DCIT CIR 2(2), MUMBAI V. ORNATE MULTI MODAL CARRIERS P. LTD, MUMBAI

ITA 1923/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 1532 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-06-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 13-04-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 30-03-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K K MAHAJAN
• Assessee Lawyers: PR AFUL K SANGHVI
• Keywords: Business income; Depreciation; Revised return; Capital Gains
• Section: 139(5)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C : MUMBAI BEFORE SHRI D.K. AGARWAL, (JM) AND SHRI PRAMOD KUM AR ,(AM) ITA NO.1923/MUM/2009 ASSESSMENT YEAR : 2005-06 DY. COMMISSIONER OF INCOME TAX CIRCLE-2(2) AAYAKAR BHAVAN ROOM NO.545, 5 TH FLOOR M.K. ROAD MUMBAI-400 020. ..( APPELLANT ) VS. ORNATE MULTI MODAL CARRIERS PVT. LTD. C/O. ORIENT SHIP AGENCY PVT. LTD. ORIENT HOUSE, 4 TH FLOOR ADI MERZBAN PATH, BALLARD ESTATE MUMBAI-400 038. ..( RESPONDENT ) P.A. NO. (AAACO 0797 R) APPELLANT BY : SHRI K.K. MAHAJAN RESPONDENT BY : SHRI PR AFUL K. SANGHVI O R D E R PER D.K. AGARWAL (JM). THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER DATED 2.1.2009 PASSED BY THE LD. CIT(A) FOR THE ASSESSMENT YEAR 2005-06. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSESSEE COM PANY IS ENGAGED IN THE BUSINESS OF TRANSPORT CONTRACTORS, CONTAIN ER HANDLERS AND SHIP FREIGHT FORWARDING. THE RETURN WAS FILED DE CLARING TOTAL INCOME AT RS. NIL. DURING THE COURSE OF ASSESSMENT PROCEEDI NG THE ITA NO.1923/M/09 A.Y:05-06 2 ASSESSEE FILED A REVISED COMPUTATION OF INCOME ON 24.12.20 07, INTERALIA REVISING THE FOLLOWING: I) BY MAKING A CLAIM OF DEDUCTION U/S.43B ON ACCOUNT OF EMPLOYERS CONTRIBUTION TO PF OF RS.9,55,553/-; II) BY MAKING A CLAIM OF DEDUCTION U/S.43B ON ACCOUNT OF EMPLOYERS CONTRIBUTION TO ESIC OF RS.1,92,879/-; III) REVISING CLAIM OF DEPRECIATION FROM RS.39,35,517/- TO RS.17,81,113/-; IV) OFFERING CAPITAL GAINS U/S.50 OF RS.59,54,036/- AND V) REDUCTION OF BUSINESS INCOME BY RS.1,68,28,921/- ON ACCOUNT OF WRONG INCLUSION OF PROFIT ON SALE OF VEHICLES AND PRO PERTY. THE ASSESSING OFFICER DID NOT ACCEPT THE REVISED CLAIMS MADE BY THE ASSESSEE SINCE THE REVISED CLAIM WAS NOT MADE IN THE RETURN OF INCOME U/S.139(5). IN SUPPORT THE ASSESSING OFFICER RELIED ON T HE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF GOETZE (INDIA ) LTD. VS. CIT 284 ITR 323 AND ACCORDINGLY COMPLETED THE ASSESSMENT ON A TOTAL INCOME OF RS. NIL AFTER ALLOWING DEDUCTION OF BROUGHT FORWARD LOSS OF RS.3,04,78,665/-,VIDE ORDER DATED 28.12.2007 PASSED U/ S.143(3) OF THE INCOME TAX ACT, 1961(THE ACT). 3. ON APPEAL THE LD. CIT(A), WHILE DIRECTING THE ASSESSI NG OFFICER TO RE-COMPUTE THE CORRECT INCOME IN ACCORDANCE WITH LAW HAS H ELD VIDE PARA-8 OF HIS ORDER AS UNDER:- 8. THUS IRRESPECTIVE OF THE FACT THAT THE APPELLANT HAS MADE BELATED CLAIM IN THE REVISED STATEMENT OF INCOME, IT WAS INCUMBENT ON THE ASSESS ING OFFICER TO COMPUTE THE INCOME AS PER THE PROVISION OF THE ACT. THE ISSUE OF DEDUCTIONS U/S.43B ON ACCOUNT OF EMPLOYERS CONTRIBUTION TO PF/ESIC IS STATUTORILY PRESCRIBED AND IN CASE THE CONTRIBUTIONS HAVE BEEN PAID ITA NO.1923/M/09 A.Y:05-06 3 BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME, DEDUCTION HAS TO BE ALLOWED. SIMILARLY, GAINS ARIS ING ON SALES OF ASSETS HAVE TO BE ASSESSED UNDER HEAD CAPI TAL GAIN AND IN ACCORDANCE WITH PROVISIONS OF SECTION 5 0. EVEN THOUGH THE ASSESSEE MIGHT NOT HAVE CLAIMED THE CORRECT DEDUCTIONS OR WRONGLY COMPUTED THE INCOME UNDER THE HEAD INCOME FROM BUSINESS OR PROFESSION OR CAPITAL GAINS, THE ASSESSING OFFICER OUGHT TO HAV E COMPUTED THE CORRECT INCOME AS PER THE PROVISIONS O F THE ACT. ACCORDINGLY, THE ASSESSING OFFICER IS DIRECTE D TO RE- COMPUTE THE CORRECT INCOME IN ACCORDANCE WITH LAW A FTER EXAMINING THE CLAIM OF DEDUCTIONS U/S.43B; CLAIM TH E DEPRECIATION U/S.32; THE CAPITAL GAIN ASSESSABLE U/ S.50 AND AFTER DETERMINATION OF CORRECT INCOME ASSESSABL E UNDER THE HEAD INCOME FROM BUSINESS OR PROFESSION. 4. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) T HE REVENUE IS IN APPEAL BEFORE US TAKING FOLLOWING GROUNDS OF APPEAL: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A), ERRED IN ALLOWING RELIE F TO THE ASSESSEE TO THE EXTENT IMPUGNED IN THE GROUND ENUMERATED BELOW: 1. THE LD. CIT(A) HAS ERRED IN DIRECTING THE ASSESSING OFFICER TO COMPUTE THE INCOME UNDER THE HEAD INCOME FROM BUSINESS OR PROFESSION AND CAPITAL GAINS ACCORDING TO THE REVISED COMPUTATION OF INCOME FILED, BEYOND THE TIME LIMIT PRESCRIBED U/S.139(5) OF THE INCOME TAX ACT, 1961. 2. THE LD. CIT(A) HAS ERRED IN DIRECTING THE ASSESSING OFFICER TO ALLOW THE DEDUCTION U/S.43B ON ACCOUNT OF EMPLOYERS CONTRIBUTION TO PROVIDENT FUND OF RS.9,55,553/- AND ESIC OF RS.1,92,879/- WHICH WAS NOT CLAIMED IN THE RETURN OF INCOME FILED U/S.139(1) NOR THE CLAIM WAS MADE BY FILING REVISED RETURN WITHIN THE TIME LIMIT PRESCRIBED U/S.139(5) OF THE INCOME TAX ACT. 3. THE LD. CIT(A) HAS ERRED IN DIRECTING THE ASSESSING OFFICER TO REDUCE BUSINESS INCOME BY RS.1,68,28,921/- ON ACCOUNT OF PROFIT ON SALE OF VEHICLES AND PROPERTY DECLARED BY THE ASSESSEE U/S.139(1) OF THE INCOME TAX ACT AND ASSESS THE ITA NO.1923/M/09 A.Y:05-06 4 SAME UNDER THE HEAD CAPITAL GAIN AT RS.59,54,036/-. EVEN THOUGH THE ASSESSEE DID NOT MAKE SUCH CLAIM BY FILING REVISED RETURN U/S.139(5) OF THE INCOME TAX ACT. 5. AT THE TIME OF HEARING THE LD. DR SUBMITS THAT SIN CE THE ASSESSEE HAS FAILED TO FILE REVISED RETURN WITHIN THE TIME PRO VIDED U/S.139 (5) OF THE ACT, AND KEEPING IN VIEW THE DECISION IN GOETZE ( INDIA) LTD. VS. CIT (2006) 284 ITR 323(SC), THE LD. CIT(A) WAS NOT J USTIFIED IN DIRECTING THE ASSESSING OFFICER TO RE-COMPUTE THE CORRECT IN COME IN ACCORDANCE WITH LAW. HE THEREFORE, SUBMITS THAT THE ORD ER PASSED BY THE ASSESSING OFFICER BE RESTORED. 6. ON THE OTHER HAND THE LD. COUNSEL FOR THE ASSESSEE WH ILE RELYING ON THE ORDER OF THE LD. CIT(A) FURTHER SUBMITS THAT I N VIEW OF THE JUDGMENT IN CHOKSHI METAL REFINERY VS. CIT, GUJARAT- II (1977) 107 ITR 63 (GUJ.) AND THE CIRCULAR NO. 14(XL-35) OF 1995 , THE ASSESSING OFFICER IS BOUND TO CORRECTLY COMPUTE THE INCOME EVEN THO UGH THE ASSESSEE MIGHT NOT HAVE COMPUTED INCOME CORRECTLY BY CLAIMIN G ALL SUCH RELIEF AND DEDUCTION AS OTHERWISE BEEN AVAILABLE TO THE ASSESSEE AS PER PROVISION OF THE ACT. HE THEREFORE, SUBMITS THAT THE ORDER PASSED BY THE LD. CIT(A) BE UPHELD. 7. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RI VAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE FACTS ARE NOT IN DISPUTE INASMUCH AS THERE IS NO DISPUTE THAT ASSESSEE HAS ITA NO.1923/M/09 A.Y:05-06 5 MADE ITS CLAIM OF DEDUCTION U/S.43B, DEPRECIATION U/S.32 AND CAPITAL GAINS U/S.50 BY FILING REVISED COMPUTATION OF INCOME ON 24.12.2007 I.E. AFTER THE EXPIRY OF STATUTORY PERIOD OF FILING REVISED RETURN PROVIDED U/S. 139(5) OF THE ACT. THE ASSESSING OFFICER HAS DISALLOWE D THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE HAS NOT FILE D THE REVISED RETURN OF INCOME U/S. 39(5) WITHIN THE STATUTOR Y PERIOD AND IN SUPPORT THE RELIANCE WAS ALSO PLACED ON THE DECISION OF T HE HONBLE APEX COURT IN THE CASE OF GOETZE (INDIA) LTD.(SUPRA). HOWEVER, THE LD. CIT(A) WHILE OBSERVING THAT IT IS INCUMBENT ON THE ASSE SSING OFFICER TO CORRECTLY COMPUTE THE INCOME AND TO ALLOW ALL SUCH RELIE FS AND DEDUCTIONS WHICH AN ASSESSEE IS ENTITLED TO, EVEN THOUGH T HE ASSESSEE MIGHT HAVE COMPUTED THE INCOME WRONGLY OR HAD FAILED TO CLAIM ANY RELIEF OR DEDUCTION, DIRECTED THE ASSESSING OFFICER TO RE -COMPUTE THE INCOME IN ACCORDANCE WITH LAW AFTER EXAMINING THE CLAIM OF THE ASSESSEE. 8. IN GOETZE (INDIA) LTD. (SUPRA), IT HAS BEEN HELD (HEADNOTE) : THE SUPREME COURT DISMISSED THE APPEAL, MAKING IT CLEAR THAT THE DECISION WAS RESTRICTED TO THE POWER OF TH E ASSESSING AUTHORITY TO ENTERTAIN A CLAIM FOR DEDUCT ION OTHERWISE THAN BY A REVISED RETURN, AND DID NOT IMP INGE ON THE POWER OF THE APPELLATE TRIBUNAL UNDER SECTIO N 254 OF THE INCOME-TAX ACT, 1961. DECISION OF THE DELHI HIGH COURT AFFIRMED. 9. FROM THE READING OF THE ABOVE DECISION WE FIND THA T IN THE SAID DECISION IT HAS BEEN CLARIFIED THAT THE ISSUE IN THIS CASE I S LIMITED TO THE ITA NO.1923/M/09 A.Y:05-06 6 POWER OF THE ASSESSING AUTHORITY AND DOES NOT IMPINGE O N THE POWER OF THE INCOME TAX APPELLATE TRIBUNAL U/S.254 OF THE ACT. KEEPING IN VIEW THE ABOVE OBSERVATIONS WE FIND THAT THERE IS NO DISPUTE THAT THE CLAIMS MADE BY THE ASSESSEE U/S.43B, U/S.32 AND U/S.50 ARE LEGAL CLAIMS AND IT IS NOT THE CASE OF THE REVENUE THAT THE SAME ARE OTH ERWISE NOT ALLOWABLE TO THE ASSESSEE OR THE CLAIMS MADE BY THE ASSESSEE DO NOT ARISE FROM THE RECORDS. IT IS SETTLED LAW THAT IF IN LA W AN ITEM IS NOT TAXABLE, NO AMOUNT OF ADMISSION OR MISAPPREHENSION CAN MAKE IT TAXABLE. THIS VIEW ALSO FINDS SUPPORT FROM THE CBDT C IRCULAR AND DECISIONS WHICH ARE AS UNDER: 10. CIRCULAR NO.14(XI-35) OF 1955, DATED APRIL 11, 1 955 REPORTED IN CHATURVEDI & PITHISARIAS INCOME TAX LAWS (FIFTH EDITI ON )(VOL.-I) AT PAGE-1435 READS AS UNDER : OFFICERS OF THE DEPARTMENT MUST NOT TAKE ADVANTAG E OF IGNORANCE OF AN ASSESSEE AS TO HIS RIGHTS. IT IS ON E OF THEIR DUTIES TO ASSIST A TAXPAYER IN EVERY REASONABLE WAY PARTICULARLY IN THE MATTER OF CLAIMING AND SECURING RELIEFS AND IN THIS REGARD THE OFFICERS SHOULD TAKE THE INI TIATIVE IN GUIDING A TAXPAYER WHERE PROCEEDINGS OR OTHER PARTI CULARS BEFORE THEM INDICATE THAT SOME REFUND OR RELIEF IS DUE TO HIM. THIS ATTITUDE WOULD, IN THE LONG RUN, BENEFIT THE DEPARTMENT; FOR IT WOULD INSPIRE CONFIDENCE IN HIM THAT HE MAY BE SURE OF GETTING A SQUARE DEAL FROM THE DEPARTMENT. ALTHOUGH, THEREFORE, THE RESPONSIBILITY FOR CLAIMING REFUNDS AND RELIEFS RESTS WITH THE ASSESSE E ON WHOM IT IS IMPOSED BY THE LAW, OFFICERS SHOULD: (A) DRAW THEIR ATTENTION TO ANY REFUNDS OR RELIEFS TO WHICH THEY APPEAR TO BE CLEARLY ENTITLED BUT WHICH THEY HAVE OMITTED TO CLAIM FOR SOME REASON OR OTHER; ITA NO.1923/M/09 A.Y:05-06 7 (B) FREELY ADVISE THEM WHEN APPROACHED BY THEM AS TO THEIR RIGHTS AND LIABILITIES AND AS TO THE PROCEDURE TO BE ADOPTED FOR CLAIMING REFUNDS AND RELIEFS. 11. IN CIT VS. SMT. ARCHANA R. DHANWATAY (1982) 136 ITR 355 (BOM.) IT HAS BEEN HELD (HEADNOTE): (II) THAT, HOWEVER, THE DEDUCTION COULD BE ALLOWED FROM THE INCOME FROM OTHER SOURCES THOUGH NOT CLAIMED BY THE ASSESSEE AND THE TRIBUNAL WAS RIGHT IN HOLDING THAT IF THE CLAIM FOR DEDUCTION MADE BEFORE THE ITO COULD NOT B E CONSIDERED BY WAY OF DEDUCTION FROM THE INCOME FROM HOUSE PROPERTY BUT COULD BE CONSIDERED AGAINST THE INCOME FROM OTHER SOURCES, NOTHING PREVENTED THE IT O FROM CONSIDERING THE CLAIM AGAINST THE INCOME FROM OTHER SOURCES, AND THAT IT WAS THE DUTY OF THE ITO TO CON SIDER WHETHER THE CLAIM FOR DEDUCTION WAS ALLOWABLE AGAIN ST ANY OTHER INCOME. THERE WAS A DUTY ON THE PART OF T HE ITO TO CONSIDER WHETHER THE ASSESSEE WAS ENTITLED T O A DEDUCTION FROM THE INCOME FROM OTHER SOURCES, THOUG H NO SUCH SPECIFIC CLAIM WAS MADE BY THE ASSESSEE. THE JURISDICTION OF THE ITO WAS TO COMPUTE THE TOTAL IN COME WHICH COULD BE BROUGHT TO TAX IN ACCORDANCE WITH LA W, BECAUSE, IF IN FACT AND IN LAW, THE ASSESSEE WAS EN TITLED TO A DEDUCTION WHICH WOULD HAVE ULTIMATELY AFFECTED HI S OR HER TOTAL INCOME, THE ASSESSEE COULD NOT BE ASSESSE D ON A LARGER INCOME. 12. IN MAYNAK PODDAR (HUF) VS. WEALTH- TAX OFFICER(200 3) 262 ITR 633(CAL.) IT HAS BEEN OBSERVED (PAGE 637 PLACITUM C T O G) AS UNDER : EVEN IF THE ASSESSEE HAD INCLUDED THE SAME IN HI S RETURN, THAT WOULD NOT PRECLUDE THE ASSESSEE FROM CLAIMING THE BENEFIT OF LAW. THERE CANNOT BE ANY ESTOPPEL AGAINST THE STATUTE. A PROPERTY, WHICH IS NOT OTHER WISE TAXABLE, CANNOT BECOME TAXABLE BECAUSE OF MISUNDERSTANDING OR WRONG UNDERSTANDING OF LAW BY T HE ASSESSEE OR BECAUSE OF HIS ADMISSION OR ON HIS MISAPPREHENSION. IF IN LAW AN ITEM IS NOT TAXABLE, NO AMOUNT OF ADMISSION OR MISAPPREHENSION CAN MAKE IT TAXABLE. THE TAXABILITY OR THE AUTHORITY TO IMPOSE TAX IS INDEPENDENT OF ADMISSION. NEITHER THERE CAN BE ANY WAIVER OF THE RIGHT BY THE ASSESSEE. THE DEPARTMENT ITA NO.1923/M/09 A.Y:05-06 8 CANNOT RELY UPON ANY SUCH ADMISSION OR MISAPPREHENSION IF IT IS NOT OTHERWISE TAXABLE. THIS QUESTION WAS DEALT WITH BY THIS COURT IN BHASK AR MITTERS CASE [1994] 73 TAXMAN 437, AT PARAGRAPH 8 AT PAGE 442. IN THIS DECISION, THIS COURT OBSERVED : AN ASSESSEE IS LIABLE TO PAY TAX ONLY UPON SUCH IN COME AS CAN BE IN LAW INCLUDED IN HIS TOTAL INCOME AND WHICH CAN BE LAWFULLY ASSESSED UNDER THE ACT. THE LAW EMPOWERS THE INCOME-TAX OFFICER TO ASSESS THE INCOME OF AN ASSES SEE ACCORDING TO LAW AND DETERMINE THE TAX PAYABLE THER EON. IN DOING SO, HE CANNOT ASSESS AN ASSESSEE ON AN AMO UNT, WHICH IS NOT TAXABLE IN LAW, EVEN IF THE SAME IS SHOWN BY AN ASSESSEE. THERE IS NO ESTOPPEL BY CONDUCT AGAINS T LAW NOR IS THERE ANY WAIVER OF THE LEGAL RIGHT AS MUCH AS THE LEGAL LIABILITY TO BE ASSESSED OTHERWISE THAN ACCORDING TO THE MANDATE OF THE LAW (SIC).IT IS ALWAYS OPEN TO AN ASSESSEE TO TAKE THE PLEA THAT THE FIGURE, THOUGH S HOWN IN HIS RETURN OF TOTAL INCOME, IS NOT TAXABLE IN LAW. 13. THAT BEING SO WE ARE OF THE VIEW THAT THE LD. CI T(A) WAS FULLY JUSTIFIED IN DIRECTING THE ASSESSING OFFICER TO RE-COMPUTE THE CORRECT INCOME IN ACCORDANCE WITH LAW AFTER EXAMINING THE CLAIM OF DEDUCTION U/S.43B; CLAIM THE DEPRECIATION U/S.32; THE CAPITAL GAI N ASSESSABLE U/S.50 AND AFTER DETERMINATION OF CORRECT INCOME ASSESSABL E UNDER THE HEAD INCOME FROM BUSINESS OR PROFESSION. ACCORDINGLY TH E GROUNDS TAKEN BY THE REVENUE ARE REJECTED. 14. IN THE RESULT, REVENUES APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 4.6.2010. SD/- SD/- (PRAMOD KUMAR) ( D.K. AGARWAL ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 4.6.2010. JV. ITA NO.1923/M/09 A.Y:05-06 9 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 25.5.10 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 25.5.10 SR.PS/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 4.6.10 SR.PS/PS 7. FILE SENT TO THE BENCH CLERK 7.6.10 SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER