Welterman International Ltd., Baroda V. CIT -1, Baroda

ITA 1466/AHD/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1497 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 17-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIBHA BHALLA TH E
• Assessee Lawyers: DIVYAKANT PARIKH
• Keywords: Depreciation; Unabsorbed depreciation
• Section: 143(3); 263

Judgement Text

I.T.A. NO . 1466 /AHD/ 20 1 3 ASSESS MENT YEAR: 200 8 - 09 PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL, AHMEDABAD C BENCH, AHMEDABAD [CORAM : PRAMOD KUMAR AM AND S.S. GODARA JM ] I.T.A. NO. 1466 /AHD/ 20 1 3 ASSESSMENT Y EAR : 200 8 - 09 WELTERMAN INTERNATIONAL LIMITED .... .......... .APPELLANT PLOT NO.1135, LAMDAP URA ROAD, P.O. MANJUSAR, SAVLI, VADODARA 391 775 . [ PAN: A A ACW 1721 H ] VS. COMMISSIONER OF INCOME TAX - I , BARODA. ............. . RESPONDENT APPEARANCES BY: DIVYAKANT PARIKH , FOR THE APPELLANT VIBHA BHALLA , FOR TH E RESPONDENT D ATE OF CONCLUDING THE HEARING : APRIL 12 TH , 201 6 DATE OF PRONOUNCING THE ORDER : MAY 31 ST , 201 6 O R D E R PER PRAMOD KUMAR AM : BY WAY OF THIS APPEAL THE ASSESSEE APPELLANT HAS CHALLENGED CORRECTNESS OF LD . C IT S ORDER D ATED 28.03.2013 IN THE MATTER OF REVISION UNDER SECTION 263 R.W.S. 143(3) OF THE INCOME TAX ACT, 1961 ( THE ACT FOR SHORT), FOR THE ASSESSMENT YEAR 2008 - 09. 2. GRIEVANCES RAISED BY THE ASSESSEE ARE AS FOLLOWS : - I) THAT THE LEARNED CIT HAS ERRED BOTH IN LAW AND IN FACTS IN INVOKING THE PROVISIONS OF SECTION 263 OF THE INCOME TAX ACT, 1961. THE ORDER PASSED BY THE ID A.O. UNDER S. 143(3) BEING NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENUE, THE CIT HAD NO JURISDICTION TO REVISE THE SAME. IT BE SO HELD NOW AND ORDER UNDER S. 263 BE CANCELLED. II) THE ORDER PASSED BY ID . CIT UNDER S. 263 IS INVALID, ILLEGAL AND AGAINST THE SANCTION OF LAW AS THE REVISION IS NOT PERMISSIBLE MERELY DUE TO CIT HAVING ANOTHER VIEW WHEN THE ID A.O. HELD THE VIEW T HAT CLAIM OF CARRY FORWARD OF I.T.A. NO . 1466 /AHD/ 20 1 3 ASSESS MENT YEAR: 200 8 - 09 PAGE 2 OF 6 DEPRECIATION AND DEDUCTION OF INTEREST EXPENSES BEING ALLOWABLE WHICH WERE ALLOWED AFTER DUE APPLICATION OF MIND BY A.O. THE ORDER UNDER S. 263 BE CANCELLED. III) THE LD. CIT ERRED IN NOT FOLLOWING THE DECISION OF THE JURIS DICTIONAL GUJARAT HIGH COURT'S VERY RECENT JUDGMENT [GENERAL MOTORS INDIA PVT . LTD . VS . DCIT (2012) 6 TAX CORP (DT) 52242 (GUJARAT)] HOLDING THAT CARRY FORWARD AND SET OFF OF DEPRECIATION BROUGHT FORWARD WAS ALLOWABLE INDEFINITELY IN VIEW OF THE AMENDED SE CTION 32(2). IT BE SO HELD NOW . IV) THE ID . CIT OUGHT TO HAVE HELD THAT THERE WAS NO ERROR IN THE ORDER OF A.O. AND OUGHT TO HAVE ALLOWED CARRY FORWARD OF UNABSORBED DEPRECIATION AMOUNTING TO RS.2,08,54,526 PERTAINING TO A.Y. 1994 - 95 TO A.Y.2000 - 01 . I T BE NOW DIRECTED TO ALLOW THE SAME . V) THE ID . CIT ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THAT THE ASSESSEE HAD CORRECTLY ACCOUNTED FOR INTEREST ON LOAN AS EXPLAINED TO HIM. IT BE SO HELD NOW AND INTEREST CLAIMED BE ALLOWED. VI) EVEN OTHERWI SE, THERE BEING NO ERROR IN THE ORDER FOR THE YEAR UNDER APPEAL, THE REVISION ORDER PASSED IS WITHOUT JURISDICTION. THE SAME BE SET ASIDE. 3. DURING THE COURSE OF HEARING , IT WAS POINTED OUT BY THE LD . C OUNSEL FOR THE ASSESSEE THAT SO FAR AS THE CORE IS SUE REGARDING CARRY FORWARD OF DEPRECIATION IS CONCERNED, THERE IS NO DISPUTE THAT THE SAME IS COVERED IN FAVOUR OF THE ASSESSEE BY HON BLE JURISDICTIONAL HIGH COURT S JUDGEMENT IN THE CASE OF GENERAL MOTORS INDIA PVT. LTD. VS. DCIT (2012) 6 TAX CORP (DT) 52242 (GUJARAT) BUT THE LD. COMMISSIONER HAS DECLINED TO FOLLOW THE SAME ON THE GROUND THAT THE DECISION OF HON BLE HIGH COURT IN THE CASE OF GENERAL MOTORS INDIA PVT. LTD. R ELIED UPON BY THE ASSESSEE HAS NOT BEEN ACCEPTED AND THE DEPARTMENT HAS PROPOSED SLP BEFORE THE HON BLE SUPREME COURT. 4. AS REGARDS TO SECOND POINT, I.E. WITH REGARD TO INTEREST DEDUCTION IN RESPECT OF THE LOAN TAKEN FROM IFCI, LEARNED COUNSEL POINTS OUT THAT THE ASSESSEE HAD DULY GIVEN AN EXPLANATION WHICH HAS NOT BEEN CONTROVERTED OR FOUND INCORRECT BY THE LD . COMMISSIONER BUT THE LD. COMMISSIONER HAS NEVERTHELESS PROCEEDED WITH REVISING ORDER ON THE GROUND THAT THE EVIDENCE OF PAYMENT OF INTEREST AS CLAIMED BY THE ASSESSEE IN THE COMPUTATION IS NOT CERTIFIED BY THE TAX AUDITOR , SI NCE THE MOUNT WAS OUTSTANDING AS ON 31.03.2008 I.T.A. NO . 1466 /AHD/ 20 1 3 ASSESS MENT YEAR: 200 8 - 09 PAGE 3 OF 6 AND THE ANNEXURE ATTACHED TO THE TAX AUDIT REPORT IS NOT AUTHENTICATED BY THE TAX AUDITOR. IT IS THUS POINTED OUT THAT ON THE SECOND ISSUE ALSO THE LD . COMMISSIONER HAS PRECEDED TO SUBJECT THE IMPUGNED ORDE R OF REVISION EVEN THOUGH THE ASSESSEE S EXPLANATION HAS BEEN FOUND TO BE INCORRECT ON TECHNICAL GROUNDS. TO SUM UP , WHILE ISSUE NO.1 I.E. CARRY FORWARD OF UNABSORBED DEPRECIATION IS COVERED IN FAVOUR OF THE ASSESSEE, BY HON BLE JURISDICTIONAL H IGH COURT S JUDGEMENT IN THE CASE OF GENERAL MOTORS INDIA PVT. LTD. (SUPRA), SO FAR AS SECOND ISSUE IS CONCERNED, THERE IS NO FINDING BY THE LD . COMMISSIONER THAT ORDER PASSED BY THE ASSESSING OFFICER IS IN ANY WAY ERRONEOUS OR PREJUDICIAL TO THE INTEREST OF R EVENUE . WE ARE THUS URGED TO VACATE THE IMPUGNED REVISION ORDER WHICH, ACCORDING TO THE LD. COUNSEL, IS WHOLLY FRIVOLOUS AND DEVOID OF ANY LEGALLY SUSTAINABLE MERITS. 5. LEARNED DEPARTMENTAL REPRESENTATIVE DUTIFULLY RELIES UPON THE IMPUGNED REVISION ORDER. S HE SUBMITS THAT EVEN THOUGH THE MATTER HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE JUDGEMENT OF HON BLE JURISDICTIONAL HIGH COURT, IT IS NECESSARY T O KEEP THE ISSUE ALIVE SINCE THE MAT T E R IS PENDING CONSIDERATION OF THE HON BLE SUPREME COURT. 6. AS REGARDS THE SECOND POINT I.E. WITH REGARD TO DEDUCTION CLAIMED IN RESPECT OF INTEREST, SHE SUBMITS THAT THE LD . COMMISSIONER HAS ONLY REFERRED THE MAT T ER BACK TO THE ASSESSING OFFICER FOR FACTUAL VERIFICATION AND , THEREFORE, ASSESSEE S GRIEVANCE IS ILL - CO NCEIVED. IF THE ASSESSEE S CLAIM WAS INDEED CORRECT, HE HAS NOTHING TO LOSE . 7. ON THE STRENGTH OF THESE ARGUMENTS , WE ARE URGED TO CONFIRM THE IMPUGNED REVISION ORDER AND DECLINE TO INTERFERE IN THE MATTER. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE APPLICABLE LEGAL POSITION. WE FIND THAT SO FAR AS ISSUE IN THE IMPUGNED REVISION ORDER IS CONCERNED I.E. UNABSORBED DEPRECIATION LOSS AMOUNTING TO RS.2, 0 8,54,526/ - PERTAININ G TO ASSESSMENT YEAR 1994 - 95 TO 2000 - 01 I.T.A. NO . 1466 /AHD/ 20 1 3 ASSESS MENT YEAR: 200 8 - 09 PAGE 4 OF 6 BEING ALLOWED TO BE CARRIED FORWARD TO ASSESSMENT YEAR 2009 - 10, I.E. BEYOND EIGHT ASSESSMENT YEARS , T HE ISSUE IS UNDISPUTEDLY COVERED IN FAVOUR OF THE ASSESSEE BY THE HON BLE JURISDICTIONAL HI GH C OURT S CASE S JUDGEM ENT IN THE CASE OF GENERAL MOTORS INDIA PVT. LTD. (SUPRA). CLEARLY, THEREFORE, THE ORDER PASSED BY THE ASSESSING OFFICER , WHICH IS IN ACCORDANCE WITH LAW , CANNOT BE TERMED AS ERRONEOUS OR PREJUDICIAL TO THE INTEREST OF R EVENUE WHICH IS A SINE QUA NON FOR EXERCISE OF POWER UNDER SECTION 263. LD. COMMISSIONER , THEREFORE , WAS DEFINITELY IN ERROR IN INVOKING HIS REVISION POWERS TO CORRECT THE ORDER WHICH IS IN ACCORDANCE WITH LAW LAID DOWN BY HON BLE JURISDICTIONAL HIGH COURT. ON THIS POINT , THEREFORE , WE AR E UNABLE TO UPHOLD THE STAND OF THE LD. COMMISSIONER AND VACATE THE REVISION ORDER ON THAT POINT. 9. SO FAR AS SECOND POINT I.E. ALLEGED EXCESS CLAIM OF ACCUMULATED INTEREST ON TERM LOAN TAKEN FROM I FCI IS CONCERNED , WE FIND THAT THE LD. COMMISSIONER TAKEN NOTE OF THE EXPLANATION GIVEN BY THE ASSESSEE AND HAS NOT DISPUTED OR CONTROVERTED THE SAME. HE HAS NEVERTHELESS PROCEEDED TO EXERCISE HIS REVISION POWER ON RATHER HYPER TECHNICAL GROUND THAT THE EVIDENCE OF PAYMENT OF INTEREST WAS NOT CERTIFIED BY T AX A UDITOR , BUT THEN IT IS NOT STATUTORY REQUIREMENT FOR CLAIMING THE DEDUCTION TO HAVE OBTAINED SUCH CERTIFICATION EITHER. THE T AX A UDIT R EPORT IS INDEPENDENT AUDIT REPORT AND FLOW THEREIN , EVEN IF ANY , CANNOT BE REASON ENOUGH TO INVOKE THE POWER OF REVISION UNDER SECTION 163. WE FURTHER FIND , AS EVIDENT FROM THE FOLLOWING EXTRACT FROM THE IMPUGNED ORDER , THAT THE STAND OF THE ASSESSEE WAS NEITHER FAULTED NOR EVEN CHALLENGED : - THE SECOND ISSUE IS WITH REGARD TO EXCESS CLAIM OF ACCUMULATED INTEREST ON TERM LOAN TAKEN FROM IFCL . AS PER NOTES - 9 TO SCHEDULE 14 OF THE BALANCE SHEET OF THE ASSESSEE COMPANY FOR THE YEAR UNDER REPORT, THE ASSESSEE COMPANY HAS SETT LED OUTSTANDING TERM - LOAN BALANCE ALONG WITH ACCUMULATED INTEREST ON THE TERM - LOAN TAKEN FROM IFCI. TH E TOTAL LIABILITY OF THE COMPANY WAS FIXED AT RS.8 88.36 LACS [ PRINCIPLE RS. 502.00 LACS + INTEREST RS. 386.36 LACS]. H OWEVER, IN THE ACCOUNTS, COMPANY HAD PROVIDED FOR INTEREST RS. 87.97 LACS AS ON 31.03.2007 AND FURTHER AMOUNT OF RS. 1 98.39 LACS WAS DEBITED I N THE P& L ACCOUNT. HOWEVER, IN THE BALANCE SHEET AT SCHEDULE - 3, THE ACCRUED INTEREST ON THE SAID TERM LOAN AS ON 31 - 03 - 2008 IS SHOWN AT RS. 291 . 26 LACS. THE ACCRUED I.T.A. NO . 1466 /AHD/ 20 1 3 ASSESS MENT YEAR: 200 8 - 09 PAGE 5 OF 6 INTEREST AS ON 31.03.2007 WAS RS. 187 . 96 LACS, AND, THEREFORE, THE ADDITIONAL INTEREST PROVID ED AS ACCRUED AS ON 31.03.2008 WAS ONLY RS. 103. 30 LACS [RS.291.26 LACS ( - ) RS. 187.96 LACS]. BUT THE ASSESSEE HAS CLAIMED INTEREST OF RS. 198.39 LACS IN THE P&L ACCOUNT . IN THIS REGARD, THE ASSESSEE VIDE ITS LETTER 13.03.2013 HAS SUBMITTED THAT SUCH INFEREN CE HAS BEEN MADE FROM TH E ANNUAL ACCOUNTS OF THE COMPANY AND NOR ON THE BASIS OF THE BOOKS OF ACCOUNTS OF THE ASSESSEE COMPANY. AN AMOUNT OF RS. 502 LACS WERE OUTSTANDING AS PAYABLE AS TERM LOAN PRINCIPLE TO IFCI AND RS.1 87.97 L ACS OUTSTANDING AS PAYABLE A S INTEREST TO IFCI AS ON 31.03.2007. AGAINST THESE TWO TERM LOAN HAS BECOME NIL AS ON 31.03.2008 AND AGAINST THE TOTAL OUTSTANDING INTEREST OF RS. 386.36 LACS, PROVISIONS OF RS. 187.97 LACS AND RS. 198.39 LACS FOR A.Y. 2007 - 08 AND 2008 - 09, RESPECTIVELY, WERE MADE. AN AMOUNT OF RS. 97.10 LACS WHICH INCLUDE INTEREST AMOUN T OF RS.95.10 LACS, WAS PAID B Y CHEQUE ON 15.03.2008 . THUS, INTEREST ON TERM - LOAN OF RS. 29 1.26 IS OUTSTANDING AS ON 31.03.2007. THE SUBMISSION OF THE ASSESSEE WAS DULY CONSIDERED . BUT IT WAS FOUND THAT THE EVIDENCE OF PAYMENT OF INTEREST AS CLAIMED BY THE ASSESSEE IN THE COMPUTATION IS NOT CERTIFIED BY THE TAX AUDITOR, SINCE THE AMOUNT WAS OUTSTANDING AS ON 31.03.2008 AND THE ANNEXURE ATTACHED TO THE TAX AUDIT REPORT IS NOT AUTHENTICATED BY TH E AUDITOR. THEREFORE , THIS ISSUE IS SET ASIDE AN D RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER FOR PROPER VERIFICATION OF T H E CLAIM BY THE ASSESSEE. 10. IN VIEW OF THE ABOVE DISCUSSION, IN OUR CONSIDERED VIEW, THE ACTION OF THE LD. COMMISSIONER IN INVOKING REVISION POWER ON THIS POINT ALSO IS INDEED UNSUSTAINABLE IN LAW. AS REGARDS LD. D EPARTMENTAL REPRESENTATIVE S SUGGESTION THAT THERE IS NO LEGITIMATE PREJUDICE TO THE INTEREST OF THE R EVENUE , AS THE MATTER HAS ONLY BEEN REMITTED BACK TO THE FILE OF ASSESSING OFFICER FOR NECESSARY VERIFICATION, WE MAY ONLY ADD THAT WHAT IS BEFORE US IS CORRECTNESS OF THE REVISION ORDER PASSED BY THE LD. COMMISSIONER AND IT IS CONDITION PRECEDENT FOR PASSING SUCH ORDER THAT THE ORDER SOUGHT TO BE REVISED MUST BE EIT HER ERRONEOUS OR PREJUDICIAL TO THE INTEREST OF R EVENUE. WHEN THE LD. COMMISSIONER FAILS TO ESTABLISH THAT SUCH ORDER IS ERRONEOUS OR PREJUDICIAL TO THE INTEREST OF REVENUE, HE HAS N O JURISDICTION TO EXERCISE HIS POWERS UNDER SECTION 263 IN THAT CASE . T H AT PRECISELY IS THE SITUATION HERE. THERE IS NOTHING BEFORE US TO SHOW THAT THE A SSESSMENT O RDER WHICH WAS SUBJECTED TO IMPUGNED REVISION PROCEEDING WAS I.T.A. NO . 1466 /AHD/ 20 1 3 ASSESS MENT YEAR: 200 8 - 09 PAGE 6 OF 6 ERRONEOUS OR WAS PREJUDICIAL TO THE LEGITIMATE INTEREST OF THE R EVENUE. ON THESE FACTS , THEREFORE , TH E REVISION PROCEEDINGS ON THAT POINT CANNOT BE SUSTAINED . A CCORDINGLY , WE VACATE THE IMPUGNED REVISION ORDER ON SECOND POINT AS WELL. 11. IN THE RESULT, APPEAL IS ALLOWED. PRONOUNCED IN THE OPEN COUR T TODAY ON THE 3 1 ST DAY OF MAY , 2016 . SD/ - SD/ - S.S. GODARA PRAMOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) DATED: THE 31 ST DAY OF MAY , 2016. COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD