Quadra Medical Services Pvt Ltd., Kolkata V. I.T.O Wd - 12(1),kolkata, Kolkata

ITA 1896/KOL/2012

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 2055 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-10-2015
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2004-2005
• Appeal Filed On: 26-12-2012
• Court: TRIBUNAL
• Department Lawyers: MD GHYAS UDDIN JCIT LD
• Assessee Lawyers: DEV KR KOTHARI ACA FCA LD
• Keywords: Business income; Depreciation; Rectification of order; Cost of acquisition
• Section: 143(3); 148; 54; 154; 15

Judgement Text

ITA NO. 1896/KOL/2012 -C-AM M/S. QUADRA MED.SERV. P.LTD 1 IN THE INCME TAX APPELLATE TRIBUNAL, C BENCH, KO LKATA BEFORE : SHRI MAHAVIR SINGH, JUDICIAL MEMBER, AND SHRI M. BALAGANESH, ACCOUNTANT MEMBER I.T.A NO. 1896/KOL/2012 A.Y 2004-05 M/S. QUADRA MEDICAL SERVICES VS. I T O WARD 12(1) , KOLKATA PVT. LTD PAN: AAACQ1017C (APPELLANT) (RESPOND ENT) FOR THE APPELLANT: SHRI DEV KR. KOTHARI, ACA , FCA, LD.AR FOR THE RESPONDENT : MD. GHYAS UDDIN,J CIT, LD.DR DATE OF HEARING: 06-10-2015 DATE OF PRONOUNCEMENT: 8 -10-2 015 ORDER SHRI M.BALAGANESH, AM THIS APPEAL OF THE ASSESSEE ARISES OUT OF THE ORDE R OF THE LEARNED CITA IN APPEAL NO. 489/CIT(A)-XXIV/12(1)/08-09 DATED 04-09-2012 F OR THE ASST YEAR 2004-05 PASSED AGAINST THE ORDER OF ASSESSMENT FRAMED BY THE LEARN ED AO U/S 154 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 2. SHRI.DEV KR.KOTHARI, FCA, THE LEARNED AR ARGUED ON BEHALF OF THE ASSESSEE AND SHRI.MD.GHAYASUDDIN, JCIT, THE LEARNED SENIOR DR AR GUED ON BEHALF OF THE REVENUE. 3. THE ONLY ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE OMISSION TO DISALLOW A SUM OF RS. 10,2,7456/- TOWARDS LOSS ON SALE / EXC HANGE OF FIXED ASSETS IN THE ORIGINAL ASSESSMENT IS A MISTAKE APPARENT FROM RECORD OR NOT IN THE FACTS AND CIRCUMSTANCES OF THE CASE . 4. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASSE SSEE PURCHASED A CT SCAN MACHINE DURING THE ASSESSMENT YEAR UNDER APPEAL BY WAY OF EXCHANGE OF OLD CT SCAN MACHINE AVAILABLE WITH IT. ON EXCHANGE OF OLD CT SCAN MACHINE, THE A SSESSEE DEBITED A SUM OF RS. ITA NO. 1896/KOL/2012 -C-AM M/S. QUADRA MED.SERV. P.LTD 2 10,27,456/- AS LOSS ON SALE OF FIXED ASSETS IN ITS BOOKS OF ACCOUNTS AND DEBITED THE SAME IN THE PROFIT AND LOSS ACCOUNT. BUT THE IMPACT OF THE SAME WOULD BE EFFECTED IN THE COMPUTATION OF INCOME TAX DEPRECIATION STATEMENT FI LED BY THE ASSESSEE. THE LEARNED AO DID NOT DISTURB THE INCOME TAX DEPRECIATION FIGURE CLAIMED BY THE ASSESSEE. THE ASSESSEE DID NOT DISALLOW THE LOSS ON SALE OF ASSETS IN THE SUM OF RS. 10,27,456/- VOLUNTARILY IN THE RETURN OF INCOME. THE LEARNED AO ALSO OMITTED TO DISALLOW THE SAME IN THE ORIGINAL SCRUTINY ASSESSMENT PROCEEDINGS U/S 143(3) OF THE A CT. LATER THE LEARNED AO SOUGHT TO RECTIFY THE SAID APPARENT MISTAKE BY ISSUANCE OF NO TICE U/S 154 CLEARLY MENTIONING THE MISTAKE SOUGHT TO BE RECTIFIED BY HIM. LATER THE A SSESSMENT U/S 154 OF THE ACT WAS FRAMED BY THE LEARNED AO DULY DISALLOWING THE LOSS ON SALE OF FIXED ASSETS TO THE TUNE OF RS. 10,27,456/-. ON FIRST APPEAL, THE LEARNED CITA UPH ELD THE ACTION OF THE LEARNED AO. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US ON T HE FOLLOWING GROUND (CONCISE GROUNDS OF APPEAL):- 1. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCE S OF THE CASE LEARNED CIT(A) XXIV, KOLKATA WAS WRONG IN CONFIRMIN G INITIATION OF RECTIFICATION PROCEEDING AND ORDER PASSED BY THE AO U/S. 154 AND CONFIRMING RECTIFICATION, THOUGH THE NOTICE WAS VE RY VAGUE AND THERE WAS NO MISTAKE APPARENT FROM RECORDS RECTIFIABLE U/ S. 154 2. THE APPELLANT PRAY THAT THE ORDER PASSED U/S. 15 4 MAY BE SET ASIDE AND THE ORDER PASSED U/S. 143(3) MAY BE RESTO RED.. 5. THE LEARNED AR ARGUED THAT THERE WAS NO COMPUT ATION UNDER THE HEAD CAPITAL GAINS IN THE COMPUTATION OF TAXABLE INCOME BY THE ASSESSEE AND BY THE LEARNED AO IN THE ASSESSMENT PROCEEDINGS AND HENCE HE ARGUED THAT THE LOSS ON SALE OF FIXED ASSETS IS ONLY INCIDENTAL TO THE BUSINESS AND IS ALLOWABLE AS DEDU CTION. HE FURTHER ARGUED THAT ONLY THE NET ADDITION TO CT SCAN MACHINE (I.E THE PURCHASE COST OF NEW CT SCAN MACHINE LESS THE OLD CT SCAN MACHINE EXCHANGED) IS REFLECTED IN THE INCOME TAX DEPRECIATION SCHEDULE AND DEPRECIATION CLAIMED ACCORDINGLY BY THE ASSESSEE WH ICH IS NOT DISPUTED BY THE LEARNED AO. THE LEARNED AR ARGUED THAT THE NOTICE ISSUED U/S 15 4 WHICH IS ALSO PLACED ON RECORD IN THE PAPER BOOK FILED BY THE ASSESSEE IS VERY VAGUE AND DID NOT INDICATE THE APPARENT MISTAKE FROM RECORD AND ACCORDINGLY PLACED RELIANCE ON THE DECISION OF THE HONBLE SUPREME COURT ITA NO. 1896/KOL/2012 -C-AM M/S. QUADRA MED.SERV. P.LTD 3 IN THE CASE OF ADDL CIT VS SHREYAS GRAMIN BANK REPORTED IN 2012 (9 ) TMI 518 SUPREME COURT IN SUPPORT OF HIS CONTENTIONS. 6. IN RESPONSE TO THIS, THE LEARNED DR VEHEMENTL Y SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES AND STATED THAT THE LEARNED AO HAD CLEA RLY STATED IN THE NOTICE ISSUED U/S 154 OF THE ACT THE MISTAKE PROPOSED TO BE RECTIFIED AND HE NCE THE DECISION STATED BY THE LEARNED AR IS DISTINGUISHABLE TO THE FACTS OF THE INSTANT C ASE. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIALS AVAILABLE ON RECORD. THE FACTS STATED HEREINABOVE ARE NOT DISPUTED BY BO TH THE PARTIES AND HENCE ARE NOT REPRODUCED FOR THE SAKE OF BREVITY. WE FIND THAT T HE NOTICE ISSUED U/S 154 OF THE ACT CLEARLY MENTIONS THE INTENTION OF THE LEARNED AO BY DULY ME NTIONING THE MISTAKE THAT HAD CREPT IN THE ORIGINAL ASSESSMENT ORDER TOWARDS OMISSION TO D ISALLOW THE LOSS ON SALE OF FIXED ASSETS TO THE TUNE OF RS 10,27,456/- . ADMITTEDLY, THE L OSS ON SALE OF FIXED ASSETS IS ONLY A CAPITAL LOSS AND CANNOT BE CONSTRUED AS A LOSS INCIDENTAL T O THE BUSINESS AS CLAIMED BY THE LEARNED AR. HENCE THE SAID CAPITAL LOSS OUGHT TO HAVE BEE N DISALLOWED IN THE COMPUTATION OF TOTAL INCOME BY THE ASSESSEE VOLUNTARILY OR BY THE LEARNE D AO IN THE ORIGINAL SCRUTINY ASSESSMENT PROCEEDINGS IN ACCORDANCE WITH LAW. HO WEVER, THE SAME WAS DULY SOUGHT TO BE RECTIFIED BY THE LEARNED AO IN SECTION 154 PROCEEDI NGS AS IT IS NOT A DEBATABLE ISSUE AND THE SAID MISTAKE IS PATENT , GLARING AND VERY OBVIOUS. NOW LET US GET INTO THE DECISION OF THE HONBLE APEX COURT RELIED BY THE LEARNED AR IN THE CASE OF ADDL CIT VS SHREYAS GRAMIN BANK REPORTED IN 2012 (9) TMI 518 (CIVIL APPEAL NO. 4801 OF 2007 DATED 12 TH SEPTEMBER 2012) SUPREME COURT WHEREIN IT WAS HELD AS BELOW:- HEAD NOTES: RECTIFICATION OF MISTAKE NOTICE U/S. 154- HELD T HAT;- THE SAID NOTICE IS YTOTALLY VAGUE AS AO HAS NOT EVEN INDICATED AS T O ON WHAT BASIS HE HAS ALLOWED EXCESS SET-OFF-NOTICE U/S. 148 ISSUED S QUARELY ON THE BASIS OF NOTICE UNDER SECTION 154- BOTH THE NOTICES SET ASIDE- IN FAVOUR OF ASSESSEE. HELD/ORDER: HEARD LEARNED COUNSEL ON BOTH SIDES. ITA NO. 1896/KOL/2012 -C-AM M/S. QUADRA MED.SERV. P.LTD 4 WE HAVE GONE THROUGH THE NOTICE UNDER SECTION 154 O F THE INCOME TAX ACT, 1961 [ ACT, FOR SHORT]. WE FIND THAT THE SA ID NOTICE IS TOTALLY VAGUE. THE ASSESSING OFFICER HAS NOT EVEN INDICATED AS TO ON WHAT BASIS HE HAS ALLOWED EXCESS SET-OFF. NOTICE UNDER SECTION 154 OF THE ACT, THEREFORE, WAS NOT MAINTAINABLE. THE SECOND NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED SQUARELY ON THE BASIS OF NOTI CE UNDER SECTION 154 OF THE ACT. IN THE CIRCUMSTANCES, THE HIGH COURT WA S RIGHT IN SETTING ASIDE BOTH THE NOTICES. WE, THEREFORE, SEE NO REAS ON TO INTERFERE WITH THE IMPUGNED ORDER. ACCORDINGLY, THE CIVIL APPEAL FILED BY THE DEPARTME NT IS DISMISSED WITH NO ORDER AS TO COSTS. 7.1 WE ARE IN TOTAL AGREEMENT WITH THE ARGUMENTS OF THE LEARNED DR THAT THE CASE LAW QUOTED BY THE LEARNED AR ARE SQUARELY DISTINGUISHAB LE TO THE FACTS OF THE INSTANT CASE AS IN THE CASE BEFORE THE SUPREME COURT, THE NOTICE U/S 1 54 WAS VERY VAGUE IN NATURE AND DID NOT INDICATE THE INTENTION OF THE AO TO RECTIFY THE MIS TAKE. WHEREAS IN THE INSTANT CASE BEFORE US, THE LEARNED AO HAD CLEARLY MENTIONED THE MISTAK E SOUGHT TO BE RECTIFIED IN THE NOTICE U/S 154 OF THE ACT ITSELF. WE DONT ENDORSE THE AR GUMENTS OF THE LEARNED AR THAT WHEN THERE IS NO COMPUTATION UNDER THE HEAD CAPITAL GAIN S WHILE DETERMINING THE TAXABLE INCOME, THE RESULTANT CAPITAL LOSS CANNOT BE SET OFF AGAINS T THE BUSINESS INCOME. THIS IS A GLARING MISTAKE COMMITTED BY BOTH ASSESSEE AS WELL AS BY TH E LEARNED AO IN ORIGINAL SCRUTINY ASSESSMENT PROCEEDINGS WHICH WAS LATER RECTIFIED U/ S 154 BY THE LEARNED AO AND WE HOLD THAT THE ACTION OF THE LEARNED CITA DOES NOT REQUIR E ANY INTERFERENCE IN THIS REGARD. ACCORDINGLY THE GROUND RAISED BY THE ASSESSEE IS DI SMISSED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. THIS ORDER IS PRONOUNCED IN OPEN COURT ON 8 / 10 /2015 SD/- ( MAHAVIR SINGH, JUDICIAL MEMBER ) SD/- (M. BALAGANESH, ACCOUNTANT MEMBER) DATE 8 /10/2015 ITA NO. 1896/KOL/2012 -C-AM M/S. QUADRA MED.SERV. P.LTD 5 COPY OF THE ORDER FORWARDED TO: 1.. THE APPELLANT M/S. QUADRA MEDICAL SERVICES PVT . LTD 41 HAZRA ROAD, KOL-19. 2 THE RESPONDENT- I T O W 12(1), AAYKAR BHAWAN P-7 CHOWRINGHEE SQ., KOL-69. 3 4.. /THE CIT, / THE CIT(A) 5. DR, KOLKATA BENCH 6. GUARD FILE. TRUE COPY, BY ORDER, ASSTT REGISTRAR ** PRADIP SPS