M/s GMR Energy Trading Limited , Bangalore V. Deputy Commissioner of Income Tax Circle-3(1)(2), Bangalore

ITA 2065/BANG/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1922 (ITAT-BANGALORE)
• Duration Of Justice: 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2015-2016
• Appeal Filed On: 19-06-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SUNIL JAIN
• Keywords: Depreciation; Opportunity of being heard; Question of law; Revised return; Set aside
• Section: 43; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, B ENGALURU BEFORE S HRI N.V.VASUDEVAN , VICE PRESIDENT AND SHRI INTURI RAMA RAO , ACCOUNTANT MEMBER I TA NO. 2065 / BANG/2 0 1 8 (ASSESSMENT YEAR: 20 15 - 16 ) M/S.GMR ENERGY TRADING LTD., 25/1, SKIP HOUSE, MUSEUM ROAD, BENGALURU - 560 025. PAN:AADCG0771C VS. APPELLANT DEPUTY COMMISSIONER OF INCOME - TAX, CIRCLE 3(1)(2), BENGALURU. RESPONDENT A PPELLANT BY : SHRI SUNIL JAIN, CA. RESPONDENT BY : DR. P.V.PRADEEP KUMAR, ADDL.CIT(DR) DATE OF HEARING : 1 4 /11/2018 DATE OF PRONOUNCEMENT : 20 /11/2018 O R D E R PER INTURI RAMA RAO, A M : THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) - 3, BENGALURU, DATED 16 /05/2018 FOR THE ASSE SSMENT YEAR 2015 - 16 . 2 . BRIEFLY, THE FACTS OF THE CASE ARE AS UNDER: THE ASSESSEE IS A COMPANY INCORPORATED UNDER THE PROVISIONS OF THE COMPANIES ACT 1956 . I T IS ENGAGED IN THE BUSINESS OF TRADING IN ELECTRICITY POWER . THE RETURN OF INCOME FOR T HE ASSESSMENT YEAR 2015 - 16 WAS FILED ON 30TH SEPTEMBER 2015 DECLARING INCOME UNDER NORMAL PROVISIONS AFTER SET OFF OF BROUGHT FORWARD BUSINESS LOSS OF RS. 7 , 33 , 43 , 364 / - AND RETURNING BOOK PROFITS UNDER SECTION 115 JB OF THE INCOME - TAX ACT, 1961 [HEREINAFTE R REFERRED TO AS 'THE ACT' FOR SHORT] OF RS. 50 , 17 , 461 / - . T HE RETURN OF INCOME WAS TAKEN FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT WAS COMPLETED ACCEPTING THE ITA NO . 2065 /BANG/20 18 PAGE 2 OF 7 RETURN ED INCOME . HOWE VER , DURING THE COURSE OF ASSESSMENT PROCEEDINGS , THE ASSESSEE, VIDE LETTER DATED 11 /1 1 / 2016 SUBMITTED A REVISED COMPUTATION OF BUSINESS PROFITS UNDER SECTION 115 JB . T HE DIFFERENCE BETWEEN THE RETURNED BOOK PROFITS AND THE REVISED STATEMENT IS AN ACCOUNT OF CLAIM FOR DEDUCTION OF THE AMOUNT OF LOSS BR O UGHT FORWARD AND UNABSORB ED DEPRECIATION WHICHEVER IS LESS AS PER BOOKS OF ACCOUNT . THIS CLAIM WAS NOT CONSIDERED BY THE ASSESSING OFFICER. 3. BE ING AGGRIEVE D , AN APPEAL WAS PREFERRED BEFORE THE LD.CIT(A) WHO , VIDE IMPUGNED ORDER , HAD NOT ALLOWED THE CLAIM PLACING RELIANCE ON THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF GOETZE (INDIA) LTD. VS C IT ( 28 4 ITR 323 ) (SC) . 4 . BEING AGGRIEVED , THE ASSESS EE IS BEFORE US RAISING THE FOLLOWING GROUNDS OF APPEAL: ITA NO . 2065 /BANG/20 18 PAGE 3 OF 7 5 . T HE ISSUE IN THE PRESENT APPEAL IS WHETHER THE CLAIM MADE DURING ASSESSMENT PROCEEDINGS CAN BE CONSIDERED BY AO WHEN NO SUCH CLAIM WAS MADE IN RETURN OF INCOME, IS COVERED BY THE DECISION OF THE CO - ORDINATE BENCH OF DELHI IN THE CASE OF THE KANGRA CO - OPERATIVE BANK LTD . VS. JCIT IN ITA NO.840/DEL/2013 & 1432/DEL/2012 DATED 16/10/2015 (AUTHORED BY THE HON BLE ACCOUNTANT MEMB E R), IN FAVOUR OF ASSESSEE, WHEREIN IT HAS BEEN HELD A S FOLLOWS: 5.4 WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ASSESSING OFFICER DISALLOWED THIS CLAI M FOR DEDUCTION OF BONUS PAID OF RS.19,49,792/ - WHICH WAS DISALLOWED FOR THE ASSESSMENT YEAR 2009 - 10 ON PAYMENT BASIS DURING THE YEAR UNDER APPEAL ON THE GROUND THAT THE CLAIMS WERE NOT MADE BY FILING THE REVISED RETURN OF INCOME. THE REASONING OF THE ASSE SSING OFFICER CANNOT STAND THE TEST OF THE LAW LAID DOWN BY SEVERAL HIGH COURTS. THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. MITESH IMPEX, 225 TAXMAN 168 (GUJARAT) AFTER REVIEW OF ENTIRE LAW ON THE INCOME, HELD AS FOLLOWS: '30. IN WHAT MANNER AN D TO WHAT EXTENT, A GROUND, A LEGAL CONTENTION OR A FRESH CLAIM CAN BE MADE AT AN APPELLATE STAGE ARE VEXED QUESTIONS AND HAVE OCCUPIED THE MINDS OF THE COURTS IN NUMEROUS OCCASIONS. 31. IN THE CASE OF JUTE CORPN. OF INDIA LTD. V. CIT [1991] 187 ITR 688 THE SUPREME COURT NOTED WITH APPROVAL OBSERVATION OF THE COURT IN THE CASE OF CIT V. KANPUR COAL SYNDICATE [1964] 53 ITR 225 TO THE EFFECT THAT 'TH E APPELLATE ASSISTANT COMMISSIONER, THEREFORE, HAS PLENARY POWERS IN DISPOSING OF APPEAL. THE SCOPE OF HIS POWER IS CO - TERMINUS WITH THAT OF THE INCOME - TAX OFFICER. HE CAN DO WHAT THE INCOME - TAX OFFICER CAN DO AND ALSO DIRECT HIM TO DO WHAT HE HAS FAILED T O DO.' IT WAS OBSERVED THAT THERE WAS NO REASON WHY THE APPELLATE AUTHORITY CANNOT MODIFY THE ASSESSMENT ORDER ON AN ADDITIONAL GROUND EVEN IF NOT RAISED BEFORE THE INCOME - TAX OFFICER. THE ACT DOES NOT P LACE ANY RESTRICTION OR LIMITATION ON THE EXERCISE OF APPELLATE POWER. IT WAS OBSERVED THAT: -- 'THE ABOVE OBSERVATIONS ARE SQUARELY APPLICABLE TO THE INTERPRETATION OF SECTION 251(1)(A) OF THE ACT. THE DECLARATION OF LAW IS CLEAR THAT THE POWER OF THE APPELLATE ASSISTANT COMMISSIONER IS CO - TERMINUS WITH THAT OF THE INCOME - TAX ITA NO . 2065 /BANG/20 18 PAGE 4 OF 7 OFFICER, IF THAT BE SO, THERE APPEARS TO BE NO REASON AS TO WHY THE APPELLATE AUTHORITY CANNOT MODIFY THE ASSESSMENT ORDER ON AN A DDITIONAL GROUND EVEN IF NOT RAISED BEFORE THE INCOME - TAX OFFICER. NO EXCEPTION COULD BE TAKEN TO THIS VIEW AS THE ACT DOES NOT PLACE ANY RESTRICTION OR LIMITATION ON THE EXERCISE OF APPELLATE POWER. EVEN OTHERWISE AN APPELLATE AUTHORITY WHILE HEARING APPE AL AGAINST THE ORDER OF A SUBORDINATE AUTHORITY HAS ALL THE POWERS WHICH THE ORIGINAL AUTHORITY MAY HAVE IN DECIDING THE QUESTION BEFORE IT SUBJECT TO THE RESTRICTIONS OR LIMITATIONS IF ANY PRESCRIBED BY THE STATUTORY PROVISIONS. IN THE ABSENCE OF ANY STAT UTORY PROVISION THE APPELLATE AUTHORITY IS VESTED WITH ALL THE PLENARY POWERS WHICH THE SUBORDINATE AUTHORITY MAY HAVE IN THE MATTER. THERE APPEARS TO BE NO GOOD REASON AND NONE WAS PLACED BEFORE US TO JUSTIFY CURTAILMENT OF THE POWER OF THE APPELLATE ASSI STANT COMMISSIONER IN ENTERTAINING AN ADDITIONAL GROUND RAISED BY THE ASSESSEE IN SEEKING MODIFICATION OF THE ORDER OF ASSESSMENT PASSED BY THE INCOME - TAX OFFICER.' 32. IN CASE OF NATIONAL THERMAL POWER CO. LTD. V. CIT [1998] 229 ITR 383 (SC) WHEN THE QUESTION OF LAW WAS RAISED FOR THE FIRST TIME BEFORE THE TRIBUNAL THOUGH FACTS WERE ALREADY ON RECORD, THE SUPREME COURT OBSERVED THAT THERE IS NO REASON WHY THE ASSESSEE SHOULD BE PREVENTED FROM RAI SING SUCH A QUESTION BEFORE THE TRIBUNAL FOR THE FIRST TIME SO LONG AS THE RELEVANT FACTS ARE ON RECORD IN RESPECT OF THE ITEM CONCERNED. THERE IS NO REASON TO RESTRICT THE POWER OF THE TRIBUNAL IN SUCH APPEAL ONLY TO DECIDE THE GROUNDS WHICH ARISE FROM TH E ORDER OF COMMISSIONER (APPEALS). THE TRIBUNAL SHOULD NOT BE PREVENTED FROM CONSIDERING THE QUESTIONS OF LAW ARISING IN ASSESSMENT PROCEEDINGS ALTHOUGH NOT RAISED EARLIER. 33. IN CASE OF GOETZE (INDIA) LTD. (SUPRA) THE SUPREME COURT DISTINGUISHED THE JUDGMENT IN THE CASE OF NATIONAL THERMAL POWER CO. LTD. (SUPRA) ON THE GROUND THAT THE SAME PERTAINED TO THE POWER OF THE TRIBUNAL UNDER SECTION 254 OF THE ACT TO ENTERTAIN A POINT OF LAW FOR THE FIRST TIME AND COMMENTED THAT SUCH DECISION DOES NOT RELATE TO THE POWER OF THE ASSESSING OFFICER TO ENTERTAIN A CLAIM FOR DEDUCTION OTHERWISE THAN BY FILING A REVISED RETURN. IN THE PROCESS THE SUPREME COURT RECOGNIZED THAT A NEW CLAIM COULD NOT BE ENTERTAINED BY THE ASSESSING OFFICER WITHOUT THE ASSESSEE REVISING THE RETURN. WHILE DOING SO IT WAS CLARIFIED THAT: -- '4. . . HOWEVER, WE MAKE IT CLEAR THAT THE ISSUE IN THIS CASE IS LIMITED TO THE POWER OF THE ASSESSING AUTHORITY AND DOES NOT IMPINGE ON THE POWER I TA NOS. 840/DEL/2013 & 1432/DEL/2012 OF THE INCOME - TAX APPELLATE TRIBUNAL UNDER SECTION 254 OF THE INCOME - TAX ACT, 1961. THERE SHALL BE NO ORDER AS TO COSTS.' ITA NO . 2065 /BANG/20 18 PAGE 5 OF 7 34. IN THE CASE OF CIT V. JAI PARABOLIC SPRINGS LTD . [2008] 306 ITR 42/172 TAXMAN 258 (DELHI), THE DELHI HIGH COURT HELD THAT THERE IS NO PROHIBITION ON THE POWERS OF THE TRIBUNAL TO ENTERTAIN AN ADDITIONAL GROUND WHICH ACCORDING TO THE TRI BUNAL AROSE IN THE MATTER AND FOR JUST DECISION OF THE CASE. 35. IN CASE OF CIT V. PRUTHVI BROKERS & SHAREHOLDERS (P.) LTD. [2012] 349 ITR 336/208 TAXMAN 498/23 TAXMANN.COM 23 (BOM.) THE BOMBAY HIGH COURT CONSIDERED THE ISSUE AT CONSIDERABLE LENGT H AND HELD THAT COMMISSIONER (APPEALS) AS WELL AS THE TRIBUNAL HAVE THE JURISDICTION TO CONSIDER THE ADDITIONAL CLAIM AND NOT MERELY ADDITIONAL LEGAL SUBMISSIONS. THE APPELLATE AUTHORITIES HAVE DISCRETION TO PERMIT SUCH ADDITIONAL CLAIMS. SUCH CLAIMS NEED NOT BE THOSE WHICH BECAME AVAILABLE ON ACCOUNT OF CHANGE OF CIRCUMSTANCES OF LAW BUT WHICH WERE EVEN AVAILABLE WHEN THE RETURN WAS FILED. 36. THE DELHI HIGH COURT ONCE AGAIN IN RECENT JUDGMENT IN THE CASE OF CIT V. SAM GLOBAL SECURITIES LTD . [2014] 360 ITR 682/[2013] 38 TAXMANN.COM 129 OBSERVED THAT THE COURTS HAVE TAKEN A PRAGMATIC VIEW AND NOT A TECHNICAL ONE AS TO WHAT IS REQUIRED TO BE DETERMINED IN TAXABLE INCOME. IN THAT SENSE ASSESSMENT PROCEEDINGS ARE NOT ADVERSARIAL IN NATURE. WITH THESE OBSERVATIONS COURT CONFIRMED THE VIEW OF THE TRIBUNAL REVERSING THE DECISION OF THE ASSESSING OFFICER REJECTING THE CLAIM OF THE ASSESSEE ON THE GROUND THAT NO REVISED RETURN WAS FILED. 37. IN C ASE OF CIT V. CELLULOSE PRODUCTS OF INDIA LTD . [1985] 151 ITR 499 (GUJ.), FULL BENCH OF THIS COURT HELD THAT MERELY BECAUSE A GROUND HAS NOT BEEN RAISED THOUGH IT COULD HAVE BEEN RAISED IN SUPPORT OF THE RELIEF SOUGHT IN THE APPEAL, IT CANNOT BE SAID THAT SUCH GROUND CANNOT BE RAISED BEFORE THE TRIBUNAL. SUCH GROUND CAN BE RAISED PROVIDED IT FALLS WITHIN THE CONTOURS OF THE SUBJECT MATTER OF THE APPEAL. 38. IT THUS BECOMES CLEAR THAT THE DECISION OF THE SUPREME COURT IN THE CASE OF GOETZE (INDIA) LTD. (SUPRA) IS CONFINED TO THE POWERS OF THE ASSESSING OFFICER AND ACCEPTING A CLAIM WITHOUT REVISED RETURN. THIS IS WHAT SUPREME COURT OBSERVED IN THE SAID JUDGMENT WHILE DISTINGUISHING THE JUDGMENT IN THE CASE OF NATIONAL THERMAL POWER CO. LTD.(SUPRA) AND THAT IS HOW VARIOUS HIGH COURTS HAVE VIEWED THE DICTUM OF THE DECISION IN THE CASE OF GOETZE (INDIA) LTD.(SUPRA). WHEN IT COMES TO THE POWER OF APPELLATE COMMISSIONER OR THE TRIBUNAL, THE COURTS HAVE R ECOGNIZED THEIR JURISDICTION TO ENTERTAIN A NEW GROUND OR A LEGAL CONTENTION. A GROUND WOULD HAVE A REFERENCE TO AN ARGUMENT TOUCHING A QUESTION OF FACT OR A ITA NOS. 840/DEL/2013 & 1432/DEL/2012 QUESTION OF LAW OR MIXED QUESTION OF LAW OR FACTS. A LEGAL C ONTENTION WOULD ORDINARILY BE A PURE QUESTION OF LAW WITHOUT RAISING ANY DISPUTE ABOUT THE FACTS. NOT ONLY SUCH ADDITIONAL GROUND ITA NO . 2065 /BANG/20 18 PAGE 6 OF 7 OR CONTENTION, THE COURTS HAVE ALSO, AS NOTED ABOVE, RECOGNIZED THE POWERS OF THE APPELLATE COMMISSIONER AND THE TRIBUNAL TO E NTERTAIN A NEW CLAIM FOR THE FIRST TIME THOUGH NOT MADE BEFORE THE ASSESSING OFFICER. INCOME - TAX PROCEEDINGS ARE NOT STRICTLY SPEAKING ADVERSARIAL IN NATURE AND THE INTENTION OF THE REVENUE WOULD BE TO TAX REAL INCOME. 39. THIS IS PRIMARILY ON THE PR EMISE THAT IF A CLAIM THOUGH AVAILABLE IN LAW IS NOT MADE EITHER INADVERTENTLY OR ON ACCOUNT OF ERRONEOUS BELIEF OF COMPLEX LEGAL POSITION, SUCH CLAIM CANNOT BE SHUT OUT FOR ALL TIMES TO COME, MERELY BECAUSE IT IS RAISED FOR THE FIRST TIME BEFORE THE APPEL LATE AUTHORITY WITHOUT RESORTING TO REVISING THE RETURN BEFORE THE ASSESSING OFFICER.' 5.5 THUS, IN THE ABOVE CASES, IT HAS BEEN HELD THAT NEW CLAIMS CAN ALWAYS BE MADE AT ANY STAGE OF APPELLATE PROCEEDINGS. THE LAW LAID DOWN BY HON'BLE APEX COURT IN THE CASE OF GOETZ INDIA LTD (SUPRA) IS NOT APPLICABLE TO THE CLAIM MADE EITHER BEFORE COMMISSIONER OF INCOME TAX (APPEALS) OR INCOME TAX APPELLATE TRIBUNAL. IN THE LIGHT OF ABOVE PRONOUNCEMENT, THE HON'BLE GUJARAT HIGH COURT AFTER REVIEWING THE ENTIRE CASE LAW ON THIS ISSUE HAD CLEARLY LAID DOWN 'THERE IS NO BAR TO ENTERTAIN NEW CLAIM EITHER BY COMMISSIONER OF INCOME TAX (APPEALS) OR INCOME TAX APPELLATE TRIBUNAL'. ACCORDINGLY, RESPECTFULLY FOLLOWING THE ABOVE RULINGS, WE DIRECT THE ASSESSING OFFICER TO ALLOW T HIS CLAIM AFTER DUE VERIFICATION, WHETHER THE BONUS HAS BEEN PAID DURING THE PREVIOUS YEAR UNDER CONSIDERATION, AND WHETHER THE INTEREST CLAIM OF RS. 2,55,233/ - IS TAX FREE OR NOT. ACCORDINGLY, THIS GROUND OF APPEAL IS SET ASIDE TO THE FILE OF THE ASSESSI NG OFFICER TO ALLOW THE CLAIM, IN THE AFORESAID TERMS. RESPECTFULLY FOLLOWING THE ABOVE DECISION, WE REMIT THIS ISSUE BACK TO THE FILE OF THE LD.CIT(A) TO ADJUDICATE THE CLAIM IN ACCORDANCE WITH LAW AFTER AFFORDING DUE OPPORTUNITY OF BEING HEARD TO THE AS SESSEE. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH NOVEMBER, 2018 SD/ - SD/ - (N.V.VASUDEVAN) ( INTURI RAMA RAO) VICE PRESIDENT ACCOUNTANT M EMBER PLACE : BENGALURU. D A T E D : 20 / 11 /2018 SRINIVASULU, SPS ITA NO . 2065 /BANG/20 18 PAGE 7 OF 7 COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A) 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FIL E BY ORDER ASSISTANT REGISTRAR INCOME - TAX APPELLATE TRIBUNAL BANGAL ORE