QUEST ORGANICS P. LTD, PUNE V. ITO 2(3)-1, MUMBAI

ITA 1910/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 2215 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-05-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 29-03-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 26-03-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R N JHA
• Assessee Lawyers: DHIRENDRA M SHAH
• Keywords: Depreciation
• Section: 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D, MUMBAI BEFORE SHRI R.S.SYAL, AM AND SMT.ASHA VIJAYARAGHAVAN , JM ITA NO.1910/MUM/2009 : ASST.YEAR 2005-2006 M/S.QUEST ORGANICS PRIVATE LIMITED C/O.VINAY D.MAHAJAN BUILDING NO.S-6, FLAT NO.1101 GANGA SATELLITE, WANOWRIE PUNE 411 040. PA NO.AAACQ0116E. VS. THE INCOME TAX OFFICER WARD 2(3)-1 MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI DHIRENDRA M.SHAH RESPONDENT BY : SHRI R.N.JHA (CIT-DR) O R D E R PER R.S.SYAL, AM : THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDE R PASSED BY THE COMMISSIONER OF INCOME-TAX U/S.263 OF THE ACT ON 2 7 TH FEBRUARY, 2009 IN RELATION TO THE ASSESSMENT YEAR 2005-2006. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSMENT U/S.143(3) WAS COMPLETED ON 30.11.2007. THE LEARNED CIT FOUND SUCH ASSESSMENT ORDER TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE INASMUCH AS THE ASSESSING OFFICER FAILED TO EXAMINE THE APPLICABILITY OF THE PROVISIONS OF SECTION 115JB. THE AMOUNT OF BOOK PROFIT COMPUTED BY THE ASSESSEE WAS AFTER DEDUCTING PROFIT ON SALE OF LAND OF RS.70,31,300 WHICH WAS FOUND TO BE NOT P ERMISSIBLE AND FURTHER THE DEDUCTION OF UNABSORBED LOSS AMOUNTING TO RS.20,02, 716 AS CLAIMED BY THE ASSESSEE WAS ALSO FOUND TO BE NOT IN ACCORDANCE WIT H LAW INASMUCH AS IT WAS ONLY LOWER AMOUNT OF CARRY FORWARD BUSINESS LOSS OR UNAB SORBED DEPRECIATION WHICH WAS LIABLE TO BE DEDUCTED. SHOW CAUSE NOTICE U/S.263 WA S ISSUED IN RESPONSE TO WHICH THE ASSESSEE OBJECTED TO THE PROPOSED REVISION ON T HE FOLLOWING TWO GROUNDS:- ITA NO.1910/MUM/2009 M/S.QUEST ORGANICS PRIVATE LIMITED. 2 (I) THE ASSESSMENT ORDER WAS PASSED WITHOUT JURISDI CTION AS THE ASSESSEE HAD REQUESTED FOR THE TRANSFER OF JURISDICTION TO P UNE AND HENCE THE ORDER U/S.263 WAS ALSO WITHOUT JURISDICTION. (II) DETAILED COMPUTATION U/S.115JB WAS FILED ALONG WITH RETURN OF INCOME TO WHICH THE ASSESSING OFFICER APPLIED HIS MIND. 3. THE LEARNED CIT REJECTED THE CONTENTIONS RAISED ON BEHALF OF THE ASSESSEE. HE SET ASIDE THE ASSESSMENT ORDER BY DECLARING IT TO B E ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AND REMITTED THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR PASSING A FRESH ASSESSMENT ORDER AND ALSO COMPU TING BOOK PROFIT U/S.115JB. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE FIRST ISSUE RAISED BY THE LEARNED A.R. BEFORE US WAS THAT THE ASSESSMENT ORDER PASSED BY THE A.O. WAS WITHOUT JURISDICTION A S THE ASSESSEE HAD WRITTEN SEVERAL LETTERS TO THE A.O. ABOUT SHIFTING OF ITS P REMISES TO PUNE. IN THAT VIEW OF THE MATTER IT WAS ARGUED THAT THE PRESENT REVISIONAL OR DER BE ALSO DECLARED AS WITHOUT JURISDICTION. WE ARE UNABLE TO ACCEPT THIS PROPOSIT ION FOR THE OBVIOUS REASON THAT ON A SPECIFIC QUERY RAISED FROM THE BENCH, THE LEARNED A.R. ADMITTED THAT THE ASSESSMENT ORDER PASSED U/S.143(3) WAS DULY ACCEPTE D BY THE ASSESSEE AND NO APPEAL THERE-AGAINST WAS FILED BEFORE THE LEARNED C IT(A). WHEN THE VERY ASSESSMENT ORDER U/S.143(3) HAS ATTAINED FINALITY, IT CANNOT BE ARGUED IN REVISIONAL PROCEEDINGS THAT THE ASSESSMENT ORDER WAS PASSED WI THOUT JURISDICTION AND CONSEQUENTLY NO ACTION COULD BE TAKEN U/S.263 QUA SUCH ASSESSMENT ORDER. THE ASSESSEE CANNOT BE ALLOWED TO BLOW HOT AND COLD IN THE SAME BREATH, FIRSTLY BY ACCEPTING THE ASSESSMENT ORDER AS IT IS AND THEN A RGUING IN REVISIONAL PROCEEDINGS THAT SUCH ASSESSMENT ORDER WAS WITHOUT JURISDICTION AND HENCE 263 ORDER BE ALSO DECLARED AS WITHOUT JURISDICTION. ONCE A VALID ASSE SSMENT ORDER IS PASSED, IT CANNOT BE HEARD IN THE REVISIONAL PROCEEDINGS THAT THE AS SESSMENT ORDER WAS NOT VALID AND ITA NO.1910/MUM/2009 M/S.QUEST ORGANICS PRIVATE LIMITED. 3 HENCE THE JURISDICTION OF THE LD. CIT IS OUSTED. WE , THEREFORE, DISMISS THIS CONTENTION RAISED ON BEHALF OF THE ASSESSEE. 5. THE SECOND ISSUE RAISED BY THE LEARNED A.R. IS ABOUT COMPUTATION OF BOOK PROFIT. PRIMARILY WE FIND THAT THE ASSESSEE, IN ITS COMPUTATION OF BOOK PROFIT, CLAIMED DEDUCTION OF RS.70,31,300 REPRESENTING PROF IT ON SALE OF LAND, WHICH POSITION IS CONTRARY TO THE JUDGEMENT OF THE JURISD ICTIONAL HIGH COURT, EXISTING AT THE MATERIAL TIME, IN CIT VS. VEEKAYLAL INVESTMENT CO. (P) LTD. [(2001) 2 49 ITR 597 (BOM.)] . IN THIS JUDGEMENT BOOK PROFIT U/S.115J WAS UNDER CONSIDERATION AND THE HONBLE HIGH COURT HELD THAT THE INCOME FROM CA PITAL GAINS U/S.45 HAS TO BE INCLUDED FOR THE PURPOSE OF COMPUTING BOOK PROFIT U /S.115J. THE SAME VIEW HAS BEEN REITERATED RECENTLY BY THE HONBLE KERALA HIGH COURT IN THE CASE OF N.J.JOSE & CO. (P.) LTD. VS. ACIT [(2010) 321 ITR 132 (KER.) ] . INSOFAR AS THE COMPUTATION OF BOOK PROFIT U/S.115JB IS CONCERNED, WHICH IS PRE SENTLY UNDER CONSIDERATION, THERE IS NO MATERIAL DIFFERENCE IN THE LANGUAGE OF SECTIO N 115J AND 115JB QUA THE NON- DEDUCTIBILITY OF CAPITAL GAIN FROM NET PROFITS COMP UTED AS PER PARTS II AND III OF SCHEDULE VI OF THE COMPANIES ACT, 1956, FOR THE PU RPOSES OF COMPUTING BOOK PROFIT. 6. BE THAT AS IT MAY WE FIND FROM THE ASS ESSMENT ORDER THAT THERE IS NO REFERENCE MUCH LESS ANY DISCUSSION ABOUT THE APPLIC ABILITY OF SECTION 115JB. THE ASSESSING OFFICER FAILED TO APPLY HIS MIND ABOUT TH E QUESTION OF EXAMINING THE APPLICABILITY OF PROVISIONS OF SECTION 115JB AND IT S COMPUTATION MORE SPECIFICALLY WHEN THE ASSESSEE IN ITS COMPUTATION OF INCOME HAD REFERRED TO THE CALCULATION OF BOOK PROFIT. THE HONBLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. VS. CIT [(2000) 243 ITR 83 (SC)] HAS HELD THAT THE CIT CAN REVISE ORDER WHEN THE ASSESSING OFFICER MERELY ACCEPTS WHAT THE ASSES SEE STATED BEFORE HIM AND DID NOT APPLY HIS MIND TO THE SUBMISSIONS MADE ON BEHAL F OF THE ASSESSEE. IN THE LIGHT OF THE ABOVE DISCUSSION, WE ARE OF THE CONSIDERED O PINION THAT THE ORDER PASSED BY ITA NO.1910/MUM/2009 M/S.QUEST ORGANICS PRIVATE LIMITED. 4 THE ASSESSING OFFICER WAS RIGHTLY HELD BY THE CIT A S ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE CALLING FOR REVISION. THE S AME IS UPHELD. 7. IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED ON THIS 7 TH DAY OF MAY 2010. SD/- SD/- ( ASHA VIJAYARAGHAVAN ) ( R.S.SYAL ) JUDICIAL MEMBER ACCOUNTANT M EMBER MUMBAI : 7 TH MAY, 2010 . DEVDAS* COPY TO : 1. THE APPELLANT. 2. THE RESPONDENTS. 3. THE CIT CONCERNED 4. THE CIT, MUMBAI. 5. THE DR/ITAT, MUMBAI. 6. GUARD FILE. TRUE COPY. BY ORDER ASSISTANT REGISTRAR, ITAT, MUMBAI. ITA NO.1910/MUM/2009 M/S.QUEST ORGANICS PRIVATE LIMITED. 5 DATE INITIAL 1. DRAFT DICTATED ON 03.05.2010 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 03.05.2010 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. FILE SENT TO THE BENCH CLERK SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 9. DATE OF DISPATCH OF ORDER. *