Cement Corporation of India Ltd., New Delhi V. DCIT, New Delhi

ITA 1645/DEL/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6510 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 9 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 20-12-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 21-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHYAMA S BANSIA
• Assessee Lawyers: G N GUPTA I T P
• Keywords: Earning of tax free income; Deemed to accrue or arise in india; Benefit of exemption
• Section: 143(3); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B, NEW DELHI BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER AND SHRI RAJPAL YADAV, JUDICIAL MEMBER ITA NO.1645/DEL/2013 ASSESSMENT YEAR : 2007-08 CEMENT CORPORATION OF INDIA LTD., CORE- 5, SCOPE COMPLEX, 7, LODHI ROAD, NEW DELHI. VS. DCIT, CIRCLE- 3(1), NEW DELHI. PAN : AAACC 0949 B (APPELLANT) (RESPONDENT) ITA NO.5358/DEL/2013 ASSESSMENT YEAR : 2006-07 CEMENT CORPORATION OF INDIA LTD., CORE- 5, SCOPE COMPLEX, 7, LODHI ROAD, NEW DELHI. VS. DCIT, CIRCLE- 3(1), NEW DELHI. PAN : AAACC 0949 B (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI G. N. GUPTA, ITP RESPONDENT BY : MS. SHYAMA S. BANSIA, CIT-DR DATE OF HEARING : 20-12-2016 DATE OF PRONOUNCEMENT : 23-12-2016 O R D E R PER S.V. MEHROTRA, A.M : BOTH THE CAPTIONED APPEALS, PREFERRED BY THE SAME A SSESSEE, WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CO NSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2 ITA NO.1645/DEL/2013 ITA NO.5358/DEL/2013 2. THE APPEAL, FILED BY THE ASSESSEE VIDE ITA NO.53 58/DEL/2013 FOR ASSESSMENT YEAR 2006-07 IS AGAINST THE ORDER DATED 05.08.2013, PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS)-VI, NEW DE LHI, U/S 147/143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) AN D THE APPEAL FILED BY THE ASSESSEE VIDE ITA NO.1645/DEL/2013 FOR ASSESSMENT Y EAR 2007-08 IS AGAINST THE ORDER DATED 03.01.2013, PASSED BY THE COMMISSIO NER OF INCOME TAX (APPEALS)-VIII, NEW DELHI, U/S 143(3) OF THE ACT. 3. FACTS AS REGARDS ADDITION U/S 41(1) ARE IDENTICA L FOR BOTH THE YEARS AND, THEREFORE, WE REFER TO FACTS OBTAINING IN ASSESSMEN T YEAR 2006-07. 4. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE HAD FI LED RETURN OF INCOME DECLARING A LOSS OF RS.3,80,21,811/-. THE CASE WAS SELECTED FOR SCRUTINY AND THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT ON 21.10.2008 AT A LOSS OF RS.3,17,55,150/-. THEREAFTER, NOTICE U/S 148 DA TED 21.04.2010 WAS ISSUED, INTER-ALIA, FOR FOLLOWING TWO REASONS :- (II) ASSESSEE HAD CLAIMED EXEMPTION FROM THE PROVI SIONS OF SECTION 41(1) ON A SUM OF RS.935,37,76,000/- BY RELYING UPON THE ORDER OF BIFR. HOWEVER, THE MATTER HAD NOT ATTAINED FINALITY THEREFORE, SUCH CL AIM WAS NOT MAINTAINABLE UNDER LAW. IN VIEW OF THE SAME SUCH EXEMPTION FROM PROVI SIONS OF SECTION 41(1) WAS WRONGLY CLAIMED. (IV) PRIOR PERIOD EXPENSES AMOUNTING TO RS.8,09,14, 000/- WERE CLAIMED BY THE ASSESSEE. 5. THE ASSESSMENT WAS COMPLETED AT TOTAL INCOME OF RS.885,00,87,850/- AFTER MAKING BOTH THE ABOVE ADDITIONS. LD. CIT(A), WHILE PARTLY ALLOWING 3 ITA NO.1645/DEL/2013 ITA NO.5358/DEL/2013 THE ASSESSEES APPEAL, CONFIRMED BOTH THESE ADDITIO NS. BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US AND HAS TAKEN FOLLO WING GROUNDS OF APPEAL IN ITA NO.5358/DEL/2013 :- 1) THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)- VI- NEW DELHI IS BAD IN LAW AND SHOULD BE QUASHED. 2) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN IGNORING THE SUBMISSION THAT THE VIEW OF THE INCOME TAX DEPARTMENT HAS BEEN CONSIDERED BY THE HON'BLE BIFR WHILE FRAMING THE SANCTIONED SCHEME. 3) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED HAVING NOT CONSIDERED THE HON'BLE BIFR ORDER DATED 03.05.2 006, WHERE VIEW OF THE INCOME TAX DEPARTMENT HAS BEEN CONSIDER ED. 4) THE INCOME TAX DEPARTMENT HAS WRITTEN A LETTER T O HON'BLE BIFR THAT SINCE CONSIDERABLE TIME WAS INVOLVED IN WORKIN G OUT THE EXACT QUANTUM AND PERIOD OF RELIEF AND CONCESSION, THEREF ORE IT WAS REQUESTED THAT THE DRS (DRAFT REHABILITATION SCHEME ) MAY BE SANCTIONED WITH THE WORDS TO CONSIDER WITH RESPECT TO THE RELIEFS AND CONCESSIONS. 5) THE FINAL SCHEME HAS BEEN SANCTIONED BY THE HON' BLE BIFR VIDE ITS ORDER DATED 03.05.2006 INCORPORATING THE VIEW OF TH E INCOME TAX DEPARTMENT IN CLAUSE 9 UNDER HEADING RELIEFS & CONC ESSIONS SUB HEADING 9.8 (A) CENTRAL BOARD OF DIRECT TAXES AT PA GE 26 OF THE SANCTIONED SCHEME STATING THIS TO CONSIDER PROVIDIN G EXEMPTION TO CCI UNDER SECTION 41(1) OF INCOME TAX ACT. 6) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN DISALLOWING RS.883,94,96,000/- OUT OF THE EXEMPT IN COME ON THE GROUND THAT THE DRS (DRAFT REHABILITATION SCHEME) H AS NOT BEEN CONSIDERED BY THE CBDT. 7) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE ALLOWED THE WHOLE EXEMPT INCOME AS PER RELIEF GIVEN BY THE HON'BLE BIFR IN THE SECTIONED SCHEME U/S 41(1) OF INCOME TA X ACT. 8) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN DISALLOWING THE PRIOR PERIOD EXPENDITURE WHEREAS PR IOR PERIOD INCOME HAS BEEN TAKEN INTO CONSIDERATION. 9) SUBMISSION BEFORE THE LEARNED COMMISSIONER OF IN COME TAX (APPEALS) ON THE SAME ISSUE DECIDED BY THE HON'BLE HIGH COURT OF DELHI IN THE CASE OF CIT VS. EXXON MOBIL LUBRICANTS PVT. LTD. NOT ACCEPTED. 4 ITA NO.1645/DEL/2013 ITA NO.5358/DEL/2013 10) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) OUGHT TO HAVE ALLOWED THE PRIOR PERIOD EXPENDITURE BASED ON THE DELHI HIGH COURT DECISION. 11) THE APPELLANT CRAVES LEAVE FOR RESERVING THE RI GHT TO AMMEND, MODIFY, ALTER, ADD OR FORGO ANY GROUNDS OF APPEAL. 6. THE ASSESSEE IN ITA NO.1645/DEL/2013 HAS TAKEN F OLLOWING GROUNDS OF APPEAL :- I) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE COMMISSIONER OF INCOME TAX (APPEALS)-VI, NEW DELHI (CIT (A) FOR SHORT) ERRED IN HOLDING THAT THE ASSESSING OFFICER WAS JUSTIFIED IN INITIATING P ROCEEDINGS U/S 147/148 OF THE INCOME TAX ACT, 1961 (ACT FOR SHORT). II) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, CIT(A) ERRED IN CONFIRMING THE ACTION OF THE AO IN DEEMING AN INCOM E OF RS. 883,94,96,000/- AS INCOME U/S 41(1) OF THE ACT. III) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, CIT(A) ERRED IN CONFIRMING THE ACTION OF THE AO IN DISALLOWING PRIO R PERIOD EXPENSES OF RS. 3,37,39,000/-. IV) THAT THE APPELLANT COMPANY CRAVES LIBERTY TO AD D, ALTER, VARY OR AMEND ANY GROUND OF APPEAL. 7. LD. COUNSEL FOR THE ASSESSEE, SHRI G. N. GUPTA, SUBMITTED THAT ASSESSEE IS A GOVERNMENT OF INDIA UNDERTAKING AND W AS ENGAGED IN THE MANUFACTURE AND SALE OF CEMENT. HOWEVER, THE ASSES SEE WAS DECLARED SICK UNDERTAKING BY BIFR ON 08.08.1996. SUBSEQUENTLY, A SCHEME WAS APPROVED BY BIFR, VIDE ITS ORDER DATED 03.05.2006, WHICH IS UNDER IMPLEMENTATION. LD. COUNSEL FOR THE ASSESSEE POINT ED OUT THAT THE ASSESSING OFFICER ERRED IN DISALLOWING RS.883,94,96,000/- OUT OF EXEMPT INCOME ON ACCOUNT OF WITHDRAWAL OF INTEREST LIABILITY AND, TH EREBY, WITHDREW RELIEF 5 ITA NO.1645/DEL/2013 ITA NO.5358/DEL/2013 GIVEN BY THE BIFR IN THE SANCTIONED SCHEME TREATING RS.883,94,96,000/- AS DEEMED INCOME U/S 41(1) OF THE ACT. HE POINTED OUT THAT THE LD. CIT(A) DISMISSED THE ASSESSEES APPEAL, INTER-ALIA, OBSERVING THAT THERE WAS NO EVIDENCE ON RECORD TO SHOW THAT THE INCOME WHICH HA S BEEN CLAIMED TO BE EXEMPT BY THE ASSESSEE HAD BEEN CONSIDERED AND ACCE PTED BY THE CBDT. LD. COUNSEL REFERRED TO PAGE 61 OF PAPER BOOK WHERE IN THE ORDER OF BIFR DATED 05.12.2005 IS CONTAINED. LD. COUNSEL POINTED OUT THAT PARA 4 OF THE SAID ORDER READS AS UNDER :- BOARD FOR INDUSTRIAL AND FINANCIAL RECONSTRUCTION CASE NO.501/96 RE.: CEMENT CORPORATION OF INDIA LTD . BENCH-I ORDER . 4. THE CENTRAL/STATE GOVT. CONCERNED MAY, WHERE REQ UIRED, SEEK REQUISITE/ADDITIONAL INFORMATION FROM THE COMPANY I MMEDIATELY AND WOULD ENSURE TO INDICATE WITHIN THE SPECIFIED TIME, THEIR SPECIFIC DECISION IN TERMS OF SECTION 19(2) OF THE ACT OTHERWISE IT SHALL BE DEEM ED THAT CONSENT HAS BEEN GIVEN AS THE BOARD MIGHT NOT BE ABLE TO ESTABLISH THE VIA BILITY OF THE REHABILITATION SCHEME UNDER CONSIDERATION EXPEDITIOUSLY IF THE CON SENT OR OBJECTIONS ARE NOT RECEIVED WITHIN THE STIPULATED TIME LIMIT. FURTHER , AT THE HEARING TO CONSIDER OBJECTIONS/SUGGESTIONS TO THE DRS, THE OFFICER ATTE NDING MUST BE FULLY BRIEFED OF THE POLICY OF THE CENTRAL/STATE GOVT. AND WOULD IND ICATE WHETHER CONSENT WAS BEING GIVEN AND IF NOT, THE REASONS THEREOF WHY CON SENT WAS NOT BEING GIVEN. HE SHOULD ALSO CARRY WITH HIM A COPY OF THE POLICY GUI DELINES OF THE STATE/CENTRAL GOVT. THE ABOVE WOULD BE EQUALLY APPLICABLE, MUTAT IS MUTANDIS, TO ALL THOSE WHO ARE TO EXTEND THEIR CONSENT IN TERMS OF SECTION 19 OF THE ACT. SD/- SD/- (A.K. GOSWAMI) (RAVINDRA GUPTA) MEMBER CHAIRMAN NEW DELHI DATED : 05.12.2005 6 ITA NO.1645/DEL/2013 ITA NO.5358/DEL/2013 8. LD. COUNSEL REFERRED TO APPROVED REHABILITATION SCHEME, THE PARA 9.8 OF WHICH READS AS UNDER :- 9.8 CENTRAL BOARD OF DIRECT TAXES (A) TO CONSIDER PROVIDING EXEMPTION TO CCI UNDER SECTIO N 41(1) OF INCOME TAX ACT. (B) TO CONSIDER EXEMPTING CCI FROM SECTION 72 OF INCOME TAX ACT TO CARRY FORWARD THE ACCUMULATED LOSSES BEYOND A PERIOD OF 8 YEARS. (C) TO CONSIDER EXEMPTING CCI FROM CAPITAL GAIN TAX ON SALE OF ITS SEVEN NON-OPERATING UNITS I.E. MANDHAR, KURKUNTA, AKALTAR A, ADILABAD, NAYAGAON, CHARKHI DADRI AND DELHI GRINDING UNIT/ BH ATINDA UNIT. (D) TO CONSIDER WAIVING OF PENALTIES, SURCHARGES, ETC. IF ANY LEVIED IN THE PAST. 9. LD. COUNSEL FOR THE ASSESSEE POINTED OUT THAT AS FAR AS ASSESSMENT YEAR 2006-07 IS CONCERNED, NOTHING HAD HAPPENED BECAUSE THE SCHEME ITSELF WAS SANCTIONED ON 03.05.2006. HE, FURTHER, POINTED OUT THAT AS FAR AS ASSESSMENT YEAR 2007-08 IS CONCERNED, THE ENTIRE ADDITION IS S UBJECT TO CBDTS APPROVAL. HE, THEREFORE, SUBMITTED THAT THE MATTER CAN BE RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER FOR PASSING THE O RDER IN TERMS OF SANCTIONED SCHEME AFTER CONSIDERING THE CBDT APPROVAL. 10. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND HAVE PERUSED THE RECORD OF THE CASE. IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS POINTED OUT THAT THE REPORT OF DIT(R) I N THIS REGARD WAS STILL AWAITED AND, THEREFORE, THE BENEFIT OF EXEMPTION FR OM THE PROVISIONS OF SECTION 41(1) HAD NOT BEEN PROVIDED, INTER-ALIA, OBSERVING THAT THE CLAIM OF 7 ITA NO.1645/DEL/2013 ITA NO.5358/DEL/2013 THE ASSESSEE WAS PREMATURE. THESE OBSERVATIONS ITS ELF MAKE IT CLEAR THAT THE ADDITION HAD NOT BEEN MADE ON ANY CONCRETE BASIS. IN OUR OPINION, CONSIDERING THE TERMS OF APPROVED REHABILITATION SC HEME, IT WOULD BE PROPER TO SET-ASIDE THE MATTER FOR BOTH THE ASSESSMENT YEA RS UNDER CONSIDERATION TO THE FILE OF THE ASSESSING OFFICER TO MAKE THE ADDIT ION ONLY IN LINE WITH THE DIRECTIONS OF BIFR AFTER CONSIDERING THE CBDTS DIR ECTIONS IN THIS REGARD. 11. THE NEXT ISSUE IN ASSESSMENT YEAR 2006-07 IS IN REGARD TO PRIOR PERIOD EXPENSES. LD. COUNSEL POINTED OUT THAT NEITHER PRI OR PERIOD INCOME NOR PRIOR PERIOD EXPENSES CAN BE TAKEN INTO CONSIDERATION. I N THIS REGARD, HE RELIED ON THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. EXXON MOBIL LUBRICANTS PVT. LTD. IN ITA NO.288/2010, ORDE R DATED 08.09.2010. LD. DR SUBMITTED THAT IF THE MATTER IS GOING BACK O N FIRST ISSUE TO THE FILE OF ASSESSING OFFICER, THEREFORE, THIS MAY ALSO BE REST ORED BACK TO THE FILE OF ASSESSING OFFICER. AFTER CONSIDERING THE SUBMISSIO NS OF BOTH THE PARTIES, WE RESTORE THIS ISSUE ALSO TO THE FILE OF ASSESSING OF FICER TO EXAMINE THE ISSUE AFRESH IN THE LIGHT OF DECISION OF HONBLE DELHI HI GH COURT IN THE CASE OF EXXON MOBIL LUBRICANTS PVT. LTD.. 8 ITA NO.1645/DEL/2013 ITA NO.5358/DEL/2013 12. IN THE RESULT, BOTH THE CAPTIONED APPEALS OF TH E ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 23 RD DAY OF DECEMBER, 2016. SD/- SD/- (RAJPAL YADAV) (S.V. MEHROTRA) JUDICIAL MEMBER ACCOUN TANT MEMBER DATED : 23-12-2016. SUJEET COPY OF ORDER TO: - 1) THE APPELLANT; 2) THE RESPONDENT; 3) THE CIT; 4) THE CIT(A)-, NEW DELHI; 5) THE DR, I.T.A.T., NEW DELHI; BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, NEW DELHI