DCIT 8(3)(1), MUMBAI V. ULTRAMARINE & PIGMENTS LTD, MUMBAI

ITA 1975/MUM/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1784 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-12-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2009-2010
• Appeal Filed On: 07-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAURABH DESHPANDE
• Keywords: Depreciation; Opportunity of being heard; Additional depreciation
• Section: 143(3); 115JB; 63

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'F' BENCH, MUMBAI BEFORE SHRI JASON P. BOAZ, ACCOUNTANT MEMBER AND SHRI SANDEEP GOSAIN , JUDICIAL MEMBER ITA NO. 1975/MUM/2015 (ASSESSMENT YEAR: 2009-10) DY. C I T 8(3)(1) VS. M/S. ULTRAMARINE & PIGMENTS LTD. ROOM NO. 615, 6 TH FLOOR AAYAKAR BHAVAN, M.K. ROAD MUMBAI 400020 PLOT NO. 101/102,SION MATUNGA ESTATE, SCHEME NO. 6, ROAD NO. 29 SION (E), MUMBAI 400022 PAN AAACU0718Q APPELLANT RESPONDENT APPELLANT BY: SHRI SAURABH DESHPANDE RESPONDENT BY: SHRI HIRO RAI DATE OF HEARING: 28.11.2016 DATE OF PRONOUNCEMENT: 01.12.2016 O R D E R PER JASON P. BOAZ, A.M. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)- 14, MUMBAI DATED 24.12.2014 PASSED IN RESPECT OF TH E ORDER OF ASSESSMENT FOR A.Y. 2009-10 PASSED UNDER SECTION 14 3(3) R.W.S 263 OF THE INCOME TAX ACT, 1961 (IN SHORT 'THE ACT') VIDE ORDE R DATED 30.01.2014. 2. THE FACTS OF THE CASE, BRIEFLY, ARE AS UNDER: - 2.1 THE ASSESSEE COMPANY FILED ITS RETURN OF INCOME FOR A.Y. 2009-10 ON 26.09.2009 DECLARING INCOME OF ` 3,34,29,990/- UNDER NORMAL PROVISIONS OF THE ACT AND BOOK PROFITS UNDER SECTION 115JB OF T HE ACT WERE DECLARED AT ` 15,78,87,606/-. THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT VIDE ORDER DATED 03.12.2012 WHEREIN THE TOT AL INCOME OF THE ASSESSEE WAS DETERMINED AT ` 3,11,01,575/- AND BOOK PROFITS UNDER SECTION 115JB OF THE ACT AT ` 15,78,87,606/- IN VIEW OF VARIOUS ADDITIONS/ DISALLOWANCES. ITA NO. 1975/MUM/2015 M/S. ULTRAMARINE & PIGMENTS LTD. 2 2.2 SUBSEQUENTLY, THE CIT-7, MUMBAI INVOKING REVISI ONARY JURISDICTION UNDER SECTION 263 OF THE ACT, PASSED AN ORDER THERE UNDER DATED 15.02.2013, HOLDING THAT HAVING REGARD TO THE MATER IAL ON RECORD, HE WAS OF THE VIEW THAT THE ORDER OF ASSESSMENT DATED 03.1 2.2013 FOR A.Y. 2009-10 IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF RE VENUE AS THE ASSESSING OFFICER (AO) HAD ALLOWED THE ASSESSEES CLAIM FOR D EPRECIATION, WHICH INCLUDED CLAIM OF ADDITIONAL DEPRECIATION OF ` 1,65,04,000/- AND DEDUCTION UNDER SECTION 10A OF THE ACT WITHOUT ANY ENQUIRY. A CCORDINGLY, THE LEARNED CIT SET ASIDE THE ORDER OF ASSESSMENT DATED 03.12.2 013 AND DIRECTED THE AO TO EXAMINE THE ISSUES WHICH ARE THE SUBJECT MATT ER OF NOTICE UNDER SECTION 263 OF THE ACT AND TO CONDUCT ENQUIRIES REQ UIRED ON FACTS AND CIRCUMSTANCES OF THE CASE IN ACCORDANCE WITH LAW. 2.3 IN PURSUANCE THEREOF, THE AO PASSED AN ORDER OF ASSESSMENT UNDER SECTION 143(3) R.W.S 263 OF THE ACT VIDE ORDER DAT ED 31.01.2014 WHEREIN THE ASSESSEES INCOME WAS DETERMINED AT ` 5,91,97,150/- UNDER NORMAL PROVISIONS OF THE ACT IN VIEW OF THE FOLLOWING DISA LLOWANCES/ADDITIONS: - (I) ADDITIONAL DEPRECIATION DISALLOWED ` 1,65,04,000/- (II) DEDUCTION UNDER SECTION 10A DISALLOWED ` 1,15,91,571/- 2.4 AGGRIEVED BY THE ORDER OF ASSESSMENT PASSED UND ER SECTION 143(3) R.W.S. 263 OF THE ACT VIDE ORDER DATE 31.01.2014 FO R A.Y. 2009-10, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A)-13, MUMBAI. THE LEARNED CIT(A) DISPOSED OFF THE APPEAL VIDE ORDER DATED 24. 12.2014 GRANTING THE ASSESSEE PARTIAL RELIEF BY ALLOWING ITS CLAIMS IN R ESPECT OF BOTH ADDITIONAL DEPRECIATION AND DEDUCTION UNDER SECTION 10A OF THE ACT. 3.1 REVENE, BEING AGGRIEVED BY THE ORDER OF THE CIT (A)-14, MUMBAI DATED 24.12.2014, HAS PREFERRED THIS APPEAL RAISING THE F OLLOWING GROUNDS: - (I) THE LEARNED CIT(A) HAS ERRED ON FACTS AND LAW, IN ALLOWING ADDITIONAL DEPRECIATION ON WIND TURBINE GENERATORS U/S. 32(I)(IIA) OF THE ACT OF RS.1,65,04,000/- WITHOUT P ROPERLY APPRECIATING THE FACTUAL AND LEGAL MATRIX AS CLEARL Y BROUGHT OUT BY THE ASSESSING OFFICER. (II) THE LEARNED CIT(A) HAS ERRED ON FACTS AND IN L AW IN DELETING THE DISALLOWANCE U/S. 10A AMOUNTING TO RS.1,15,91,5 71/- ITA NO. 1975/MUM/2015 M/S. ULTRAMARINE & PIGMENTS LTD. 3 WITHOUT PROPERLY APPRECIATING THE FACTUAL AND LEGAL MATRIX AS CLEARLY BROUGHT OUT BY THE ASSESSING OFFICER. 2. THE LD. CIT(A)S ORDER IS CONTRARY TO LAW AND ON FACTS AND DESERVES TO BE SET ASIDE AND A.OS ORDER MAY BE RES TORED. 3. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND THAT MAY BE NECESSARY. 3.2 AT THE OUTSET OF THE HEARING, THE LEARNED A.R. OF THE ASSESSEE SUBMITTED THAT THE ORDER OF THE CIT PASSED UNDER SE CTION 263 OF THE ACT DATED 15.02.2013 HAS BEEN QUASHED AND HELD TO BE NO N-MAINTAINABLE BY THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNA L IN ORDER IN ITA NO. 2844/MUM/2013 DATED 10.08.2016, A COPY OF WHICH HAS BEEN PLACED ON RECORD. IT IS PRAYED THAT IN VIEW OF THE AFORESAID ORDER OF THE COORDINATE BENCH THE PRESENT APPEAL OF REVENUE BASED ON THE OR DER OF THE ASSESSMENT PASSED UNDER SECTION 143(3) R.W.S. 263 OF THE ACT D ATED 31.01.2014 IS NOT MAINTAINABLE AND IS TO BE DISMISSED. 3.3.1 WE HAVE HEARD BOTH THE LEARNED A.R. OF THE AS SESSEE AND THE LEARNED D.R. FOR REVENUE AND PERUSED AND CAREFULLY CONSIDER ED THE MATERIAL ON RECORD; INCLUDING THE JUDICIAL PRONOUNCEMENTS CITED . WE FIND THAT A COORDINATE BENCH OF THE TRIBUNAL IN ITS ORDER IN IT A NO. 2844/MUM/2013 DATED 10.08.2016 HAS QUASHED THE ORDER OF THE CIT U NDER SECTION 263 DATED 15.02.2013 HOLDING AS UNDER: - 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE RECORD. AT THE VERY OUTSET WE HAVE ANYALISED THE S HOW-CAUSE NOTICED ISSUED BY LEARNED CIT AND SUBSEQUENTLY ORDER PASSED BY LEARNED CIT WHICH READS AS UNDER :- IN VIEW OF THE ABOVE, IT IS CLEAR THAT THE AOS ORDER ALLOWING FOR SUCH DEPRECIATION WITHOUT ENQUIRY HAS RESULTED IN E RROR WITHIN THE MEANING OF SECTION 263 OF THE I.T. ACT,1961; THIS E RROR HAS DIFFERENTLY CAUSED PREJUDICE TO THE REVENUE BECAUSE OF ALLOWANCE OF EXCESS DEPRECIATION TO THE EXTENT OF RS.1,65,04, 000/-. ACCORDINGLY, IT IS HELD THAT ORDER OF THE AO IN THI S REGARD IS ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE INTER EST OF REVENUE WITHIN THE MEANING OF SECTION 263 OF I.T. ACT,1961. 7. IN RESPECT OF OTHER ITEMS VIZ. PROFIT OF RS.1,15 ,91,571/-, THE AO HAS ALLOWED DEDUCTION U/S 10A WITHOUT CONDUCTING AN Y ENQUIRY. THE ASSESSEES REPLY IN THIS REGARD AS CONTAINED IN THE WRITTEN REPLY DATED 12.2.2013 IS CAREFULLY CONSIDERED. HOWEVER, I T IS A FACT THAT THE AO HAS NOT CONDUCTED ANY ENQUIRY IN RESPECT OF THESE ITEMS BEFORE ALLOWING DEDUCTION U/S 10A. IN VIEW OF THIS, AFTER HAVING ITA NO. 1975/MUM/2015 M/S. ULTRAMARINE & PIGMENTS LTD. 4 CONSIDERED THE MATERIAL ON RECORD AND ASSESSEES SU BMISSIONS, I AM OF THE CONSIDERED VIEW THAT THESE ITEMS HAVE BEEN C ONSIDERED FOR EXEMPTION U/S 10A BY THE A.O. WITHOUT CONDUCTING TH E ENQUIRIES WHICH ARE PRIMA-FACIE WARRANTED ON THE FACTS AND CI RCUMSTANCES OF THIS CASE. IT IS TRITE LAW THAT LACK OF ENQUIRY RES ULTS IN ERROR WITHIN THE MEANING OF SEC.263 OF THE I.T. ACT,1961. IT IS A FA CT THAT CONSIDERING PROFIT OF RS.1,15,91,571/- FOR COMPUTATION OF INCOM E U/S.10A WITHOUT ENQUIRIES HAS RESULTED IN ERROR WITHIN THE MEANING OF SECTION 263 OF THE I.T. ACT,1961. THIS HAS ALSO CAUSED PREJ UDICE TO THE REVENUE INASMUCHAS IT HAS RESULTED IN GRANTING EXEM PTION WITHOUT ENQUIRIES WARRANTED ON FACTS AND CIRCUMSTANCES OF T HE CASE. ACCORDINGLY, THE ORDER THE AO IN RESPECT OF PROFIT OF RS.1,15,91,571/- IS ALSO SET ASIDE TO THE FILE OF THE AO. 8. THE AO IS DIRECTED TO EXAMINE ISSUES WHICH ARE S UBJECT MATTER OF NOTICE U/S.263 AND CONDUCT ENQUIRIES REQUIRED ON FA CTS AND CIRCUMSTANCES OF THE CASE. THEREAFTER, THE AO IS DI RECTED TO TAKE THE DECISION AS PER LAW. IN NUTSHELL, THE ORDER PASSED BY THE AO IS SET ASIDE TO THE FILE OF THE AO FOR CONSIDERING THE ISS UES WHICH ARE SUBJECT MATTER OF NOTICE U/S.263 AFRESH AND TAKE DECISION A S PER LAW. FROM THE PERUSAL OF BOTH SHOW-CAUSE NOTICE AS WELL AS FINDINGS RECORDED BY LEARNED CIT WHILE PASSING THE ORDER U/S . 263, WE HAVE NOTICED THAT THE GROUNDS TAKEN BY LEARNED CIT WHILE ISSUING SHOW- CAUSE NOTICE IS WITH REGARD TO THE DISALLOWANCE BUT IN THE FINAL ORDER PASSED U/S. 263, THE LEARNED CIT HAS CATEGORICALLY MENTIONED THAT THE ASSESSING OFFICER HAS NOT CARRIED OUT ANY INQUI RY THEREFORE DIRECTION WAS GIVEN TO CARRY OUT NECESSARY INQUIRY IN THIS REGARD. WE FIRST OF ALL REFERRED TO THE JUDGMENT PASSED BY THE ITAT, MUMBAI BENCH IN THE CASE OF STAR INDIA LTD. (SUPRA), WHERE IN IT HAS BEEN CATEGORICALLY HELD THAT WHEN THE SHOW-CAUSE NOTICE IS ISSUED ON THE GROUND THAT THE COMPUTATION IS INCORRECT BUT THE RE VISION IS EXERCISED ON THE GROUND THAT THE MATTER WAS NOT EXAMINED ON T HE MERITS. THE REASON WHICH CAN BE INFERRED FROM THE REVISION ORDE R U/S 263 IS DIFFERENT FROM THE REASON SET OUT IN THE SHOW CAUSE NOTICE AND THEREFORE IN THAT CASE IT WAS HELD THAT IF A GROUND OF REVISION IS NOT MENTIONED IN THE SHOW-CAUSE NOTICE, THEN IT CANNOT BE MADE THE BASIS OF THE ORDER FOR THE REASON THAT ASSESSEE WOULD HAV E HAD NO OPPORTUNITY TO MEET THE POINT. HONBLE ITAT DELHI BENCH IN THE CASE OF B.S. SANGWA N VS. ITO (SUPRA) HAS ALSO CATEGORICALLY HELD THAT THE COMMIS SIONER STARTED BY POINTING OUT, THAT HE SAW AS, GLARING ILLEGALITIES IN THE ASSESSMENT ORDER, WHICH WAS SUBJECTED TO REVISION PROCEEDINGS, BUT WHAT HE CONCLUDED WAS THAT THE SAID ASSESSMENT ORDER WAS PA SSED WITHOUT MAKING PROPER REQUISITE AND DESIRED INQUIRIES. TH EREFORE, THE HONBLE ITAT HAS HELD IN THE ABOVE CITED CASE THAT A REVISI ON ORDER CAN ONLY BE PASSED ON THE GROUND ON WHICH THE ASSESSEE HAS B EEN GIVEN A REASONABLE OPPORTUNITY OF BEING HEARD, AND IT IS NO T OPEN TO THE COMMISSIONER TO SET OUT ONE REASON GROUND FOR REVIS ING THE ORDER BUT ACTUALLY REVISE THE ORDER ON SOME OTHER GROUND. ITA NO. 1975/MUM/2015 M/S. ULTRAMARINE & PIGMENTS LTD. 5 8. CONSIDERING THE OTHER JUDGMENTS RELIED UPON BY L EARNED AR, WE FIND THAT THE GROUNDS MENTIONED BY LEARNED CIT IN S HOW-CAUSE NOTICE ARE DIFFERENT AND THE ORDER PASSED BY LEARNED CIT U /S. 263 IS BASED ON ANOTHER GROUND AND THEREFORE THE ASSESSEE COULD NOT GET OPPORTUNITY TO EXPLAIN THE POINT RECORDED AT THE TI ME OF PASSING THE FINAL ORDER. THEREFORE, RESPECTFULLY FOLLOWING THE JUDGMENTS WHICH ARE BASED ON THE FACTS WHICH ARE SIMILAR TO THE FACTS O F THE PRESENT CASE, WE HOLD THAT THE ORDER PASSED BY LEARNED CIT U/S. 2 63 IS BAD IN LAW AND NOT SUSTAINABLE IN LAW. THEREFORE THE SAME IS Q UASHED. 3.3.2 IN VIEW OF THE FACT THAT THE COORDINATE BENCH OF THE TRIBUNAL HAS QUASHED THE ORDER UNDER SECTION 263 OF THE ACT DATE D 15.02.2013 PASSED BY THE CIT-7, MUMBAI FOR A.Y. 2009-10, THE CONSEQUENT ORDER OF ASSESSMENT PASSED UNDER SECTION 143(3) R.W.S. 263 OF THE ACT D ATED 31.01.2014 IN PURSUANCE THEREOF IS RENDERED NON-EST. CONSEQUENTLY , THE PRESENT APPEAL BY REVENUE, AGAINST THE IMPUGNED ORDER OF THE CIT(A) I N RESPECT OF THE ORDER OF ASSESSMENT UNDER SECTION 143(3) R.W.S. 263 OF THE A CT DATED 31.01.2014, IS NOT MAINTAINABLE AND IS ACCORDINGLY DISMISSED. THER EFORE, THE GROUNDS RAISED BY REVENUE (SUPRA) ARE NOT REQUIRED TO BE AD JUDICATED. 4. IN THE RESULT, REVENUES APPEAL FOR A.Y. 2009-10 IS DISMISSED AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 1 ST DECEMBER, 2016. SD/ - SD/ - (SANDEEP GOSAIN) (JASON P. BOAZ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 1 ST DECEMBER, 2016 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) -14, MUMBAI 4. THE CIT - 8 MUMBAI 5. THE DR, F BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.