M/s Prima Agro Ltd, Cochin V. Assistant Commissioner of Income Tax, Ernakulam

ITA 146/COCH/2009

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 0883 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 9 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-01-2011
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 10-01-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 20-03-2009
• Court: TRIBUNAL
• Department Lawyers: T J VINCENT
• Assessee Lawyers: PREETHA S NAIR ADV
• Keywords: Depreciation; Unabsorbed depreciation; Capital Gains
• Section: 142(1); 250; 143(2); 191; 207; 139(1); 139(4); 32; 27; 10

Judgement Text

IN THE INCOME TAX APPELLAT E TRIBUNAL COCHIN BEN CH, COCHIN BEFORE S/SHRI N.VIJAYAKUMARAN, JM AND SANJAY AR ORA, AM I.T.A. NO. 146/COCH/2009 ASSESSMENT YEAR : 2005-06 M/S. PRIMA AGRO LTD., PRIMA HOUSE, KALAMASSERY. [PAN: AABCP 6643C] VS. THE ASSISTANT COMMISSIONER OF INCOME-TAX,CIRCLE-2(1), ERNAKULAM (ASSESSEE -APPELLANT) (REVENUE- RESPONDENT) ASSESSEE BY SMT. PREETHA S.NAIR, ADV.-A.R. REVENUE BY SHRI T.J.VINCENT, DR O R D E R PER SANJAY ARORA, AM: THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDE R BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-II, KOCHI (CIT(A) FOR SHORT) DATED 29.12.2008 FOR THE ASSESSMENT YEAR (A.Y.) 2005-06. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FILED ITS RETURN FOR THE YEAR, DECLARING A LOSS OF ` 3,03,29,736/-, ON 02.11.2005 ALONG WITH THE AUDIT R EPORT U/S. 44AB OF THE INCOME-TAX ACT, 1961 ('THE ACT', HEREINAFTER). THE SAME WAS RECEIVED BY THE DEPARTMENT THROUGH REGISTERED POST EFFECTED ON 31.1 0.2005. THE ASSESSING OFFICER (A.O.), AFTER ISSUING NOTICE U/S. 143(2) ON 3.10.20 06, ASSESSED THE SAME AT A LOSS OF ` 2,80,57,830/- (INCLUDING UNABSORBED DEPRECIATION AT ` 44,48,091/-) BY EFFECTING A DISALLOWANCE OF EXPENSES AT ` 22,71,906/- AND, FURTHER, DENIED THE ASSESSEE CARRY FORWARD OF THE ASSESSED LOSS. THIS WAS AS IN HIS VIEW THE POSTING OF THE RETURN ON 31.10.2005, THE LAST DATE FOR THE FURNISHING THE RETURN OF INCOME F OR THE YEAR U/S. 139(1), WOULD NOT AMOUNT TO ITS FURNISHING BY OR ON THAT DATE. THE SA ME STOOD CONFIRMED IN APPEAL BY THE FIRST APPELLATE AUTHORITY AS THE FACT OF THE RETURN HAVING BEEN CONVEYED THROUGH REGISTERED POST ON 31/10/2005, AND ITS RECEIPT BY THE DEPTT. O N 02/11/2005, WERE UNDISPUTED. FURTHER, THE ASSESSEES CLAIM THAT ITS REPRESENTATI VE (SHRI ESWARAN PILLAI) HAD ARRIVED AT ITA.NO 146/COCH/2009 2 THE CONCERNED RECEIPT COUNTER AT 5:25 P.M. ON 31.10 .2005 ITSELF, BUT WAS REFUSED RECEIPT BY THE CONCERNED OFFICIALS, AS THE COUNTER STOOD CL OSED BEFORE 5:30 P.M., WAS NOT SUBSTANTIATED IN ANY MANNER. AGGRIEVED, THE ASSESS EE IS IN APPEAL. 3. BEFORE US, THE LD. AR CONTENDED THAT THE AO HAS NOT TREATED THE ASSESSEES RETURN AS A BELATED RETURN U/S. 139(4) NOR DID HE ISSUE ANY N OTICE U/S. 142(1), I.E., ACCEPTED THE ASSESSEES RETURN OF LOSS AS SUCH. IT WAS, THEREFO RE, NOT OPEN TO HIM TO DENY THE ASSESSEE ITS CLAIM FOR CARRY FORWARD OF THE ASSESSED LOSS. T HE LD. DR, ON THE OTHER HAND, WOULD CONTEND THAT THERE WAS NO NEED FOR THE AO TO ISSUE NOTICE U/S. 142(1) AS THE ASSESSEES RETURN WAS A VALID RETURN U/S. 139(3) READ WITH SEC TION 139(4) OF THE ACT. HOWEVER, AS THE SAME STOOD FILED BEYOND THE TIME STIPULATED U/S. 13 9(1) FOR THE FILING OF THE RETURN, THE SAME CANNOT THUS BE SAID TO BE IN ACCORDANCE WITH T HE PROVISIONS OF SECTION 139(3), AND IS THUS HIT BY THE NON OBSTANTE CLAUSE OF SECTION 80, WHICH MANDATES THAT ANY LOSS TO BE CARRIED FORWARD HAS NECESSARILY TO BE IN ACCORDANCE WITH THE PROVISIONS OF SECTION 139(3) OF THE ACT. 4. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. 4.1 AT THE VERY OUTSET, WE MAY CLARIFY THAT OUR DECISION WOULD REST ON THE GIVEN FACTS OF THE CASE, I.E., OF THE RETURN HAVING BEEN FILED ON 2.11.2005 PER REGISTERED POST DATED 31.10.2005. THIS IS FOR THE SIMPLE REASON THAT THE ASSESSEE HAS BEFORE BOTH THE AUTHORITIES BELOW CLAIMED OF ITS RETURN AS HAVING BEEN TENDERED THROUGH ITS AUTHORISED REPRESENTATIVE, THOUGH REFUSED RECEIPT BY THE CONCE RNED OFFICIALS, EVEN THOUGH THEY WERE APPROACHED BEFORE THE CLOSURE TIME ON 31.10.2005. THE REVENUE AUTHORITIES HAVE NOT FOUND THE ASSESSEES CLAIM IN THE MATTER ADMISSIBLE ON ACCOUNT OF IT BEING UNSUBSTANTIATED. THE ASSESSEE HAS RAISED THE ISSUE BEFORE US PER ITS GROUND NOS. 2 AND 3 (GROUND NO. 1 BEING GENERAL IN NATURE, REQUIRING NO ADJUDICATION), WITHOUT IN ANY MANNER REBUTTING THE FINDING/S BY THE REVENUE IN THE MATTE R. AS SUCH, WE PROCEED ON THE BASIS OF THE FURNISHING OF THE RETURN OF INCOME IN THE INSTA NT CASE BY THE ASSESSEE BEYOND THE DUE DATE SPECIFIED U/S. 139(1) OF THE ACT, I.E., 31/10/ 2005. WE CONSIDER IT RELEVANT TO CLARIFY THIS ASPECT OF THE MATTER AS THE ASSESSEES CLAIM, IF ACCEPTED, COULD HAVE LEAD TO THE ITA.NO 146/COCH/2009 3 ACCEPTANCE OF ITS RETURN ON GROUNDS OF NATURAL JUST ICE, AND BY ADVERTING TO SEC. 10 OF THE GENERAL CLAUSES ACT, 1897. 4.2 CONTINUING FURTHER, IT WOULD ALSO BE RELEVANT T O, EVEN AS NOT ARGUED BY THE LD. AR, ADDRESS THE ASSESSEES GROUND NOS. 4 TO 6 STATING T HAT THE ENTRUSTMENT OF THE RETURN WITH A PUBLIC SERVICE, AS THE POSTAL DEPARTMENT, IS SUFFIC IENT, BESIDES BEING RECOGNIZED BY THE EVIDENCE ACT. THE POSTAL DEPARTMENT, IN CONVEYING THE ARTICLE ENTRUSTED FOR DELIVERY, ACTS AS AN AGENT OF THE ADDRESSEE AND NOT THE ADDRE SSOR. THE EVIDENCE ACT, 1872 AS ALSO/ READ WITH THE GENERAL CLAUSES ACT, 1897, RECOGNISES THE SAME AS A VALID PROCESS, ALLOWING, HOWEVER, THE TIME PERIOD AS IS NORMAL FOR THE RELEVANT DELIVERY, WHICH STOOD EFFECTED IN THE INSTANT CASE THUS, I.E., IN THE NOR MAL COURSE AND PERIOD BY THE POSTAL DEPARTMENT. AS SUCH, THERE IS NO SCOPE FOR BACK DA TING THE DELIVERY, I.E., DEEMING IT AS WITH EFFECT FROM AN EARLIER DATE, AND THE ASSESSEE DISCHARGED THE OBLIGATION OF FILING THE RETURN OF INCOME ONLY ON 2.11.2005, I.E., AFTER THE EXPIRY OF THE DUE DATE FOR FILING THE RETURN U/S. 139(1) ON 31.10.2005. RELIANCE ON THE DECISION IN THE CASE OF CIT VS. KALYANI SELECTION KARAGALLIA COLLIERY, 146 ITR 577 (PATNA) IS MISPLACED, AS THE SAME HAS NO APPLICATION IN THE FACTS OF THE PRESENT CASE. THIS IS AS, FIRSTLY, THE RETURN IN THE INSTANT CASE WAS ADMITTEDLY POSTED ONLY AFTER THE OFFICE CLOSURE TIME ON THE LAST DATE OF THE FILING OF THE RETURN (31.10.2005). HOW THEN, IT MAY BE ASKED, COULD IT BE TAKEN AS HAV ING BEEN FILED IN TIME, IMPLYING ITS RECEIPT ACTUAL OR CONSTRUCT IVE BY THE DEPARTMENT BEFORE THE CLOSURE TIME, AND WHICH IT MUST FOR THE CLAIM TO BE VALID . SECONDLY, THE SAID DECISION IS BASED ON THE DECISIONS BY THE APEX COURT, AS IN THE CASE OF HARIHAR BANNERJEE VS. RAM ROY , AIR 1918 PC 102, HOLDING, WITH REFERENCE TO SECTI ON 114 OF THE EVIDENCE ACT AND SECTION 27 OF THE GENERAL CLAUSES ACT, OF RAISING A STATUTORY, THOUGH REBUTTABLE, PRESUMPTION OF SERVICE OR DELIVERY OF THE ARTICLE OR CHATTEL POSTED IN THE REGULAR CO URSE OF ITS BUSINESS BY THE POSTAL DEPARTMENT. THAT IS, TH E NORMAL TIME TAKEN FOR DELIVERY IS TO BE TAKEN INTO CONSIDERATION, AND IS ON ACCOUNT OF THE ADDRESSEE. THE RETURN OF INCOME IN THE PRESENT CASE, THEREFORE, CAN ONLY BE CONSIDERED AS HAVING BEEN FILED ON 2.11.2005, I.E., THE DATE OF ITS ACTUAL RECEIPT BY THE REVENUE. ITA.NO 146/COCH/2009 4 4.3 THE ASSESSEES CASE, IN PRINCIPLE, IS THAT THE AO HAVING ACTED ON ITS SO-CALLED `BELATED RETURN WAS BOUND IN LAW TO ALLOW IT ITS C LAIM OF LOSS, I.E., AS ASSESSED BY HIM. THE FIRST QUESTION, THEREFORE, THAT ARISES IS WHETH ER THE RETURN AS FILED IS A VALID RETURN. THIS IS AS NO VALID ASSESSMENT COULD BE MADE ON THE BASIS OF AN INVALID OR NON-EST RETURN ( CONTROLLER OF ESTATE DUTY VS. BHOLA DUTT, 130 ITR 468 (ALL.), CIT VS. BISESSAR LAL GUPTA, 105 ITR 684 (CAL.). EQUALLY, AN ACTION BY THE REVE NUE QUA AN INVALID RETURN WOULD NOT MAKE IT A VALID RETURN ( ELECTRICAL INSTRUMENT COMPANY VS. CIT, 250 ITR 734, 736 (DELHI). ALSO, THERE IS NO POWER VESTED WITH TH E AO TO EXTEND THE TIME FOR FILING THE RETURN. AS SUCH, THE ASSESSEES RETURN HAS TO BE C ONSIDERED AS FILED BEYOND THE TIME LIMIT U/S. 139(3), WHICH READS AS UNDER:- IF ANY PERSON WHO HAS SUSTAINED LOSS IN ANY PREVIO US YEAR UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR LOSS OR UNDER THE HEAD CAPITAL GAINS, AND CLAIMS THAT THE LOSS OR ANY PART THEREOF SHOULD BE CARRIED FOR WARD UNDER SUB-SECTION (1) OF SECTION 72, ORR SUB-SECTION (2) OF SECTION 73, OR SUB-SECTI ON (1) OR SUB-SECTION (3) OF SECTION 74, OR SUB-SECTION(3) OF SECTION 74A, HE MAY FURNISH, W ITHIN THE TIME ALLOWED UNDER SUB- SECTION(1), A RETURN OF LOSS IN THE PRESCRIBED FORM AND VERIFIED IN THE PRESCRIBED MANNER AND CONTAINING SUCH OTHER PARTICULARS AS MAY BE PRE SCRIBED, AND ALL THE PROVISIONS OF THIS ACT SHALL APPLY AS IF IT WERE A RETURN UNDER SUB-SE CTION (1). 4.4 WE DO NOT CONSIDER THE ASSESSEES RETURN AS INV ALID. THIS IS AS SECTION 139(3) ONLY MANDATES THE ASSESSEE, WHERE DESIROUS TO CLAIM CARR Y FORWARD (AND SET OFF) OF ITS LOSS(ES), INCURRED FOR ANY YEAR, TO FILE THE RETURN OF SUCH L OSS BY THE DUE DATE OF FILING OF THE RETURN U/S. 139(1), EVEN AS NO RETURN OF INCOME IS DUE THE RE-UNDER; THE TERMS INCOME AND LOSS BEING USED IN SECTION 139(1) IN CONTRADISTINCTION T O EACH OTHER. A CLAIM OF LOSS, HOWEVER, DOES NOT IMPLY ITS ACCEPTANCE AS SUCH BY THE REVENU E, WHICH ON VERIFICATION MAY FIND SOME CLAIM/S PREFERRED THEREBY AS NOT IN ACCORDANCE WITH LAW AND, HENCE, NOT ADMISSIBLE, AS HAS BEEN DONE IN THE INSTANT CASE AS WELL. IN A GIVEN CASE THE RETURN OF LOSS MAY WELL BE ASSESSED AS INCOME. SECTION 139(3) IS AN ENABLING PROVISION FOR THE ASSESSEES AND NOT FOR THE REVENUE, WHICH IS BOUND TO ACCEPT THE RETURN AS FILED AS LONG AS IT IS WITHIN THE TIME LIMIT U/S. 139(4) AND IS OTHERWISE IN ORDER. THERE IS, AS SUCH, NO INFIRMITY IN LAW IN THE ACCEPTANCE OF THE ASSESSEES RETURN, FILED WITHIN T HE EXTENDED TIME ALLOWED U/S. 139(4), BY THE AO, AND THE NON-ISSUE BY HIM OF A NOTICE U/S. 1 42(1) AND, CONSEQUENTLY, THE ASSESSMENT AS FRAMED BY HIM. ITA.NO 146/COCH/2009 5 4.5 WE NEXT PROCEED TO DISCUSS THE ASSESSMENT AS MA DE, THE VALIDITY OF WHICH IS THE FINDING OF THE DISCUSSION PER THE PRECEDING PARAGRA PH(S). THE AO HAS DENIED THE ASSESSEES CLAIM FOR LOSS (TO THE EXTENT OF ` 280.58 LAKHS) ON ACCOUNT OF THE RETURN FOR THE YEAR HAVING BEEN FILED AFTER 31.10.21005, AND THUS, AFTER THE PRESCRIBED TIME U/S. 139(1), COUPLED WITH SECTION 80 OF THE ACT, WHICH READS AS UNDER:- NOTWITHSTANDING ANYTHING CONTAINED IN THIS CHAPTER , NO LOSS WHICH HAS NOT BEEN DETERMINED IN PURSUANCE OF A RETURN FILED IN ACCORD ANCE WITH THE PROVISIONS OF SUB- SECTION (3) OF SECTION 139, SHALL BE CARRIED FORWAR D AND SET OFF UNDER SUB-SECTION (1) OF SECTION 72 OR SUB-SECTION (2) OF SECTION 73 OR SUB- SECTION (3) OF SECTION 74 OR SUB-SECTION (3) OF SECTION 74A. WE HAVE ALREADY FOUND THE RETURN TO HAVE BEEN FILE D ON 2.11.2005, SO THAT IT IS NOT FILED IN ACCORDANCE WITH SECTION 139(3) OF THE ACT. AS SUCH, THE NON OBSTANTE CLAUSE U/S. 80 OF CHAPTER VI OF THE ACT, TITLED `AGGREGATE OF I NCOME AND SET OFF OR CARRY FORWARD OF LOSS, PROSCRIBES THE CARRY FORWARD AND SET OFF OF ANY LOSS UNDER SECTIONS 72, 73, 74 & 74A. THE LAW IN THE MATTER IS WELL-SETTLED, FOR WH ICH RELIANCE MAY READILY BE PLACED ON THE DECISION IN THE CASE OF KOPPIND PVT. LTD. VS. CIT , 207 ITR 228 (CAL.) AS WELL AS THE RECENT DECISION IN THE CASE OF ERNAKULAM REGIONAL COOPERATIVE MILK PRODUCERSS UNI ON LTD. VS. DY. CIT (IN I.T.A. NOS. 191 & 205/COCH/2009 DATED 24.11.20 10). 4.6 SO, HOWEVER, THE ASSESSEES ASSESSED LOSS OF `280.58 LAKHS ADMITTEDLY INCLUDES UNABSORBED DEPRECIATION ALLOWANCE, THE CLAIM OF WHI CH FALLS U/S. 32 AND NOT U/S. 72 TO 74A, SO AS TO BE HIT BY SECTION 80. THE DENIAL OF T HE ASSESSEES CLAIM, TO THE EXTENT IT RELATES TO UNABSORBED DEPRECIATION, IS, THEREFORE, NOT VALID UNDER LAW AND, CONSEQUENTLY, REVERSED. THE LD. CIT(A), WE OBSERVE, HAS FAILED TO OBSERVE THE BIFURCATION OF LOSS, I.E., BETWEEN LOSS PER SE AND UNABSORBED DEPRECIATION ALLOWANCE, EVEN AS THE SAM E STANDS BROUGHT OUT IN THE ASSESSMENT ORDER ITSELF. WE DEC IDE ACCORDINGLY. ITA.NO 146/COCH/2009 6 5. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY A LLOWED. SD/- SD/ - (N.VIJAYAKUMARAN) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: ERNAKULAM DATED: 18TH JANUARY, 2011 GJ COPY TO: 1. M/S. PRIMA AGRO LTD., PRIMA HOUSE, KALAMASSERY. 2. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE -2(1), ERNAKULAM. 3. THE COMMISSIONER OF INCOME-TAX (APPEALS)-II, KOC HI. 4. THE COMMISSIONER OF INCOME-TAX, KOCHI. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE. BY (ASSISTANT REGITRAR) ITA.NO 146/COCH/2009 7