Appeal Details
Counselvise Citation
[2019] 117 COUNSELVISE.COM (IT) 4825 (ITAT-KOLKATA)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
10 month(s) 19 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
31-05-2019
Appeal Filed By
Department
Order Result
Partly Allowed
Bench Allotted
A
Assessment Year
2004-2005
Appeal Filed On
11-07-2018
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA C BENCH, KOLKATA (BEFORE SRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER & SRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER) I.T.A. NO. 2504/KOL/2017 ASSESSMENT YEAR: 1999-2000 ACIT, (OSD), WARD-12(3)..........................................................................................APPELLANT M/S. DATEX OHMEDA (INDIA) PVT. LTD..............................................RESPONDENT BRIGADE METROPOLIS 73/1, WHITE FIELD ROAD SUMMIT TOWER-B GURUDACHR PALYA MAHADEVAPPURA POST- BANGALORE - 560048 [PAN : AABCD 1182 E] C.O. NO. 97/KOL/2018 ASSESSMENT YEAR: 1999-2000 M/S. DATEX OHMEDA (INDIA) PVT. LTD..............................................APPELLANT BRIGADE METROPOLIS 73/1, WHITE FIELD ROAD SUMMIT TOWER-B GURUDACHR PALYA MAHADEVAPPURA POST- BANGALORE - 560048 [PAN : AABCD 1182 E] ACIT, (OSD), WARD-12(3)..........................................................................................RESPONDENT I.T.A. NO. 155/KOL/2019 ASSESSMENT YEAR: 1999-2000 M/S. DATEX OHMEDA (INDIA) PVT. LTD..............................................APPELLANT BRIGADE METROPOLIS 73/1, WHITE FIELD ROAD SUMMIT TOWER-B GURUDACHR PALYA MAHADEVAPPURA POST- BANGALORE - 560048 [PAN : AABCD 1182 E] INCOME TAX OFFICER, WARD-12(3), KOLKATA..........................................................RESPONDENT 2 I.T.A. NO. 2504/KOL/2017 ASSESSMENT YEAR: 1999-2000 C.O. NO. 97/KOL/2018 ASSESSMENT YEAR: 1999-2000 I.T.A. NO. 155/KOL/2019 ASSESSMENT YEAR: 1999-2000 I.T.A. NO. 1492/KOL/2018 ASSESSMENT YEAR: 2004-05 I.T.A. NO. 2505/KOL/2017 ASSESSMENT YEAR: 2004-05 M/S. DATEX OHMEDA (INDIA) PVT. LTD I.T.A. NO. 1492/KOL/2018 ASSESSMENT YEAR: 2004-05 INCOME TAX OFFICER, WARD-12(3), KOLKATA.........................................................APPELLANT M/S. DATEX OHMEDA (INDIA) PVT. LTD..............................................RESPONDENT BRIGADE METROPOLIS 73/1, WHITE FIELD ROAD SUMMIT TOWER-B GURUDACHR PALYA MAHADEVAPPURA POST- BANGALORE - 560048 [PAN : AABCD 1182 E] I.T.A. NO. 2505/KOL/2017 ASSESSMENT YEAR: 2004-05 ACIT (OSD), WARD-12(3), KOLKATA.........................................................................APPELLANT M/S. DATEX OHMEDA (INDIA) PVT. LTD..............................................RESPONDENT BRIGADE METROPOLIS 73/1, WHITE FIELD ROAD SUMMIT TOWER-B GURUDACHR PALYA MAHADEVAPPURA POST- BANGALORE - 560048 [PAN : AABCD 1182 E] APPEARANCES BY: SHRI RAVI SHARMA, ACA, APPEARED ON BEHALF OF THE ASSESSEE. SHRI ROBIN CHOUDHURY, ADDL. CIT SR. DR. , APPEARING ON BEHALF OF THE REVENUE. DATE OF CONCLUDING THE HEARING : MAY 9 TH ,2019 DATE OF PRONOUNCING THE ORDER : MAY 31 ST , 2019 ORDER PER J. SUDHAKAR REDDY, AM :- THESE ARE CROSS APPEALS AND ONE CROSS OBJECTION FOR THE ASSESSMENT YEARS 1999-2000 & 2004-05 DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 8, KOLKATA, (HEREINAFTER THE LD.CIT(A)), PASSED U/S. 250 OF THE INCOME TAX ACT, 1961 (THE ACT). 3 I.T.A. NO. 2504/KOL/2017 ASSESSMENT YEAR: 1999-2000 C.O. NO. 97/KOL/2018 ASSESSMENT YEAR: 1999-2000 I.T.A. NO. 155/KOL/2019 ASSESSMENT YEAR: 1999-2000 I.T.A. NO. 1492/KOL/2018 ASSESSMENT YEAR: 2004-05 I.T.A. NO. 2505/KOL/2017 ASSESSMENT YEAR: 2004-05 M/S. DATEX OHMEDA (INDIA) PVT. LTD 2. THERE IS A DELAY OF 380 DAYS IN FILING OF THE ASSESSEES APPEAL IN ITA NO. 155/KOL/2019. THE ASSESSEE FILED A CONDONATION PETITION, WHICH IS NOT ACCOMPANIED BY ANY AFFIDAVIT. THE 2 ND AND 3 RD PARAGRAPHS OF THE CONDONATION PETITION READS AS FOLLOWS: WE WOULD LIKE TO BRING TO YOUR KIND ATTENTION THAT THE APPELLANT HAS ALREADY FILED CROSS-OBJECTIONS IS (SIC) ON THE SAME GROUNDS IN FORM 36A VIDE C.O. NO. 97/KOL/2018 ON 13 TH SEPTEMBER, 2018 WHICH HAS BEEN LISTED FOR HEARING BEFORE B BENCH ON 5 FEBRUARY, 2019. HOWEVER, AS A MATTER OF ABUNDANT PRECAUTION, ON THE ADVICE BY YOUR (SIC) LEGAL COUNSEL, THE APPELLANT IS ALSO FILING THE CAPTIONED APPEAL BEFORE YOUR HONOURS. IN THIS CONNECTION, WE WOULD LIKE TO HUMBLY REQUEST YOUR HONOURS TO CONDONE THE DELAY IN FILING THE APPEAL AGAINST THE CIT(A) ORDER OF 380 DAYS AND TREAT THE SAID APPEAL TO BE IN ORDER. WE WOULD NONETHELESS BE GRATEFUL TO HAVE THE OPPORTUNITY OF A PERSONAL HEARING BEFORE THE PETITION IS DISPOSED OFF. 2.1. A PERUSAL OF THIS CONDONATION PETITION DEMONSTRATES THAT THE ASSESSEE HAS NOT EXPLAINED EACH DAY OF DELAY AND HAS IN A VERY CASUAL MANNER STATES THE REASON WHICH HAS CAUSED THE DELAY IN FILING OF THE APPEAL. IN OUR VIEW, THE ASSESSEE HAS NOT DEMONSTRATED THAT IT HAS SUFFICIENT CAUSE FOR FILING THE APPEAL QUESTION, WITH A DELAY OF 380 DAYS. THE CONDONATION PETITION HAS A NUMBER OF GRAMMATICAL MISTAKES. IN THE RESULT, THIS APPEAL OF THE ASSESSEE IS DISMISSED ON THE GROUNDS OF DELAY. 3. NOW WE TAKE UP THE REVENUES APPEAL ITA NO. 2504/KOL/2017; ASSESSMENT YEAR 1999-2000. 4. THE ASSESSEE IS A DOMESTIC COMPANY AND IS ENGAGED IN THE BUSINESS OF TRADING AND PROVIDING SERVICES IN RESPECT OF MEDICAL EQUIPMENTS. IT FILED ITS RETURN OF INCOME ON 31 ST DECEMBER, 1999 DISCLOSING TOTAL LOSS OF RS.3,89,26,680/-. THE ASSESSING OFFICER VIDE HIS ORDER DT. 31/03/2004 PASSED U/S 144 R.W.S. 147 OF THE ACT, TREATED THIS RETURN OF INCOME AS INVALID AND NON EST. ON APPEAL, THE LD. FIRST APPELLATE AUTHORITY CONFIRMED THE SAME. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE ITAT. THE KOLKATA E BENCH OF THE ITAT IN ITS ORDER DT. 01/04/2005 IN ITA NO. 1560/KOL/2004, RESTORED THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR PASSING A DE NOVO ASSESSMENT ORDER AFTER GIVING THE ASSESSEE ADEQUATE OPPORTUNITY OF BEING HEARD. THE RETURN FILED ORIGINALLY WAS HELD AS A VALID RETURN. CONSEQUENTLY THE 4 I.T.A. NO. 2504/KOL/2017 ASSESSMENT YEAR: 1999-2000 C.O. NO. 97/KOL/2018 ASSESSMENT YEAR: 1999-2000 I.T.A. NO. 155/KOL/2019 ASSESSMENT YEAR: 1999-2000 I.T.A. NO. 1492/KOL/2018 ASSESSMENT YEAR: 2004-05 I.T.A. NO. 2505/KOL/2017 ASSESSMENT YEAR: 2004-05 M/S. DATEX OHMEDA (INDIA) PVT. LTD ASSESSING OFFICER PASSED AN ASSESSMENT ORDER UNDER SECTION 144 R.W.S. 254 ON 27/12/2006 DETERMINING A TOTAL LOSS OF RS.2,14,26,680/- INTERALIA, DISALLOWING CLAIM OF DEPRECIATION ON TECHNICAL KNOW-HOW AND DEPRECIATION ON BRAND VALUATION. THE ASSESSING OFFICER AT THE LAST PARA OF PAGE 3 OF THE ASSESSMENT ORDER OBSERVED AS FOLLOWS: INSPITE OF REPEATED OPPORTUNITIES GIVEN, NOTHING WAS HEARD FROM THE ASSESSEE. TAX AUDIT REPORT IN FORM 3CD WAS PERUSED. NOTHING WAS FOUND RECORDED THERE SO AS TO SUGGEST ANY MANUFACTURING/PROCESSING ACTIVITY OF THE ASSESSEE. IN THE TRADING OF MEDICAL EQUIPMENT DURING THE RELEVANT PREVIOUS YEAR, THERE WAS NO SCOPE FOR THE ASSESSEE TO PUT AFORESAID ASSETS NAMELY TECHNICAL KNOW HOW AND BRAND VALUATION TO USE FOR HIS BUSINESS. AS SUCH, DEPRECIATION CLAIMED ON THE AFORESAID ASSETS TO THE TUNE OF RS.25,00,000/- AND RS.1,50,00,000/- RESPECTIVELY ARE NOT ALLOWABLE UNDER THE PROVISIONS OF SECTION 32 OF THE I.T. ACT, 1961. ACCORDINGLY, AFORESAID AMOUNTS OF DEPRECIATION CLAIMED ARE HEREBY DISALLOWED AND ADDED BACK TO THE BUSINESS INCOME OF THE ASSESSEE. 4.1. AGGRIEVED THE ASSESSEE CARRIED THE MATTER IN APPEAL. THE LD. FIRST APPELLATE AUTHORITY GRANTED RELIEF, BY OBSERVING AS FOLLOWS:- 5 I.T.A. NO. 2504/KOL/2017 ASSESSMENT YEAR: 1999-2000 C.O. NO. 97/KOL/2018 ASSESSMENT YEAR: 1999-2000 I.T.A. NO. 155/KOL/2019 ASSESSMENT YEAR: 1999-2000 I.T.A. NO. 1492/KOL/2018 ASSESSMENT YEAR: 2004-05 I.T.A. NO. 2505/KOL/2017 ASSESSMENT YEAR: 2004-05 M/S. DATEX OHMEDA (INDIA) PVT. LTD 5. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD RIVAL CONTENTIONS. ON CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, PERUSAL OF THE PAPERS ON RECORD, ORDERS OF THE AUTHORITIES BELOW AS WELL AS CASE LAW CITED, WE HOLD AS FOLLOWS:- 7. WE HAVE PERUSED THE ASSESSMENT ORDERS PASSED FOR THE ASSESSMENT YEAR 1999- 2000. THIS IS THE BEST JUDGEMENT ASSESSMENT ORDER PASSED U/S 254/144 OF THE ACT, AS THE ASSESSEE DID NOT APPEAR BEFORE THE ASSESSING OFFICER IN RESPONSE TO THE VARIOUS NOTICES ISSUED TO IT. BEFORE THE LD. CIT(A), THE ASSESSEE HAD SUBMITTED WRITTEN SUBMISSIONS, COPY OF WHICH IS THAT PAGE 31 OF THE PAPER BOOK. ALONG WITH THESE WRITTEN SUBMISSIONS THE FOLLOWING DOCUMENTS WHERE ATTACHED:- COPY OF AGREEMENT BETWEEN BOC INDIA LIMITED AND THE APPELLANT COPY OF THE VALUATION REPORT ON PURCHASE PRICE ALLOCATION OF THE ASSETS ACQUIRED FROM BOC INDIA LIMITED ANNUAL ACCOUNTS OF THE APPELLANT FOR THE FY 2000-2001 ANNUAL ACCOUNTS OF THE APPELLANT FOR THE FY 2002-2003 ANNUAL ACCOUNTS OF THE APPELLANT FOR THE FY 1998-1999 7.1. A PERUSAL OF THE LD. CIT(A)S ORDER DEMONSTRATES THAT HE HAS RELIED ON THESE WRITTEN SUBMISSIONS ALONG WITH THE DOCUMENTS ENCLOSED THEREWITH WHICH ARE LISTED ABOVE. THE LD. CIT(A) TOOK THE MANDATORY CONDITION FOR GRANT OF DEPRECIATION U/S 32 OF THE ACT AS FULFILLED WITHOUT ANY VERIFICATION OF FACTS. THE ASSESSEE HAD NOT APPEARED BEFORE THE ASSESSING OFFICER AND NOTHING WAS SUBMITTED BEFORE THE ASSESSING OFFICER. WHETHER THE ASSETS IN QUESTION HAVE BEEN USED FOR THE PURPOSE OF BUSINESS IS A QUESTION OF FACT. THIS NEEDS ENQUIRY INTO FACTS. ADMITTEDLY NONE OF THESE DOCUMENTS WERE FILED BEFORE THE ASSESSING OFFICER. IT IS ALSO CLEAR FROM THE ABOVE THAT THE ASSESSEE 6 I.T.A. NO. 2504/KOL/2017 ASSESSMENT YEAR: 1999-2000 C.O. NO. 97/KOL/2018 ASSESSMENT YEAR: 1999-2000 I.T.A. NO. 155/KOL/2019 ASSESSMENT YEAR: 1999-2000 I.T.A. NO. 1492/KOL/2018 ASSESSMENT YEAR: 2004-05 I.T.A. NO. 2505/KOL/2017 ASSESSMENT YEAR: 2004-05 M/S. DATEX OHMEDA (INDIA) PVT. LTD HAS NOT MADE ANY APPLICATION FOR ADMISSION OF ADDITIONAL EVIDENCE UNDER RULE 46A OF THE INCOME TAX RULES, 1962 (RULES). THE LD. CIT(A) HAS ALSO NOT RECORDED THAT HE HAS DIRECTED THE ASSESSEE TO PRODUCE ANY OF THESE DOCUMENTS UNDER RULE 46A(4) OF THE RULES, SO AS TO ENABLE HIM TO DISPOSE OFF THE APPEAL OR FOR ANY OTHER SUBSTANTIAL CAUSE. THERE IS NO WHISPER ABOUT FILING OR ADMISSION OF ADDITIONAL EVIDENCE IN THE ORDER OF THE LD. CIT(A) LET ALONE RECORDING REASONS FOR ADMISSION OF ADDITIONAL EVIDENCE. 8. RULE 46A OF THE INCOME TAX RULES, 1962, READS AS FOLLOWS:- 46A. (1) THE APPELLANT SHALL NOT BE ENTITLED TO PRODUCE BEFORE THE [DEPUTY COMMISSIONER (APPEALS)] [OR, AS THE CASE MAY BE, THE COMMISSIONER (APPEALS)], ANY EVIDENCE, WHETHER ORAL OR DOCUMENTARY, OTHER THAN THE EVIDENCE PRODUCED BY HIM DURING THE COURSE OF PROCEEDINGS BEFORE THE [ASSESSING OFFICER], EXCEPT IN THE FOLLOWING CIRCUMSTANCES, NAMELY : (A) WHERE THE [ASSESSING OFFICER] HAS REFUSED TO ADMIT EVIDENCE WHICH OUGHT TO HAVE BEEN ADMITTED ; OR (B) WHERE THE APPELLANT WAS PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING THE EVIDENCE WHICH HE WAS CALLED UPON TO PRODUCE BY THE [ASSESSING OFFICER] ; OR (C) WHERE THE APPELLANT WAS PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING BEFORE THE [ASSESSING OFFICER] ANY EVIDENCE WHICH IS RELEVANT TO ANY GROUND OF APPEAL ; OR (D) WHERE THE [ASSESSING OFFICER] HAS MADE THE ORDER APPEALED AGAINST WITHOUT GIVING SUFFICIENT OPPORTUNITY TO THE APPELLANT TO ADDUCE EVIDENCE RELEVANT TO ANY GROUND OF APPEAL. (2) NO EVIDENCE SHALL BE ADMITTED UNDER SUB-RULE (1) UNLESS THE [DEPUTY COMMISSIONER (APPEALS)] [OR, AS THE CASE MAY BE, THE COMMISSIONER (APPEALS)] RECORDS IN WRITING THE REASONS FOR ITS ADMISSION. (3) THE [DEPUTY COMMISSIONER (APPEALS)] [OR, AS THE CASE MAY BE, THE COMMISSIONER (APPEALS)] SHALL NOT TAKE INTO ACCOUNT ANY EVIDENCE PRODUCED UNDER SUB-RULE (1) UNLESS THE [ASSESSING OFFICER] HAS BEEN ALLOWED A REASONABLE OPPORTUNITY (A) TO EXAMINE THE EVIDENCE OR DOCUMENT OR TO CROSS-EXAMINE THE WITNESS PRODUCED BY THE APPELLANT, OR (B) TO PRODUCE ANY EVIDENCE OR DOCUMENT OR ANY WITNESS IN REBUTTAL OF THE ADDITIONAL EVIDENCE PRODUCED BY THE APPELLANT. (4) NOTHING CONTAINED IN THIS RULE SHALL AFFECT THE POWER OF THE [DEPUTY COMMISSIONER (APPEALS)] [OR, AS THE CASE MAY BE, THE COMMISSIONER (APPEALS)] TO DIRECT THE PRODUCTION OF ANY DOCUMENT, OR THE EXAMINATION OF ANY WITNESS, TO ENABLE HIM TO DISPOSE OF THE APPEAL, OR FOR ANY OTHER SUBSTANTIAL CAUSE 7 I.T.A. NO. 2504/KOL/2017 ASSESSMENT YEAR: 1999-2000 C.O. NO. 97/KOL/2018 ASSESSMENT YEAR: 1999-2000 I.T.A. NO. 155/KOL/2019 ASSESSMENT YEAR: 1999-2000 I.T.A. NO. 1492/KOL/2018 ASSESSMENT YEAR: 2004-05 I.T.A. NO. 2505/KOL/2017 ASSESSMENT YEAR: 2004-05 M/S. DATEX OHMEDA (INDIA) PVT. LTD INCLUDING THE ENHANCEMENT OF THE ASSESSMENT OR PENALTY (WHETHER ON HIS OWN MOTION OR ON THE REQUEST OF THE [ASSESSING OFFICER]) UNDER CLAUSE (A) OF SUB- SECTION (1) OF SECTION 251 OR THE IMPOSITION OF PENALTY UNDER SECTION 271.] 9. IT IS WELL SETTLED THAT THE LD. CIT(A) WITHOUT AN APPLICATION BEING MADE BY THE ASSESSEE FOR ADMISSION OF ADDITIONAL EVIDENCE UNDER RULE 46A AND WITHOUT RECORDING REASONS FOR ADMITTING THE ADDITIONAL EVIDENCE FILED BEFORE HIM AND WITHOUT AFFORDING REASONABLE OPPORTUNITY TO THE ASSESSING OFFICER TO EXAMINE SUCH DOCUMENTS OR EVIDENCE FILED BEFORE HIM BY THE ASSESSEE, CANNOT DECIDE THE ISSUE BASED ON THESE NEW EVIDENCES. THE HONBLE DELHI HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS MANISH BUILD WELL PVT. LTD. IN INCOME TAX APPEAL NO. 928/2011 JUDGEMENT DT. :NOVEMBER 15, 2011 HELD AS FOLLOWS:- 22. AS WE HAVE WITH THE CONSENT OF THE LEARNED COUNSEL, HEARD THEM ON MERITS, WE PROCEED TO DECIDE THE AFORESAID SUBSTANTIAL QUESTIONS OF LAW. SINCE THE CIT (A) HIMSELF REFERS TO RULE 46A AND HAS ALSO ADMITTED THAT THE CONFIRMATION LETTERS ADDUCED BY THE ASSESSEE BEFORE HIM WERE TECHNICALLY FRESH EVIDENCE, IT IS NOT POSSIBLE TO ACCEPT THE PLEA OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE CIT (A), IN EXAMINING THE CONFIRMATION LETTERS, WAS EXERCISING HIS INDEPENDENT POWERS OF ENQUIRY UNDER SUB-SECTION (4) OF SECTION 250 OF THE INCOME TAX ACT. IT IS TRUE THAT THE CIT (A) AS FIRST APPELLATE AUTHORITY HAS CONTERMINOUS POWERS OVER THE SOURCES OF INCOME CONSTITUTING THE SUBJECT MATTER OF THE ASSESSMENT, EXCEPT THE POWER TO TACKLE NEW SOURCES OF INCOME NOT CONSIDERED BY THE ASSESSING OFFICER, AND CAN DO WHAT THE ASSESSING OFFICER CAN DO AND CAN DIRECT THE ASSESSING OFFICER TO DO WHAT HE HAS FAILED TO DO, AS HELD BY THE SUPREME COURT IN THE CASE OF COMMISSIONER OF INCOME-TAX, U.P. V. KANPUR COAL SYNDICATE , (1964) 53 ITR 225, BUT IN THIS CASE, THE CIT (A) DID NOT EXERCISE THIS RIGHT. THIS POWER, WHICH IS RECOGNIZED IN SUB-SECTION (4) OF SECTION 250 , HAS TO BE EXERCISED BY THE CIT (A) AND THERE SHOULD BE MATERIAL ON RECORD TO SHOW THAT HE, WHILE DISPOSING OF THE APPEAL, HAD DIRECTED FURTHER ENQUIRY AND CALLED FOR THE CONFIRMATION LETTERS FROM THE ASSESSEE EVEN IN RESPECT OF RECEIPT OF MONIES FROM CUSTOMERS BY WAY OF CHEQUES. RULE 46A IS A PROVISION IN THE INCOME TAX RULES, 1962 WHICH IS INVOKED, ON THE OTHER HAND, BY THE ASSESSEE WHO IS IN AN APPEAL BEFORE THE CIT (A). ONCE THE ASSESSEE INVOKES RULE 46A AND PRAYS FOR ADMISSION OF ADDITIONAL EVIDENCE BEFORE THE CIT (A), THEN THE PROCEDURE PRESCRIBED IN THE SAID RULE HAS TO BE SCRUPULOUSLY FOLLOWED. THE FACT THAT SUB-SECTION (4) OF SECTION 250 CONFERS POWERS ON THE CIT (A) TO CONDUCT AN ENQUIRY AS HE THINKS FIT, WHILE DISPOSING OF THE APPEAL, CANNOT BE RELIED UPON TO CONTEND THAT THE PROCEDURAL REQUIREMENTS OF RULE 46A NEED NOT BE COMPLIED 8 I.T.A. NO. 2504/KOL/2017 ASSESSMENT YEAR: 1999-2000 C.O. NO. 97/KOL/2018 ASSESSMENT YEAR: 1999-2000 I.T.A. NO. 155/KOL/2019 ASSESSMENT YEAR: 1999-2000 I.T.A. NO. 1492/KOL/2018 ASSESSMENT YEAR: 2004-05 I.T.A. NO. 2505/KOL/2017 ASSESSMENT YEAR: 2004-05 M/S. DATEX OHMEDA (INDIA) PVT. LTD WITH. IF SUCH A PLEA OF THE ASSESSEE IS ACCEPTED, IT WOULD REDUCE RULE 46A TO A DEAD LETTER BECAUSE IT WOULD THEN BE OPEN TO EVERY ASSESSEE TO FURNISH ADDITIONAL EVIDENCE BEFORE THE CIT (A) AND THEREAFTER CONTEND THAT THE EVIDENCE SHOULD BE ACCEPTED AND TAKEN ON RECORD BY THE CIT (A) BY VIRTUE OF HIS POWERS OF ENQUIRY UNDER SUB-SECTION (4) OF SECTION 250 . THIS WOULD MEAN IN TURN THAT THE REQUIREMENT OF RECORDING REASONS FOR ADMITTING THE ADDITIONAL EVIDENCE, THE REQUIREMENT OF EXAMINING WHETHER THE CONDITIONS FOR ADMITTING THE ADDITIONAL EVIDENCE ARE SATISFIED, THE REQUIREMENT THAT THE ASSESSING OFFICER SHOULD BE ALLOWED A REASONABLE OPPORTUNITY OF EXAMINING THE EVIDENCE ETC. CAN BE THROWN TO THE WINDS, A POSITION WHICH IS WHOLLY UNACCEPTABLE AND MAY RESULT IN UNACCEPTABLE AND UNJUST CONSEQUENCES. THE FUNDAMENTAL RULE WHICH IS VALID IN ALL BRANCHES OF LAW, INCLUDING INCOME TAX LAW, IS THAT THE ASSESSEE SHOULD ADDUCE THE ENTIRE EVIDENCE IN HIS POSSESSION AT THE EARLIEST POINT OF TIME. THIS ENSURES FULL, FAIR AND DETAILED ENQUIRY AND VERIFICATION. A 7-JUDGE BENCH OF THE SUPREME COURT IN KESHAV MILLS CO. LTD. V. COMMISSIONER OF INCOME-TAX, BOMBAY NORTH, AHMEDABAD (1965) 56 ITR SC 365 HAD OBSERVED AS UNDER:- 'PROCEEDINGS TAKEN FOR THE RECOVERY OF TAX UNDER THE PROVISIONS OF THE ACT ARE NATURALLY INTENDED TO BE OVER WITHOUT UNNECESSARY DELAY, AND SO, IT IS THE DUTY OF THE PARTIES, BOTH THE DEPARTMENT AND THE ASSESSEE, TO LEAD ALL THEIR EVIDENCE AT THE STAGE WHEN THE MATTER IS IN CHARGE OF THE INCOME-TAX OFFICER.' 23. IT IS FOR THE AFORESAID REASON THAT RULE 46A STARTS IN A NEGATIVE MANNER BY SAYING THAT AN APPELLANT BEFORE THE CIT (A) SHALL NOT BE ENTITLED TO PRODUCE BEFORE HIM ANY EVIDENCE, WHETHER ORAL OR DOCUMENTARY, OTHER THAN THE EVIDENCE ADDUCED BY HIM BEFORE THE ASSESSING OFFICER. AFTER MAKING SUCH A GENERAL STATEMENT, WHICH IS IN CONSONANCE WITH THE PRINCIPLE STATED IN THE ABOVE JUDGMENT, EXCEPTIONS HAVE BEEN CARVED OUT THAT IN CERTAIN CIRCUMSTANCES IT WOULD BE OPEN TO THE CIT (A) TO ADMIT ADDITIONAL EVIDENCE. THEREFORE, ADDITIONAL EVIDENCE CAN BE PRODUCED AT THE FIRST APPELLATE STAGE WHEN CONDITIONS STIPULATE IN THE RULE 46A ARE SATISFIED AND A FINDING IS RECORDED. RULE 46 A READS:- 'PRODUCTION OF ADDITIONAL EVIDENCE BEFORE THE [DEPUTY COMMISSIONER (APPEALS)] [AND COMMISSIONER (APPEALS)]. 46A. (1) THE APPELLANT SHALL NOT BE ENTITLED TO PRODUCE BEFORE THE [DEPUTY COMMISSIONER (APPEALS)] [OR, AS THE CASE MAY BE, THE COMMISSIONER (APPEALS)], ANY EVIDENCE, WHETHER ORAL OR DOCUMENTARY, OTHER THAN THE EVIDENCE PRODUCED BY HIM DURING THE COURSE OF PROCEEDINGS BEFORE THE [ASSESSING OFFICER], EXCEPT IN THE FOLLOWING CIRCUMSTANCES, NAMELY : (A) WHERE THE [ASSESSING OFFICER] HAS REFUSED TO ADMIT EVIDENCE WHICH OUGHT TO HAVE BEEN ADMITTED ; OR (B) WHERE THE APPELLANT WAS PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING THE EVIDENCE WHICH HE WAS CALLED UPON TO PRODUCE BY THE [ASSESSING OFFICER] ; OR 9 I.T.A. NO. 2504/KOL/2017 ASSESSMENT YEAR: 1999-2000 C.O. NO. 97/KOL/2018 ASSESSMENT YEAR: 1999-2000 I.T.A. NO. 155/KOL/2019 ASSESSMENT YEAR: 1999-2000 I.T.A. NO. 1492/KOL/2018 ASSESSMENT YEAR: 2004-05 I.T.A. NO. 2505/KOL/2017 ASSESSMENT YEAR: 2004-05 M/S. DATEX OHMEDA (INDIA) PVT. LTD (C) WHERE THE APPELLANT WAS PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING BEFORE THE [ASSESSING OFFICER] ANY EVIDENCE WHICH IS RELEVANT TO ANY GROUND OF APPEAL ; OR (D) WHERE THE [ASSESSING OFFICER] HAS MADE THE ORDER APPEALED AGAINST WITHOUT GIVING SUFFICIENT OPPORTUNITY TO THE APPELLANT TO ADDUCE EVIDENCE RELEVANT TO ANY GROUND OF APPEAL. (2) NO EVIDENCE SHALL BE ADMITTED UNDER SUB-RULE (1) UNLESS THE [DEPUTY COMMISSIONER (APPEALS)] [OR, AS THE CASE MAY BE, THE COMMISSIONER (APPEALS)] RECORDS IN WRITING THE REASONS FOR ITS ADMISSION. (3) THE [DEPUTY COMMISSIONER (APPEALS)] [OR, AS THE CASE MAY BE, THE COMMISSIONER (APPEALS)] SHALL NOT TAKE INTO ACCOUNT ANY EVIDENCE PRODUCED UNDER SUB-RULE (1) UNLESS THE [ASSESSING OFFICER] HAS BEEN ALLOWED A REASONABLE OPPORTUNITY (A) TO EXAMINE THE EVIDENCE OR DOCUMENT OR TO CROSS-EXAMINE THE WITNESS PRODUCED BY THE APPELLANT, OR (B) TO PRODUCE ANY EVIDENCE OR DOCUMENT OR ANY WITNESS IN REBUTTAL OF THE ADDITIONAL EVIDENCE PRODUCED BY THE APPELLANT. (4) NOTHING CONTAINED IN THIS RULE SHALL AFFECT THE POWER OF THE [DEPUTY COMMISSIONER (APPEALS)] [OR, AS THE CASE MAY BE, THE COMMISSIONER (APPEALS)] TO DIRECT THE PRODUCTION OF ANY DOCUMENT, OR THE EXAMINATION OF ANY WITNESS, TO ENABLE HIM TO DISPOSE OF THE APPEAL, OR FOR ANY OTHER SUBSTANTIAL CAUSE INCLUDING THE ENHANCEMENT OF THE ASSESSMENT OR PENALTY (WHETHER ON HIS OWN MOTION OR ON THE REQUEST OF THE [ASSESSING OFFICER]) UNDER CLAUSE (A) OF SUB-SECTION (1) OF SECTION 251 OR THE IMPOSITION OF PENALTY UNDER SECTION 271 .] WE ARE HIGHLIGHTING THESE ASPECTS ONLY TO PRESS HOME THE POINT THAT THE CONDITIONS PRESCRIBED IN RULE 46A MUST BE SHOWN TO EXIST BEFORE ADDITIONAL EVIDENCE IS ADMITTED AND EVERY PROCEDURAL REQUIREMENT MENTIONED IN THE RULE HAS TO BE STRICTLY COMPLIED WITH SO THAT THE RULE IS MEANINGFULLY EXERCISED AND NOT EXERCISED IN A ROUTINE OR CURSORY MANNER. A DISTINCTION SHOULD BE RECOGNIZED AND MAINTAINED BETWEEN A CASE WHERE THE ASSESSEE INVOKES RULE 46A TO ADDUCE ADDITIONAL EVIDENCE BEFORE THE CIT (A) AND A CASE WHERE THE CIT (A), WITHOUT BEING PROMPTED BY THE ASSESSEE, WHILE DEALING WITH THE APPEAL, CONSIDERS IT FIT TO CAUSE OR MAKE A FURTHER ENQUIRY BY VIRTUE OF THE POWERS VESTED IN HIM UNDER SUB-SECTION (4) OF SECTION 250 . IT IS ONLY WHEN HE EXERCISES HIS STATUTORY SUO MOTO POWER UNDER THE ABOVE SUB-SECTION THAT THE REQUIREMENTS OF RULE 46A NEED NOT BE FOLLOWED. ON THE OTHER HAND, WHENEVER THE ASSESSEE WHO IS IN APPEAL BEFORE HIM INVOKES RULE 46A, IT IS INCUMBENT UPON THE CIT (A) TO COMPLY WITH THE REQUIREMENTS OF THE RULE STRICTLY. 9.1. IN VIEW OF THE ABOVE DISCUSSION, IT IS CLEAR THAT THE LD. CIT(A) HAD VIOLATED RULE 46A OF THE RULES. HENCE HIS ORDER CANNOT BE UPHELD. HENCE WE NEED NOT EXPRESS OUR VIEW ON THE ARGUMENTS ADVANCED BY THE ASSESSEE ON MERITS. 10 I.T.A. NO. 2504/KOL/2017 ASSESSMENT YEAR: 1999-2000 C.O. NO. 97/KOL/2018 ASSESSMENT YEAR: 1999-2000 I.T.A. NO. 155/KOL/2019 ASSESSMENT YEAR: 1999-2000 I.T.A. NO. 1492/KOL/2018 ASSESSMENT YEAR: 2004-05 I.T.A. NO. 2505/KOL/2017 ASSESSMENT YEAR: 2004-05 M/S. DATEX OHMEDA (INDIA) PVT. LTD 10. THE VIOLATION OF THE RULE HAS TAKEN PLACE AT THE STAGE OF PROCEEDINGS BEFORE THE LD. FIRST APPELLATE AUTHORITY. UNDER THE NORMAL CIRCUMSTANCES, WE WOULD HAVE RESTORED THE MATTER TO THE FILE OF THE LD. CIT(A) FOR FRESH ADJUDICATION, HAD THERE BEEN AN APPLICATION BY THE ASSESSEE FOR ADMISSION OF ADDITIONAL EVIDENCE OR HAD THERE BEEN A DIRECTION BY THE LD. CIT(A) TO THE ASSESSEE FOR PRODUCTION OF THESE DOCUMENTS TO ENABLE HIM TO DISPOSE OFF THE APPEAL UNDER RULE 46A(4) OF THE RULES. IN THE ABSENCE OF BOTH WE HAVE NO OTHER ALTERNATIVE BUT TO QUASH THIS ORDER OF THE LD. CIT(A) AS BAD IN LAW AND ALLOW THIS APPEAL OF THE REVENUE FOR THE ASSESSMENT YEAR 1999-2000. 11. COMING CROSS-OBJECTION OF THE ASSESSEE IN C.O. NO. 97/KOL/2018; ASSESSMENT YEAR 1999-2000, THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS:- 1. THAT ON THE FACTS, IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. AO/CIT(A) ERRED IN NOT GRANTING DEPRECIATION AMOUNTING TO RS. 14,18,375/- ON VARIOUS COMMERCIAL RIGHTS REPRESENTED BY GOODWILL AMOUNTING TO RS. 1,13,47,000/-, THE SAME BEING AN INTANGIBLE ASSET ELIGIBLE FOR DEPRECIATION UNDER SECTION 32(1)(II) OF THE ACT. 2. THAT ON THE FACTS, IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. AO/CIT(A) ERRED IN NOT GRANTING DEPRECIATION AMOUNTING TO RS, 10,00,000/- ON VARIOUS COMMERCIAL RIGHTS REPRESENTED BY NON-COMPETE FEES OF RS. 80,00,000/-, THE SAME BEING AN INTANGIBLE ASSET ELIGIBLE FOR DEPRECIATION UNDER SECTION 32(1)(II) OF THE ACT. 12. AS THE FACT RELATING TO THESE GROUNDS ARE NOT ON RECORD, IN VIEW OF OUR DISCUSSION IN ITA NO. 2504/KOL/2017; ASSESSMENT YEAR 1999-2000, THIS CROSS- OBJECTION OF THE ASSESSEE IS DISMISSED. THE FRESH GROUNDS REQUIRE INVESTIGATION INTO THE FACTS AND THESE FACTS ARE NOT ON RECORD. NOTHING WAS SUBMITTED BEFORE THE ASSESSING OFFICER. THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF B.R. BAMASI VS COMMISSIONER OF INCOME-TAX REPORTED IN 1972 83 ITR 223 BOM RELIED UPON BY THE ASSESSEE IS NOT APPLICABLE IN THE FACTS AND CIRCUMSTANCES OF THE CASE. HENCE THE CROSS-OBJECTIONS ARE DISMISSED. 13. REVENUES APPEAL IN ITA NO. 2505/KOL/2017; ASSESSMENT YEAR 2004-05. 14. IN THIS CASE, WE FIND THAT THE LD. CIT(A) HAS ALLOWED DEPRECIATION ON INTANGIBLE ASSET I.E., TECHNICAL KNOWHOW ETC. BY FOLLOWING HIS OWN ORDER FOR THE ASSESSMENT YEAR 11 I.T.A. NO. 2504/KOL/2017 ASSESSMENT YEAR: 1999-2000 C.O. NO. 97/KOL/2018 ASSESSMENT YEAR: 1999-2000 I.T.A. NO. 155/KOL/2019 ASSESSMENT YEAR: 1999-2000 I.T.A. NO. 1492/KOL/2018 ASSESSMENT YEAR: 2004-05 I.T.A. NO. 2505/KOL/2017 ASSESSMENT YEAR: 2004-05 M/S. DATEX OHMEDA (INDIA) PVT. LTD 1999-2000. IN VIEW OF OUR DECISION FOR THE ASSESSMENT YEAR 1999-2000, THIS DECISION OF THE LD. CIT(A) ON THIS ISSUE OF GRANT OF DEPRECIATION ON INTANGIBLE ASSET IS REVERSED. HENCE THIS GROUND OF APPEAL OF THE REVENUE IS ALLOWED. 15. GROUND NO. 2 IS ON THE ISSUE OF DISALLOWANCE OF BAD DEBTS WRITTEN OFF. THIS ISSUE HAS BEEN ADJUDICATED BY THE LD. CIT(A) BY CONSIDERING THE ARGUMENTS OF THE ASSESSEE AND BY ACCEPTING THEM WITHOUT PROPER APPRECIATION OF FACTS AND LAW. NO OPPORTUNITY WAS GIVEN TO THE ASSESSING OFFICER. THE EXPLANATIONS GIVEN BY THE LD. COUNSEL FOR THE ASSESSEE DEMONSTRATES THAT THE CLAIM OF THE ASSESSEE HAS NOTHING TO DO WITH THE PROPOSITIONS OF LAW LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF TRF LTD VS CIT (2010) 323 ITR 397 (SC) . THE LD. CIT(A) HAS MISDIRECTED HIMSELF. WHAT WAS SUBMITTED BEFORE US WAS THAT PROVISIONS WERE MADE FOR BAD DEBTS IN ALL THE EARLIER YEARS AND THAT SUCH PROVISIONS WERE ADDED BACK AS INCOME OF THOSE RESPECTIVE YEARS IN THE COMPUTATION OF INCOME AS IT WAS NOT AN ALLOWABLE DEDUCTION. THUS, NO DEDUCTION WAS CLAIMED BY THE ASSESSEE ON PROVISION MADE FOR BAD DEBTS. IN THIS YEAR, CERTAIN PORTION OF THE PROVISION FOR BAD DEBTS MADE IN THE EARLIER YEARS WAS WRITTEN BACK. HENCE IT WAS SUBMITTED THAT THE AMOUNT OF PROVISION FOR BAD DEBTS WRITTEN BACK CANNOT BE ADDED AS INCOME OF THE ASSESSEE DURING THE YEAR, FOR THE REASON THAT, NO DEDUCTION WAS CLAIMED FROM THE INCOME IN THE EARLIER ASSESSMENT YEAR. THIS ARGUMENT OF THE ASSESSEE IS CORRECT. NEVERTHELESS THE CLAIM REQUIRES VERIFICATION OF FACTS BY THE ASSESSING OFFICER. THE LD. CIT(A) HAS ALLOWED THIS CLAIM BY THE OBSERVING AS FOLLOWS:- THUS, THE CONDITIONS U/S 36(1)(VII) AND 36(2) BEING SATISFIED, THE APPELLANT IS ENTITLED TO THE DEDUCTION U/S 36(1)(VII). HENCE WE REVERSE THIS ORDER OF THE LD. CIT(A) ON THIS ISSUE AND RESTORE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION, IN ACCORDANCE WITH LAW. THE ASSESSEE IS DIRECTED TO APPEAR BEFORE THE ASSESSING OFFICER AND DEMONSTRATE ITS CASE, WITH EVIDENCE. IN THE RESULT, THIS GROUND OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. 16. THE NEXT GROUND IS ON THE ISSUE OF SHORT CREDIT OF TDS. THE LD. CIT(A) HAS SET ASIDE THE MATER FOR VERIFICATION, WE FIND NO INFIRMITY IN THE SAME. IN THE RESULT, THIS GROUND OF THE REVENUE IS DISMISSED. 12 I.T.A. NO. 2504/KOL/2017 ASSESSMENT YEAR: 1999-2000 C.O. NO. 97/KOL/2018 ASSESSMENT YEAR: 1999-2000 I.T.A. NO. 155/KOL/2019 ASSESSMENT YEAR: 1999-2000 I.T.A. NO. 1492/KOL/2018 ASSESSMENT YEAR: 2004-05 I.T.A. NO. 2505/KOL/2017 ASSESSMENT YEAR: 2004-05 M/S. DATEX OHMEDA (INDIA) PVT. LTD 17. IN THE RESULT, THIS APPEAL OF THE REVENUE IS ALLOWED IN PART. 18. NOW WE TAKE UP THE REVENUES APPEAL IN ITA NO. 1492/KOL/2018; ASSESSMENT YEAR 2004-05. 19. GROUND NO. 1, 2 & 3 IS ON THE ALLOWANCE OF DEPRECIATION ON TECHNICAL KNOWHOW. THE LD. CIT(A) RELIED ON HIS OWN ORDER DT. 17/10/2017 AND GRANTED RELIEF. IN VIEW OF OUR DECISION ON THIS ISSUE IN ITA NO. 2504/KOL/2017 FOR THE ASSESSMENT YEAR 2008- 09 IN ITA NO. 2505/KOL/2017 FOR THE ASSESSMENT YEAR 2004-05, WE ALLOW THESE GROUNDS OF THE REVENUE. 20. GROUND NO. 4 IS AGAINST THE ALLOWANCE OF BAD DEBTS WRITTEN OFF. THE LD. CIT(A) RELIED ON HIS ORDER FOR THE ASSESSMENT YEAR 2004-05 DT. 17/10/2017. THIS GROUND WAS NOT ADJUDICATED BY THE LD. CIT(A) IN THIS APPEAL ON THE GROUND THAT THE SAME IS INFRUCTUOUS. HENCE, THE REVENUE SHOULD NOT HAVE ANY GRIEVANCE. IN ANY EVENT, WHILE ADJUDICATING THE VERY SAME ISSUE IN ITA NO. 2505/KOL/2017, FOR THE VERY SAME ASSESSMENT YEAR WE HAVE REMANDED THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION, IN ACCORDANCE WITH LAW. HENCE THIS GROUND OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. 21. GROUND NO. 5 & 6 ARE AGAINST THE ALLOWANCE OF DEPRECIATION ON GOOD WILL AND NON-COMPETE FEES. IN VIEW OF OUR DECISION FOR THE ASSESSMENT YEAR 2008-09 IN ITA NO. 2504/KOL/2017 & C.O. NO. 97/KOL/2018, WE ALLOW THESE GROUNDS OF THE REVENUE. 22. IN THE RESULT, THIS APPEAL OF THE REVENUE IS ALLOWED IN PART. KOLKATA, THE 31 ST DAY OF MAY, 2019. SD/- SD/- [S.S. VISWANETHRA RAVI] [J. SUDHAKAR REDDY] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 25.05.2019 {SC SPS} 13 I.T.A. NO. 2504/KOL/2017 ASSESSMENT YEAR: 1999-2000 C.O. NO. 97/KOL/2018 ASSESSMENT YEAR: 1999-2000 I.T.A. NO. 155/KOL/2019 ASSESSMENT YEAR: 1999-2000 I.T.A. NO. 1492/KOL/2018 ASSESSMENT YEAR: 2004-05 I.T.A. NO. 2505/KOL/2017 ASSESSMENT YEAR: 2004-05 M/S. DATEX OHMEDA (INDIA) PVT. LTD COPY OF THE ORDER FORWARDED TO: 1. M/S. DATEX OHMEDA (INDIA) PVT. LTD BRIGADE METROPOLIS 73/1, WHITE FIELD ROAD SUMMIT TOWER-B GURUDACHR PALYA MAHADEVAPPURA POST- BANGALORE - 560048 2. ACIT, (OSD), WARD-12(3). 3. INCOME TAX OFFICER, WARD-12(3), KOLKATA 4. CIT(A)- 5. CIT- , 6. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT, KOLKATA BENCHES
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