DCIT, Circle- 1(2), Hyderabad V. M/s Dr. Reddy's Laboratories Ltd., Hyderabad

ITA 151/HYD/2014

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 8973 (ITAT-HYDERABAD)
• Duration Of Justice: 11 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 22-04-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 31-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PARNEET S SACHDEV
• Keywords: Audit objection; Difference of opinion; Tax effect; Change of opinion
• Section: 143(3); 6; 154; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI D.MANMOHAN, VICE PRESIDENT AND SHRI P.M.JAGTAP, ACCOUNTANT MEMBER ITA NO. 150 /HYD/2014 : ASST. YEAR 200 3 - 0 4 ITA NO.1 51 /HYD/2014 : ASST. YEAR 200 4 - 0 5 DY. COMMISSIONER OF INCOME - TAX, CIRCLE 1(2), HYDERABAD V/S. M/S. DR REDDYS LABORATORIES LTD., HYDERABAD ( PAN - AAACD 7999 Q ) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PARNEET S.S A CHDEV RESPONDENT BY : SHRI P.S.R.V.V.SURYA RAO DATE OF HEARING 20 . 01 .201 5 DATE OF PRONOUNCEMENT 20.01.2015 O R D E R PER D.MANMOHAN, VICE PRESIDENT THESE TWO APPEALS BY THE R E VENUE ARE DIRE C TED AGAINST THE ORDERS PASSED BY THE COMMISSIONER OF INCOME - TAX(APPEALS) II, HYDERABAD REFERABLE IN RESPECT OF THE ASSESSMENT YEAR 2003 - 04 AND 2004 - 05. SINCE THE ISSUE S INVOLVED IN BOTH THE APPEALS ARE COMMON, WE PROCEED TO DISPOSE O F THE S AME BY A COMMON ORDER , FOR THE SAKE OF CONVENIENCE. 2. IN RESPE C T OF ASSESSMENT YEAR 20 0 3 - 04, THE RE VENUE RAISED THE FOLLO W IN G GROUNDS - I. THE LD. CIT(A) OUGHT TO HAVE RECKONED THE LIMITATION OF TIM E FROM THE O R DER PASSED U /S. 143(3) R.W.S. 254 DATED 30.12.2011 AND NOT THE ORD E R PASSED U/S 154 ON 22.06.2006. II. THE LD. CIT(A) FAIL E D TO OB S ERVE THAT THE O R D E R HAD BEEN PASSED OUT OF AUDIT OBJ E CTION RAISED BY THE REV ENUE AUDIT I TA NO. 150 - 151/HYD/2014 M/S. DR REDDYS LABORATORIES LTD., HYDERABAD 2 PAR T Y AND THE ISSUE IS COVERED BY EXCEPTION LAID DOWN IN THE BOARDS INSTRUCTION NO.3 OF 2011. III. ANY OTHER G R OU N D THAT MAY BE URGED AT THE TIME FOE HEARING. SIMILARLY, FOR THE ASSESSMENT YEAR 2004 - 05, THE FO L LOWIN G GROUNDS ARE RAISED BEFORE US. I. THE LD. CIT(A) OUGHT TO HAVE RECKONED THE LIMITATION OF TIM E FROM THE O R DER PASSED U /S. 143(3) R.W.S . 263 DATED 13 .2.20 09 AND NOT THE ORD E R PASSED U/S 154 ON 2 6 .0 2 .200 7 . II. THE LD. CIT(A) FAIL E D TO OB S ERVE THAT THE O R D E R HAD BEEN PASSED OUT OF AUDIT OBJ E CTION RAISED BY THE REV ENUE AUDIT PAR T Y AND THE ISSUE IS COVERED BY EXCEPTION LAID DOWN IN THE BOAR DS INSTRUCTION NO.3 OF 2011. III. ANY OTHER G R OU N D THAT MAY BE URGED AT THE TIME FOE HEARING. 3. AT THE OUTSET, IT MAY BE NO T ICED THAT IN S. 154 PROCE E DINGS, THE ASSESSING OFFICER SOUGHT TO MAKE CERTAIN DISALLO W ANCES, WHICH WERE CHALLENGED BY THE ASSESSEE ON THE FOLLOWING GROUND - THE ASSESSING OFFICER HAS ERRED IN LAW AND FACTS OF THE CA S E TO ISSUE THE ORDER UN D ER S.154 B ASED ON RENEWED INTERPRETATION OF LAW AND CHANGE OF INTERPRETATION. 4. TH E ASSESSEE ALSO RAISED OBJECTION WITH REGARD TO THE VALIDITY OF THE PROCEEDINGS UN D ER S.154 ON TH E GROUND THAT IT I S TIME BARRED AND E V EN ON MERITS, THE ASSESSEE IS ELIGIBL E TO WEIGHTED DEDUCTION. IN PARA 4.1 AND 4.2, THE LEARNED CIT(A) PROCEEDED TO DISPOSE OF THE PRELIMINARY ISSUE BY SUCCINCTLY REFERRING TO THE FACT THAT THE PROCEEDINGS UN D ER S.154 WERE INITIATED CONSEQUENT TO REVENUE AUDIT OBJECTION , AND WHETHER A PARTICULAR EXPENDITURE IS ALLOWABLE OR N O T INVOLVES APPLICATION OF MIND AND ANY MI S TAKE INCURRED IN THIS CONN E C T ION CANNOT B E CONSI D ERED AS MI S TAKE I TA NO. 150 - 151/HYD/2014 M/S. DR REDDYS LABORATORIES LTD., HYDERABAD 3 APPARENT FROM RECORD. PLACING RELIANCE UPON THE DECISIO N OF THE HON'BLE SUPREME COURT IN MEPCO I NDU S TRIES LTD. V/S. CIT (319 ITR 205), THE LEARNED CIT(A) CONCLUDED AS UN D ER - 4.3. IN VIEW OF THE ABOVE DECISION, AN ISSUE WHICH NEEDS APPLI C A T ION OF MIND, CANNO T BE TREATED AS MI S TAKE APPARENT FROM THE RECORD THEREFORE, THE ISSUE DOES NO T FALL UN D ER THE PU R VIEW OF SECTION 15 4 . THEREFORE, THIS G R OUND O F APP EA L IS ALLOWED. THE LEARNED CIT(A) HAS ALSO DECIDED OTHER G R OUNDS IN FAVO UR OF TH E ASSESSEE BY H OLDING THAT THE PROCEEDINGS UN D ER S.154 ARE BARRED BY LIMITATION, ETC. 5. AS MAY BE NOTICED FORM THE G R OUNDS OF APPEAL URGED BEFORE US BY THE RE VENUE, THE ISSUE CONCERNING THE VALIDITY OF PROCEE D INGS UN D ER S.154, WHEN SUCH PROC E EDIN G S ARE BASED ON MERE CHANGE OF OPINION, WAS NO T AGITATED IN TH ESE APPEAL S . THE G R OUNDS OF APPEAL ARE ALREADY EXTRACTED ABOVE, WHICH CLEARLY SHOW THAT THE REVENUE IS CONTESTING ONLY THE ISSUE S CONCERNING THE PERIOD O F LIMI T ATION FOR PASSING AN ORDER UN D ER S .154 ; AND ALSO WITH R EGARD TO THE EXCEPTIONS PROVIDED FOR FILING AN APPEAL EVEN WHERE THERE W A S NO TAX EFFECT, BUT THE ISSUE CONCERNING VALIDITY OF INIT I ATING PROCE E D I N G S UN D ER S.154 ON THE RENEWED INTERPRETATION OF LAW WAS CONSPICUOUSLY ABSENT IN THE G R OUN D S OF APPEAL. IN OTHER WORDS, THE ORDER OF THE LEARNED CIT(A) WITH REGA R D TO THE I S SU E CO N C E RNING VALIDITY OF PROCEEDIN G S UNDER S.154 FOR THE R E ASON THAT THE ASSESSING OFFICER HAVING AP P LIED HIS MIND AT THE ASSESSMENT S T AGE, IS NOT ENTITLED TO INI TI ATE PROC E EDIN G S UN D ER S .154 BASED ON CHANGE OF OPINION, HAS ATTAINED FINALITY. IN SUCH AN EVENT OF THE MATT E R, GROUNDS FILED BEFOR E US, EVEN IF A DECISION HAS TO B E RENDER E D, ARE OF ACAD E MIC IMPO R TAN C E. HAVING REGARD TO THE CIR C UM S TANCES OF THE CASE AND UPON H EA RING RIVAL SU B M I S SION S , WE ARE O F TH E VI E W THAT THE APPEALS FIL E D BY TH E R E VENU E I TA NO. 150 - 151/HYD/2014 M/S. DR REDDYS LABORATORIES LTD., HYDERABAD 4 DESERVE TO BE DISMISSED ON THE G R OUND THAT THE ISSUES RAISED HEREIN ARE O F ACADEMIC IMPO R TANCE, SINCE THE ORDER PASSED UNDER S.154 HAS NO LEGS TO STAND ON THE LIMITED GROUND THAT IT IS BASED ON CHANGE OF OPIN I ON, AND ON THIS ASPECT OF THE MA T TER HAS ATTAINED FINALITY. 6. AS PRONOUNCED IN TH E OPEN COURT, THE APPEALS FIL E D BY THE R E VENUE ARE DISMISSED. ORDER PRONOUNCED IN THE COURT ON 20 TH JANUARY, 2015 (P.,M.JAGTAP ) (D.MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT DT/ - 20 TH JANUARY, 2015 COPY FORWARDED TO: 1. M/S. DR REDDYS LABORATORIES LTD., 7 - 1 - 27, AMEERPET, HYDERABAD 500 016 2. DY. COMMISSIONER OF INCOME - TAX CIRCLE 1(2), HYDERABAD 3. 4. COMMISSIONER OF INCOME - TAX(APPEALS) - II , HYDERABAD COMMISSIONER OF INCOME - TAX I, HYDERABAD 5. DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S 1. DATE OF DICTATION 20 .1.201 5 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH PLACED BEFORE THE OTHER MEMBER 3. / DATE ON WHICH THE APPROVED DRAFT COMES TO THE SENIOR P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER 20 .1.201 5 5. / DATE ON WHICH THE FAIR ORDER GOES TO THE SR. P.S. 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK. 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 8. DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR 9. DATE OF THE DESPATCH OF THE TRIBUNAL ORDER I TA NO. 150 - 151/HYD/2014 M/S. DR REDDYS LABORATORIES LTD., HYDERABAD 5