M/s. Regency Creations Limited, New Delhi V. DCIT, New Delhi

ITA 1923/DEL/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7425 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 4 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 03-08-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 02-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: F R MEENA SENIOR
• Assessee Lawyers: Y K AIYAR
• Keywords: Depreciation; Opportunity of being heard
• Section: 143(3); 10B; 148; 154; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH F : NEW DELHI) BEFORE SHRI J.S. REDDY, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.1923/DEL./2014 (ASSESSMENT YEAR : 2005-06) M/S. REGENCY CREATIONS LIMITED, VS. DCIT, CIRCLE 15 (1), A 106, SECOND FLOOR, NEW DELHI. LAJPAT NAGAR 1, NEW DELHI-110 024. (PAN : AAACR4348D) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI Y.K. AIYAR, CA REVENUE BY : SHRI F.R. MEENA, SENIOR DR DATE OF HEARING : 03.08.2016 DATE OF ORDER : 24.08.2016 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : APPELLANT, M/S. REGENCEY CREATIONS LIMITED (HEREI NAFTER REFERRED TO AS THE ASSESSEE), BY FILING THE PRESE NT APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 05.02.2014 PASSE D BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-XVIII, NEW DEL HI, AFFIRMING THE ASSESSMENT ORDER DATED 30.03.2012 UND ER SECTION 154 OF THE INCOME-TAX ACT, 1961 (FOR SHORT THE ACT) Q UA THE ASSESSMENT YEAR 2005-06 ON THE GROUND THAT :- ON THE BASIS OF THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT (A)-XVIII, NEW DELHI HAS ERRED IN THE UPHOL DING WRONGFUL DISALLOWANCE MADE BY THE ASSESSING OFFICER ITA NO.1923/DEL./2014 2 2. BRIEFLY STATED THE FACTS OF THIS CASE ARE : THE ASSESSEE COMPANY IS INTO THE BUSINESS OF 100% EXPORT OF META L, HANDICRAFTS, HOME FURNISHING ITEMS AND SOFTWARE EXPORT HAVING TH REE SEPARATE DIVISIONS : FIRST DEALS IN METAL HANDICRAFT; SECOND DEALS IN HOME FURNISHING (BOTH IN THE NAME AND STYLE OF M/S. REGE NCY CREATIONS LTD.) AND THIRD DEALS IN THE SOFTWARE IN THE NAME AND STYLE AS M/S. MAXTECH ISOLUTION. HOME FURNISHING A ND SOFTWARE DIVISION ARE HAVING 100% EXPORT ORIENTED STATUS, TH US, THE ASSESSEE CLAIMED 90% OF THE PROFIT AS EXEMPTION U/S 10B OF T HE ACT WHICH WAS DENIED BY THE AO BUT ALLOWED BY THE CIT (A) AND ITAT. 3. HOWEVER, THE ASSESSMENT WAS REOPENED U/S 148 AFT ER RECORDING THE REASONS WHICH WERE CONVEYED TO THE AS SESSEE. ASSESSEE FILED WRITTEN SUBMISSIONS WHICH WERE CONSI DERED AND ACCEPTED BY THE AO. HOWEVER, AFTER GIVING EFFECT T O THE ORDER OF THE CIT (A)/ITAT, INCOME/LOSS IS ASSESSED AT THE VA LUE EQUAL TO THE RETURNED LOSS TO THE TUNE OF RS.7,05,35,059/- BY TH E AO. 4. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT ( A) BY CHALLENGING THE ORDER PASSED U/S 154 OF THE ACT BY WAY OF FILING AN APPEAL WHICH HAS BEEN DISMISSED. FEELING AGGRIEVED, THE ASSESSEE HAS COME UP BEFORE THE TRIBUNAL BY WAY OF FILING TH E PRESENT APPEAL. ITA NO.1923/DEL./2014 3 5. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 6. LD. AR FOR THE ASSESSEE CHALLENGING THE IMPUGNED ORDER CONTENDED THAT WHEN THE AO HAD ADMITTED THE LOSS DE CLARED BY THE ASSESSEE AND HAS NOT MADE ANY ADDITION IN THE AY 20 02-03, DISALLOWANCE OF THE CARRY FORWARD LOSS BY THE AO/CI T (A) IS NOT SUSTAINABLE. 7. HOWEVER, ON THE OTHER HAND, LD. DR FOR THE REVEN UE RELIED UPON THE ORDER PASSED BY THE LD. CIT(A). 8. BARE PERUSAL OF THE ASSESSMENT ORDER DATED 31.12 .2010 PASSED U/S 147/143(3) OF THE ACT QUA ASSESSMENT YEA R 2003-04 PASSED IN ASSESSEES CASE APPARENTLY GOES TO PROVE THAT THE INCOME OF THE ASSESSEE TO THE TUNE OF RS.80,11,261/- WAS A DJUSTED AGAINST THE BROUGHT FORWARD DEPRECIATION LOSS FOR AY 2002-0 3. OPERATIVE PART OF THE ASSESSMENT ORDER DATED 31.12.2010 IS RE PRODUCED AS UNDER FOR READY REFERENCE :- ORIGINAL ASSESSMENT IN THIS CASE WAS COMPLETED UND ER SECTION 143 (3) AT INCOME OF RS.80,11,261/- ON 28.02.2006 WHICH WAS ADJUSTED AGAINST THE BROUGHT FORWARD DEPRECIATION LOSS FOR THE A.Y. 2002-03. ITA NO.1923/DEL./2014 4 9. HOWEVER, FURTHER PERUSAL OF PARA 6, 7, 8 AND 9 O F THE ASSESSMENT ORDER QUA AY 2003-04 (SUPRA) FURTHER GOE S TO PROVE THAT THE LOSS DECLARED BY THE ASSESSEE HAS BEEN ADM ITTED AND NO ADDITION HAS BEEN MADE. 10. BEFORE THE LD. CIT (A), THE ASSESSEE COMPANY HA S ADDRESSED CATEGORIC ARGUMENTS WHICH ARE REPRODUCED FOR READY REFERENCE AS UNDER :- ARGUMENTS 1. FOR A.Y. 2002-03 INCOME ASSESSED U/S 143(1) WAS RS.(-) 1.20 CRORES (COPY ENCLOSED). ASSESSING OFFI CER IN HIS ORDER U/S 154 REDUCED IT BY RS.80.11 LACS INCOME FR OM 2003- 04. FOR A.Y. 2003-04 ASSESSING OFFICER HAD VIDE OR DER U/S 147/143(3) ASSESSED ON THE RETURNED LOSS OF RS.88.4 3 LACS (COPY ENCLOSED). HENCE THERE IS NO REDUCTION OF CA RRIED FORWARD LOSS AND THE CARRIED FORWARD LOSS AS EARLIE R ASSESSED AT RS.8.73 CRORES IS CORRECT AND OUGHT NOT TO HAVE DIS TURBED THE TOTAL LOSS. WE ENCLOSE HEREWITH THE COPIES OF ORDE4RS FOR A.Y. 2002-03, 2003-04 AND 2005-06 WHICH CONFIRMS OUR CONTENTION A ND THESE ORDERS WERE PASSED BY PREVIOUS ASSESSING OFFI CER MRS. SURBHI SHARMA. WE REQUEST YOUR HONOUR TO DELETE TH IS WRONGFUL DISALLOWANCE OF PRESENT ASSESSING OFFICER AND ACCORD RELIEF. 11. CIT (A) ON THE BASIS OF GROUNDS AS WELL AS ARGU MENTS ADDRESSED BY THE PARTIES RETURNED THE FOLLOWING GRO UNDS :- 4.2 I HAVE GONE THROUGH THE FINDING OF AO AND WRIT TEN SUBMISSIONS. IN THIS REGARD, IN THE BODY OF ASSESS MENT ORDER FOR ASSESSMENT YEAR 2003-04 DATED 31.12.2010. AO H AS VERY SPECIFICALLY MENTIONED AS UNDER :- ORIGINAL ASSESSMENT IN THIS CASE WAS COMPLETED UNDE R SECTION 143(3) AT INCOME OF RS.80,11,261/- ON ITA NO.1923/DEL./2014 5 28.02.2006 WHICH WAS ADJUSTED AGAINST THE BROUGHT FORWARD DEPRECIATION LOSS FOR THE AY 2002-03. 4.3 ALL THE DOCUMENTS PRODUCED BY THE APPELLANT WER E ALSO PERUSED BY ME AND I FOUND THAT AO HAS VERY RIGHTLY CALCULATED BROUGHT FORWARD FIGURE AT RS.7,05,35,059 /- AS AGAINST CLAIMED AT RS.8,73,89,860/-. THERE IS NO I NFIRMITY IN THE ORDER OF THE AO IN THIS REGARD. GROUNDS OF APP EAL NO.1 & 2 ARE DISMISSED. 12. BARE PERUSAL OF THE FINDINGS RETURNED BY THE CI T (A) GOES TO PROVE THAT LD. CIT (A) WITHOUT APPLYING HIS MIND RA TIFIED THE FINDINGS RETURNED BY THE AO. CIT (A) HAS NOT EVEN PREFERRED TO PERUSE AND RETURN THE FINDINGS ON THE ISSUE IF IN A Y 2002-03 INCOME ASSESSED U/S 143 (1) WAS (MINUS) RS.1.20 CRO RES NOR HE HAS DETERMINED IF THE ASSESSEE COMPANY HAS CARRIED FORW ARDED LOSSES TO THE TUNE OF RS.8.74 CRORES AS CLAIMED BY THE ASSESS EE RATHER PUT HIS STAMP ON THE ASSESSMENT ORDER PASSED BY THE AO. IN THESE CIRCUMSTANCES, WE ARE OF THE CONSIDERED VIEW THAT T HE MATTER IS REQUIRED TO BE RESTORED TO THE FILE OF CIT (A) TO D ECIDE AFRESH AFTER PROVIDING AN OPPORTUNITY OF BEING HEARD TO THE PART IES. CONSEQUENTLY, THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON THIS 24 TH DAY OF AUGUST, 2016. SD/- SD/- (J.S. REDDY) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 24 TH DAY OF AUGUST, 2016 TS ITA NO.1923/DEL./2014 6 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-XVIII, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.