DCIT, Circle - 11(1), Kolkata , Kolkata V. M/s. JCT Ltd., , Kolkata

ITA 1644/KOL/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 6253 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 6 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 14-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR P K SRIHARI
• Assessee Lawyers: A K GUPTA
• Keywords: Depreciation; Unabsorbed depreciation
• Section: 143(3); 115JB; 263

Judgement Text

ITA NO. 1644/KOL/2017 A.Y. 2011-2012 M/S. JCT LIMITED 1 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA C BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, VICE-PRESIDENT (KZ) AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER I.T.A. NO. 1644/KOL/2017 ASSESSMENT YEAR: 2011-2012 DEPUTY COMMISSIONER OF INCOME TAX,................. ..................APPELLANT CIRCLE-11(1), KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 -VS.- M/S. JCT LIMITED,.................................. ................................RESPONDENT 18, MONILAL SAHA LANE, 2 ND FLOOR, NEW MARKET, KOLKATA-700 013 [PAN: AAACJ 6733 E] APPEARANCES BY: DR. P.K. SRIHARI, CIT, D.R. , FOR THE APPELLANT SHRI A.K. GUPTA, FCA, FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : JANUARY 23, 2019 DATE OF PRONOUNCING THE ORDER : JANUARY 25, 2019 O R D E R PER SHRI P.M. JAGTAP, VICE-PRESIDENT (KZ):- THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST TH E ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-4, KOLKATA DAT ED 19.05.2017 AND THE GROUNDS RAISED BY THE REVENUE THEREIN READ AS U NDER:- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD. CIT(A) ERRED IN ALLOWING THE CLAIM WITHOUT CONSIDERING THE QUANTUM OF BROUGHT FORWARD BUSINESS LOSS VIS-A-VIS DEPRECIATION LOSS. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE CIT(A) ERRED IN OVERLOOKING EXPLANATION TO SECT ION 115JB OF THE ACT. WHEREBY BOOK PROFIT AS PER THE STATEMENT OF PROFIT AND LOSS FOR THE RELEVANT PREVI OUS YEAR WAS SUPPOSED TO BE REDUCED BY THE AMOUNT OF LOSS BR OUGHT FORWARD OR UNABSORBED DEPRECIATION, WHICHEVER IS LE SS AS PER BOOKS OF ACCOUNTS. ITA NO. 1644/KOL/2017 A.Y. 2011-2012 M/S. JCT LIMITED 2 2. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY, W HICH IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND SELLING OF TEXTIL E YARNS, NYLON SYNTHETIC POLYESTER FILAMENT YARN, POLYSTER CHIPS E TC. IN THE ASSESSMENT ORIGINALLY COMPLETED BY THE ASSESSING OFFICER VIDE AN ORDER DATED 30.03.2014 PASSED UNDER SECTION 143(3), THE TOTAL I NCOME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION WAS DETERMINED AT NIL UNDER THE NORMAL PROVISIONS OF THE ACT AND BOOK PROFIT UNDER SECTION 115JB AT RS.21,37,16,635/-. THE SAID ASSESSMENT WAS SET ASID E BY THE CONCERNED LD. CIT VIDE AN ORDER DATED 28.03.2016 PASSED U/S 263 W ITH A DIRECTION TO THE ASSESSING OFFICER TO FRAME THE ASSESSMENT AFRESH AF TER VERIFYING AND EXAMINING THE ISSUE RELATING TO THE AVAILABILITY OF BOOK LOSS OR UNABSORBED DEPRECIATION FOR SET OFF WHILE COMPUTING THE BOOK PROFIT UNDER SECTION 115JB. AS PER THE DIRECTION OF THE LD . CIT GIVEN UNDER SECTION 263, FRESH ASSESSMENT WAS COMPLETED BY THE ASSESSING OFFICER UNDER SECTION 143(3) READ WITH SECTION 263 OF THE A CT VIDE AN ORDER DATED 09.11.2016 WHEREIN HE HELD THAT THE TOTAL CUMULATIV E BROUGHT FORWARD LOSS OF THE ASSESSEE-COMPANY AS ON 31.03.2010 AMOUN TING TO RS.10213.43 LAKHS BEING INCLUSIVE OF DEPRECIATION OF RS.53789.4 4 LAKHS, THERE WAS NO BOOK LOSS EXCLUDING UNABSORBED DEPRECATION AVAILABL E FOR SET OFF FROM BOOK PROFIT. HE ACCORDINGLY DISALLOWED THE CLAIM OF THE ASSESSEE FOR SUCH SET OFF AND COMPUTED THE BOOK PROFIT OF THE ASSESSE E-COMPANY FOR THE YEAR UNDER CONSIDERATION UNDER SECTION 115JB AT RS.59,97 ,10,354/-. 3. AGAINST THE ORDER PASSED BY THE ASSESSING OFFICE R UNDER SECTION 143(3) READ WITH SECTION 263 OF THE ACT, AN APPEAL WAS PREFERRED BY THE ASSESSEE BEFORE THE LD. CIT(APPEALS) AND AFTER CONS IDERING THE SUBMISSIONS MADE BY THE ASSESSEE AS WELL AS THE MAT ERIAL AVAILABLE ON RECORD, THE LD. CIT(APPEALS) DECIDED THE ISSUE VIDE HIS APPELLATE ORDER DATED 19.05.2017 AS UNDER:- I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS AND TH E MATERIAL ON RECORD. IT IS FOUND THAT THERE IS MERIT IN THE CONTENTIONS OF THE APPELLANT'S A/R THAT THE CUMULAT IVE BROUGHT FORWARD BOOK LOSS OF RS.10213.43 LACS WAS N OT INCLUDED IN THE CUMULATIVE BROUGHT FORWARD LOSS OF RS. ITA NO. 1644/KOL/2017 A.Y. 2011-2012 M/S. JCT LIMITED 3 5378,94 LAKHS AND THAT ONLY A SUM OF RS.1,185,643,9 95/- BEING UNABSORBED DEPRECIATION BROUGHT FORWARD FROM THE PREVIOUS YEAR 2001-02 TO 2009-10 WAS INCLUDED IN TH E BROUGHT FORWARD LOSS OF RS.1,580,004,341/- ALONG WI TH UNABSORBED BUSINESS LOSS OF RS. 394,360,346/- ACCUM ULATED SINCE 2008-09. IT IS FOUND THAT IT IS NOT THE CASE OF THE A.O THAT THERE IS ANY CHANGE IN THE METHOD OF WORKING O F DEPRECIATION BY THE APPELLANT COMPANY, THE DISPUTE IN QUESTION HAS ARISEN DUE TO THE MISAPPRECIATION OF T HE CUMULATIVE FIGURE OF BROUGHT-FORWARD LOSS FOR DISCL OSURE AS PER COMPANY'S ACT WAS CONSTRUED BY THE A.O. TO BE I NCLUSIVE OF CUMULATIVE BROUGHT FORWARD LOSS OF RS.1,021,343, 248/-, WHICH WAS FACTUALLY INCORRECT AS PER DOCUMENTS ON R ECORD. ON THE ISSUE OF ADJUSTMENT OF UNABSORBED DEPRECIATI ON OR BOOK LOSSES, IT IS WELL SETTLED BY THE HONBLE APEX COURT THAT ONCE THE AMOUNT OF DEPRECIATION WAS ACTUALLY DEBITE D TO THE P&L A/C. AND WAS CERTIFIED BY THE AUDITORS, IT WAS NOT PERMISSIBLE FOR THE A.O TO MAKE FURTHER BOOK ADJUST MENTS. THE A.O IS DIRECTED TO ALLOW THE APPELLANT'S CLAIM FOR DEDUCTION OF RS.38,59,93,719/- BEING THE LESSER AMO UNT OF (I) BROUGHT FORWARD DEPRECIATION, I.E. RS. 118,56,43,99 5 OR (II) BROUGHT FORWARD BUSINESS LOSS OF PREVIOUS YEARS OF RS.38,59,93,719/- AS STIPULATED BY THE PROVISIONS O F CLAUSE (III) OF EXPLANATION 1 TO SECTION 115JB OF THE LT. ACT, 1961 FOR COMPUTATION OF BOOK PROFIT U/S 115JB OF THE I.T . ACT, AFTER DUE VERIFICATION. THUS, GROUNDS NOS. 1 TO 11 ARE AL LOWED FOR STATISTICAL PURPOSES. THE LD. CIT(APPEALS) THUS ACCEPTED THE CLAIM OF THE ASSESSEE IN PRINCIPLE AND DIRECTED THE ASSESSING OFFICER TO ALLOW THE SAM E AFTER DUE VERIFICATION. AGGRIEVED BY THE ORDER OF THE LD. CIT (APPEALS), THE REVENUE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 4. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE LD. D.R. HAS CONTENDED THAT THE RELEVANT FACTS AND FIGURES FOR CLAIMING THE SET OFF OF BOOK LOSS AND UNABSORBED DEPRECIATION FOR COMPUTING THE BOOK PROF IT UNDER SECTION 115JB WERE NOT FURNISHED BY THE ASSESSEE AND IN THE ABSENCE OF THE SAME, THE CLAIM OF THE ASSESSEE WAS DISALLOWED BY THE ASS ESSING OFFICER. HE HAS CONTENDED THAT EVEN A PERUSAL OF THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) DOES NOT SHOW THE BASIS ON WHICH SET O FF OF RS.38,59,93,719 WAS CLAIMED BY THE ASSESSEE AND ALLOWED BY THE LD. CIT(APPEALS). THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, HAS IN VITED OUR ATTENTION TO ITA NO. 1644/KOL/2017 A.Y. 2011-2012 M/S. JCT LIMITED 4 THE COPY OF THE AUDITORS CERTIFICATE PLACED AT PAG E NO. 29 OF THE PAPER BOOK ALONG WITH THE RELEVANT WORKING GIVEN ON PAGE NO. 30 AS WELL AS 31 AND 32 TO SHOW AS TO HOW THE FIGURE OF UNABSORBED D EPRECIATION ELIGIBLE FOR DEDUCTION IN COMPUTATION OF BOOK PROFIT FOR THE YEAR UNDER CONSIDERATION WAS ARRIVED AT RS.38,59,93,719/-. HE HAS SUBMITTED THAT THE SAID CERTIFICATE DATED 28.10.2016 ALONG WITH THE EN TIRE WORKING WAS SUBMITTED BY THE ASSESSEE EVEN BEFORE THE ASSESSING OFFICER, BUT HE DISALLOWED THE CLAIM OF THE ASSESSEE WITHOUT CONSID ERING OR APPRECIATING THE SAME. HE HAS CONTENDED THAT THE LD. CIT(APPEALS ), HOWEVER, HAS APPRECIATED THE SAID WORKING AND ON SUCH APPRECIATI ON ALLOWED THE CLAIM OF THE ASSESSEE. 5. THE RELEVANT WORKING PREPARED AND FURNISHED BY T HE ASSESSEE AND DULY CERTIFIED BY ITS AUDITORS IN SUPPORT OF ITS CL AIM IS EXTRACTED BELOW FROM PAGES NO. 31 & 32 OF THE PAPER BOOK:- FINANCIAL YEAR TOTAL LOSS AS PER ACCOUNTS UNABSORBED DEPRECIATION UNABSORBED BUSINESS LOSS 1997-98-LOSS FOR THE YEAR 1227390600 607923841 619466759 LESS 1) LOSS ADJUSTED AGAINST GENERAL RESERVE BEING THE SURPLUS TRANSFERRED FROM PROFIT IN EARLIER YEARS 1138007257 607923841 530083416 (II) SURPLUS PROFIT BROUGHT FORWARD FROM THE FINANCIAL YEAR 1997-98 89383343 89383343 1998-99-LOSS FOR THE YEAR 826847432 593617143 233230289 LESS: ADJUSTED BY TRANSFER FROM GENERAL RESERVE 165805494 165805494 CARRIED FORWARD 661041938 593617143 67424795 ADD: 1999-2000-LOSS FOR THE YEAR 610106818 587720125 22386693 CARRIED FORWARD 1271148756 1181337268 89811488 ADD.: 2000-2001-LOSS FOR THE YEAR 2439475323 524865378 1914609945 CARRIED FORWARD 3710624079 1706202646 2004421433 LESS: LOSS OF EARLIER YEAR ADJUSTED BY TRANSFER (I) FROM 910427118 ITA NO. 1644/KOL/2017 A.Y. 2011-2012 M/S. JCT LIMITED 5 CAPITAL RESERVE (II) FROM SHARE PREMIU M 2800196961 1706202646 2004421433 2001-02-LOSS FOR THE YEAR 441192972 441192972 N.A. CARRIED FORWARD 441192972 441192972 - LESS: 2002-03 PROFIT FOR THE YEAR SET OFF AGAINST EARLIER YEAR DEPRECIATION 28580870 28580870 - CARRIED FORWARD 412612102 412612102 ADD.: 2003-04 LOSS FOR THE YEAR 219044499 219044499 N.A. CARRIED FORWARD 631656601 631656601 - LESS: 2004-05 PROFIT FOR THE YEAR SET OFF AGAINST EARLIER YEAR DEPRECIATION 21044240 21044240 - CARRIED FORWARD 610612361 610612361 - LESS: 2005-06 PROFIT FOR THE YEAR SET OFF AGAINST EARLIER YEAR DEPRECIATION 108416358 108416358 - CARRIED FORWARD 502196103 502196103 - LESS: 2006-07 PROFIT FOR THE YEAR SET OFF AGAINST EARLIER YEAR DEPRECIATION 106769994 106769994 - CARRIED FORWARD 395426009 395426009 - LESS: 2007-08 PROFIT FOR THE YEAR SET OFF AGAINST EARLIER YEAR DEPRECIATION 38007000 38007000 - CARRIED FORWARD 357419009 357419009 - ADD: 2008-09 LOSS FOR THE YEAR 613634061 435555538 178078523 CARRIED FORWARD 971053070 792974547 178078523 ADD: 2009-10 LOSS FOR THE YEAR 608951271 392669448 216281823 CARRIED FORWARD 1580004341 1185643995 394360346 LESS A) TAX EXPENSES F.Y. 2008-09 7364378 (B) TAX EXPENSES F.Y. 2009-10 1002249 LOSS DEDUCTED IN COMPUTATION OF BOOK PROFIT FOR THE YEAR 2010-11 385,993,719 ITA NO. 1644/KOL/2017 A.Y. 2011-2012 M/S. JCT LIMITED 6 IT IS MANIFEST FROM THE ABOVE WORKING THAT THE TOTA L ACCUMULATED LOSS OF RS.38,59,93,719/- WAS AVAILABLE WITH THE ASSESSEE-C OMPANY AS ON 31.03.2010 AND KEEPING IN VIEW THE SAME, THE CLAIM OF THE ASSESSEE FOR SET OFF OF SUCH LOSS WAS DIRECTED TO BE ALLOWED BY THE LD. CIT(APPEALS) IN COMPUTATION OF BOOK PROFIT UNDER SECTION 115JB AFTE R DUE VERIFICATION BY THE ASSESSING OFFICER. AT THE TIME OF HEARING, THE LD. D.R. HAS NOT BEEN ABLE TO POINT OUT ANY MISTAKE IN THE WORKING FURNISHED B Y THE ASSESSEE IN SUPPORT OF ITS CLAIM. THE ONLY CONTENTION RAISED BY HIM IS THAT THIS WORKING REQUIRES VERIFICATION BY THE ASSESSING OFFI CER. SINCE THE LD. CIT(D.R.) VIDE HIS IMPUGNED ORDER HAS DIRECTED TO A LLOW THE CLAIM OF THE ASSESSEE AFTER DUE VERIFICATION OF THE SAID WORKING BY THE ASSESSING OFFICER, WE FIND NO JUSTIFIABLE REASON TO INTERFERE WITH THE IMPUGNED ORDER OF THE LD. CIT(APPEALS). THE SAME IS ACCORDIN GLY UPHELD ON THIS ISSUE DISMISSING THIS APPEAL OF THE REVENUE. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON JANUARY 25, 2 019. SD/- SD/- (S.S. VISWANETHRA RAVI) (P.M. JAGTAP) JUDICIAL MEMBER VICE-PRESIDENT (KZ) KOLKATA, THE 25 TH DAY OF JANUARY, 2019 COPIES TO : (1) DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-11(1), KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 (2) M/S. JCT LIMITED, 18, MONILAL SAHA LANE, 2 ND FLOOR, NEW MARKET, KOLKATA-700 013 (3) COMMISSIONER OF INCOME TAX (APPEALS)-4, KOLKA TA, (4) COMMISSIONER OF INCOME TAX- , (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.