M/s Canbank Financial Services Ltd., Bangalore V. DCIT, Bangalore

ITA 182/BANG/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 63747 (ITAT-BANGALORE)
• Duration Of Justice: 8 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-10-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 23-10-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 03-02-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K AMBUSTHA CITI
• Assessee Lawyers: RAMASUBRAMANIYAN
• Keywords: Wrong claim; Revised return
• Section: 14A; 115JB

Judgement Text

ITA.NO.182/BANG/2012 PAGE - 1 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH 'A', BANGALORE BEFORE SHRI. N. BARATHVAJA SANKAR, VICE PRESIDENT AND SHRI. GEORGE GEORGE K. JUDICIAL MEMBER I.T.A NO.182/BANG/2012 (ASSESSMENT YEAR : 2008-09) M/S. CANBANK FINANCIAL SERVICES LTD NAVEEN COMPLEX, 6TH FLOOR, 14, M. G. ROAD, BANGALORE 560 001 .. APPELLANT PAN : AABCC5756H V. DEPUTY COMMISSIONER OF INCOME-TAX, WARD - 11(2), BANGALORE .. RESPONDENT APPELLANT BY : SHRI. RAMASUBRAMANIYAN, CA RESPONDENT BY : SHRI. S. K. AMBUSTHA, CIT-I, DR DATE OF HEARING : 23.10.2012 DATE OF PRONOUNCEMENT : 23.10.2012 O R D E R PER N. BARATHVAJA SANKAR, VICE PRESIDENT : THIS IS AN APPEAL PREFERRED BY THE ASSESSEE M/S. C ANBANK FINANCIAL SERVICES LTD., BANGALORE, FOR THE ASSESSM ENT YEAR 2008-09, AGAINST THE APPELLATE ORDER DATED.30.11.2011 OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-I, BANGALORE. 02. THE ASSESSEE HAS TAKEN BEFORE US GROUNDS RELATI NG TO A CLAIM OF RS.1,03,99,072/- AND APPLICATION OF SECTION 14A WHI LE COMPUTING ITA.NO.182/BANG/2012 PAGE - 2 BOOK PROFIT U/S.115JB OF THE ACT. AT THE TIME OF H EARING, THE LEARNED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT HE H AD BEEN INSTRUCTED NOT TO PRESS GROUND NOS.4 AND 5 RAISED BEFORE THIS TRIBUNAL (WHICH RELATES TO SECTION 14A R,W,RULE 8D). HE HAS ALSO M ADE AN ENDORSEMENT AGAINST THESE GROUNDS IN THE ORIGINAL G ROUNDS OF APPEAL FILED, STATING THAT THESE GROUNDS ARE WITHDRAWN. HENCE, THESE GROUND NOS.4 AND 5 ARE DISMISSED AS NOT PRESSED FOR. 03. NOW, WE ARE LEFT WITH THE ISSUE RELATING TO DED UCTION OF RS.1,03,99,072/-. THE GROUNDS RELATING TO THIS ISS UE READ AS UNDER : (I) THAT THE LEARNED COMMISSIONER OF INCOME-TAX (AP PEALS) ERRED IN LAW AND ON FACTS IN NOT DEDUCTING A SUM OF RS.1, 03,99,072/- EVEN THOUGH THE AMOUNT WAS ACTUALLY WRITTEN OFF IN THE BOOKS OF ACCOUNT. (II) THAT THE LEARNED COMMISSIONER OF INCOME-TAX (A PPEALS) ERRED IN LAW AND ON FACTS IN HOLDING THAT THE APPELLANT I S ESTOPPED FROM CLAIMING THE DEDUCTION OF RS.1,03,99,072/-. 04. THE BRIEF FACTS PERTAINING TO THIS GROUND ARE T HAT THE ASSESSEE HAD IN THE EARLIER YEARS ACCOUNTED A SUM OF RS.1,03 ,99,072/- AS DIVIDENDS RECEIVABLE. DURING THE FINANCIAL YEAR 31 .3.2008 THE ASSESSEE HAD WRITTEN OFF THE AMOUNT AS PART OF BAD DEBT. IT IS TO BE NOTED THAT THE AMOUNT WAS ACTUALLY WRITTEN OFF IN THE PROFIT A ND LOSS ACCOUNT AS A PART OF BAD DEBT. BY MISTAKE, THE ASSESSEE HAD ADD ED THIS SUM TO THE ITA.NO.182/BANG/2012 PAGE - 3 BOOK PROFIT AND OFFERED IT TO TAX U/S.115JB OF IT A CT, 1961. THE ASSESSING OFFICER DID NOT DELETE THIS ITEM WHILE CO MPUTING THE BOOK PROFITS. HENCE, THE ASSESSEE TOOK THE MATTER BEFOR E THE FIRST APPELLATE AUTHORITY. 05. BEFORE THE FIRST APPELLATE AUTHORITY, IT WAS AR GUED THAT THE ACTUAL WRITE-OFF OF ANY AMOUNT CANNOT BE ADDED TO THE BOOK PROFITS. SUCH A WRITE-OFF DOES NOT FALL UNDER CLAUSES (A) TO (G) OF EXPLANATION BEFORE SECTION 115JB OF THE ACT. IT WAS FURTHER ARGUED TH AT THIS WAS NOT A PROVISION FOR BAD DEBT AND IT WAS A ACTUAL WRITE OF F. HENCE, THE SUM OF RS.1,03,99,072/- HAS TO BE REDUCED FROM THE BOOK PR OFITS. ALSO THE REPRESENTATIVE MADE THE SUBMISSIONS THAT AN ITEM CA NNOT BE TAXED JUST BECAUSE ASSESSEE WRONGLY OFFERED IT TO TAX. IT IS WELL SETTLED THAT THERE IS NO ESTOPPEL AGAINST LAW; THE ASSESSEE CANNOT BE PREVENTED FROM MAKING A CLAIM ON THE GROUND THAT THE ASSESSEE ITSE LF HAS TAXED THE SUM IN THE RETURN FILED BY IT; THE DECISION OF THE HON'BLE CALCUTTA HIGH COURT IN PEERLESS FINANCE LTD V. COMMISSIONER OF IN TEREST TAX IS RELIED UPON, WHEREIN THE HIGH COURT HELD THAT IN TH E FIELD OF TAXATION THERE IS NO ESTOPPEL AGAINST A PERSON FOR HIS ERRON EOUS SUBMISSION OF RETURN UNDER A WRONG IMPRESSION; THE DECISION OF KA RNATAKA HIGH COURT IN BHANDARI METALS AND ALLOYS (PVT) LTD V. ST ATE OF KARNATAKA (56 KLJ 438) HAS BEEN RELIED UPON WHEREIN THE HIGH COURT HAS HELD THAT A WRONG CLAIM IN THE RETURN WILL NOT ESTOP THE ASSESSEE FROM ITA.NO.182/BANG/2012 PAGE - 4 CONTENDING THAT THE AMOUNT IS NOT TAXABLE. THUS IT WAS PLEADED THAT THE ASSESSEE'S CLAIM BE ALLOWED. 06. THE COMMISSIONER OF INCOME-TAX (APPEALS) AFTER GOING THROUGH THE SUBMISSIONS IN THE LIGHT OF THE FACTS AND CIRCU MSTANCES OF THE CASE NOTICED THAT THE ASSESSMENT ORDER AS WELL AS THE RE CTIFICATION ORDER U/S.154, REVEALED THAT NO SUCH CLAIM HAD BEEN MADE AT ALL DURING THE COURSE OF PASSING THESE ORDERS. FURTHER, THE RETUR N FILED ORIGINALLY ON 20.08.2009 WAS REVISED ON 30.03.2010 AND EVEN IN TH E REVISED RETURN SUCH CLAIM WAS NOT MADE. HENCE, HE CAME TO THE CON CLUSION THAT THIS CLAIM HAS BEEN MADE FOR THE FIRST TIME AT THE APPEL LATE STAGE. THE COMMISSIONER OF INCOME-TAX (APPEALS) DISMISSED THIS GROUND OF THE ASSESSEE WITHOUT ADMITTING THE SAME FOR DISCUSSION BY RELYING ON THE FOLLOWING DECISIONS : JAY BHARAT CO-OP HOUSING SOCIETY LTD V. ITO (10 ITR (TRIB) 717 (MUM); GOEETZE INDIA LTD V. CIT (2006) 284 ITR 323 (SC) ; MITTAL ALLOYS & STEEL V. CIT (2008) 299 ITR 291 (P & H) NOW THE ASSESSEE IS STILL AGGRIEVED AND IS ON SECON D APPEAL BEFORE US WITH THE GROUNDS OF APPEAL EXTRACTED ELSEWHERE IN T HE ORDER. 07. AT THE TIME OF HEARING THE LEARNED REPRESENTATI VE FOR THE ASSESSEE SUBMITTED THAT THE HON'BLE SUPREME COURT D ECISION IN GOETZE ITA.NO.182/BANG/2012 PAGE - 5 INDIA LTD., (SUPRA), HAS MADE IT CLEAR THAT THE ISS UE IN THIS CASE IS LIMITED TO THE POWER OF THE ASSESSING OFFICER TO EN TERTAIN A CLAIM FOR DEDUCTION OTHERWISE THAN BY A REVISED RETURN, AND D ID NOT IMPINGE ON THE POWER OF THE APPELLATE AUTHORITIES. 08. PER CONTRA, THE LEARNED DR RELIED ON THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) AND REITERATED THE CONTENTS AS HIS SUBMISSIONS. 09. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS ON RECORD AND THE DECISIONS CITED BEFORE US. THE H ON'BLE APEX COURT IN GOETZE (INDIA) LTD., (SUPRA) HAS GIVEN A FINDING THAT IT WAS OPEN TO THE ASSESSEE TO RAISE POINTS OF LAW BEFORE THE TRIB UNAL. RECENTLY, THE HON'BLE HIGH COURT OF MUMBAI IN PRITHVI BROKERS AND SHAREHOLDERS P. LTD., (2012) 252 CTR 151, HAS HELD THAT IN AN APPEA L BEFORE THE COMMISSIONER OF INCOME-TAX (APPEALS) AND TRIBUNAL, AN ASSESSEE IS ENTITLED TO RAISE ADDITIONAL GROUNDS NOT MERELY IN TERMS OF LEGAL SUBMISSIONS, BUT ALSO ADDITIONAL GROUNDS IN RESPECT OF CLAIMS NOT MADE IN THE RETURN OF INCOME FILED BY IT. RELYING ON TH E ABOVE TWO DECISIONS, WE EXERCISE THE POWERS VESTED WITH US TO ADMIT NEW CLAIM MADE BEFORE THE COMMISSIONER OF INCOME-TAX (APPEALS ) EVEN THOUGH IT WAS NOT MADE BEFORE THE ASSESSING OFFICER, FOR A DJUDICATION. HAVING ADMITTED THIS GROUND, HOWEVER, IN THE INTERE ST OF NATURAL ITA.NO.182/BANG/2012 PAGE - 6 JUSTICE, WE DEEM IT FIT AND PROPER TO RESTORE THIS ISSUE BACK TO THE FILE OF THE COMMISSIONER OF INCOME-TAX (APPEALS) TO DEAL WITH THE GROUNDS ON MERITS OF THE ISSUE AFTER GIVING EFFECTI VE OPPORTUNITY OF HEARING TO THE ASSESSEE. THE ASSESSEE IS ALSO DIRE CTED TO COOPERATE WITH THE COMMISSIONER OF INCOME-TAX (APPEALS) BY FU RNISHING NECESSARY DETAILS THAT WOULD BE REQUIRED OF IT. TH US THIS ISSUE IS ALLOWED FOR STATISTICAL PURPOSE. 10. IN THE RESULT, THE ASSESSEE'S APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT AT THE END OF HE ARING ON 23.10.2012. SD/- SD/- (GEORGE GEORGE K) (N. BARATHVAJA SANKAR) JUDICIAL MEMBER VICE PRESIDENT