ITO, CHENNAI V. M/s. M3 Infrastructure P. Ltd., CHENNAI

ITA 1865/CHNY/2010

• Counselvise Citation: 186521714 RSA 2010
• Duration Of Justice: 11 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-10-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 20-10-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 03-11-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R B NAIK
• Assessee Lawyers: C V RAJAN
• Keywords: Opportunity of being heard
• Section: 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B' BENCH, CHENNAI [BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI ABRAHAM P GEORGE, ACCOUNTANT MEMBER] I.T.A NO. 1865/MDS/2010 & 70/MDS/2011 (ASSESSMENT YEAR : 2007-08 ) THE ITO COMPANY WARD IV(1) CHENNAI VS M/S M3 INFRASTRUCTURE P. LTD F-6, TOWN HALL 69, MC NICHOLAS ROAD CHETPET CHENNAI 600 031 [PAN AAECM3482H] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI R.B.NAIK, CIT/DR RESPONDENT BY : SHRI C.V.RAJAN, ADVOCATE DATE OF HEARING : 20.10.2011 DATE OF PRONOUNCEMENT : 20.10.2011 O R D E R PER HARI OM MARATHA, JUDICIAL MEMBER: THESE APPEALS OF THE REVENUE, PERTAINING AS SESSMENT YEAR 2007-08, ARE DIRECTED AGAINST THE ORDER OF THE LD. CIT(A), CHENNAI, DATED 9.8.2010. ONE APPEAL IS IN RELATION TO REGUL AR ASSESSMENT ORDER AND THE OTHER ONE ARISES FROM THE ORDER PASSED U/S 154 OF THE ACT. ITA 1865/10 & 70/11 :- 2 -: FOR THE SAKE OF CONVENIENCE, WE ARE PROCEEDING TO D ECIDE THEM BY A COMMON ORDER. I.T.A.NO. 1865/MDS/2010 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2007-08 ON 30.10.2007 DECLARING A TOTAL LOSS OF ` 59,63,559/-. THE CASE WAS SELECTED FOR SCRUTINY AND ASSESSMENT WAS COMPLETED ON 29.12.2009 DETERMINING THE TOTAL INCOME AT ` 5,74,46,185/- BY MAKING THE FOLLOWING ADDITIONS: 1. SHIPMENT EXPENSE IRON ORE FINES 99,00,189 2. SHIP FREIGHT MILL SCALE 2,85,86,226 3. SHIPMENT EXPENSES MILL SCALE 75,13,161 4. AGENCY COMMISSION 10,86,775 5. RAILWAY FREIGHT CHARGES 1,42,10,263 6. QUALITY CLAIM 13,07,576 7. INTEREST 7,71,846 3. AGGRIEVED, THE ASSESSEE WENT IN APPEAL BEFORE THE L D. CIT(A) AND WAS SUCCESSFUL IN GETTING THE ENTIRE AD DITIONS DELETED. NOW, THE REVENUE IS AGGRIEVED AND IS IN APPEAL BEFO RE US. 4. THE LD.DR HAS SUBMITTED THAT THE LD. CIT(A) HAS DEC IDED THE ISSUES BASED ON EVIDENCE(S) PRODUCED BEFORE HIM FOR THE FIRST TIME WITHOUT GIVING THE ASSESSING OFFICER A REASONABLE O PPORTUNITY TO ITA 1865/10 & 70/11 :- 3 -: EXAMINE THE SAME WHICH IS IN VIOLATION OF THE PRO VISIONS OF RULE 46A OF THE INCOME TAX RULES. HE, THEREFORE, PRAYED F OR REMANDING THE ISSUES BACK TO THE FILE OF THE ASSESSING OFFICER. THE LD.AR DID NOT RAISE ANY OBJECTION TO THE ABOVE PROPOSAL. 5. AFTER GOING THROUGH THE RECORDS, IT WAS OTHERWISE F ELT IMPERATIVE TO RESTORE THE ISSUES INVOLVED IN THIS APPEAL TO THE FILE OF THE ASSESSING OFFICER SO THAT HE CAN EXAMINE THE EV IDENCE(S) FILED BY THE ASSESSEE BEFORE THE LD. CIT(A) AND DECIDE THE I SSUES AFRESH. ACCORDINGLY, WE RESTORE THE ISSUES TO THE FILE OF T HE ASSESSING OFFICER WITH THE ABOVE DIRECTION. NEEDLESS TO MENTION THAT THE ASSESSING OFFICER SHALL GIVE DUE OPPORTUNITY OF BEING HEARD T O THE ASSESSEE AS PER LAW. I.T.A.NO. 70/MDS/2011 6. WHILE COMPLETING THE ASSESSMENT ORDER ON 29.12.2009 , AN ADDITION OF ` 2,85,56,226/- WAS MADE U/S 40A(IA). IT WAS NOTICE D THAT THIS PAYMENT WAS MADE TOWARDS SHIP FREIGHT MILL SCA LE, BUT NO TDS WAS DEDUCTED. SO, A SUM OF ` 6,59,511/- WAS FOUND TO HAVE BEEN OMITTED TO BE DISALLOWED U/S 40A(IA). THUS, THE AS SESSING OFFICER RECTIFIED HIS ORDER U/S 154 ON 19.4.2010 AND TAXABL E INCOME WAS DETERMINED AT ` 5,81,05,696/- AND AFTER THAT BROUGHT FORWARD BUSIN ESS ITA 1865/10 & 70/11 :- 4 -: LOSS WAS ALLOWED. THE LD. CIT(A) HAS ALLOWED THE APPEAL OF THE ASSESSEE FILED AGAINST THIS ORDER AND GOT THE DESIR ED RELIEF. BUT THE REVENUE IS NOW AGGRIEVED. FOLLOWING GROUNDS HAVE B EEN RAISED BY THE REVENUE IN ITS APPEAL: 1. THE ORDER OF THE LD. CIT(A) IS CONTRARY TO LAW AND FACTS OF THE CASE. 2.1 THE LEARNED CIT(A) HAS ERRED IN DELETING THE DI SALLOWANCE U/S. 40(A)(IA) ON SHIP FREIGHT-MILL SCALE ` RS.6,59,511 HOLDING THAT THE IMPUGNED AMOUNT IS NOT TAXABLE IN INDIA. 2.2 THE LEARNED CIT(A) FAILED TO APPRECIATE THAT TH E EVIDENCE PRODUCED BY THE ASSESSEE STANDING IN THE NAME OF M/ S REJOY SHIPPING CO MALTA WAS ONLY A FINAL FREIGHT STATEMEN T WHICH DID NOT CONTAIN THE ADDRESS OF THE COMPANY, BILL NUMBER AND SIGNATURE. THE ASSESSEE HAS PAID USD 6,26,400 TO ON E M/S INTEROCEAN SHIPPING ( INDIA) P LTD AND NOT TO M/S R EJOY SHIPPING CO L.TD EVIDENCED BY INVOICE DATED 19/09/2006. 3. FOR THESE AND OTHER GROUNDS THAT MAY BE ADDUCED AT THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE LEARNED CIT(A) MAY BE SET ASIDE AND THAT OF THE ASSESSING O FFICER RESTORED. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS. IT WAS FOUND THAT THE LD. CIT(A) HAS NOT CORRECTLY LAID DOWN THE FACTS OF THIS ISSUE IN ITS CORRECT PERSPECTIVE. THE ASSESSING OFFICER HAS ALS O NOT EXAMINED THIS ISSUE CAREFULLY. THE LD. CIT(A) HAS GONE IN THE DI RECTION WHICH IS NOT MATCHING WITH THE FACTS NOTED DOWN BY THE ASSESSING OFFICER. THEREFORE, WE FEEL THAT THIS ISSUE ALSO NEEDS TO BE RE-EXAMINED BY THE ASSESSING OFFICER. ACCORDINGLY, WE SET ASIDE EVEN THIS ISSUE TO THE FILE ITA 1865/10 & 70/11 :- 5 -: OF THE ASSESSING OFFICER WITH SIMILAR DIRECTION GIV EN IN I.T.A.NO. 1865/MDS/2010. 8. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ST AND ALLOWED FOR STATISTICAL PURPOSES. THE ORDER PRONOUNCED IN THE OPEN COURT ON 20.10.2011. SD/- SD/- (ABRAHAM P GEORGE) ACCOUNTANT MEMBER ( HARI OM MARATHA ) JUDICIAL MEMBER DATED: 20 TH OCTOBER, 2011 RD COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR