DCIT, Circle - 4, Kolkata, Kolkata V. M/s. Mcleod & Co. Pvt. Ltd, Kolkata

ITA 2092/KOL/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 9355 (ITAT-KOLKATA)
• Duration Of Justice: 2 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-02-2011
• Appeal Filed By: Department
• Bench Allotted: B
• Assessment Year: 2001-2002
• Appeal Filed On: 19-11-2010
• Court: TRIBUNAL
• Department Lawyers: P P SARKARSR
• Assessee Lawyers: A K TIBREWAL
• Keywords: Depreciation; Tax effect; Unabsorbed depreciation

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL, BEN CH B, KOLKATA () BEFORE . .. . . .. . , , , , , SHRI B.R.MITTAL, JUDICIAL MEMBER. /AND . .. .!' !'!' !'. .. . , #$ SHRI C.D.RAO, ACCOUNTANT MEMBER % % % % / ITA NO . 2092/KOL/2010 &' ()/ ASSESSMENT YEAR : 2001-02 (+, / APPELLANT ) D.C.I.T., CIRCLE-4, KOLKATA (PAN: AABCM 7872 L) - & - - VERSUS - . (./+,/ RESPONDENT ) M/S. MCLEOD & CO.LTD., KOLKATA +, 0 1 #/ FOR THE APPELLANT: SHRI P.P.SARKAR,SR.DR ./+, 0 1 #/ FOR THE RESPONDENT: SHRI A.K.TIBREWAL #2 / ORDER ( (( ( . .. .!' !'!' !'. .. . ) )) ), , , , #$ PER SHRI C.D.RAO, AM THIS APPEAL IS FILED BY THE REVENUE AGAINST THE OR DER DATED 30.11.2009 OF THE CIT(A)-IV, KOLKATA PERTAINING TO A.YR. 2001-02. 2. IN THIS APPEAL THE REVENUE HAS TAKEN THE FOL LOWING GROUNDS OF APPEAL :- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CAS E THE LD. CIT(A) HAS ERRED IN LAW IN DIRECTING THE AO TO SET OFF OF BROUGHT FORWA RD UNABSORBED DEPRECIATION WITH THE INCOME FROM HOUSE PROPERTY WITHOUT APPRECI ATING THE FACT THAT UNABSORBED DEPRECIATION GOVERNED BY SECTION 72 DOES NOT STIPULATE SET OFF OF SUCH DEPRECIATION AGAINST INCOME FROM THE HOUSE PRO PERTY GOVERNED BY SECTION 71B. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN LAW IN DIRECTING THE AO TO ALLOW RS.28,000/- ON ACC OUNT OF WATER TAX PAID BY THE ASSESSEE WITHOUT APPRECIATING THE FACT THAT INC OME FROM HOUSE PROPERTY IS TREATED AS ON PAID BASIS AND NOT ON DUE BASIS AND A BOVE ALL THE ASSESSEE HIMSELF HAS CLAIMED THAT IT DID NOT PAY THE WATER T AX WITHIN DUE DATE. 2 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN LAW IN DIRECTING THE AO TO ALLOW RS.10,847/- ON ACC OUNT OF PRIOR PERIOD EXPENSES WITHOUT APPRECIATING THE FACT THAT SECTION 35D ALLOWS PRIOR PERIOD EXPENSES TO BE DIVIDED OVER A PERIOD OF TEN YEARS. 4. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN LAW IN DIRECTING THE AO TO ALLOW RS.24,426/- ON ACC OUNT OF FIXED ASSETS WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE, AT THE SAM E TIME CLAIMED THE STATUTORY DEDUCTION IN THE INCOME FROM HOUSE PROPERTY FROM TH E SAME BUILDING AS WELL AS HOW THE SAME BUILDING IS USED FOR BUSINESS FOR DEPR ECIATION PURPOSES. 5. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN LAW IN DIRECTING THE AO TO ALLOW CREDIT OF MAT PAID BY THE ASSESSEE IN THE ASSTT.YEARS 1998-99 AND 2000-01 WITHOUT CONSIDERING THE FACT THAT IN HIS ORDER LD. CIT(A) HIMSELF MENTIONED ASSTT.YEAR 2002-03 AN D 2003-04 AND IN ANOTHER PLACE HE MENTIONED ASST.YEAR 1998-99 AND 2000-01 WHICH IS MISLEADING AND BESIDES THIS ASSESSEE COMPANY DID NOT CLAIM CREDIT FOR MAT IN ITS RETURN. 6. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN LAW IN DELETING THE INTEREST U/S 234D AMOUNTING TO RS.50,085/- WITHOUT APPRECIATING THE FACT THAT THE INTEREST U/S 234D IS TO BE CHARGED W.E.F. 1.06.2003 IRRESPECTIVE OF ANY ASSESSMENT YEAR. 7. THAT THE APPELLANT CRAVES FOR LEAVE TO ADD, DELE TE OR MODIFY ANY OF THE GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING. 3. AT THE OUTSET, AT THE TIME OF HEARING BEFORE US, THE LD. COUNSEL APPEARING ON BEHALF OF THE ASSESSEE FILED A COMPUTATION OF TAX I NVOLVED IN ALL THESE GROUNDS TAKEN BY THE REVENUE. HE CONTENDED THAT THE TAX EFFECT IN TH IS CASE IS ONLY RS.79,739.92. THEREFORE, AS PER THE INSTRUCTION OF CBDT CIRCULAR THE REVENUE IS BARRED FROM FILING OF THE APPEAL BEFORE THIS TRIBUNAL. 4. ON THE OTHER HAND, THE LD. DR THOUGH RELIED ON T HE ORDERS OF THE A.O. COULD NOT CONTRADICT THE SUBMISSIONS MADE BY THE LD. COUNSEL APPEARING FOR THE ASSESSEE. 5. AFTER HEARING THE RIVAL SUBMISSIONS AND ON CAREF UL PERUSAL OF THE ASSESSMENT ORDER, IT IS OBSERVED THAT THE TAX EFFECT IN THIS C ASE IS ONLY RS.79,739.92. THE COMPUTATION OF TAX SUBMITTED BY THE LD. COUNSEL FOR THE ASSESSEE AT THE TIME OF HEARING IS REPRODUCED AS UNDER :- M/C. MCLEOD & CO.LIMITED ITA NO.2092/KOL/2010 B BENCH ASSESSMENT YER 2001-02 3 GROUND OF APPEAL DISPUTED AMOUNT 1 138,345.00 2 28,000.00 3 10,847.00 4 24,426.00 201,618.00 TAX CALCULATION TAX @ 35% 70,566.30 SURCHARGE @ 13% ` 9,173.62 79,739.92 5.1. ADMITTEDLY THE TAX PAYABLE IN RESPECT OF GROUN DS OF APPEAL BY THE DEPARTMENT IS LESS THAN RS.2 LAKHS AND AS PER REVISED INSTRUCT ION OF THE CBDT NO. 279 DATED 24 TH OCTOBER, 2005 W.E.F. 31.10.2005 AND SINCE IN THE PR ESENT CASE, THE ABOVE REVISED INSTRUCTION OF CBDT IS WELL APPLICABLE AND THEREFOR E, IN OUR CONSIDERED OPINION, THE REVENUE SHOULD HAVE REFRAINED FROM FILING SECOND AP PEAL BEFORE THE TRIBUNAL. IT WOULD BE APT TO QUOTE THE OBSERVATION OF THE DELHI HIGH C OURT IN THE CASE OF CIT VS.- ITAT 232 ITR 207 AT PAGE 216 AS BELOW :- THE CENTRAL BOARD OF DIRECT TAXES INSTRUCTIONS ARE BINDING ON THE DEPARTMENT. IF THE CASE AT HAND IS C OVERED BY A POLICY LAID DOWN BY THE CENTRAL BOARD OF DIREC T TAXES IN THAT CASE NO FAULT CAN BE FOUND WITH THE ORDER O F THE TRIBUNAL REFUSING TO STATE THE CASE AND THERE IS NO REASON WHY THE HIGH COURT SHOULD INTERFERE WITH SUCH DISCR ETION OF THE TRIBUNAL AS HAS BEEN EXERCISED CONSISTENTLY WIT H THE UNIFORM POLICY LAID DOWN BY THE CENTRAL BOARD OF DI RECT TAXES WHICH BINDS ALL THE SUBORDINATE AUTHORITIES O F THE INCOME TAX DEPARTMENT. THE HIGH COURT WOULD NOT ORDINARILY ENCOURAGE BREACH OF POLICY DECISIONS AND THE DEPARTMENTAL INSTRUCTIONS WHICH HAVE A PUBLIC PURPO SE BEHIND THEM. VALUABLE TIME OF HIGH COURTS AND HIGHL Y PLACED TRIBUNALS IS NOT TO BE WASTED ON PETTY MATTE RS. 5.2.. FURTHER, THE BOMBAY HIGH COURT HAS ALSO HELD IN THE CASE OF CIT VS.- CAMCO COLOUR LTD. (SUPRA) AND IN THE CASE OF PITHWA ENGIN EERING WORKS REPORTED IN 276 ITR 519 MUMBAI THAT THE CIRCULAR IS BINDING ON THE REVE NUE AND AN APPEAL OR REFERENCE CONTRARY TO THE INSTRUCTION ISSUED IN THE CIRCULAR WOULD NOT BE CONSIDERED BY THE COURT. 4 5.3.. WE FURTHER FIND THAT IT IS A SETTLED LAW THAT THE CIRCULARS ISSUED BY CBDT ARE BINDING ON THE REVENUE AND IT IS WELL SETTLED THAT ONE HAS TO ADOPT THAT INTERPRETATION WHICH FAVOURS THE ASSESSEE AS HELD BY HONBLE SUPRE ME COURT IN CASE OF CIT VS.- VEGETABLE PRODUCT LTD. REPORTED IN 88 ITR 192 (SC). 5.4. IN VIEW OF THE ABOVE, WE HOLD THAT THE APPEAL FILED BY THE DEPARTMENT, AGAINST THE IMPUGNED ORDER OF THE LD. CIT(A), IS CONTRARY T O THE POLICY DECISION OF THE DEPARTMENT AND AS SUCH THE APPEAL FILED BY THE DEPA RTMENT IS DISMISSED IN LIMINE . 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 01.02.2011. SD/- SD/- . .. . . .. . , , , , B.R.MITTAL, JUDICIAL MEMBER . .. .!' !'!' !'. .. . , ,, , #$ #$ #$ #$ , C.D.RAO, ACCOUNTANT MEMBER. ( (( ('$ '$ '$ '$) )) ) DATE: 01.02.2011. #2 0 .3 4#3(5- COPY OF THE ORDER FORWARDED TO: 1. M/S. MCLEOD & CO. LTD., 3, N.S.ROAD, KOLKATA-700001 . 2 THE DCIT, CIRCLE-4, KOLKATA 3. THE CIT, 4. THE CIT(A)-IV, KOLKATA 5. DR, KOLKATA BENCHES, KOLKATA /3 ./ TRUE COPY, #2&:/ BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES R.G.(.P.S.)