Appeal details
Counselvise Citation
21219914 RSA 2013
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 7 month(s) 4 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
19-12-2014
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
DB
Next Hearing Date
24-09-2014
Assessment Year
2005-2006
Appeal Filed On
15-05-2013
Judgement Text
, IN THE INCOME TAX APPELLATE TRIBUNAL A , BENCH MUMBAI , BEFORE SHRI R.C.SHARMA , A M & SHRI SANJAY GARG , J M ITA N O. 210 TO 212 / NAG /20 1 3 ( ASSESSMENT YEAR : 200 3 - 04 TO 2005 - 06 ) CENTRAL INDIA POLYESTERS LTD., (MERGED WITH INDIAN PETROCHEMICALS CORPORATION LIMITED (IPCL), (IPCS NOW MERGED WITH RELIANCE INDUSTRIES LTD) AT DAHALI, RAMTEK ROAD, MOUDA, NAGPUR - 441104 . VS. COMMISSIONER OF INCOME TAX - IV, 5 TH FLOOR, MECL BUILDING, DR.BABASAHEB AMBEDKAR BHAVAN, SEMINARY HILLS, HIGH LAND DRIVE, NAGPUR - 440006 PAN/GIR NO. : A A BCC 9686 Q ( APPELLANT ) .. ( RE SPONDENT ) /ASSESSEE BY : SHRI ARVIND SONDE /REVENUE BY : SHRI MATI S. PADMAJA DATE OF HEARING : 25 TH NOVEMBER , 201 4 DATE OF PRONOUNCEMENT 19 TH DECEMBER , 201 4 O R D E R PER R.C.SHARMA (A.M) : THESE ARE THE THREE APPEALS FILED BY THE ASSESSEE AGAINST THE THREE SEPARATE ORDERS DATED 28.3.2013 PASSED BY THE COMMISSIONER OF INCOME TAX - IV UNDER SECTION 263 OF THE INCOME TAX ACT, 1961 (THE ACT) FOR THE ASSESSMENT YEARS 2003 - 04 TO 2005 - 06. SINCE ISSUE INVOLVED IN ALL THESE APPEALS IS COMMON, THEREFORE, WE HAVE HEARD THESE APPEALS TOGETHER AND THESE ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER, FOR THE SAKE OF CONVENIENCE. ITA NO. 210 - 212 / 1 3 2 2 . RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. IN THE ORDER PASSED U/S 263 OF THE ACT BY THE LD. CIT FOR THE A.Y. 2003 - 04, HE OBSERVED AS UNDER : 2. ON GOING T H ROUGH THE RECORDS, IT WAS NOTICED THAT IN 'SCHEDULE - 1, BOOK PROFIT U/S. 115JB', IT HAS BEEN STATED THAT THE BOOK PROFIT FOR THE PURPOSE OF SECTION 11 5JB IS NIL AFTER DEDUCTING ABSORBED DEPRECIATION AND CARRY FORWARD BUSINESS LOSS AS PER CLAUSE (III) OF EXPLANATION TO SECTION 115JB(2), AND, THEREFORE, NO TAX IS PAYABLE. THE THEN AO. FOUND THAT THERE WAS A BOOK PROFIT OF RS . 331.83 LOSS FOR THE YEAR UNDER CONSIDERATION. HOWEVER, NO DOCUMENTS WERE FILED IN SUPPORT OF THE CLAIM OF DEDUCTION. THE SAID CLAIM WAS, THEREFORE, CONSIDERED AS INADMISSIBLE AND, ACCORDINGLY, THE CASE WAS REOPENED AND NOTICE U/S.148 WAS SENT ON 30/03/20 10. DURING THE REASSESSMENT PROCEEDINGS, FORM NO. 29B WAS SUBMITTED SHOWING THE WORKING OF THE BOOK PROFIT AT RS. ( - ) 596.23 LACS. CONSIDERING THE ASSESSEE'S SUBMISSION, THE A.O. PASSED AN ORDER U/S.143(3) R.W.S. 147 ON 30/11/2010 AT A TOTAL INCOME OF RS . ( - ) 82,44,840/ - . 3. AS PER THE PROVISIONS OF EXPLANATION (1) (III) TO SECTION 115JB OF THE I.T. ACT 1961, THE AMOUNT OF LOSS BROUGHT FORWARD OR UNABSORBED DEPRECIATION, WHICHEVER IS LESS, NEEDS TO BE REDUCED FROM THE BOOK PROFIT. AS PER THE DECISION OF ITAT, PUNE BENCH, IN THE CASE OF KIRLOSKAR FERROUS INDUSTRIES VS. ACIT DATED 31' JANUARY, 2012, THE LOSS AND UNABSORBED DEPRECIATION HAS TO BE COMPARED IN EACH OF THE PREVIOUS YEARS' SEPARATELY BEFORE QUANTIFYING THE AMOUNT OF SET OFF. IT IS NOTICED FROM THE RECORD THAT THE ASSESSEE HAS NOT WORKED OUT BOOK PROFIT CORRECTLY. THE BOOK LOSS AND CUMULATIVE BOOK LOSS HAS BEEN BIFURCATED INTO BUSINESS LOSS AND DEPRECIATION FOR DEDUCTING THE LOWER OF THE TWO AS PER EXPLANATION (1) (III) TO SECTION 115JB. HOWEVER , IT IS NOTICED THAT IN EACH OF THE EARLIER YEARS, EITHER THE UNABSORBED DEPRECIATION OR THE BUSINESS LOSS IS ZERO AND, THEREFORE, THE CARRY FORWARD OF LOSS/ DEPRECIATION AS CLAIMED BY THE ASSESSEE AND ALLOWED BY THE A.O. IS INCORRECT. THE ASSESSEE WAS, TH EREFORE, LIABLE TO PAY MAT U/S. 1I5JB OF INCOME TAX ACT, 1961. THE ORDER U/S. 143(3) R.W.S. 147 OF THE I.T. ACT 1961 PASSED BY THE ACIT, CIRCLE - 7, NAGPUR ON 30/11/2010 IS, THEREFORE, FOUND ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE INTERESTS OF REVENUE AND IT WAS PROPOSED TO BE REVISED U/S. 263 OF THE I.T. ACT 1961. ACCORDINGLY, A NOTICE U/S.263(1) OF THE I.T. ACT, WAS ISSUED ON 21/12/2012 GIVING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE ASSESSEE WAS REQUESTED TO FILE ITS WRITTEN SUBMISSION, IF ANY, TOGETHER WITH NECESSARY SUPPORTING EVIDENCE REGARDING THE PROPOSED REVISION AT THE TIME OF HEARING. 3 . IN RESPONSE TO THE ABOVE OBSERVATION , THE ASSESSEE REPLIED AS UNDER : WE SUBMIT THAT M/S. CENTRAL INDIA POLYESTERS LTD WAS MERGED WITH INDIAN PETROCHEMICALS CORPORATION LTD (IPCL) IN AY 2006 - 07 VIDE AHMEDABAD HIGH COURT ORDER AND FURTHER IPCL WAS LATER MERGED WITH RELIANCE INDUSTRIES LTD IN AY 2007 08. THE ABOVE FACTS WERE INTIMATED TO LTO - IV, NAGPUR VIDE OUR LETTER DATED 30.08.2010 FILED ON 31. 08.2010 WHEREIN THE ASSESSEE HAS REQUESTED FOR TRANSFER OF RECORDS TO THE LTU, MUMBAI SINCE THE JURISDICTION OF THE CASE UPON MERGER LIES WITH LTU, MUMBAI (COPY OF THE SAME IS ENCLOSED FOR REFERENCE AS ANNEXURE '1'). ITA NO. 210 - 212 / 1 3 3 WITHOUT PREJUDICE TO OUR ABOVE SUBMISS IONS, THE ASSESSEE COMPANY SUBMITS THAT IT HAD FILED RETURN OF INCOME FOR AY 2003 - 04 ON 28.11.2003 DECLARING TOTAL LOSS OF RS.( - )82,44,840 / - . THE CASE WAS SELECTED FOR SCRUTINY AND ASSESSMENT WAS COMPLETED U/S.143(3) OF THE LT. ACT VIDE AN ORDER DATED 08.1 1.2005 WHEREIN THE INCOME WAS ASSESSED AT RS.85,90,171/ - . THE ABOVE CASE WAS REOPENED U/S.148 VIDE NOTICE DATED 30.03.2010. DURING THE COURSE OF REASSESSMENT PROCEEDINGS, THE ASSESSEE FILED REPORT U/S.II5JB OF THE I T ACT, 1961 FOR COMPUTING BOOK PROFITS O F THE COMPANY IN FORM 29B, ISSUED BY THE CHARTERED ACCOUNTANTS, WHEREIN THE WORKING OF BOOK PROFIT OF RS.( - )5,96,23,000 WAS GIVEN (FORM 298 IS ENCLOSED AS ANNEXURE'2'). AFTER PERUSING THE DETAILS ON RECORD, THE AO DULY APPLYING HIS MIND HAS ACCEPTED THE WO RKING OF THE ASSESSEE AND COMPUTED THE BOOK PROFITS U/S.I15JB OF THE INCOME TAX ACT( - ) 5,96,23,000 IN HIS ORDER U/S.143(3) R.W.S.147 OF THE INCOME - TAX ACT DATED 30 TH NOV, 2010. HOWEVER, YOUR HONOUR HAVE NOW ON THE SAME SET OF FACTS PROPOSED TO REVISE THE ASSESSMENT U/S.263 OF THE INCOME TAX ACT, 1961 WITH REGARDS TO COMPUTATION OF BOOK PROFITS U/S.I15JB OF THE ACT, RELYING ON ITAT, PUNE BENCH DECISION IN THE CASE OF KIRLOSKAR FERROUS INDUSTRIES VS. ACIT. WE REFER TO THE PROVISIONS OF SECTION 263, WHICH ENT ITLES THE COMMISSIONER OF INCOME TAX TO PASS AN ORDER UNDER THAT SECTION, IF HE CONSIDERS THAT ANY ORDER PASSED BY THE A.O. IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. WE SUBMIT THAT THE ORDER PASSED BY THE A0. IS NOT ERRONE OUS AND IS NOT PREJUDICIAL TO THE INTEREST OF THE REVENUE AS THE SAME HAS BEEN PASSED BY HIM BY VERIFYING ALL FACTS AND ALL SUBMISSIONS AS MADE BY THE ASSESSEE. WE DRAW YOUR ATTENTION TO THE DECISION OF DELHI HIGH COURT IN THE CASE OF CIT V. ESCORTS LTD [( 338 ITR 435) (2011)], IN WHICH THE HIGH COURT HAS OBSERVED THAT THE CIT CANNOT TAKE RECOURSE U/S.263 ON FUNDAMENTAL ASPECTS OF A TRANSACTION ON WHICH VIEW HAD BEEN TAKEN AND ACCEPTED BY REVENUE FOR SEVERAL PRECEDING YEARS. THE COURT HAS HELD AS FOLLOWS: HELD, THAT THE COMMISSIONER S ORDER DID NOT CONTAIN A FINDING TO THE EFFECT THAT THE STAND TAKEN BY THE ASSESSEE, THAT THE UNIT PURCHASED FROM THE UNIT TRUST OF INDIA HAD ACTUALLY BEEN PHYSICALLY DELIVERED ALONG WITH EXECUTED TRANSFER DEED WAS FALSE. WITHOUT SUCH A FINDING THE ALLEGATION THAT THE TRANSACTIONS WERE SPECULATIVE COULD NOT BE SUSTAINED. THE FUNDAMENTAL NATURE OF THE TRANSACTIONS WAS EXAMINED YEAR AFTER YEAR MORE IMPORTANTLY IN THE ASSESSMENT YEAR 1986 - 87 IT WAS SPECIFICALLY CONSIDERE D BY THE CIT(A) AND IT REMAINED THE SAME. GIVEN THE FACT THAT THE ASSESSEE HAD BEEN ENGAGED IN THESE TRANSACTION IN THE PRECEDING ASSESSMENT YEAS, THE COMMISSIONER COULD HAVE HAD NO OCCASION TO HAVE RECOURSE TO THE REVISIONAL POWERS UNDER SECTION 263 OF THE ACT ON THE FUNDAMENTAL ASPECTS OF THE TRANSACTIONS IN ISSUE ON VIEW A VIEW HAD BEEN TAKEN AND NOT SHOWN TO HAVE BEEN CHALLENGED. 'WE ALSO DRAW YOUR ATTENTION TO THE DECISION OF PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT V. SALUJA EXIM LTD [329 ITR 603] (2010), IN WHICH THE HIGH COURT HAS OBSERVED THAT THE POSITION OF LAW AS ON DATE WHEN AO PASSES AN ORDER HAD TO BE TAKEN INTO CONSIDERATION., - THE COURT HAS HELD AS FOLLOWS: ITA NO. 210 - 212 / 1 3 4 HELD, DISMISSING THE APPEALS, THAT THE LAW WHICH WAS APPLICABLE ON THE DATE WHEN THE ASSESSING OFFICER PASSED THE ORDER HAD TO DETERMINE THE ERRONEOUS NATURE OF THE ORDER PASSED BY THE ASSESSING OFFICER. ON THAT BASIS THE ORDER PASSED BY THE COMMISSIONER COULD NOT BE JUSTIFIED BY ANY SUBSEQUENT PRONOUNCEMENT OF LAW AND CONSEQUENT LY THE ORDER OF THE ASSESSING OFFICER COULD NOT BE HELD TO BE ERRONEOUS AS LAW APPLICABLE ON THE DATE OF PASSING ORDER BY THE ASSESSING OFFICER HAD TO BE APPLIED. THE ORDER OF THE TRIBUNAL DID NOT SUFFER FROM ANY LEGAL INFIRMITY WARRANTING INTERFERENCE. WI THOUT PREJUDICE TO OUR ABOVE SUBMISSIONS, WE WISH TO STATE THAT: YOU HAVE REFERRED TO THE DECISION OF ITAT, PUNE BENCH DECISION IN THE CASE OF KIRLOSKAR FERROUS INDUSTRIES VS. ACIT DECIDED ON 31.01.2012 AND HAVE MENTIONED THAT THE ITAT HAS DIRECTED THAT T HE LOSS AND UNABSORBED DEPRECIATION HAS TO BE COMPARED IN EACH OF THE PREVIOUS YEARS SEPARATELY BEFORE QUANTIFYING THE AMOUNT OF SET OFF. IN THIS CONNECTION, WE SUBMIT THAT AT THE OUTSET, THE ITAT HAS NOT DECIDED THE MATTER OF COMPUTATION OF BOOK PROFIT U/ S.115JB IN THE CASE OF KIRLOSKAR FERROUS INDUSTRIES. WHAT THE ITAT HAS DONE IS TO MENTION THAT ' WE FIND THAT THIS ISSUE STANDS CONCLUDED IN FAVOUR OF THE ASSESSEE BY DECIDING THE ISSUE BY SETTING ASIDE THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) AND RESTORING THE ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH CERTAIN DIRECTIONS.' IN EFFECT, IT MEANS THAT THE ITAT HAS GIVEN DIRECTION TO THE A.O. TO 'SET ASIDE THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS) AND RESTORE THE ISSUE THE FILE OF THE ASSESSING OFFICER WITH SIMILAR DIRECTIONS AS EXTRACTED ABOVE. ' WE HAVE PERUSED THE AFORESAID DECISION OF THE PUNE ITAT. THE GIST OF THE AFORESAID DECISION OF ITAT IS THAT WHILE WORKING OUT BOOK PROFIT U/S.II5JB. 'WHENEVER THERE IS POSITIVE INCOME IN A NY PARTICULAR YEAR ON THE BASIS PRINCIPLE ENSHRINED IN SECTION 115JB, THE LOWER OF LOSS OR DEPRECATION IS REDUCE ABLE TO ARRIVE A SURPLUS AND ACCORDINGLY FOR THE AFORESAID TWIN REASONS, IN OUR VIEW, IN ORDER TO DETERMINE THE LOSSES CARRIED FORWARD AND UNAB SORBED DEPRECIATION IN THE PAST YEARS ALSO, IT WOULD BE APPROPRIATE TO REDUCE THE LOWER OF THE TWO AND THEREAFTER, ASCERTAIN THE AMOUNT OF LOSSES BROUGHT FORWARD AND UNABSORBED DEPRECIATION. 'WITHOUT PREJUDICE TO THE AFORESAID SUBMISSION, WHILE ON THE SUB JECT EVEN ON THE MERITS OF THE CASE THE ASSESSEE SUBMITS THAT CLAIM OF DEDUCTION ON ACCOUNT OF BROUGHT FORWARD BOOK LOSSES WHILE COMPUTING INCOME U/S.I15JB OF THE ACT IS CORRECT SINCE UNDER THE COMPANIES ACT, THERE IS NO PROVISION FOR BIFURCATION OF BOOK L OSS AND CUMULATIVE BOOK LOSS INTO BUSINESS LOSS AND DEPRECIATION. UNDER THE INCOME TAX ACT, TOTAL LOSS IS TO BE BIFURCATED INTO BUSINESS LOSS AND DEPRECIATION FOR THE REASON THAT BUSINESS LOSS IS ALLOWED TO BE C/F AND IS AVAILABLE FOR SET OFF FOR 8 YEARS O NLY WHEREAS UNABSORBED DEPRECIATION CAN BE C/F AND IS AVAILABLE FOR SET OFF WITHOUT ANY TIME LIMIT. IT IS ONLY FOR THE PURPOSE OF SECTION II5JB IN TERMS OF CLAUSE (III) OF EXPLANATION I TO SECTION 115JB, THAT A MEMORANDUM STATEMENT OF TOTAL BOOK LOSS AS PE R AUDITED ACCOUNTS UNDER THE COMPANIES ACT IS REQUIRED TO BE BIFURCATED BETWEEN BUSINESS LOSS AND DEPRECIATION. WE MAY ALSO POINT OUT THAT UNDER SECTION 115J, EXPLANATION (IV) (WHICH WAS OPERATIVE FROM A Y 1988 - 89 TO A Y 1990 - 91) THERE WAS A PROVISION FOR COMPARING LOSS WITH APPROPRIATE DEPRECIATION AS MENTIONED IN SECTION 205 OF THE COMPANIES ACT. HOWEVER, THERE IS NO ITA NO. 210 - 212 / 1 3 5 REFERENCE IN EITHER SECTION II5JA OR I15JB (WITH WHICH WE ARE DEALING PRESENTLY) OF ANY DEPRECIATION TO BE PROVIDED AS PER SECTION 205 OF TH E COMPANIES ACT. ACCORDINGLY, IF THERE WAS ANY PROFIT DURING ANY PARTICULAR YEAR, IT IS APPROPRIATE TO ALLOCATE /ADJUST SUCH PROFITS AGAINST THE B/F BUSINESS LOSS AND DEPRECIATION IN THE SAME PROPORTION IN WHICH THEY STAND AT THE BEGINNING OF THE YEAR. FOLLOWING THIS PRINCIPLE, THE TOTAL BUSINESS LOSS LAND UNABSORBED DEPRECIATION ON YEAR TO YEAR BASIS AS PER THE BOOKS OF ACCOUNTS CAN BE WORKED OUT AND ACCORDINGLY THE LOWER OF BUSINESS LOSS AND UNABSORBED DEPRECIATION AT THE BEGINNING OF THE YEAR IS DED UCTIBLE AS PER CLAUSE (III) OF EXPLANATION 1 TO SECTION 115JB. YOUR HONOUR WILL THUS APPRECIATE THAT THE PROVISIONS OF SECTION 115JB. YOUR HONOUR WILL THUS APPRECIATE THAT THE PROVISIONS OF SECTIO115JB HAVE BEEN APPLIED CORRECTLY AS REFLECTED BY THE A UDITORS CERTIFICATE. WE ENCLOSE HEREWITH A WORKING OF BOOK PROFIT U/S 115JB AS GIVEN IN FORM NO.29B . WE ALSO ENCLOSE HEREWITH THE WORKING OF BROUGHT FORWARD LOSS AND DEPRECIATION WHICH HAS BEEN REFLECTED IN FORM NO.29B. YOU WILL THUS APPRECIATE THAT T HE BROUGHT FORWARD LOSS AND DEPRECIATIONS ON 31.3.2002 IS AS FOLLOWS: RS.IN LACS BUSINESS 928.06 DEPRECIATION 973.20 TOTAL 1901.26 THE FIGURE OF BUSINESS LOSS OF RS.928.06 LACS BEING LOWER OF THE TWO HAS BEEN CLAIMED BY WAY OF SET OFF AGAINST BOOK PROFIT. WE ALSO WISH TO BRING TO YOUR NOTICE THAT REFERENCE TO WORKING SHEET WOULD CLEARLY INDICATE THAT THERE HAVE BEEN SUBSTANTIAL LOSSES DURING F Y 1998 - 99, 199 - 2000 AND 2000 - 01. SUCH LOSSES HAVE BEEN RECOUPED OUT OF TRANSFER FROM RESERVES AND ONLY BALA NCE LOSS OF RS.1901.26 LACS IS OUTSTANDING AS ON 31.03.2002 WHICH CONSISTS OF: RS.IN LACS LOSS FOR THE YEAR 2001 - 02 481.76 LOSS OF EARLIER YEARS AND OF THE FINANCIAL YEAR 31.3.2001(AFTER ADJUSTMENT FROM RESERVES) 1419.50 SINCE THE LOSS OF RS.1419.50 LACS WAS MAINLY CONSISTING OF THE LOSS OF F Y 31.03.2001, THE TOTAL LOSS HAS BEEN BIFURCATED BETWEEN BUSINESS LOSS AND DEPRECIATION IN THE SAME RATIO AS HAS BEEN INCURRED IN F.Y 2000 - 01 AND ACCORDINGLY THE LOSS OF RS.1419.50 LACS IS BIFURCATED AS BUSINESS LOSS OF RS.928.06 LACS AND UNABSORBED DEPRECIATION OF RS.491.44 LACS. ADDING THE FIGURE OF LOSS OF RS.481.76 LACS FOR FINANCIAL YEAR 31.03.2002, THE FIGURE OF BUSINESS LOSS OF RS.928.06 LACS BEING LOWER OF THE TWO HAS BEEN CLAIMED BY WAY OF SET OFF AGAINS T BOOK PROFIT. IN VIEW OF THE ABOVE WE SUBMIT THAT THERE IS NO ERROR IN THE ORDER PASSED BY AO U/S.143(3) R.W.S. 147 DATED 30 TH NOV, 2010. WE THEREFORE REQUEST YOU TO DROP THE PROCEEDINGS U/S.263 INITIATED BY YOU THROUGH YOUR NOTICE UNDER REPLY'. 4.2. THE ASSESSEE SUBSEQUENTLY FILED ANOTHER WRITTEN SUBMISSION DATED 08/02/2013, WHICH IS AS UNDER: 'WE REFER TO YOUR NOTICE NO.C!T - IV/NGP/TECH./263/CIPL/A Y 2003 - 04/2012 - 13 DATED 21 - 12 - 2012 U/S.263 OF THE INCOME TAX ACT AND OUR ITA NO. 210 - 212 / 1 3 6 SUBSEQUENT REPLY VIDE OUR LET TER DATED 15 - 01 - 2013 CONCERNING INITIATION OF REVISION PROCEEDING FOR AY 2003 - 04. IN THIS CONNECTION, WE SUBMIT AS UNDER: 1. WE REITERATE OUR SUBMISSIONS MADE VIDE OUR LETTER DATED 15 - 01 - 2013, THAT THE ASSESSING OFFICER WHILE PASSING THE ORDER U/S.147 R.W.S. 143(3) DATED 30 - 11 - 2010 HAS TAKEN ONE OF THE POSSIBLE VIEWS WHILE COMPUTING THE BOOK PROFIT U/S.115JB OF THE INCOME TAX ACT AND HENCE THE ORDER PASSED BY THE ASSESSING OFFICER IS NOT ERRONEOUS SO AS TO BE PREJUDICIAL TO THE INTEREST OF THE REVENUE WITHIN T HE MEANING AND AS CONTEMPLATED U/S.263 OF THE INCOME TAX ACT. 2. IN YOUR LETTER DATED 21 - 12 - 2012 INITIATING REVISION PROCEEDING, YOU HAVE RELIED UPON THE JUDGMENT OF ITAT PUNE BENCH IN THE CASE OF KIRLOSKAR FERROUS INDUSTRIES LTD. - ITA NO.1044/PN/10, FOR FOR MING AN OPINION THAT THE BOOK PROFIT FOR AY 2003 - 04 OUGHT TO HAVE BEEN REDUCED BY UNABSORBED DEPRECIATION OR BUSINESS LOSS, WHICHEVER IS LESS ON A YEAR TO YEAR BASIS AS HELD IN THAT CASE. THE VERY FACT THAT THE ASSESSEE REDUCED THE BOOK PROFIT BY TAKING ON E PARTICULAR VIEW POINT AND THE ASSESSING OFFICER RECOMPUTED THE BOOK PROFIT IN A DIFFERENT MANNER AND THE HON'BLE ITAT DISREGARDING BOTH THE VIEW HAVE PRONOUNCED A THIRD VIEW FOR COMPUTING THE BOOK PROFIT BY ITSELD MAKES THE ISSUE HIGHLY DEBATABLE. WE THE REFORE SUBMIT THAT MERELY BECAUSE THE ASSESSING OFFICER HAS TAKEN ONE OUT THE ABOVE THREE POSSIBLE VIEW, THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER CANNOT BE CONSIDERED TO BE ERRONEOUS. IN SUPPORT OF THE ABOVE, WE STRONGLY RELY UPON THE VARIOUS J UDICIAL PRONOUNCEMENTS WHICH HAVE BEEN REFERRED IN OUR LETTER DATED 15 - 01 - 2013 AND SUBMIT THAT NO ACTION NEED BE TAKEN U/S.263 OF THE ACT. 3. WITHOUT PREJUDICE TO THE ABOVE, IT IS SUBMITTED THAT CONTRARY TO THE JUDGEMENT OF ITAT PUNE IN THE CASE OF KIRLO SKAR FERROUS INDUSTRIES LTD., THE MUMBAI ITAT HAS TAKEN A CONSISTENT VIEW THAT WHILE COMPUTING BOOK PROFIT U/S.115JB OF THE ACT, THE BOOK PROFIT IS TO BE REDUCED BY ACCUMULATED BROUGHT FORWARD, UNABSORBED DEPRECIATION OR BUSINESS LOSS, WHICHEVER IS LESS. T HE HON'BLE MUMBAI ITAT HAS FURTHER HELD THAT YEAR TO YEAR WORKING OF UNABSORBED DEPRECIATION OR BUSINESS LOSS IS NOT REQUIRED TO BE FOLLOWED FOR REDUCING THE BOOK PROFIT U/S.115JB OF THE ACT. IT IS RESPECTFULLY SUBMITTED THAT THIS VIEW OF MUMBAI ITAT HAS B EEN FOLLOWED BY AHMEDABAD ITAT. THE COPIES OF THE FOLLOWING JUDGEMENT REFERRED HEREINABOVE ARE ENCLOSED FOR YOUR REFERENCE: (I) AMLINE TEXTILES (P) LTD V. INCOME TAX OFFICER, WARD 3(1) - I, MUMBAI - 27 SOT 152 (MUM) (II) OWENS CORNING INDIA LTD. V. INCOME TAX OFFIC ER, RANGE - 7(L)(1), MUMBAI - 2011 - TIOL - 453 - ITA T - MUM. (III) THE ACIT CIRCLE - 1, AHMEDABAD V. M/S. ARVIND MILLS LTD., AHMEDABAD - ITA NO.3440/AHD/2010. IN VIEW OF THE FACTS OF OUR CASE AND THE JUDICIAL PRONOUNCEMENTS REFERRED HEREINABOVE, IT IS RESPECTFULLY SU BMITTED THAT THE ASSESSING OFFICER HAVING TAKEN ONE OF THE POSSIBLE VIEW, THE ORDER PASSED BY HIM U/S.147 R.W.S 143(3) OF THE INCOME TAX ACT CANNOT BE CONSIDERED TO BE ERRONEOUS SO AS TO BE PREJUDICIAL TO THE INTEREST OF REVENUE WITHIN THE MEANING OF SECTI ON 263 OF THE INCOME TAX ACT AND HENCE PROCEEDING INITIATED BY YOU SHALL BE DROPPED'. ITA NO. 210 - 212 / 1 3 7 4 . THE LD. CIT DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND HELD THAT THE LOSS AND UNABSORBED DEPRECIATION HAS TO BE COMPARED IN EACH OF THE PREVIOUS YEAR SEPARATE LY BEFORE QUANTIFYING THE AMOUNT OF SET OFF. PRECISE OBSERVATION OF CIT WAS AS UNDER : - 6. IN VIEW OF THE AFOREMENTIONED DISCUSSION, IT IS CLEAR THAT THE LOSS AND UNABSORBED DEPRECIATION HAS TO BE COMPARED IN EACH OF THE PREVIOUS YEARS' SEPARATELY BEFORE QUANTIFYING THE AMOUNT OF SET OFF. THE ASSESSEE HAS NOT WORKED OUT THE BOOK PROFIT CORRECTLY. THE BOOK LOSS AND CUMULATIVE BOOK LOSS HAS BEEN BIFURCATED INTO BUSINESS LOSS AND DEPRECIATION FOR DEDUCTING THE LOWER OF THE TWO AS PER EXPLANATION (1) (III) TO SECTION 115JB. HOWEVER, AS IN EACH OF THE EARLIER YEARS, IT IS CLEARLY SEEN THAT EITHER THE UNABSORBED DEPRECIATION OR THE BUSINESS LOSS IS ZERO, THEREFORE THE CARRYING FORWARD OF LOSS I DEPRECIATION AS CLAIMED BY THE ASSESSEE AND .ALLOWED BY THE AO IS I NCORRECT. I, THEREFORE, HOLD THE ORDER U/S. 143(3) R.W.S. 147 OF THE LT. ACT,1961 PASSED BY THE ACIT, CIRCLE - 7, NAGPUR ON 30/11/2010, AS ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE INTERESTS OF REVENUE IN THIS VIEW OF THE MATTER, I HEREBY SET ASIDE THE SAID ASSESSMENT ORDER DATED 30/11/2010 WITH A D I RECTION TO THE A.O. TO PASS A FRESH ORDER AFTER GIVING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 5 . AGAINST THE ABOVE ORDER OF CIT PASSED U/S.263, ASSESSEE IS IN FURTHER APPEAL BEFORE US. 6 . L EARNED AR REITERATED THE ARGUMENTS TAKEN BEFORE THE LOWER AUTHORITIES AND ALSO INVITED OUR ATTENTION TO THE JUDICIAL PRONOUNCEMENTS AS CONTAINED IN THE PAPER BOOK AND CONTENDED THAT THE ORDER PASSED BY THE AO WAS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE IN TEREST OF REVENUE AND AFTER APPLYING HIS MIND AND DISCUSSING THE ISSUE FOLLOWED ONE OF THE POSSIBLE LEGALLY TENABLE VIEW REGARDING SET OFF OF UNABSORBED DEPRECIATION. 7 . ON THE OTHER HAND, LEARNED DR RELIED ON THE ORDER OF CIT(A). 8 . WE HAVE CONSIDERED RI VAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND ALSO DELIBERATED ON THE JUDICIAL PRONOUNCEMENTS REFERRED BY CIT IN HIS ORDER U/S.263 AS WELL AS CITED AT ITA NO. 210 - 212 / 1 3 8 BAR BY LEARNED AR AND DR, IN THE FACTUAL MATRIX OF INSTANT CASE BEFO RE US . FROM THE RECORD WE FOUND THAT ASSESSEE IS A COMPANY ENGAGED IN MANUFACTURING AND SALE OF GLASS FIBRE PRODUCTS FOR USE IN COMPOSITES. THE ASSESSEE FILED ITS RETURN OF INCOM E ` DECLARING TOTAL INCOME OF RS.( - )82,44,840 UNDER NORMAL PROVISION AND NIL UN DER SECTION 115JB OF THE ACT. SUBSEQUENTLY T HE CASE WAS SELECTED FOR SCRUTINY AND ASSESSMENT WAS COMPLETED U/S.143(3) OF THE ACT VIDE ASSESSMENT ORDER DATED 08.11.2005 DETERMINING TOTAL INCOME AT RS.85,90,175 UNDER NORMAL PROVISION WHEREAS NIL BOOK PROFIT WAS ACCEPTED U/S.115JB . IN APPEAL, THE CIT(A) DELETED THE ADDITIONS AND RESTORED THE RETURNED INCOME AND UNABSORBED DEPRECIATION OF RS.61,28,12,921 AND BUSINESS LOSS OF RS.60,50,59,533 / - WAS ALLOWED TO BE BROUGHT FORWARD. SUBSEQUENTLY, CASE WAS REOPENED U/ S.147 OF THE INCOME - TAX ACT VIDE NOTICE U/S.148 DATED 30.03.2010. FOLLOWING REASONS WERE STATED FOR REOPENING : - AS THE ASSESSEE HAS CLAIMED NIL PROFIT U/S. 115J B DESPITE HAVING POSITIVE BOOK PROFIT FOR THE YEAR WITHOUT FILING NECESSARY DETAILS INCLUDING FORM NO.29 B THE CLAIM OF THE ASSESSEE WAS INADMISSIBLE AND WAS REQUIRED TO BE DISALLOWED DURING THE ASSESSMENT PROCEEDINGS. NON DISALLOWANCE OF THIS CLAIM HAS RESULTED IN UNDER ASSESSMENT OF THE INCOME OF THE ASSESSEE TO THAT EXTENT. THIS INCOME HAS ESCAPE D ASSESSMENT BY REASON OF FAILURE ON PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT, FOR THAT ASSESSMENT YEAR' 9 . IN THE COURSE OF THE REASSESSMENT PROCEEDING THE ASSESSEE EXPLAINED THAT WHILE COMPUTING BO OK PROFIT U/S.115JB THE ASSESSEE HAS TO REDUCE THE BOOK PROFIT BY AGGREGATE AMOUNT OF BROUGHT FORWARD UNABSORBED DEPRECIATION OR BUSINESS LOSS WHICHEVER IS LESS AS PER EXPLANATION 1 CLAUSE (III) OF SECTION 115JB OF THE ACT. THE AO COMPLETED THE ASSESSMENT U/S.143(3) RWS 147 VIDE ORDER DATED 30.11.2010 ACCEPTING THE COMPUTATION OF BOOK PROFIT AS PER ASSESSEE 'S WORKING. THE ITA NO. 210 - 212 / 1 3 9 BROUGHT FORWARD POSITION OF UNABSORBED DEPRECIATION AND BUSINESS LOSS AS PER ACCOUNTS WAS AS UNDER: AY UNABSORBED BUSINESS LOSS CAPITAL GAIN LOSS DEPRECIATION 1997 - 98 337,271,756 0 4,634,535 1998 - 88 168,027,820 0 0 1999 - 00 0 175,361,887 0 2000 - 01 0 174,002,549 0 2001 - 02 0 255,69 5,097 0 2002 - 03 107,513,345 0 0 TOTAL 612,812,921 605,059,533 4,634,535 10 . THE CIT NAGPUR ISSUED NOTICE DATED 21.12.2012 FOR REVISION OF ORDER U/S.263. AS PER T HE CIT THE BOOK PROFIT U/S.115JB WAS NOT COMPUTED AS PER LA W IN AS MUCH AS THE BROUGHT FORWARD UNABSORBED DEPRECIATION OR BUSINESS LOSS WHICHEVER IS LESS, HAD TO BE COMPUTED IN EACH OF THE PREVIOUS YEAR SEPARATELY BEFORE QUALIFYING THE AMOUNT FOR SET OFF. ACCORDINGLY, IT WAS HELD BY THE CIT THAT BROUGHT FORWARD U NABSORBED DEPRECIATION OR BUSINESS LOSS WHICHEVER IS LESS HAS TO BE WORKED OUT ON YEAR TO YEAR BASIS FOR SET OFF AGAINST BOOK PROFIT U/S 115JB R.W. EXPL.1 CLAUSE (III). THE CIT RELIED UPON ITAT PUNE BENCH DECISION IN THE CASE OF KERLOSKAR FERROY VS. ACIT D ELIVERED ON 31.01.20017 . 11 . LEARNED AR APPEARING ON BEHALF OF THE ASSESSEE MR. ARVIND SONDE, STRONGLY OPPOSED THE ORDER PASSED U/S.263 AND CONTENDED THAT ORDER U/S.263 IS TIME BARRED AS IT WAS PASSED BEYOND THE PERIOD STIPULATED U/S.263 AND THAT ORDER PAS SED U/S.143(3) R.W.S.147 PASSED BY THE AO WAS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENUE. 12 . O N MERITS, LEARNED AR CONTENDED THAT WHILE COMPUTING BOOK PROFIT U/S.115JB, THE QUALIFYING AMOUNT FOR SET OFF OF BROUGHT FORWARD UNABSORBED DEP RECIATION AND BUSINESS LOSS WHICHEVER IS LESS IS REQUIRED ITA NO. 210 - 212 / 1 3 10 TO BE COMPUTED BY AGGREGATING THE SAME AND NOT ON YEAR TO YEAR BASIS. FOR THIS PURPOSE HE REPLACED RELIANCE ON THE DECISION OF THE COORDINATE BENCH IN THE CASE S DISCUSSED IN SUBSEQUENT PARAS. 13 . FR OM THE RECORD, WE FOUND THAT THE FIRST ASSESSMENT ORDER U/S.143(3) WAS PASSED BY THE AO ON 08 .11.2014 DETERMINING TOTAL INCOME AT RS. 8 5 , 90 , 17 5 UNDER NORMAL PROVISION AND NIL BOOK PROFIT RETURNED BY THE ASSESSEE WAS ACCEPTED. VARIATION IN THE RETURNED AND A SSESSED INCOME WAS DUE TO VARIOUS OTHER DISALLOWANCES WHICH WERE SUBSEQUENTLY DELETED BY THE CIT(A). HOWEVER, THE BOOK PROFIT DECLARED U/S.115JB WAS ACCEPTED TO BE NIL. THE ASSESSMENT WAS REOPENED U/S.147 AND AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESS EE THE COMPUTATION OF BOOK PROFIT WAS ACCEPTED AT NIL AND THE REASON FOR REOPENING THE ASSESSMENT WERE IGNORED. THE CIT VIDE HIS ORDER U/S.263 HAS PROPOSED TO REVISE THE ORDER PASSED BY THE AO U/S.143 RWS 147 OF THE ACT. WE FOUND THAT DURING REASSESSMENT PROCEEDINGS T HE AO HAS IGNORED THE REASON FOR REOPENING THE ASSESSMENT AND ACCEPTED THE COMPUTATION OF BOOK PROFIT AS PER THE ORIGINAL ASSESSMENT ORDER PASSED ON 08.11.2005. UNDER THESE CIRCUMSTANCES IF AT ALL THERE IS A MISTAKE IN COMPUTATION OF BOOK PROF IT 115JB, THE SAME IS IN THE ORDER U/S 143(3) DATED 08.11.2005 AND NOT IN THE SUBSEQUENT ORDER U/S 143(3) R.W.S. 147 DATED 30.11.2010. THE REASON FOR REOPENING HAVE BEEN CONSIDERED IN THE ORDER PASSED ON 30.11.2010 AND SAME HAVE BEEN NOT FOUND TO BE CORREC T AND HENCE COMPUTATION OF BOOK PROFIT AS PER RETURN OF INCOME WHICH WAS ACCEPTED IN ASSESSMENT ORDER DATED 08.11.2005 HAS BEEN RESTORED. UNDER THE SE CIRCUMSTANCES, IT CANN OT BE SAID THAT ORDER PASSED U/S .143(3) R.W.S. 147 DATED 30.11.2010 ITA NO. 210 - 212 / 1 3 11 WAS ERRONEOUS AS ALLEGED MISTAKE, IF AT ALL TO BE CONSIDERED, IT COULD ONLY BE IN THE ASSESSMENT OR DER U/S 143(3) DATED 08.11.2005. SI NCE THE TIME LIMIT FOR PASSING THE ORDER U/S.263 BY THE CIT HAS TO BE COMPUTED WITH REFERENCE TO THE ASSESSMENT ORDER PASSED ON 08.11.05, AS THE ERROR, IF ANY, IS COMMITTED IN THAT ORDER, THE SAME IS REQUIRED TO BE REVISED UPTILL 31.03.2008 , AND HENCE THE REVISION ORDER PASSED BY THE CIT U/S.263 ON 28.03.2013 IS BEYOND THE PERIOD OF LIMITATION PROVIDED IN SUB - SECTION (2) OF SECTION 263. 14 . NOW, COMING TO MERITS OF ORDER PASSED U/S.263, WE FOUND THAT AO HAS ACCEPTED THE ASSESSEE'S COMPUTATION OF TOTAL INCOME U/S.115JB WHILE PASSING THE ASSESSMENT ORDER U/S.143 DATED 08.11.2005. THE AO FURTHER ACCEPTED THE COMPUTATION OF BOOK PROFIT U/S 115JB WHILE PASSING ANOTHER ORDER DT. 30.11.2010 U/S.143 RWS 147 OF THE INCOME - TAX ACT, EVEN AFTER CONSIDERING THE REASON FOR REOPENING THE EARLIER ASSESSMENT ORDER. THE REASON GIVEN BY THE CIT FOR REVISION OF ASSESSMENT ORDER U/S 263 WAS THE MANNER OF COMPUTAT ION OF BROUGHT FORWARD UNABSORBED DEPRECIATION OR BUSINESS LOSS WHICHEVER IS LESS FOR SET OFF WHILE COMPUTING BOOK PROFIT U/S 115J B. THE ASSESSEE HAS TAKEN THE TOTAL BROUGHT FORWARD UNABSORBED DEPRECIATION AND COMPARED IT WITH THE BROUGHT FORWARD UNABSORB ED BUSINESS LOSS WHILE CALCULATING THE QUALIFYING AMOUNT OF SET OFF AS PER CLAUSE (III) OF EXPL 1 TO SEC 115JB; WHEREAS THE CIT - IV HAS COMPARED BROUGHT FORWARD UNABSORBED DEPRECIATION WITH BUSINESS LOSS OF EACH YEAR SEPARATELY FOLLOWING THE JUDGMENT OF PUN E TRIBUNAL. O N THE ISSUE OF SET OFF OF UNABSORBED DEPRECIATION OR BUSINESS LOSS THERE ARE THREE JUDGMENTS OF THE MUMBAI AND AHMEDABAD TRIBUNAL WHICH ARE IN FAVOUR OF THE ITA NO. 210 - 212 / 1 3 12 ASSESSEE, WHICH SUPPORTS THE ASSESSEE'S WORKING FOR COMPUTING BOOK PROFIT AGAINST ONE JUDGMENT OF PUNE TRIBUNAL SUPPORTING CIT'S WORKING. MOREOVER, PUNE TRIBUNAL WHILE PASSING ORDER HAS NOT CONSIDERED THE EARLIER JUDGMENTS OF MUMBAI AND AHMEDABAD BENCHES. A S THERE ARE TWO VIEWS POSSIBLE IN THE GIVEN CASE DULY SUPPORTED BY DIFFERENT TRIBUNAL ORDERS AND THE AO HAS TAKEN ONE POSSIBLE VIEW THE DECISION IN MALABAR INDUSTRIES APPLIES . THE ORDER PASSED BY THE AO CANNOT BE CONSIDERED TO BE ERRONEOUS OR PREJUDICIAL TO THE INTEREST OF REVENUE MORE PARTICULARLY WHEN THE AO HAS TAKEN ONE OF THE POSSIBLE VIEW DULY SUPPORTED BY THREE TRIBUNAL JUDGMENTS . I F THE AO TAKES ONE OF THE POSSIBLE VIEW, THE ASSESS MENT ORDER PASSED BY THE AO CAN NOT BE TREATED AS ERRONEOUS EVEN THOUGH THE VIEW TAKEN BY THE AO. MAY NOT BE THE SAME AS THAT OF THE CIT'S VIEW. OUR VIEW I S SUPPORTED BY THE FOLLOWING JUDGMENTS OF HONBLE SUPREME COURT AND HIGH COURTS : (I) MALABAR INDUSTRIAL CO. LTD V. CIT [243 ITR 83] ...... THE PHRASE 'PREJUDICIAL TO THE INTERESTS OF THE REVENUE' HAS TO BE READ IN CONJUNCTION WITH AN ERRONEOUS ORDER PAS SED BY THE ASSESSING OFFICER. EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF THE ASSESSING OFFICER, CANNOT BE TREATED AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, FOR EXAMPLE, WHEN AN INCOME - TAX OFFICER ADOPTED ONE OF THE COURSES PERMISSIBLE IN L AW AND IT HAS RESULTED IN LOSS OF REVENUE, OR WHERE TWO VIEWS ARE POSSIBLE AND THE INCOME - TAX OFFICER HAS TAKEN ONE VIEW WITH WHICH THE COMMISSIONER DOES NOT AGREE, IT CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE INTERESTS OF THE REVENUE UNLE SS THE VIEW TAKEN BY THE INCOME - TAX OFFICER IS UNSUSTAINABLE IN LAW. (II) CIT V. MAX INDIA LTD [2951TR 282] ...... FOR EXAMPLE, WHEN THE ASSESSING OFFICER ADOPTS ONE OF TWO COURSES PERMISSIBLE IN LAW AND IT HAS RESULTED IN LOSS OF REVENUE, OR WHERE TWO VIEWS ARE POSSIBLE AND THE ASSESSING OFFICER HAS TAKEN ONE VIEW WITH WHICH THE COMMISSIONER DOES NOT AGREE, IT CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE REVENUE, UNLESS THE VIEW TAKEN BY THE ASSESSING OFFICER IS UNSUSTAINABLE IN LAW. (II I) CIT V. GABRIEL INDIA LTD [203 ITR 108] ....... HELD, THAT THE INCOME - TAX OFFICER IN THIS CASE HAD MADE ENQUIRIES IN REGARD TO THE NATURE OF THE EXPENDITURE INCURRED BY THE ITA NO. 210 - 212 / 1 3 13 ASSESSE. THE ASSESSE HAD GIVEN A DETAILED EXPLANATION IN THAT REGARD BY A LETTER IN WRITING. ALL BY THE INCOME - TAX OFFICER ON BEING SATISFIED WITH THE EXPLANATION OF THE ASSESSE. THIS DECISION OF THE INCOME TAX OFFICER COULD NOT BE HELD TO BE 'ERRONEOUS' SIMPLY BECAUSE IN HIS ORDER HE DID NOT MAKE AN ELABORATE DISCUSSION IN THAT REGAR D. (IV) CLT V. SALUJA EXIM LIMITED WHERE TWO VIEWS POSSIBLE, ASSESSING OFFICER ADOPTING ONE VIEW - REVISION NOT PERMISSIBLE. 15 . EVEN ON MERIT WHILE COMPUTING THE BOOK PROFIT U/S.115JB THE ASSESSEE IS REQUIRED TO REDUCE BROUGHT FORWARD UNABSORBED DEPRE CIATION OR BUSINESS LOSS, WHICHEVER IS LESS. THE RELEVANT PROVISION OF SECTION 115JB EXPL.1 READS AS UNDER: III) THE AMOUNT OF LOSS BROUGHT FORWARD OR UNABSORBED DEPRECIATION, WHICHEVER IS LESS AS PER BOOKS OF ACCOUNT. EXPLANATION. - FOR THE PURPOSES OF THIS CLAUSE- (A) THE LOSS SHALL NOT INCLUDE DEPRECIATION (B) THE PROVISIONS OF THIS CLAUSE SHALL NOT APPLY IF THE AMOUNT OF LOSS BROUGHT FORWARD OR UNABSORBED DEPRECIATION IS NIL '. 16 . IT IS CLEAR FROM THE ABOVE PROVISION, THAT WHILE COMPUTING BOOK P ROFIT U/S 115JB FOR A GIVEN YEAR THE AMOUNT OF LOSS BROUGHT FORWARD OR UNABSORBED DEPRECIATION, WHICHEVER IS LESS AS PER BOOKS OF ACCOUNT, IS REQUIRED TO BE REDUCED. NOWHERE IT SUGGESTS THAT ONE HAS TO COMPARE THE YEAR WISE UNABSORBED DEPRECIATI ON OR BUSIN ESS LOSS AS DESIRED BY THE CIT. TH US, AOS VIEW IS FULLY SUPPORTED BY THE THREE JUDGMENTS DISCUSSED HEREINA FTER. THUS, NO FAULT CAN BE FOUND IN THE ORDER OF AO, SO AS TO BRAND IT ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF JUSTICE . IT IS WORTHWHILE TO REF ER TO MUMBAI TRIBUNAL JUDGMENT IN THE CASE OF OVENS CORNING INDIA LTD WHEREIN THE HON'BLE TRIBUNAL AFTER CONSIDERING THE CASE OF AMLINE TEXTILES P. LTD (SUPRA), HAS HELD AS UNDER: WE HOLD THAT AGGREGATE AMOUNT OF UNABSORBED DEPRECIATION OR BROUGHT FORWARD LOSSES OF THE YEARS TAKEN TOGETHER WHICH LOSSES WAS TO BE REDUCED FOR THE PURPOSE OF COMPUTING BOOK ITA NO. 210 - 212 / 1 3 14 PROFIT U/S. 115JB. IT CANNOT BE CONSIDERED ON A YEAR TO YEAR BASIS. THE GROUND RAISED BY THE ASSESSE IS ACCORDINGLY ALLOWED. SAME VIEW WAS ALSO FOLLOWED BY TRIBUNAL IN THE CASE OF AMLINE TEXTILES (P) LTD, HAS HELD AS UNDER: WE HAVE CONSIDERED THE REVIVAL SUBMISSIONS AND DO NOT FIND ANY MERIT IN THE APPEAL OF THE REVENUE. THE IDENTICAL ISSUE IS CONSIDERED BY ITAT MUMBAI BENCH IN THE CASE OF AMLINE TEXTILES (P) LTD (SUPRA) AND THE ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSE. THE LEARNED CIT(A) REPRODUCED THE OPERATIVE PORTION OF THE ORDER IN THE IMPUGNED ORDER. EVEN, ACCORDING TO EXPLANATION (III) TO SECTION 115JB(2) OF THE ORDER. EVEN, ACCORDING TO EXPLANATI ON (III) TO SECTION 115JB (2) OF THE IT ACT THE AMOUNT OF LOSS BROUGHT FORWARD OR UNABSORBED DEPRECIATION WHICHEVER IS LESS AS PER THE BOOKS OF ACCOUNTS SHALL HAVE TO BE CONSIDERED BY THE AO WHILE COMPLETING THE ASSESSMENT. THE SAME PROVISION WAS TAKEN INT O CONSIDERATION WHILE FINALIZING THE ASSESSMENT. THE AO AT THE RECTIFICATION STAGE HAD TAKEN DIFFERENT INTERPRETATION OF THIS PROVISION IN ORDER TO PASS ORDER U/S.154 OF THE IT ACT. THEREFORE, THE LEARNED CIT(A) RIGHTLY HELD THAT THE ISSUE IS DEBATABLE AND THE CONCLUSION COULD BE DRAWN AFTER LONG DRAWN DISCUSSIONS. THERE WAS NO MISTAKE APPARENT ON RECORD; THEREFORE, ON A DEBATABLE ISSUE THE PROCEEDINGS U/S. 154 OF THE IT ACT WOULD NOT BE VALID. THE LEARNED DR MERELY RELIED UPON THE ORDER OF THE AO U/S.154 O F THE IT ACT AND HAS NOT POINTED OUT ANY INFIRMITY IN THE ORDER OF THE LEARNED CIT(A). IN VIEW OF THE ABOVE, WE DO NOT FIND ANY MERIT IN THE APPEAL OF THE REVENUE. SAME IS ACCORDINGLY DISMISSED. THE ABOVE VIEW HAS BEEN ALSO FOLLOWED BY THE AHMEDABAD ITAT IN THE CASE OF ACIT V S . ARVIND MILLS LTD. (ITA NO. 3440/AHD/2010) AND HELD AS UNDER: WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND DO NOT FIND ANY MERIT IN THE APPEAL OF THE REVENUE. THE IDENTICAL ISSUE IS CONSIDERED BY THE ITAT MUMBAI BENCH IN THE CASE O F AMLINE TEXTILES (P) LTD (SUPRA) AND THE ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE. THE LEARNED CIT(A) REPRODUCED THE OPERATIVE PORTION OF THE ORDER IN THE IMPUGNED ORDER. EVEN, ACCORDING TO EXPLANATION (III) TO SECTION 115JB (2) OF THE IT ACT THE AMOUN T OF LOSS BROUGHT FORWARD OR UNABSORBED DEPRECIATION WHICHEVER IS LESS AS PER THE BOOKS OF ACCOUNTS SHALL HAVE TO BE CONSIDERED BY THE AO WHILE COMPLETING THE ASSESSMENT. THE SAME PROVISION WAS TAKEN INTO CONSIDERATION WHILE FINALIZING THE ASSESSMENT. THE AO AT THE RECTIFICATION STAGE HAS TAKEN DIFFERENT INTERPRETATION OF THE PROVISION IN ORDER TO PASS ORDER U/S 154 OF THE IT ACT. THEREFORE, THE LEARNED CIT(A) RIGHTLY HELD THAT THE ISSUE IS DEBATABLE AND THE CONCLUSION COULD BE DRAWN AFTER LONG DRAWN DISCUS SIONS. THERE WAS NO MISTAKE APPARENT ON RECORD; THEREFORE, ON A DEBATABLE ISSUE THE PROCEEDINGS U/S 154 OF ITA NO. 210 - 212 / 1 3 15 THE IT ACT WOULD NOT BE VALID. THE LEARNED DR MERELY RELIED UPON THE ORDER OF THE AO U/S 154 OF THE IT ACT AND HAS NOT POINTED OUT ANY INFIRMITY IN T HE ORDER OF THE LEARNED CIT(A). IN VIEW OF THE ABOVE, WE DO NOT FIND ANY MERIT IN THE APPEAL OF THE REVENUE. SAME IS ACCORDINGLY DISMISSED. 17 . IN VIEW OF THE ABOVE DISCUSSION, WE DO NOT FIND ANY MERIT IN THE ORDER PASSED BY CIT U/S.263. 18 . IN THE RESU LT, ALL THE APPEAL S OF THE ASSESSEE ARE ALLOWED ORDER PRONOUNCED IN THE OPEN COURT ON THIS 19 /12 / 201 4 . 19 /12 / 2014 SD/ - SD/ - ( ) ( SANJAY GARG ) ( ) ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT ME MBER MUMBAI ; DATED 19 /12 /2014 /PKM , PS COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( ASSTT. REGISTRAR) / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A), MUMBAI. 4. / CIT 5. / DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//
