE AUTHORITIES WHILE DECIDING THE ISSUE BUT THE SAME CANNOT BE PRESSED INTO ITA NO.140/CTK/2017 ASSESSMENT YEAR : 2012 - 13 P A G E 7 | 7 SERVICE IN FAVOUR OF THE ASSESSEE WHILE ADJUDICATING THE ISSUE OF VALIDITY AND SUSTAINABILITY OF ORDER OF PR. CIT U/S.263 OF THE ACT. 13. BEFORE WE PART WITH THIS ORDER, WE FIND IT APPROPRIATE T O RECORD THAT WE ARE NOT EXPRESSING ANY OPINION ON THE MERITS OF THE ISSUE AND SAME IS LEFT OPEN TO THE CIT(A) WHILE DECIDING THE APPEAL OF THE ASSESSEE FILED AGAINST THE REASSESSMENT ORDER U/S.143(3)/263 OF THE ACT IN PURSUANCE TO THE IMPUGNED REVISIONAL ORDER OF PR. CIT KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE CASE AND WITHOUT BEING PREJUDICED FROM THE OBSERVATIONS RECORDED BY US IN THIS ORDER. 14. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON 05 / 0 8 /201 9 . SD/ - SD/ - (LAXMI PRASAD SAHU) ( CHANDRA MOHAN GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER CUTTACK; DATED 05 / 0 8 /20 9 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER SR . PVT. S ECRETARY ITAT, CUTTACK 1. THE APPELLANT : MJSJ COAL LIMITED, AT/PO: BALANDA, TALCHER, ANGUL 2. THE RESPONDENT. ITO, WARD 1(3), BHUBANESWAR 3. THE CIT(A) - , BHUBANESWAR 4. PR.CIT - 1 , BHUBANESWAR 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//