Income Tax Officer-6(2), Kanpur V. M/s Hindustan Ferro & Industries Ltd., Kanpur

ITA 195/LKW/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6587 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 2 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-06-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 12-06-2018
• Assessment Year: 2004-2005
• Appeal Filed On: 23-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Tax effect; Unabsorbed depreciation
• Section: 143(3); 260A

Judgement Text

I.T.A. NO.195/LKW/2017 ASSESSMENT YEAR:2004-05 1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI T. S. KAPOOR, ACCOUNTANT MEMBER AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER ITA NO.195/LKW/2017 ASSESSMENT YEAR:2004-05 INCOME TAX OFFICER-6(2), KANPUR. VS. M/S HINDUSTAN FERRO & INDUSTRIES LTD., 3/190, VISHNUPURI, KANPUR. PAN:AAACH 5670 A (APPELLANT) (RESPONDENT) O R D E R PER T. S. KAPOOR, A.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A) DATED 08/12/2016. 2. AT THE OUTSET, LEARNED A. R. SUBMITTED THAT THE APPEAL FILED BY THE REVENUE IN THIS CASE IS NOT SUSTAINABLE SIMPLY BECA USE OF THE FACT THAT TAX EFFECT IN THIS CASE IS LESS THAN THE PRESCRIBED LIM ITED OF RS.10 LACS. LEARNED A. R. IN THIS RESPECT FILED THE BRIEF SYNOPSIS WHER EIN THE INCOME DECLARED BY THE ASSESSEE AND THAT ASSESSED BY ASSESSING OFFICER AND RELIEF ALLOWED BY LEARNED CIT(A) WAS MENTIONED. LEARNED A. R. SUBMIT TED THAT THE INCOME FINALLY ASSESSED BY THE ASSESSING OFFICER TURNED OU T TO RS.35,63,815/- AND ASSESSEE HAD UNABSORBED DEPRECIATION AND BUSINESS L OSS TO THE TUNE OF APPELLANT BY SHRI J. H. MINHAS, CIT, (.D.R.) RESPONDENT BY SHRI RAKESH GARG, ADVOCATE DATE OF HEARING 13/06/2018 DATE OF PRONOUNCEMENT 14 / 06 /201 8 I.T.A. NO.195/LKW/2017 ASSESSMENT YEAR:2004-05 2 APPROXIMATELY RS.11 CRORES. LEARNED A. R. FURTHER SUBMITTED THAT HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. ZILA SA HKARI BANK LTD. [2014] 45 TAXMANN.COM 438 (ALLAHABAD) HAS HELD THAT NOTIONAL TAX EFFECT IS NOT TO BE CONSIDERED WHILE FOLLOWING INSTRUCTION NO. 5 OF 200 8 DATED 15 TH MAY 2008 WHICH IS RELATED TO NOT FILING OF APPEAL BEYOND A C ERTAIN MONETARY LIMIT. 3. LEARNED D. R., ON THE OTHER HAND, FAIRLY AGREED AND CONCEDED THE ABOVE FACTS. 4. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE T HROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT THE ASSESSEE FILED ITS RETURN OF INCOME DECLARING A LOSS OF RS.24,66,823/- AND THE ASSESSIN G OFFICER ASSESSED THE INCOME AT RS.98,08,140/-. THE ASSESSING OFFICER, A FTER CONSIDERING RELIEF OF RS.62,44,325/-, ASSESSED THE TOTAL INCOME VIDE ORDE R DATED 08/02/2017 AT RS.35,63,815/-. THE ASSESSING OFFICER IN HIS ORDER ALSO ALLOWED SET OFF OF BUSINESS LOSS OF PREVIOUS YEAR UPTO THE EXTENT OF R S.35,63,815/- AND THEREFORE, THE TAX DEMAND BECAME NIL. THEREFORE, I N THE PRESENT CASE THE TAX LIABILITY BECOMES ZERO. THOUGH THERE IS A NOTI ONAL TAX LIABILITY ON THE RELIEF GIVEN BY LEARNED CIT(A) HOWEVER, HON'BLE ALL AHABAD HIGH COURT IN THE CASE OF ZILA SAHKARI BANK LTD. (SUPRA) VIDE ORDER D ATED 23 RD OCTOBER, 2013 HAS HELD THAT WHERE THE TAX IS NIL THE NOTIONAL TAX LIABILITY HAS TO BE IGNORED. THE FINDINGS OF HON'BLE ALLAHABAD HIGH COURT ARE RE PRODUCED BELOW: 1. THE PRESENT APPEAL HAS BEEN FILED BY THE DEPAR TMENT UNDER SECTION 260A OF THE INCOME-TAX ACT, 1961 AGAI NST THE JUDGMENT AND ORDER DATED 14.12.2009, PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, LUCKNOW IN ITA NO.470/LUC/2 009, FOR THE ASSESSMENT YEAR 2004-05. 2. ON 27.04.2010, A COORDINATE BENCH OF THIS COURT HAS ADMITTED THE APPEAL ON THE FOLLOWING SUBSTANTIAL QU ESTION OF LAW: I.T.A. NO.195/LKW/2017 ASSESSMENT YEAR:2004-05 3 'WHETHER THE TRIBUNAL HAS COMMITTED SUBSTANTIAL ILL EGALITY WHILE INTERPRETING INSTRUCTION NO. 5 OF 2008 DATED 15TH MAY, 2008 WITHOUT TAKING INTO ACCOUNT THE LOSS, NOT IONAL TAX EFFECT IN CASE OF LOSS?' 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE IS A COOPERATIVE BANK. FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, THE ASSESSEE HAS FILED THE RETURN DE CLARING THE LOSS OF RS.2,81,73,770/- AFTER CLAIMING DEDUCTION U NDER SECTION 36(1)((VIIA) OF THE ACT FOR RS.2,48,03,100/-. THE A SSESSMENT WAS COMPLETED UNDER SECTION 143(3) AND THE AO HAS D ISALLOWED THE BAD DEBT AND ITS INTEREST CLAIMED UNDER SECTION 36(1)(VIIA) RESULTING IN AN ADDITION ON AN APPEAL CIT(A) HAS DE LETED THE SAME. NOT BEING SATISFIED, THE DEPARTMENT HAS FILED AN APPEAL BEFORE THE TRIBUNAL, WHO UPHOLDS THE ORDER OF THE C IT(A) BY OBSERVING THAT THE TAX EFFECT IS LESS THAN RS.2.00 LACS, SO AS PER THE C.B.D.T.-INSTRUCTION NO. 5/2008 DATED 15.05.200 8. RHE APPEAL IS NOT MAINTAINABLE. STILL NOT BEING SATISFI ED, THE DEPARTMENT HAS FILED THE PRESENT APPEAL. 4. WITH THIS BACKGROUND, HEARD SRI D.D. CHOPRA, LE ARNED COUNSEL FOR THE DEPARTMENT AND LEARNED COUNSEL FOR THE ASSESSEE. 5. AFTER HEARING BOTH THE PARTIES AND ON PERUSAL O F THE RECORD, IT APPEARS THAT THE ASSESSEE IS ENJOYING TH E BENEFIT OF SECTION SOP OF THE ACT AND AS SUCH THE TAX ON AN IN COME IS EXEMPTED. EVEN IF THE ADDITION II SUSTAINED, THERE WILL BE NO TAX DEMAND AS THE TAX EFFECT WILL BE NIL. 6. IN THE CASE OF CIT V. MANGLAM RICINUS LTD. [200 81 174 TAXMAN 186 DELHI, THE HON'BLE DELHI HIGH COURT OBSE RVED THAT IN SUCH TYPE OF CASES, THE EXERCISE SHALL BE MERELY ACADEMIC EXERCISE. 7. IN THE INSTANT CASE, THE TRIBUNAL OBSERVED THAT -IN CASE THE ISSUE ARISING IN THE SUBSEQUENT YEARS AND HAS T AX EFFECT, IT IS LEFT OPEN TO BE CONSIDERATION BY THE DEPARTMENT. WITH THIS LIBERTY, THE APPEAL FILED BY IT, DEPARTMENT WAS DIS MISSED. THE SAME APPEARS REASONABLE IN THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE. HENCE, THE ORDER PASSED BY THE TRIBUNAL IS HEREBY SUSTAINED. I.T.A. NO.195/LKW/2017 ASSESSMENT YEAR:2004-05 4 5. IN VIEW OF THE ABOVE, THE APPEAL OF THE REVENUE IS DISMISSED BEING BELOW THE MONETARY TAX LIMITED. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. (ORDER PRONOUNCED IN THE OPEN COURT ON 14/06/2018) SD/. SD/. (PARTHA SARATHI CHAUDHURY) ( T. S. KAPOOR ) JUDICIAL MEMBER A CCOUNTANT MEMBER DATED:14/06/2018 *SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW