ITO, Hyderabad V. M/s A.P.State Agro Industries Development Corpn. Ltd., Hyderabad

ITA 169/HYD/2009

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7510 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2012
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 22-02-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 03-02-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: HARI LAL NAIK
• Assessee Lawyers: S RAMA RAO
• Keywords: Depreciation; Retrospective amendment
• Section: 143(3); 234B; 115JB; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SHRI D.KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO.169/HYD/2009 ASSTT. YEAR: 2003-04 INCOME - TAX OFFICER, WARD-1(1),HYDERABAD. VS AP STATE AGRO INDUSTRIES DEVELOPMENT CORPORATION LTD., HYDERABAD. APPELLANT RESPONDENT APPELLANT BY : SRI HARILAL NAIK RESPONDENT BY : SRI S. RAMA RAO DATE OF HEARING : 29-02-2012. DATE OF PRONOUNCEMENT : -03-2012. ORDER PER SAKTIJIT DEY, J.M. THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER DATED 24-11-2008 PASSED BY THE CIT (A)-II , HYDERABAD PASSED IN ITA NO.110/CIT(A)-II/07-08 PERTAINING TO THE ASSESSMENT YEARS 2003-04. 2. THE EFFECTIVE GROUNDS RAISED IN THIS APPEAL READ AS UNDER:- 1. ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE, THE CIT (A) ERRED IN HOLDING THAT THE PRIOR PERIOD EXPENDITURE OF RS.20,77,764 SHALL BE ITA NO.851/H/2009 M/S. CONTINENTAL COFFEE LIMITED, HYD. =============================== 2 DEDUCTED FROM THE PROFIT AS APPEARING IN THE PROFIT & LOSS A/C. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT (A) ERRED IN HOLDING THAT THE MAT I S NOT ON PAR WITH THE ADVANCE TAX AND INTEREST U/S 234B IS NOT CHARGEABLE WHICH IS CONTRARY TO THE AMENDED PROVISIONS OF SECTION 115JB(1) EFFECTED BY THE FINANCE ACT, 2002 WITH RETROSPECTIVE EFFECT FRO M 1-4-2001 ENABLING THE AO TO CHARGE INTEREST U/S 234B AND 234C OF THE IT ACT. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A STATE GOVERNMENT UNDERTAKING ENGAGED IN THE ACTIVIT Y OF DEVELOPMENT OF AGRICULTURE IN THE STATE OF ANDHRA P RADESH BY HIRING AND SELLING TRACTORS AND OTHER AGRICULTUR AL IMPLEMENTS TO THE AGRICULTURISTS. FOR THE ASSESSME NT YEAR 2003-04, THE ASSESSEE HAD SHOWN A PROFIT OF RS.8,89,845/- IN ITS PROFIT AND LOSS A/C AFTER ADJU STING PRIOR PERIOD EXPENSES OF RS.20,77,764/- FROM THE BO OK PROFIT OF RS.29,67,609/-. THE ASSESSING OFFICER ON 28-2- 2006 PASSED AN ORDER UNDER SECTION 143(3) DETERMINI NG THE BOOK PROFIT AT RS.1,59,33,381/- AND TOTAL INCOM E AT NIL. AGAINST THE SAID ASSESSMENT ORDER, THE ASSES SEE PREFERRED AN APPEAL BEFORE THE CIT (A)-II, HYDERABA D WHO DISPOSED OF THE APPEAL BY HOLDING THAT UNAUDITED/PROVISIONAL PROFIT AND LOSS ACCOUNT CANNO T BE THE BASIS FOR WORKING OUT BOOK PROFIT UNDER SECTION 115JA/115JB OF THE ACT. THE CIT (A) DIRECTED THE ASSESSING OFFICER TO COMPUTE THE BOOK PROFIT AS PER THE AUDITED PROFIT & LOSS A/C. IN CONSEQUENCE OF THE OR DER PASSED BY THE CIT (A), THE ASSESSING OFFICER PASSED AN ITA NO.851/H/2009 M/S. CONTINENTAL COFFEE LIMITED, HYD. =============================== 3 ORDER ON 15-2-2007 BY ADOPTING THE BOOK PROFIT OF RS.29,67,609/- AND RAISED TAX DEMAND OF RS.3,12,872 . THE ASSESSING OFFICER FURTHER CHARGED INTEREST UNDE R SECTION 234B OF THE ACT. THE ASSESSEE CHALLENGED T HE AFORESAID ORDER PASSED BY THE ASSESSING OFFICER BY FILING AN APPEAL BEFORE THE CIT (A)-II, HYDERABAD. THE CI T (A) ALLOWED THE APPEAL BY HOLDING THAT BOOK PROFIT HAS TO BE COMPUTED AFTER GIVING EFFECT TO THE PRIOR PERIOD ADJUSTMENTS. WHILE COMING TO SUCH A CONCLUSION, TH E CIT (A) FOLLOWED HIS EARLIER ORDER PASSED IN THE CASE O F AP POWER GENERATION CORPORATION WHICH AGAIN RELIED UP ON AN ORDER OF THE ITAT, BANGALORE BENCH REPORTED IN 46 I TD 280. SO FAR AS THE INTEREST CHARGED UNDER SECTION 234B IS CONCERNED, THE CIT (A) BY FOLLOWING SOME OF HIS EARLIER ORDERS DIRECTED THE ASSESSING OFFICER NOT TO CHARGE INTEREST UNDER SECTION 234B ON THE BOOK PROFITS COMPUTED UND ER SECTION 115JB OF THE ACT. 4. WE HAVE HEARD THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS A FACT THAT TH E ASSESSEE HAS SHOWN THE BOOK PROFIT IN THE PROFIT & LOSS A/C DRAWN UP IN TERMS WITH THE COMPANIES ACT AFTER ADJUSTING PRIOR PERIOD EXPENSES. THEREFORE, SUCH BOOK PROFIT HAS T O BE ADOPTED FOR THE PURPOSE OF COMPUTATION AS PER SECTI ON 115JB OF THE ACT. THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. APOLLO TYRES REPORTED IN 255 ITR 273 HEL D THAT THE CORRECTNESS OF THE BOOK PROFIT ARRIVED AT AS PE R THE FINAL ACCOUNT CANNOT BE QUESTIONED BY THE DEPARTMEN T AND THAT THE PROVISION FOR ARREARS OF DEPRECIATION CANN OT BE DISALLOWED FOR THE PURPOSE OF ARRIVING AT THE BOOK PROFIT. THE DELHI HIGH COURT IN THE CASE OF CIT VS. KHAILAS H ITA NO.851/H/2009 M/S. CONTINENTAL COFFEE LIMITED, HYD. =============================== 4 CHEMICALS & FERTILISERS LTD., REPORTED IN 307 ITR 1 50 HAS HELD THAT PRIOR PERIOD ADJUSTMENTS CANNOT BE ADDED TO THE BOOK PROFIT. THIS IS ALSO THE VIEW OF THE ITAT, BA NGALORE BENCH REPORTED IN 46 ITD 280 AND ITAT, HYDERABAD BE NCH B, HYDERABAD IN ITA NO.38/HYD/2008 DATED 20-6-200 8. FOLLOWING THE AFORESAID DECISIONS OF THE TRIBUNAL, WE REJECT GROUND NO.1 AND UPHOLD THE ORDER OF THE CIT (A) ON THIS COUNT. 5. SO FAR AS GROUND NO.2 WHICH RELATES TO INTEREST CHARGEABLE UNDER SECTION 234B OF THE ACT IS CONCERN ED, THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITS THA T BY VIRTUE OF THE PROVISIONS CONTAINED UNDER SECTION 11 5JA AND 115JB OF THE ACT WHICH WERE BROUGHT TO THE STAT UTE W.E.F. 1-4-1997 SECTION 234B IS ALSO APPLICABLE TO A COMPANY MENTIONED IN THAT SECTION. IN SUPPORT OF H IS CONTENTION, THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED ON THE DECISION OF MADRAS HIGH COURT IN THE CASE OF CIT VS. GEETHA RAMAKRISHNA MILLS PVT. LIMITED (288 ITR 489 (MAD). ON THE OTHER HAND, THE LEARNED AUTHORIS ED REPRESENTATIVE OF THE ASSESSEE FAIRLY SUBMITS THAT THE ISSUE IS COVERED BY THE JUDGMENT OF THE HONBLE SUP REME COURT IN THE CASE OF JT. CIT VS. ROLTA INDIA LTD., REPORTED IN 330 ITR 470. 6. IN VIEW OF THE ABOVE PRINCIPLE OF LAW LAID DOWN BY THE HONBLE SUPREME COURT AND HONBLE MADRAS HIGH COURT, WE HOLD THAT THE ASSESSING OFFICER WAS RIGHT IN CHARGING INTEREST UNDER SECTION 234B OF THE ACT. W E THEREFORE DECIDE GROUND NO.2 IN FAVOUR OF THE REVEN UE AND AGAINST THE ASSESSEE. ITA NO.851/H/2009 M/S. CONTINENTAL COFFEE LIMITED, HYD. =============================== 5 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S ALLOWED IN PART. ORDER PRONOUNCED IN THE OPEN COURT ON 07 -03-20 12. SD/- SD/- (D. KARUNAKARA RAO) ACCOUNTANT MEMBER SD/- (SAKTIJIT DEY) JUDICIAL MEMBER DATED THE 07 TH MARCH, 2012. COPY FORWARDED TO: 1. ITO,WARD-1(1), 4 TH FLOOR, AAYAKAR BHAVAN, HYDERABAD. 2. AP STATE AGRO INDUSTRIES DEVELOPMENT CORPORATION LTD., 504, HERMITAGE COMPLEX, HILLS FORT ROAD, FORT ROAD, HYDERABAD. 3. CIT (A)-II, HYDERABAD. 4. THE CIT CONCERNED, HYDERABAD 5. THE DR, ITAT, HYDERABAD JMR* ITA NO.851/H/2009 M/S. CONTINENTAL COFFEE LIMITED, HYD. =============================== 6 ITA NO.851/H/2009 M/S. CONTINENTAL COFFEE LIMITED, HYD. =============================== 7