Cermex India Pvt.Ltd, Pune V. Income-tax Officer, Ward - 8(3), Pune

ITA 1727/PUN/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 4891 (ITAT-PUNE)
• Duration Of Justice: 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2015-2016
• Appeal Filed On: 05-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M K VERMA
• Assessee Lawyers: MAHAVIR D JAIN
• Keywords: Revised return
• Section: 6; 139; 139(5)

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC, PUNE . , , BEFORE SHRI D. KARUNAKARA RAO, AM . / ITA NO. 1727/PUN/2018 !' # $# / ASSESSMENT YEAR : 2015-16 CERMEX INDIA PRIVATE LIMITED. PLOT NO. B19, MIDC, CHAKAN INDUSTRIAL AREA, MAHALUNGE VILLAGE, TALUKA-KHED, CHAKAN-410501 PAN : AAECC5121F ....... / APPELLANT %' / V/S. THE INCOME TAX OFFICER, WARD-8(3), PUNE. / RESPONDENT APPELLANT BY : SHRI MAHAVIR D. JAIN RESPONDENT BY : SHRI M.K. VERMA & / ORDER PER D. KARUNAKARA RAO, AM THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(APPEALS)-6, PUNE DATED 08.08.2018 FOR THE ASSESSMENT YEAR 20 15-16. / DATE OF HEARING : 11.02.2019 / DATE OF PRONOUNCEMENT : 11.02.2019 2 ITA NO. 1727/PUN/2018 A.Y.2015-16 2. THE ASSESSEE IN APPEAL HAS RAISED FOLLOWING GROUNDS: ON FACTS AND IN LAW, 1. THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT THE AO HAS EXCEEDED HIS JURISDICTION BY NOT FOLLOWING THE BINDING INSTRUCTI ONS/GUIDELINES ISSUED BY THE CBDT IN RESPECT MANNER IN WHICH 'LIMITED SCRUTI NY' IS TO BE HANDLED. 1.1 THE LD. CIT(A) OUGHT TO HAVE APPRECIATED THAT THE AO WAS REQUIRED TO OBTAIN PRIOR APPROVAL OF RELEVANT AUTHORITIES AS ST IPULATED BY CBDT IN ITS INSTRUCTIONS, IN ORDER TO VERIFY THE ISSUE BEYOND T HE REASONS OF SELECTION OF SCRUTINY AND AS NO SUCH APPROVAL WAS TAKEN, THE ASS ESSMENT WAS BAD IN LAW. 2. THE LD. CLT(A) ERRED IN HOLING THAT THE LD. AO W AS RIGHT IN ASSESSING THE INCOME OF THE APPELLANT ON THE BASIS OF ORIGINAL RE TURN AND DISREGARDING A VALID REVISED RETURN FILED U/S. 139(5) OF THE ACT. 2.1 THE LD. CIT(A) OUGHT TO HAVE APPRECIATED THAT O NCE A VALID REVISED RETURN IS FILED AS PER SEC.139(5) OF THE ACT, THE O RIGINAL RETURN IS AUTOMATICALLY WITHDRAWN AND REVISED RETURN STEPS IN TO THE SHOES OF ORIGINAL RETURN FILED U/S.139(1) OF THE ACT FOR ALL PURPOSES. 3. THE LD. CIT(A) IS NOT JUSTIFIED IN HOLDING THAT LOSS FOR THE YEAR CANNOT BE ALLOWED TO BE CARRIED FORWARD AS REVISED RETURN WAS FILED WITHIN TIME ALLOWED U/S.139(1) R.W.S. 139(3) R.W.S. 80 WITHOUT APPRECIATING THAT ORIGINAL RETURN WAS FILED WELL WITHIN DUE DATE. 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL. 3. BRIEFLY STATED RELEVANT FACTS INCLUDED THAT THE ASSESS EE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING OF S PARE, TOOLS AND EQUIPMENTS. THE ASSESSEE FILED ITS RETURN OF INCOME FOR ASSE SSMENT YEAR 2015- 16 ON 30.11.2015 DECLARING TOTAL INCOME AT RS.5,68,770/-. SUB SEQUENTLY, THE ASSESSEE FILED REVISED RETURN OF INCOME ON 20.09.2016 SHOWIN G LOSS OF RS.79,01,997/-. DURING THE ASSESSMENT PROCEEDINGS, THE ASS ESSING OFFICER COMPLETED ASSESSMENT U/S.143(3) OF THE INCOME TAX ACT, 19 61 (HEREINAFTER REFERRED TO AS THE ACT) ON 28.12.2017 ACCEPTING THE OR IGINAL RETURN OF INCOME AND HAS NOT CONSIDERED THE REVISED RETURN FILED SUBSEQUE NT TO THE ISSUE OF NOTICE U/S.143(2) OF THE ACT. 4. AGGRIEVED WITH THE ASSESSMENT ORDER, THE ASSESSEE FILE D APPEAL BEFORE THE LD. CIT(APPEALS). DURING FIRST APPELLATE PROCEEDINGS, THE CIT(A PPEALS) GRANTED 3 ITA NO. 1727/PUN/2018 A.Y.2015-16 PARTIAL RELIEF TO THE ASSESSEE BY HOLDING THAT THE ASSESSEE IS NOT ENTIT LED TO CARRY FORWARD ANY OF THESE LOSSES AS THE REVISED RETURN OF LOSS WAS NOT FILED WITHIN THE TIME PRESCRIBED UNDER SUB SECTION 139(1) AS PER 139(3) R.W.S. 80 OF THE AC T. 5. BEING FURTHER AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE THE TRIBUNAL AS PER GROUNDS EXTRACTED ABOVE. 6. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE SUBM ITTED THAT THIS IS CASE OF FILING OF REVISED RETURN OF INCOME DECLARING LOSS BEYON D THE PERIOD PROVIDED U/S.139(1) OF THE ACT. HOWEVER, ORIGINAL RETURN WA S FILED IN TIME AND SO IS THE REVISED LOSS RETURN. THE LD. COUNSEL ALSO SUBMIT TED THAT REGULAR RETURN WAS FILED BY THE ASSESSEE WITH POSITIVE INCOME IN T IME PROVIDED U/S.139(1) OF THE ACT. ON THIS ASPECT, THE LD. COUNSEL MENT IONED THAT THE ASSESSING OFFICER DENIED THE CARRY FORWARD LOSS AND HAS NO T CONSIDERED THE REVISED RETURN OF LOSS FILED SUBSEQUENT TO THE ISSUE OF NOT ICE U/S.143(2) OF THE ACT IN TIME. THE LD. COUNSEL FURTHER SUBMITTED THAT THE A SSESSING OFFICER HAS WRONGLY INVOKED THE PROVISIONS OF SECTION 80 R.W.S 147(3) O F THE ACT AND THE CIT(APPEALS) ALSO DID NOT ADJUDICATE THE ISSUE PROPERLY ON THE FACTS AND APPROVED THE ORDER OF ASSESSING OFFICER. 7. ON THE OTHER HAND, LD. DR FOR THE REVENUE HAS PLACED RELIANCE ON THE ORDERS OF THE AUTHORITIES BELOW. 8. BOTH SIDES HEARD. ORDERS OF THE AUTHORITIES BELOW PERU SED. IT IS UNDISPUTED FACT THAT THE ASSESSEE FILED RETURN OF INCOME O N 30.11.2015 AGAINST THE DUE DATE ON OR BEFORE 31.03.2015. THE ASSESSEE DEC LARED POSITIVE INCOME IN THIS RETURN. SUBSEQUENTLY, DURING ASSESSMENT PROCEEDIN GS, THE ASSESSEE FURNISHED REVISED RETURN OF LOSS ON 20.09.2016 DECLARING LOS S OF RS.79,01,997/- 4 ITA NO. 1727/PUN/2018 A.Y.2015-16 . THE ASSESSEE HAD TIME TO FILE THE SAID RETURN OR BEFORE 31.03.2017. NOW, THE ISSUE FOR ADJUDICATION BEFORE US IS WHETHER THE ASSESSING OFFICER OR CIT(APPEALS) ARE JUSTIFIED IN IGNORING THE SAID REVISED RETURN OF LOSS AND THEREFORE, DENYING THE CLAIM OF CARRY FORWARD LOSS MENTION ED IN THE SAID REVISED RETURN. IT IS UNDISPUTED FACT THAT THE ASSESSEE FURNISHED ORIGINA L RETURN OF INCOME U/S.139(1) OF THE ACT WITH POSITIVE INCOME IN TIME. ON THIS ASPECT, I FIN D THAT THE SIMILAR ISSUE HAS COME UP BEFORE THE TRIBUNAL IN THE CASE OF MR. RAMESH R. SHAH VS. ACIT, IN ITA NO.4312/MUM/2009 FOR THE ASSESSMENT YEAR 2005-06 DATED 29.07.2011. I ALSO FIND THAT THE FACTS ARE ID ENTICAL QUA FILING OF RETURN OF WITH POSITIVE INCOME AND REVISING RETURN WITH LOSS BEFORE THE SPECIFIED DATE AS PER PROVISIONS OF SECTION 139(5) OF THE ACT. I ALSO PERUSED THE CONTENTS OF PARA 10 AND 11 OF THE SAID TRIBUNALS ORDER (SUPRA.) AN D FOUND THAT THIS DECISION HELPS THE ASSESSEE FOR CARRY FORWARD LOSS THOUGH REVISED RE TURN FILED BY THE ASSESSEE WHICH IS FILED SUBSEQUENT TO THE VALID ORIGIN AL RETURN FILED U/S.139(1) OF THE ACT. FOR THE SAKE OF COMPLETENESS, THE CO NTENTS OF PARA 10 AND 11 OF THE TRIBUNALS ORDER ARE EXTRACTED AS UNDER: 10. IN THE PRESENT CASE, THE AO HAS SERIOUS RESERVATION FOR ALLOWING THE ASSESSEE TO CARRY FORWARD LONG-TERM CAPITAL LOSS BY INTERPRETING THE PROVISIONS OF S. 80 R/W S. 139(3). IN THIS BACKGROU ND, CAN IT BE SAID THAT THE ASSESSEE HAS NOT FULFILLED CONDITIONS LAID DOWN IN S. 80 AND HENCE, IT IS NOT PERMISSIBLE TO ALLOW TO CARRY FORWARD OF THE CA PITAL LOSS. IN THE PRESENT CASE, THE ASSESSEE FILED ORIGINAL RETURN UNDER S. 1 39(1) IN WHICH THE POSITIVE INCOME WAS DECLARED. EVEN AS PER THE ASSES SMENT ORDER POSITIVE INCOME IS DETERMINED AS THE ASSESSEE COULD NOT SET OFF THE LOSS ON THE SALE OF THE SHARES OF PHILOX PHARMA LTD. IN THE YEAR ITS ELF. HE CLAIMED THE SAME TO BE CARRIED FORWARD. IN OUR HUMBLE OPINION CORREC T INTERPRETATION OF S. 80, AS PER THE LANGUAGE USED BY THE LEGISLATURE, CONDIT ION FOR FILING REVISED RETURN OF LOSS UNDER S. 139(3) IS CONFINED TO THE C ASES WHERE THERE IS ONLY A LOSS IN THE ORIGINAL RETURN FILED BY THE ASSESSEE A ND NO POSITIVE INCOME AND ASSESSEE DESIRES TO TAKE BENEFIT OF CARRY FORWARD O F SAID LOSS. ONCE ASSESSEE DECLARES POSITIVE INCOME IN ORIGINAL RETUR N FILED UNDER S. 139(1) BUT SUBSEQUENTLY FINDS SOME MISTAKE OR WRONG STATEM ENT AND FILES REVISED RETURN DECLARING LOSS THEN CAN HE BE DEPRIVED OF TH E BENEFIT OF CARRY FORWARD OF SUCH LOSS. IN OUR HUMBLE OPINION, IF WE ACCEPT INTERPRETATION GIVEN BY THE AUTHORITIES BELOW, IT WOULD FRUSTRATE THE OBJECT OF S. 80. SEC. 80 IS A CAP ON THE RIGHT OF THE ASSESSEE, WHEN THE ASSESSEE CLAIMS THAT HE 5 ITA NO. 1727/PUN/2018 A.Y.2015-16 HAS NO TAXABLE INCOME BUT ONLY A LOSS BUT DOES NOT FILE THE RETURN OF INCOME DECLARING THE SAID LOSS AS PROVIDED IN SUB-S. (3) O F S. 139. IT IS PERTINENT TO NOTE HERE THAT LEGISLATURE HAS DEALT WITH TWO SPECI FIC SITUATIONS (I) UNDER S. 139(1), IF THE ASSESSEE HAS A TAXABLE INCOME CHARGE ABLE TO TAX THEN IT IS A STATUTORY OBLIGATION TO FILE THE RETURN OF INCOME W ITHIN THE TIME ALLOWED UNDER S. 139(1). SO FAR AS S. 139(3) IS CONCERNED, IT ONLY PROVIDES FOR FILING THE RETURN OF LOSS IF THE ASSESSEE DESIRES THAT THE SAME SHOULD BE CARRIED FORWARD AND SET OFF IN FUTURE. AS PER THE LANGUAGE USED IN SUB-S. (3) OF S. 139, IT IS CONTEMPLATED THAT WHEN THE ASSESSEE FILE S THE ORIGINAL RETURN, AT THAT TIME, THERE SHOULD BE LOSS AND THE ASSESSEE DE SIRES TO CLAIM SAID LOSS TO BE CARRIED FORWARD AND SET OFF IN FUTURE ASSESSM ENT YEARS. SUB-S. (1) OF S. 139 CASTS STATUTORY OBLIGATION ON THE ASSESSEE W HEN THERE IS POSITIVE INCOME. IN THE PRESENT CASE, ADMITTEDLY, THE ASSESS EE FILED THE RETURN OF INCOME DECLARING THE POSITIVE INCOME AND EVEN IN TH E REVISED RETURN, THE ASSESSEE HAS DECLARED THE POSITIVE INCOME AS THE LO SS IN RESPECT OF THE SALE OF SHARES, WHICH COULD NOT BE SET OFF, INTER-SOURCE OR INTER-HEAD UNDER S. 70 OR 71 OF THE ACT. 11. WE HAVE TO INTERPRET THE PROVISIONS OF ANY STAT UTE TO MAKE THE SAME WORKABLE TO THE LOGICAL ENDS. AS PER THE PROVISIONS OF SUB-S. (5) OF S. 139, IN BOTH THE SITUATIONS WHERE THE ASSESSEE HAS FILED THE RETURN OF POSITIVE INCOME AS WELL AS RETURN OF LOSS AT THE FIRST INSTA NCE AS PER THE TIME-LIMIT PRESCRIBED AND SUBSEQUENTLY, FILES THE R EVISED RETURN THEN THE REVISED RETURN IS TREATED AS VALID RETURN. IN THE PRESENT CASE, AS THE ASSESSEE FILED ITS ORIGINAL RETURN DEC LARING THE POSITIVE INCOME AND HENCE, IN OUR OPINION, SUBSEQUENT REVISE D RETURN IS VALID RETURN ALSO AND THE ASSESSEE IS ENTITLED TO CARRY FORWARD OF LONG-TERM CAPITAL LOSS. SUB-SS. (1) AND (3) OF S. 139 PROVIDE FOR TH E DIFFERENT SITUATIONS AND IN OUR OPINION, THERE IS NO CONFLICT IN APPLICABILITY OF BOTH THE PROVISIONS AS BOTH THE PROVISIONS ARE APPLICABLE IN THE DIFFERENT SITUATIONS. WE ARE, THEREFORE, OF THE OPINION THAT THERE IS NO JUSTIFIC ATION TO DENY THE ASSESSEE TO CARRY FORWARD THE LOSS. WE, ACCORDINGLY, DIRECT THE AO TO ALLOW THE ASSESSEE TO CARRY FORWARD THE LOSS. IN VIEW OF THE ABOVE DECISION, I AM OF THE OPINION THAT THE RE IS NO JUSTIFICATION TO DENY THE ASSESSEE TO CARRY FORWARD THE LOSS AND HENCE, DIRECT THE ASSESSING OFFICER TO ALLOW THE ASSESSEE TO CARRY FORWARD THE LOS S. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 11 TH DAY OF FEBRUARY, 2019. SD/- ( . / D. KARUNAKARA RAO ) ' ACCOUNTANT MEMBER / PUNE; / DATED : 11 TH FEBRUARY, 2019. SB 6 ITA NO. 1727/PUN/2018 A.Y.2015-16 &()!*+,-,$* / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(APPEALS)-6, PUNE. 4. THE PR. CIT-5, PUNE. 5. !'# $$%& , ' %& , - ()* , / DR, ITAT, SMC BENCH, PUNE. 6. #+, -. / GUARD FILE. // TRUE COPY // '/ / BY ORDER, $0 %* /PRIVATE SECRETARY ' %& , / ITAT, PUNE. 7 ITA NO. 1727/PUN/2018 A.Y.2015-16 DATE 1 DRAFT DICTATED ON 11.02.2019 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 12.02.2019 SR.PS/PS 3 DRAFT PROPOSED AND PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/JM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 DATE OF UPLOADING OF ORDER SR.PS/PS 8 FILE SENT TO BENCH CLERK SR.PS/PS 9 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 10 DATE ON WHICH FILE GOES TO THE A.R 11 DATE OF DISPATCH OF ORDER