Gujarat Gas Co. Ltd., Ahmedabad V. The ACIT., Circle-4, Ahmedabad

ITA 2209/AHD/2004

• Counselvise Citation: 220920514 RSA 2004
• Duration Of Justice: 8 year(s) 4 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 27-11-2012
• Assessment Year: 1996-1997
• Appeal Filed On: 08-07-2004
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHELLEY JINDAL
• Keywords: Reopening of assessment; Depreciation; Opportunity of being heard
• Section: 143(3); 234B; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A AHMEDABAD BEFORE SHRI, A.K.GARODIA, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER ITA NO.2209-2210/AHD/2004 ASSESSMENT YEARS :1996-97 & 1997-98 GUJARAT GAS CO. LTD., 2, SHANTISADAN SOCIETY, NR. PARIMAL GARDEN, ELLISBRIDGE, AHMEDABAD 380 006 [ PAN NO.AAACG 5600M ] GUJARAT GAS CO. LTD., 2, SHANTISADAN SOCIETY, NR. PARIMAL GARDEN, ELLISBRIDGE, AHMEDABAD 380 006 V/S . V/S . ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-4, AHMEDABAD JOINT COMMISSIONER OF INCOME TAX, SPECIAL RANGE-8, (NOW ACIT, CIRCLE-4, AHMEDABAD / APPELLANT .. / RESPONDENT) /BY ASSESSEE SHRI SANJAY R SHAH, AR /BY REVENUE SHRI SHELLEY JINDAL, CIT-DR /DATE OF HEARING 27-11-2012 ! /DATE OF PRONOUNCEMENT 30-11-2012 ' ' ' ' / // / O R D E R PER KUL BHARAT, JUDICIAL MEMBER:- THESE TWO APPEALS OF THE ASSESSEE ARE DIRECTED AGAI NST DIFFERENT ORDERS OF COMMISSIONER OF INCOME-TAX (APPEALS)-X, A HMEDABAD ITA NO.2209-10/AHD/2004 A.Y.S 96-97 & 9 7-98 GUJARAT GAS CO. LTD. V. ACIT, CIR-4, ABD PAGE 2 (CIT(A) FOR SHORT) OF DATED 25-03-2004 PERTAINING TO ASSESSMENT YEARS (AY) 1996-97 & 1997-98. SINCE THE COMMON ISSUES ARE INVOLVED BOTH ARE TAKEN UP TOGETHER AND ARE BEING DISPOSED OF BY WAY OF CONSOLIDATE ORDER. FIRST WE TAKE UP ITA NO.2209/AHD/2004 A.Y 96-97. 2. THE ASSESSEE HAS RAISED FOLLOWING CONCISE GROUND S OF APPEAL:- 1. THE ORDER PASSED BY THE LEARNED AO U/S. 143(3) R.W.S. 147 & CONFIRMED BY THE CIT(A) IS BAD IN LAW. THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE RE-OPENING OF ASSESSMENT U/ S.1 47 OF THE INCOME-TAX ACT MADE BY THE ASSESSING OFFICER. APPEL LANT SUBMITS THAT IT HAS FURNISHED ALL THE INFORMATION AND DETAI LS ALONG WITH THE RETURN OF INCOME AND ALSO DURING THE COURSE OF ORIG INAL ASSESSMENT PROCEEDINGS. THE REOPENING DONE ON THE BASIS OF CHA NGE OF OPINION IS BAD IN LAW. IT BE SO HELD NOW. 2. THE LD. CIT(APPEALS) ERRED IN CONFIRMING THE ORD ER OF THE LEARNED AO AS REGARDS NON-GRANTING OF DEPRECIATION OF RS.6, ,59,76,000/- ON THE ASSETS LEASED TO RAJASTHAN STATE ELECTRICITY BO ARD (RSEB) (A STATE GOVERNMENT UNDERTAKING, FORMED UNDER THE STAT E ELECTRICITY SUPPLY ACT) ON THE GROUND THAT THE AGREEMENTS MADE WITH RSEB IS NOTHING, BUT A DEVISE OF TAX AVOIDANCE AND TOTALLY INCORRECT. WITHOUT PREJUDICE, YOUR APPELLANT SUBMITS THAT IF T HE LEASE TRANSACTIONS ARE NOT ACCEPTED AS GENUINE, THEN THE LEASE RENT RECEIVED OF RS.1,97,54,406/- FROM RAJASTHAN STATE E LECTRICITY BOARD WHICH HAS BEEN OFFERED TO TAX SHOULD BE EXCLU DED WHILE COMPUTING THE INCOME. YOUR APPELLANT SUBMITS THAT I T BE SO HELD NOW. WITHOUT PREJUDICE TO ABOVE, YOUR APPELLANT SUBMITS THAT IN THAT EVENT, WHAT IS TAXABLE WOULD BE ONLY INTEREST PORTI ON INCLUDED IN THE LEASE RENT AND DEEMED PRINCIPAL AMOUNT OF RECOVERY INCLUDED IN THE RENT RECEIVED SHOULD HAVE BEEN EXCLUDED. IT BE SO HELD NOW. 3. THE LD. CIT(A) ERRED IN CONFIRMING THE ORDER OF THE AO AS REGARDS NON-GRANTING OF DEPRECIATION OF RS.49,36,93 8/- ON THE ASSETS LEASED TO RAJINDER STEEL LTD. EVEN THOUGH A LL THE EVIDENCES ITA NO.2209-10/AHD/2004 A.Y.S 96-97 & 9 7-98 GUJARAT GAS CO. LTD. V. ACIT, CIR-4, ABD PAGE 3 INCLUDING THE LEASE AGREEMENT WEE FILED WITH BOTH T HE LOWER AUTHORITIES TO PROVE GENUINENESS OF THE LEASE TRANS ACTION. 3.1 THE LD. CIT(A) ERRED IN CONFIRMING THE DISALLOW ANCE OF DEPRECIATION OF RS.49,36,939 ON THE GROUND THAT IT IS A CASE OF SALE AND LEASE BACK TRANSACTION AND THAT THE AGREEMENT M ADE WITH RAJINDER STEEL LTD., IS NOTHING, BUT A DEVICE OF TA X AVOIDANCE. YOUR APPELLANT SUBMITS THAT IT HAS PURCHASED THE VARIOUS ASSETS FROM DIFFERENT COMPANY IN EARLIER YEAR AND LEASED TO RAJ INDER STEEL LTD. 4. THE LD. CIT(A) HAS ERRED IN NOT DECIDING THE GRO UND FOR CHARGING INTEREST U/S. 234B. IT IS SUBMITTED THAT IN THE FAC TS AND CIRCUMSTANCES OF THE CASE, PROVISIONS OF CHARGING I NTEREST U/S. 234B IS NOT APPLICABLE. IT IS SUBMITTED THAT IT BE SO HELD NOW. 3. THE FIRST GROUND IS AGAINST THE RE-OPENING OF TH E ASSESSMENT U/S. 147 OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERR ED TO AS THE ACT). LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT RE-OPENING IS BAD IN LAW. ON THE CONTRARY, LD. CIT-DR SUPPORTED THE ORDERS OF AUTHOR ITIES BELOW. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. DURING THE COURSE OF HEARING A QUERY WAS RAISED TO LD. COUNSEL FOR THE ASSESSEE WHETHER THE OBJECTION AGAINST RE-OPENING ASSESSMENT WAS RAISED BEFORE THE ASSESSING OFFICER OR NOT, LD. AR SUBMITTED THAT NO OBJECTION WAS RAISED. THE HONBLE SUPREME COURT IN THE CASE OF GKN DRIVESHAFTS (INDIA) LTD. V. ITO AND OTHERS (2003) 259 ITR 19 (SC) HAS HELD THAT WHEN A NOTICE UNDER SECTI ON 148 OF THE INCOME-TAX ACT, 1961, IS ISSUED, THE PROPER COURSE OF ACTION FOR THE NOTICEE IS TO FILE THE RETURN AND, IF HE SO DESIRES , TO SEEK REASONS FOR ISSUING THE NOTICE. THE ASSESSING OFFICER IS BOUND TO FURNISH REASONS WITHIN A REASONABLE TIME. ON RECEIPT OF REASONS, TH E NOTICEE IS ENTITLED TO FILE OBJECTIONS TO ISSUANCE OF NOTICE AND THE ASSES SING OFFICER IS BOUND TO DISPOSE OF THE SAME BY PASSING A SPEAKING ORDER. IN THE CASE IN HAND, ITA NO.2209-10/AHD/2004 A.Y.S 96-97 & 9 7-98 GUJARAT GAS CO. LTD. V. ACIT, CIR-4, ABD PAGE 4 THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE IS THAT NO REASON WAS SUPPLIED TO THE ASSESSEE. THEREFORE, NO OBJECTION C OULD BE FILED. AFTER CONSIDERING ALL THE ASPECTS OF THE MATTER AND FOLLO WING THE RATIO LAID IN THE CASE OF GKN DRIVESHAFTS (INDIA) LTD. (SUPRA) THIS GROUND OF ASSESSEES APPEAL IS REMITTED BACK TO THE FILE OF ASSESSING OF FICER TO DECIDE AFRESH AFTER SUPPLYING THE REASONS OF RE-OPENING AND THE A SSESSEE WOULD BE ENTITLED TO FILE OBJECTIONS AGAINST THE REASONS OF RE-OPENING. THIS GROUND OF ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PUR POSES AS INDICATED ABOVE. NEEDLESS TO SAY THAT AO WOULD AFFORD REASONA BLE OPPORTUNITY OF BEING HEARD TO ASSESSEE. 5. REMAINING GROUNDS DO NOT CALL FOR ANY ADJUDICAT ION AT THIS STAGE AS THE GROUND AGAINST REOPENING OF ASSESSMENT HAS B EEN REMITTED BACK TO THE FILE OF ASSESSING OFFICER FOR FRESH DECISION . THEREFORE, THE REMAINING GROUNDS ARE HEREBY RESTORED BACK TO THE F ILE OF ASSESSING OFFICER FOR DECIDING THESE ISSUES AFRESH AFTER PROV IDING REASONABLE OPPORTUNITY OF BEING HEARD TO ASSESSEE. 6. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. COMING TO ITA NO. 2210/AHD/2004 (A.Y. 97-98) 7. IT IS SUBMITTED BY LD. COUNSEL FOR THE ASSESSEE THAT THE DECISION IN ITA NO.2209/AHD/2004 WILL HAVE BEARING ON THIS APPEAL AS ONE OF THE MAJOR GROUND IS REGARDING DISALLOWANCE OF DEPRECIAT ION OF ON ASSETS LOAN TO RAJINDER STEEL LTD. THIS SUBMISSION IS NOT CONTR OVERTED BY LD. CIT-DR. IN THIS VIEW OF THE MATTER, THIS APPEAL IS ALSO RES TORED BACK TO THE FILE OF ASSESSING OFFICER TO DECIDE AFRESH AFTER GIVING REA SONABLE OPPORTUNITY OF ITA NO.2209-10/AHD/2004 A.Y.S 96-97 & 9 7-98 GUJARAT GAS CO. LTD. V. ACIT, CIR-4, ABD PAGE 5 BEING HEARD TO THE ASSESSEE. THIS GROUND OF ASSESSE ES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. SINCE THE MATTER IS GOING BACK TO THE FILE OF AO FOR A MAJOR ISSUE, ALL OTHER ISSUES ALSO ARE RESTORED BACK TO HIM FOR A FRESH DECISION AFTER PROVIDING ADEQUATE OPPORTUNI TIES TO THE ASSESSEE. 8. IN THE RESULT, ASSESSEE APPEAL IS ALLOWED FOR S TATISTICAL PURPOSES. 9. IN COMBINED RESULT, BOTH THE APPEAL OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE AT CAPTION PAGE. SD/- SD/- (A.K.GARODIA) (KUL BHARAT) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD, *DKP #$%- 30/11/2012 +,- . ' ' ' ' //0 //0 //0 //0 10 10 10 10 / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. $-$/3 4 / CONCERNED CIT 4. 4- / CIT (A) 5. 0 78 ///3, /3!, +,- / DR, ITAT, AHMEDABAD 6. 8;< => / GUARD FILE. BY ORDER/ ' , /TRUE COPY/ ?/+ $ /3!, +,- . STRENGTHEN PREPARATION & DELIVERY O F ORDERS IN THE ITAT 1) DATE OF TAKING DICTATION 27/11 2) DIRECT DICTATION BY MEMBER STRAIGHT ON COMPUTER/LAPTOP/DRAGON DICTATE NO 3) DATE OF TYPING & DRAFT ORDER PLACE BEFORE MEMBER 27/11 4) DATE OF CORRECTION 29/11 5) DATE OF FURTHER CORRECTION 6) DATE OF INITIAL SIGN BY MEMBERS 29/11 7) ORDER UPLOADED ON 30/11 8) ORIGINAL DICTATION PAD-PART HAS BEEN ENCLOSED IN THE FILE YES 9) FINAL ORDER AND 2 ND COPY SEND TO BENCH CLERK ON 30/11