DCIT, New Delhi V. M/s. Canon India Pvt. Ltd., Gurgaon

ITA 217/DEL/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7370 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 9 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-10-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 08-10-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 11-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PARWINDER KAUR
• Assessee Lawyers: S K AGGARWAL
• Keywords: Depreciation; Difference of opinion; Unabsorbed depreciation; Change of opinion; Reassessment proceedings
• Section: 143(3); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : B NEW DELHI BEFORE SHRI S.V. MEHROTRA , JM AND SHRI H.S. SIDHU, JM ITA NO. 217/DEL/2013 ASSESSMENT YEAR : 2005-06 DCIT VS. C ANON INDIA PVT. LTD. CIRCLE-3(1) 2 ND FLOOR, TOWER- A &B, C.R. BUILDING CYB ER GREEN, NEW DELHI. DL F CITY, PHASE-III, GURGAON 122 002. (PAN AAACC4175D) (APPELLANT) (RESPONDENT) ASSESSEE BY :- SHRI S.K. AGGARWAL, CA DEPARTMENT BY:- SMT. PARWINDER KAUR, SR. DR O R D E R PER H.S. SIDHU, JUDICIAL MEMBER REVENUE HAS FILED THE PRESENT APPEAL AGA INST THE IMPUGNED ORDER DATED 23.10.2013 PASSED BY THE LD. CIT(A) VI, NE W DELHI FOR THE ASSESSMENT YEAR 2005-06. 2. THE FACTS RELATING TO THE ISSUE IN DISPUT E ARE THAT THE ASSESSEE IS A COMPANY INCORPORATED IN 1996 UNDER THE COMPANIES AC T, 1956. THE COMPANY IS ENGAGED IN THE BUSINESS OF TRADING OF VA RIOUS PRODUCTS INCLUDING PHOTOCOPIERS, PRINTERS AND CAMERAS ETC. T OGETHER WITH PROVIDING OF SERVICE SUPPORT AND MAINTENANCE SERVIC ES TO ITS CUSTOMERS AND SOFTWARE DEVELOPMENT. FOR THE RELEVANT ASSESSME NT YEAR 2005-06, 2 THE ASSESSEE COMPANY FILED ITS ORIGINAL RETURN OF I NCOME ON 31 ST OCTOBER, 2005 AND THEREAFTER REVISED ITS RETURN ON 29 TH MARCH, 2007 DECLARING INCOME AT RS. NIL AFTER SETTING OFF OF BROUGHT FORW ARD BUSINESS LOSSES TO THE EXTENT OF RS. 10,01,61,438/-. THE BALANCE BUSIN ESS LOSS/UNABSORBED DEPRECIATION OF RS. 30,40,00,776/- WAS CARRIED FORW ARD. THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE I.T. ACT VIDE ASSES SMENT ORDER DATED 22 ND DECEMBER, 2008 AT NIL INCOME AFTER SETTING OFF BRO UGHT FORWARD LOSSES. SUBSEQUENTLY THE CASE OF THE ASSESSEE WAS R EOPENED BY THE AO VIDE NOTICE U/S 148 OF THE ACT DATED 3.5.2010 AFTER RECORDING THE REASONS AND THE AO COMPLETED THE ASSESSMENT U/S 147/143(3) OF THE ACT ON 22.10.2010 AFTER MAKING THE ADDITION OF DISALLOWANC E ON ACCOUNT OF EXCESS OF BUSINESS LOSSES AMOUNTING TO RS. 7,76,76, 139/- AND DISALLOWANCE ON ACCOUNT OF PRIOR PERIOD EXPENSES AM OUNTING TO RS. 16,27,161/-. 3. AGGRIEVED BY THE AFORESAID ASSESSMENT ORDE R ASSESSEE FILED AN APPEAL BEFORE THE LD. FIRST APPELLATE AUTHORITY VID E IMPUGED ORDER DATED 10.2.2013 ALLOWED THE APPEAL FILED BY THE ASSESSEE AND CANCEL THE REASSESSMENT AS WELL AS DELETED THE ADDITION MADE B Y THE AO. 4. NOW THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DATED 23.10.2012 AND FILED THE PRESENT APPEAL. 5. AT THE TIME OF HEARING LD. DR RELIED UPON THE ORDER PASSED BY THE AO AND THE CONTENTIONS RAISED BY THE REVENUE IN THE GROUNDS OF APPEAL. ON THE CONTRARY LD. COUNSEL FOR THE ASSESSEE RELIED UPON THE ORDER 3 PASSED BY THE LD. FIRST APPELLATE AUTHORITY AND THE DOCUMENTS OF THE EVIDENCE FILED BY HIM IN HIS PAPER BOOK. 6. WE HAVE HEARD BOTH THE PARTIES . THE RELEV ANT RECORD AVAILABLE WITH US ESPECIALLY THE ORDERS PASSED BY THE AUTHORITY AL ONG WITH THE DOCUMENTARY EVIDENCE FILED BY THE ASSESSEE IN THE S HAPE OF PAPER BOOK. AS PER THE REASSESSMENT ORDER THE AO MADE ONLY TWO ADDITIONS ON ACCOUNT OF EXCESS CARRY FORWARD OF BUSINESS LOSS TO ASSTT. YEAR 2005-06 TO THE TUNE OF RS. 7,76,76,139/- AND THE DISALLOWAN CE ON EXPENDITURE AMOUNTING TO RS.16,27,161/- WHICH WAS CLAIMED ON AC COUNT OF PRIOR PERIOD EXPENSES. ACCORDING TO THE FINDING GIVEN BY THE LD. FIRST APPELLATE AUTHORITY ON THE ORIGINAL RETURN OF INCOME FOR THE ASSTT. YEARS 2005-06 FILED ON 31.10.2005 WHICH WAS SUBSEQUENTLY REVISED ON 29 .3.2007 DECLARING NIL INCOME AFTER SETTING OFF BROUGHT FORW ARD BUSINESS LOSSES OF EARLIER YEARS. THE ASSESSEE HAS FILED ALL THE DETA ILS OF BROUGHT FORWARD LOSSES AND THE AMOUNT OF SET OFF AGAINST THE INCOME & BALANCE AMOUNT OF LOSSES CARRIED FORWARD AS WRITTEN BY THE ASSESSEE I N ITS WRITTEN SUBMISSIONS WHICH THE LD. FIRST APPELLATE AUTHORITY HAS REPRODUCED IN PARA 4.1 AND AS PER RETURN OF INCOME FILED BY THE A SSESSEE COMPANY, THE TOTAL CUMULATIVE LOSSES FOR ALL THE ASSESSMENT YEAR S UPTO ASSTT. YEAR 2004-05 WAS RS. 55,60,68,779/- OUT OF THESE LOSSES AN AMOUNT OF RS. 15,16,81,860/- WAS SET OFF WITH THE INCOME OF ASSES SMENT YEAR 2004-05 AND THE BALANCE AMOUNT OF BROUGHT FORWARD LOSSES OF RS. 40,43,86,919/- WAS AVAILABLE IN THE ASSESSMENT YEAR 2005-06. OUT O F THESE LOSSES AN 4 AMOUNT OF RS.10,03,86,143/- WAS FURTHER SET OFF WIT H THE INCOME FOR THE ASSESSMENT YEAR 2005-06 7. THE AO RAISED SPECIFIC QUERY ABOUT THE ASS ESSES LOSSES BROUGHT FORWARD FROM EARLIER YEARS VIDE LETTER DATED 16.7.2 007 WHICH WAS FURNISHED BY THE ASSESSEE BEFORE THE AO VIDE ITS LE TTER DATED 4.8.2008. THE AO HAS ERRONEOUSLY REDUCED THE AMOUNT OF SET OF F BUSINESS LOSS BY RS. 7,76,76,139/- IN THE ASSTT. YEAR 2005-06 ON TH E MISTAKEN VIEW THAT SINCE FOR THE PRECEDING ASSESSMENT YEAR I.E ASSTT. YEAR 2004-05 INCOME ASSESSED WAS RS. 22,922,67,819/- AGAINST RETURNED I NCOME OF RS. 15,15,91,680/- (DIFFERENCE OF RS. 7,76,76,139/-) AC CORDINGLY THE CARRY FORWARD OF BUSINESS LOSS SHOULD BE REDUCED BY SIMIL AR AMOUNT. IN DOING SO THE AO COMPLETELY IGNORED THE FACT THAT THE AGG REGATE BUSINESS LOSSES AVAILABLE FOR SET OFF IN ASSTT. YEAR 2004-05 WAS RS . 55,60,68,779/-AND EVEN AFTER SET OFF OF RS. 22,92,67,819/-THE BALANCE LOSSES AVAILABLE FOR CARRY FORWARD WERE RS. 32,68,00,960/- WHICH WAS MUC H MORE THAN THE RETURNED INCOME OR ASSESSED INCOME FOR ASTT. YEAR 2 005-06. THEREFORE IT CANNOT BE SAID THAT THERE WAS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSA RY FOR THE PURPOSE OF ASSESSMENT . 8. THE ASSESSEE FURNISHED ITS RETURN OF IN COME AS REQUIRED UNDER THE ACT AND THERE HAS BEEN NO DEFAULT ON PART OF TH E ASSESSEE ON THIS ACCOUNT. THE VIEW TAKEN BY THE LD. FIRST APPELLATE AUTHORITY ON THIS ISSUE SUPPORTED BY VARIOUS DECISIONS RENDERED BY TH E SUPREME COURT AS 5 WELL AS HONBLE HIGH COURT LD. FIRST APPELLATE AUTH ORITY HAS ALSO CANCELLED THE ASSESSMENT PROCEEDINGS ON THE POINT O F LIMITATION BEYOND THE EXPIRY OF 4 YEARS. WE ARE OF THE VIEW THAT NO I NTERFERENCE IS CALLED FOR IN THE FINDING GIVEN BY THE LD. FIRST APPELLATE AUT HORITIES BECAUSE THE REASSESSMENT PROCEEDINGS ARE NOT PERMISSIBLE WHICH IS BASED UPON CHANGE OF OPINION BECAUSE THE AO INITIATED THE REAS SESSMENT PROCEEDINGS ON THE BASIS OF AVAILABLE MATERIAL ON RECORD NO FRE SH MATERIAL WAS AVAILABLE FOR REOPENING THE ASSESSMENT OF THE ASSES SEE. 9. WE HAVE ALSO GONE THROUGH THE FINDING GI VEN BY THE LD. FIRST APPELLATE AUTHORITY ON MERIT ALSO. LD. FIRST APPELL ATE AUTHORITY HAS ALSO DISCUSSED THE ABOVE AND DELETED THE ADDITION IN DIS PUTE ON MERITS REGARDS THE CARRY FORWARD LOSSES IN DISPUTE AS DISC USSED IN THE FACTS OF THE PRESENT CASE THE DISALLOWANCES OF CARRY FORWARD LOSSES ARE NOT PERMISSIBLE UNDER THE LAW. SIMILARLY THE DISALLOWAN CES OF PRIOR PERIOD EXPENSES AMOUNTING TO RS. 16,27,161/- THE LD. FIRST APPELLATE AUTHORITY AFTER APPRECIATING THE DOCUMENTARY EVIDENCE OF THE ASSESSEE HAS HELD THAT THE SAID EXPENSES HAS ALREADY BEEN DISALLOWED BY THE ASSESSEE IN ITS RETURN OF INCOME FOR SUCCEEDING ASSTT. YEAR 2006-07 AS THE PRIOR PERIOD EXPENSES AND NO DEDUCTION HAS BEEN CLAIMED BY THE A SSESSEE FOR THIS EXPENSE IN ASSTT. YEAR 2006-07. TO SUPPORT IT IS FU RNISHED THE ASSESSEE HAS FILED ALL THE DOCUMENTARY EVIDENCE BEFORE THE A O AS WELL AS FIRST APPELLATE AUTHORITY AND THE LD. FIRST APPELLATE AUT HORITY HAS RIGHTLY DELETED THE ADDITION IN DISPUTE BY PASSING A REASON ED ORDER AS PER LAW 6 WITH THE SUPPORT OF VARIOUS DECISIONS RENDERED BY T HE HONBLE COURTS. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT NO IN TERFERENCE IS CALLED FOR IN THE WELL REASONED IMPUGNED ORDER PASSED BY THE L D. FIRST APPELLATE AUTHORITY AND WE UPHOLD THE IMPUGNED ORDER BY DISMI SSING THE APPEAL FILED BY THE REVENUE. 10. IN THE RESULT THE APPEAL FILED BY THE REVEN UE IS DISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 29 TH OCTOBER, 2014. SD/- SD/- (S.V. MEHROTRA) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: THE 29 TH OCTOBER, 2014 *VEENA COPY OF THE ORDER FORWARDED TO: 1.APPELLANT; 2.RESPONDENT; 3.CIT; 4.CIT(A); 5.DR; 6.GUARD FILE BY ORDER ASST. REGISTRAR