The ITO, Ward-4(3), Ahmedabad V. Infinium (India) Ltd., Ahmedabad

ITA 2135/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 85635 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-01-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 08-01-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 29-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROOP CHAND
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD (BEFORE SHRI G.C.GUPTA VICE PRESIDENT & SHRI ANIL CHATURVEDI , A.M.) I. T. A. NO. 2135 / AHD/ 20 1 1 (A SSESSMENT YEAR: 2003 - 04) INCOME TAX OFFICER, WARD. 4(3), AHMEDABAD V/S INFINIUM (INDIA) LTD. 9 TH FLOOR, SHITIRATNA BUILDING, NR. PANCHVATI CIRCLE, ELL ISBRIDGE, AHMEDABAD - 380006 (APPELLANT) (RESPONDENT) PAN: AAACI7721B APPELLANT BY : SHRI ROOP CHAND, SR. D.R. RESPONDENT BY : NONE ( )/ ORDER DATE OF HEARING : 08 - 01 - 2015 DATE OF PRONOUNCEMENT : 23 - 01 - 2015 PER SHRI ANIL CHATURVEDI,A.M. 1. THIS APPEAL FILED BY THE REVENUE IS AGAINST THE ORDER OF CIT(A) - XX , AHMEDABAD DATED 22.06.2011 FOR A.Y. 2003 - 04. 2. IN THIS CASE, ON THE DATE OF HEARING, N ONE APPEARED ON BEHALF OF ASSESSEE THOUGH THE NOTICE OF HEARING WAS SERVED THROUGH THE OFFICE OF ITO WARD 2(1)(3). WE THEREFORE PROCEED TO DECIDE THE ISSUE EX PARTE QUA THE ASSESSEE AND ON THE BASIS OF MATERIAL ON RECORD. 3. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON REC ORD ARE AS UNDER. ITA NO 2135/AHD/2011 . A.Y. 2003 - 04 2 4. ASSESSEE IS A COMPANY STATED TO BE ENGAGED IN THE BUSINESS OF ASSEMBLING AND SERVICING OF SATELLITE BASED COMMUNICATION SY STEM AND I.T SERVICE PROVIDER. ASSESSEE FILED ITS RETURN OF INCOME FOR A.Y. 03 - 04 ON 01.11.2004 DECLARING TOTAL LOSS OF RS. 2,10,65,882/ - . THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAMED UNDER SECTION 143(3) VIDE ORDER DATED 28.03.2006 AND THE TOTAL LOSS WAS DETERMINED AT RS. 1,10 ,75,610/ - . AGGRIEVED BY THE ORDER OF A.O., ASSESSEE CARRIE D THE MATTER BEFORE CIT(A) WHO VIDE ORDER DATED 22.06.2011 ALLOWED THE APPEAL OF THE ASSESSEE. AGGRIEVED BY THE AFORESAID ORDER OF LD. CIT(A), REVENUE IS NOW IN APPEAL BEFORE US AND HAS FILED THE FOLLOWING GROUNDS; - 1. THE LD.CIT(A) HAS ERRED IN LAW AND ON F ACTS IN DELETING DISALLOWANCE OF EXCESS LOSS IN JOINT VENTURE BUSINESS WITHOUT APPRECIATING THE FACT THAT SUFFICIENT OPPORTUNITY HAD BEEN PROVIDED TO THE ASSESSEE TO RECONCILE THE ACCOUNT AND THE ASSESSEE WAS NOT ABLE TO GIVE ANY PLAUSIBLE EXPLANATION TOWA RDS THE DISCREPANCY. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 3. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE LD. CIT(A) MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED TO THE ABOVE EXTENT. 5. DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND ON PERUSING THE PROFIT AND LOSS ACCOUNT, A.O NOTICED THAT ASSESSEE HAD DEBITED A SUM OF RS. 1,41,97,620/ - ON ACCOUNT OF DEFICITS IN J.V . BUSINESS WITH GNFC . FROM THE COPY OF THE ACCOUNT OF THE ASSESSEE AS APPEARING IN THE BOOKS OF GNFC LTD. THAT WAS MADE AVAILABLE BY GNFC LTD, A.O NOTICED THAT THE SHARE OF LOSS OF ASSESSEE WAS OF RS. 42,07,348/ - . THE ASSESSEE WAS THEREFORE ASKED TO RECONCILE THE VARIATION IN THE FIGURES OF LOSS AS DEBITED BY THE ASSESSEE AND AS SHOWN BY GNFC LTD. THE SUBMISSION OF THE ASSESSEE WAS NOT FOUND ACCEPTABLE TO THE A.O. HE THEREFORE RESTR ICTED THE LOSS ON ACCOUNT OF J.V . BUSINESS TO RS. 42,07,349/ - AS AGAINST RS. 1,41,97,620/ - CLAIMED BY THE ASSES SEE AND THEREBY DISALLOWED THE EXCESS LOSS OF RS. 99,90,272/ - . AGGRIEVED BY THE ORDER OF A.O., ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A). LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE DELETED THE DISALLOWANCE MADE BY THE A.O BY HOLDING A S UNDER: - ITA NO 2135/AHD/2011 . A.Y. 2003 - 04 3 3.1(IV) AS SEEN FROM THE FACTS NARRATED IN THE PRECEDING PARAS, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE APPELLANT WAS ASKED TO RECONCILE THE LOSS IN THE JOINT VENTURE BUSINESS AS PER THE BOOKS OF THE GNFC LTD., A GUJARAT GOVERNMENT UNDER TAKING. IT WAS CLARIFIED BY THE APPELLANT THAT THE DISCREPANCY BETWEEN THEIR BOOKS AND THE BOOKS OF GNFC LTD. WAS ATTRIBUTABLE TO THE DIFFERENT METHODS OF ACCOUNTING FOLLOWED BY THEM. VIDE LETTER DATED 21 - 3 - 2006 THE AO ENCLOSED A COPY OF THE SUBSIDIARY LED GER PROVIDED BY GNFC LTD. (RELATING TO THE JOINT VENTURE BUSINESS WITH THE APPELLANT). THE APPELLANT WAS ASKED TO FURNISH CLARIFICATION/ DETAILS BY 24 - 3 - 2006. THE ASSESSMENT ORDER WAS PASSED ON 28 - 3 - 2006. THUS, IT IS SEEN THAT THE APPELLANT WAS GIVEN HARDL Y 3 DAYS TIME TO RECONCILE THE TRANSACTIONS OF THE FULL YEAR. THEREFORE, I AM INCLINED TO -- ACCEPT THE LEARNED AR'S CONTENTION THAT .THE TIME PROVIDED WAS TOO SHORT. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE APPELLANT FURNISHED CLARIFICATION WITH SUPP ORTING EVIDENCES. AS SEEN FROM THE REMAND REPORT REPRODUCED ABOVE THE AO SIMPLY STATED THAT THE APPELLANT DID NOT RESPOND TO THE LETTER DATED 22 - 3 - 2006. FURTHER, THE REPORT IS TOTALLY SILENT ON THE MERITS OF THE CONTENTIONS OF THE APPELLANT. KEEPING IN VIE W THE DETAILED EXPLANATION OFFERED BY THE A.R, I AM INCLINED TO AGREE WITH THE LEARNED AR THAT THE DISCREPANCY WAS ATTRIBUTABLE TO THE FACT THAT THE APPELLANT WAS FOLLOWING MERCANTILE SYSTEM WHEREAS GNFC LTD. WAS FOLLOWING MIXED SYSTEM OF ACCOUNTING. FURTH ER, AS CONTENDED BY THE LEARNED AR THAT IF THE ENTIRE PERIOD FROM FINANCIAL YEAR 2001 - 02 TO 2006 - 07 IS TAKEN INTO CONSIDERATION, ACCORDING TO THE BOOKS OF GNFC, THE APPELLANT'S SHARE OF LOSS IS MARGINALLY HIGHER AT RS,4,24,98,966/ - AS AGAINST THE CLAIM MAD E BY THE APPELLANT AT RS.4,22,13,516/ - . IT IS ALSO SEEN THAT THE APPELLANT HAS BEEN INCURRING LOSS YEAR AFTER YEAR AND IT IS NOT A CASE WHERE SHUFFLING THE LOSS FROM ONE YEAR TO ANOTHER WILL HAVE ANY REVENUE IMPLICATION. KEEPING IN VIEW THESE FACTS, I HOLD THAT THE ADDITION OF RS.99,90,272/ - (DUE TO REDUCTION IN LOSS RETURNED BY THE APPELLANT FROM JOINT VENTURE BUSINESS) IS NOT SUSTAINABLE. IT IS DELETED. 6. AGGRIEVED BY THE ORDER OF CIT(A), REVENUE IS NOW IN APPEAL BEFORE US. 7. BEFORE US, LD. D.R. SUPPORTED THE ORDER OF A.O. 8. WE HAVE HEARD THE LD. D.R. AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT WHILE DELETING T HE ADDITION LD. CIT(A) HAS GIVEN A FINDING THAT THE DISCREPANCY IN THE 2 FIGURES OF LOSS WAS ATTRIBUTABLE TO THE FACT THAT THE ASSESSEE WAS FOL LOWING MERCANTILE SYSTEM OF ACCOUNTING WHEREAS GNFC WAS FOLLOWING MIXED SYSTEM OF ACCOUNTING. HE HAS FURTHER GIVEN A FINDING THAT IF THE ENTIRE PERIOD FROM F.Y. 2001 - 02 TO F.Y. 2006 - 07 IS TAKEN INTO CONSIDERATION , THE ASSESSEE S SHARE OF LOSS AS PER THE BO OKS OF GNFC IS MARGINAL HIGHER THA N THAT CLAIM ED BY THE ASSESSEE. LD. CIT(A) HAS FURTHER GIVEN A FINDING THAT ASSESSEE H AS BEEN INCURRING LOSS YEAR ITA NO 2135/AHD/2011 . A.Y. 2003 - 04 4 AFTER YEAR AND IT WAS NOT A CASE W HERE THE SHIFTING OF LOSS FROM ONE YEAR TO ANOTHER WILL HAVE ANY REVENUE IMP LICATION. BEFORE US , REVENUE HAS NOT BROUGHT ANY MATERIAL ON RECORD TO CONTROVERT THE FINDINGS OF LD. CIT(A) AND THEREFORE WE FIND NO REASON TO INTERFERE WITH THE ORDER OF LD. CIT(A) AND THUS THIS GROUND OF REVENUE IS DISMISSED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 23 - 01 - 201 5 . SD/ - SD/ - (G.C.GUPTA) (ANIL CHATURVEDI) VICE PRESIDENT ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASST T.REGISTRAR ITAT,AHMEDABAD