DCIT, Coimbatore V. Lakshmi Machine Works Ltd., Coimbatore

ITA 1810/CHNY/2015

• Counselvise Citation: 181021714 RSA 2015
• Duration Of Justice: 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 09-11-2015
• Assessment Year: 2011-2012
• Appeal Filed On: 10-08-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P RADHAKRISHNAN
• Assessee Lawyers: R VIJAYARAGHAVAN
• Keywords: Additional evidence

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . . . , . !'# ! , % !& BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NO.1810/MDS/2015 ( )( / ASSESSMENT YEAR : 2011-12 THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE-1, 63-A, RACE COURSE ROAD, COIMBATORE. V. M/S LAKSHMI MACHINE WORKS LTD., PERIANAICKENPALAYAM, COIMBATORE 641 020. PAN : AAACL 5244 N (+,/ APPELLANT) (-.+,/ RESPONDENT) +, / 0 / APPELLANT BY : SH. P. RADHAKRISHNAN, JCIT -.+, / 0 / RESPONDENT BY : SH. R. VIJAYARAGHAVAN, ADVOCATE 1 / 2% / DATE OF HEARING : 09.11.2015 3') / 2% / DATE OF PRONOUNCEMENT : 27.11.2015 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-1, COIMBAT ORE, DATED 13.05.2015 AND PERTAINS TO ASSESSMENT YEAR 2011-12. 2 I.T.A. NO.1810/MDS/15 2. SH. P. RADHAKRISHNAN, THE LD. DEPARTMENTAL REPRE SENTATIVE, SUBMITTED THAT THE ONLY ISSUE ARISES FOR CONSIDERAT ION IS WITH REGARD TO SETTING OFF OF LOSS OF THE COMPANY INCORPORATED IN CHINA AGAINST THE PROFIT OF THE ASSESSEE-COMPANY IN INDIA. THE L D. D.R. SUBMITTED THAT THE ASSESSEE IS 100% BENEFICIAL OWNER OF THE B USINESS IN CHENNAI IN THE NAME AND STYLE OF LMW TEXTILE MACHIN ERY (SUZHOU CO. LTD.). THE ASSESSEE IS MANUFACTURING TEXTILE M ACHINERY AND SPARES IN CHINA. ACCORDING TO THE LD. D.R., THE AS SESSEE HAS TO FILE RETURN OF INCOME IN CHINA IN RESPECT OF THE INCOME EARNED THEREIN. IN FACT, THE ASSESSEE-COMPANY SUFFERED A LOSS IN CH INA. THE ASSESSEE IS CLAIMING SET OFF OF THE LOSS SUFFERED I N CHINA AGAINST THE PROFIT EARNED IN INDIA. ACCORDING TO THE LD. D.R., WHEN THE COMPANY IN CHINA IS AN INDEPENDENT AND SEPARATE ENTITY, THE LOSS SUFFERED BY CHINA COMPANY CANNOT BE SET OFF AGAINST THE PROFIT EARNED BY THE ASSESSEE-COMPANY IN INDIA. HOWEVER, THE CIT(APPEAL S), AFTER ENTERTAINING NEW MATERIAL IN THE FORM OF MINUTES OF THE BOARD MEETING HELD IN COIMBATORE AND OTHER MATERIAL WHICH WAS NOT FILED BEFORE THE ASSESSING OFFICER, ALLOWED THE CLAIM OF THE ASSESSEE FOR SET OFF. THE CIT(APPEALS) CONCLUDED THAT THE CONTR OL AND MANAGEMENT OF THE CHINA COMPANY IS IN INDIA. THE L D. D.R. FURTHER 3 I.T.A. NO.1810/MDS/15 POINTED OUT THAT THE MINUTES OF THE BOARD MEETING A ND OTHER MATERIAL FILED BEFORE THE CIT(APPEALS) WERE NOT AVA ILABLE BEFORE THE ASSESSING OFFICER. THEREFORE, THERE WAS A CLEAR VI OLATION OF RULE 46A OF THE INCOME-TAX RULES, 1962. HENCE, THE LD. D.R. SUBMITTED THAT THE MATTER MAY BE REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER FOR RECONSIDERATION. 3. WE HEARD SH. R. VIJAYARAGHAVAN, THE LD.COUNSEL F OR THE ASSESSEE, WHO SUBMITTED THAT THE ADDITIONAL EVIDENC E WAS FILED BEFORE THE CIT(APPEALS) IN THE FORM OF MINUTES OF T HE BOARD MEETING, WHICH WAS HELD AT COIMBATORE. THIS DOCUME NT WAS NOT AVAILABLE BEFORE THE ASSESSING OFFICER. 4. WE HAVE CONSIDERED THE SUBMISSIONS ON EITHER SID E AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. ADMITTEDLY, THE CIT(APPEALS) PLACED HIS RELIANCE ON THE MINUTES OF THE BOARD MEETING HELD IN COIMBATORE TO COME TO A CONCLUSION THAT THE MANAGEMENT AND CONTROL OF THE COMPANY IN CHINA IS I N INDIA. THE MINUTES OF THE BOARD MEETING WAS NOT AVAILABLE BEFO RE THE ASSESSING OFFICER. THE CIT(APPEALS) HAS NOT GIVEN ANY OPPORTUNITY TO THE ASSESSING OFFICER. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THERE WAS A VIOLATION OF RULE 46A. THIS TRIBU NAL IS OF THE 4 I.T.A. NO.1810/MDS/15 CONSIDERED OPINION THAT WHEN THE CIT(APPEALS) ADMIT TED THE ADDITIONAL EVIDENCE, AN OPPORTUNITY SHOULD HAVE BEE N GIVEN TO THE ASSESSING OFFICER TO EXAMINE THE GENUINENESS OF THE DOCUMENT EITHER BY CALLING REMAND REPORT OR OTHERWISE. IN T HIS CASE, SUCH AN OPPORTUNITY WAS NOT GIVEN TO THE ASSESSING OFFICER. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE MATT ER NEEDS TO BE RECONSIDERED BY THE ASSESSING OFFICER IN THE LIGHT OF THE MATERIAL THAT WAS FILED BEFORE THE CIT(APPEALS). ACCORDINGL Y, THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE AND THE ENTIRE ISSUE WITH REGARD TO THE CLAIM OF SET OFF OF LOSS OF THE COMPANY INCO RPORATED IN CHINA AGAINST THE PROFIT OF THE ASSESSEE-COMPANY IN INDIA , IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSIN G OFFICER SHALL CONSIDER THE MATTER AFRESH IN THE LIGHT OF THE MATE RIAL THAT WAS FILED BEFORE THE CIT(APPEALS) AND THEREAFTER DECIDE THE S AME IN ACCORDANCE WITH LAW AFTER GIVING REASONABLE OPPORTU NITY TO THE ASSESSEE. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLO WED FOR STATISTICAL PURPOSES. 5 I.T.A. NO.1810/MDS/15 ORDER PRONOUNCED ON 27 TH NOVEMBER, 2015 AT CHENNAI. SD/- SD/- (. !'# ! ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) % / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 5 /DATED, THE 27 TH NOVEMBER, 2015. KRI. / -267 87)2 /COPY TO: 1. +, /APPELLANT 2. -.+, /RESPONDENT 3. 1 92 () /CIT(A)-1, COIMBATORE 4. ! 1 : 1 92 /CCIT , COIMBATORE 5. 7; -2 /DR 6. <( = /GF.