ACIT 7(3), MUMBAI V. TATA TELESERVICES (MAHARASHTRA) LTD, NAVI MUMBAI

ITA 2211/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78786 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2014
• Appeal Filed By: Department
• Bench Allotted: E
• Next Hearing Date: 30-04-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 03-04-2012
• Court: TRIBUNAL
• Department Lawyers: GIRIJA DAYAL
• Keywords: Bad and doubtful debts; Assessment record; Capital expenditure
• Section: 143(3); 260A; 263

Judgement Text

E IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIVEK VARMA, JM ./I.T.A. NO.2211/M/2012 ( / ASSESSMENT YEAR: 2005 - 2006 ) ACIT 7(3), R.NO.615, 6 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 20. / VS. TATA TELESERVICES (MAHARASHTRA) LTD, D - 26, TTC INDUSTRIAL AREA, MIDC, SANPADA, P.O. TURBHE, NAVI MUMBAI 400 703. ./ PAN : AAACN 4412 E ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI GIRIJA DAYAL, CIT - DR / RESPONDENT BY : SHRI NIKHIL TIWARI / DA TE OF HEARING : 30.04 .2014 / DATE OF PRONOUNCEMENT : 30.04 .2014 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE REVENUE ON 03.04.2012 IS AGAINST THE ORDER OF THE CIT (A) - 13, MUMBAI DATED 20.12.2011 FOR THE ASSESSMENT YEAR 2005 - 2006. 2. IN THIS APPEAL, REVENUE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) ERRED IN DELETING THE ADDITION MADE ON ACCOUNT OF EXPENSES INCURRED ON THE ISSUANCE OF FOREIGN CURRENCY CONVERTIBLE BONDS AND ALLOW ING DEDUCTION U/S 35D(1)(II) AFTER RELYING ON THE DECISION OF THE HONBLE ITATS ORDER IN ITA NO.1015/M/2008 IN ASSESSEES OWN CASE IGNORING THE FACT THAT THE DEPARTMENT HAS NOT ACCEPTED THE DECISION OF THE HONBLE ITAT AND AN APPEAL U/S 260A WAS FILED BEF ORE THE HONBLE BOMBAY HIGH COURT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) ERRED IN DELETING THE ADDITION MADE OF RS. 8,30,28,422/ - ON ACCOUNT OF FOREIGN CURRENCY CONVERTIBLE BONDS IGNORING THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF PUNJAB STATE INDUSTRIES CORPORATION LTD REPORTED IN 225 ITR 792 IN WHICH IT WAS HELD THAT THE EXPENDITURE INCURRED ON ISSUING SHARES FOR THE PURPOSE OF INCREASING THE SHARE CAPITAL BASE OF THE COMPANY IS TO BE TREATED A S CAPITAL EXPENDITURE. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) ERRED IN ALLOWING DEDUCTION U/S 35D(1)(II) OF RS. 6,62,35,596/ - IGNORING THE FACT THAT THE ASSESSEE COMPANY IS IN THE BUSINESS OF PROVIDING SERVICES WHIC H CANNOT BE CATEGORIZED AS INDUSTRIAL UNDERTAKING. 2 4. THE LD CIT (A)S ORDER IS PERVERSE IN LAW AND ON FACTS AND DESERVES TO BE SET ASIDE. 3. BEFORE US, AT THE OUTSET, LD COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE ABOVE MENTIONED GROUNDS AND S UBMITTED THAT THE ISSUE ARISE FROM THE GROUNDS REVOLVES AROUND THE CLAIM OF DEDUCTION U/S 35D(1)(II) OF THE ACT. THE SAID ISSUE WAS THE SUBJECT MATTER OF THE REVIEW ORDER OF THE CIT U/S 263 OF THE ACT. IN THIS REGARD, LD COUNSEL NARRATED THE BRIEF FACTS THAT THE APPEAL. I N THE PRESENT CASE , THE ASSESSEE FILED THE RETURN OF INCOME AND DECLARED THE LOSS OF RS. 5,27,10,59,930/ - . ASSESSMENT ORDER WAS PASSED BY REDUCING THE TOTAL LOSS TO RS. 5,05,47,18,630/ - . SUBSEQUENTLY, ON PERUSAL OF THE ASSESSMENT RECORDS , LD CIT FOUND THAT THE ASS ESSMENT ORDER WAS ERRONEOUS SO FAR AS IT WAS PREJUDICIAL TO THE INTEREST OF THE REVENUE IN CERTAIN ASPECTS. ACCORDINGLY, LD CIT PASSED ORDER U/S 263 OF THE ACT ON 3.12.2008. THUS, THE FRESH ASSESSMENT ORDER IS MADE U/S 143(3) RE AD WITH SECTION 263 OF THE ACT. AGGRIEVED WITH THE LD CITS DECISION, ASSESSEE FILED AN APPEAL BEFORE THE TRIBUNAL VIDE APPEAL ITA NO.1015/M/2008. WHILE ADJUDICATING THE ISSUE, THE ITAT HAS QUASHED THE REVIEW ORDER OF THE LD CIT MADE U/S 263 VIDE ITS ORDER DATED 11 TH FEBRUARY, 2011 AND PARA 13 OF THE SAID ORDER OF THE TRIBUNAL IS RELEVANT IN THIS REGARD. FOLLOWING THE SAID ORDER OF THE TRIBUNAL (SUPRA) , CIT (A) ALLOWED THE APPEAL OF THE ASSESSEE ON FRESH ASSESSMENT VIDE PARA S 2.2 AND 2.3 OF HIS ORDER DATED 20.12.2011. AGGRIEVED WITH THE DECISION OF THE CIT (A), REVENUE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE ABOVE MENTIONED GROUNDS. 4. ON PERUSAL OF THE ABOVE MENTIONED FACTS AS WELL AS THE ORDERS OF THE REVENUE AUTHORITIES IN GENERAL AND PARA S 2.2 & 2.3 OF THE CIT (A)S ORDER IN PARTICULAR, WHEREIN THE CIT (A) HAS GIVEN RELIEF TO THE ASSESSEE, IS RELEVANT AND THE SAME READS AS UNDER: 2.2. THE HONBLE ITAT IN THE APPELLANTS OWN CASE AGAINST THE ORDER OF LD CIT OF THE ORDER U/S 263 DATED 3/12/08 IN PARA 13 HAS HELD AS UNDER: THERE WAS NO ERROR IN THE ORDER OF THE AO PASSED U/S 143(3) ALLOWING THE CLAIM OF THE ASSESSEE FOR DEDUCTIONS ON ACCOUNT OF EXPENDITURE INCURRED ON THE ISSUE OF FCCBS, U/S 35D(1)(II) AND BAD DEBTS WRITTEN OFF A ND THE LD CIT WAS NOT JUSTIFIED IN REVISING THE ORDER OF THE AO ON THESE THREE ISSUES. WE, THEREFORE, SET ASIDE THE IMPUGNED ORDER PASSED U/S 263 REVISING THE ORDER OF THE AO ON THESE THREE ISSUES AND RESTORE THAT OF THE AO. 2.3. SINCE, THE HONBLE ITAT HAS SET ASIDE THE IMPUGNED ADDITIONS PROPOSED U/S 263, THE ORDER U/S 143(3) R.W.S 263 IN RESPECT OF THE AFORESAID ADDITIONS DOES NOT 3 STAND AND BECOMES INFRUCTUOUS. THE ADDITIONS MADE BY THE AO ON ACCOUNT OF THE AFORESAID GROUNDS IS DELETED. 5. CONSIDERING THE ABOVE, WE ARE OF THE OPINION THAT THE THERE IS NO INFIRMITY IN THE ORDER OF THE CIT (A) AND IT DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, GROUNDS RAISED BY THE REVENUE ARE DISMISSED . 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH APRIL, 2014. S D / - S D / - (VIVEK VARMA) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 30.4.2014 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI