The ACIT, Circle-1, Bhavnagar V. The Saurashtra Salt Mfg. Co., Bhavnagar

ITA 2230/AHD/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6246 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 11 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 23-06-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 17-07-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ALBINUS TIRKEY
• Keywords: Non compliance
• Section: 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, A BENCH (BEFORE S/SHRI G.D. AGARWAL, VICE-PRESIDENT AND BHAVNESH SAINI, JUDICIAL MEMBER) ITA NO.2230/AHD/2009 [ASSTT. YEAR : 2003-2004] ACIT, CIR.1 BHAVNAGAR. VS. THE SAURASHTRA SALT MFG. CO. PLOT NO.1517 GHOGHA CIRCLE BHAVNAGAR. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI ALBINUS TIRKEY ASSESSEE BY : SHRI SUNIL TALATI O R D E R PER G.D. AGARWAL, VICE-PRESIDENT : THIS IS REVENUES APPEAL AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-XX, AHMEDABAD DATED 13.04.2009 FOR A.Y.20 03-2004 ARISING OUT OF THE ORDER OF THE AO UNDER SECTION 144 OF THE INCOME TAX ACT, 1961. 2. THE GROUNDS RAISED IN THIS APPEAL READ AS UNDER: 1. THE LD. CIT(A)-XX, AHMEDABAD HAS ERRED IN LAW A ND ON FACTS IN DIRECTING THE AO TO ALLOW THE SET OFF OF THE BRO UGHT FORWARD LOSS TO THE EXTENT OF THE CURRENT YEAR'S INCOME OF RS.6, 84,822/-, WITHOUT PROPERLY APPRECIATING THE FACTS OF THE CASE AND THE MATERIAL BROUGHT ON RECORD BY THE ASSESSING OFFICER. 1.2 IN DOING SO, THE LD. CIT(A)-XX, AHMEDABAD HAS E RRED IN LAW AND ON FACTS IN NOT APPRECIATING THAT, ON ACCOUNT O F THE NON COMPLIANCE OF THE PROVISIONS OF SECTION 184 OF THE ACT AS DISCUSSED IN DETAIL IN THE ASSESSMENT ORDER, THE ASSESSEE CON CERN WAS REQUIRED TO BE ASSESSED AS 'AOP' AND NOT AS 'FIRM' AND ACCORDINGLY THE ASSESSEE WAS NOT ENTITLED TO SET OFF OF THE BRO UGHT FORWARD LOSS OF RS.20,66,939/- AGAINST THE INCOME OF THE CURRENT YEAR. ITA NO.2230/AHD/2009 -2- 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM. FOR THE YEAR UNDER CONSIDERATION, THE AO DETERMINED THE TOTAL INCOME OF THE ASSESSEE AT RS.6,84,822/-. HE HOWEVER DENIED TO SE T OFF OF BROUGHT FORWARD LOSS AGAINST THIS INCOME ON THE GROUND THAT THE ASSESSEE DID NOT COMPLY WITH THE PROVISIONS OF SECTION 184 AND THERE FORE IT IS TO BE ASSESSED AS AN AOP. THE RELEVANT FINDINGS OF THE A O READ AS UNDER: 6. FURTHER ON ACCOUNT OF NON COMPLIANCE OF THE PRO VISIONS OF SEC. 184, THE CONCERN IS REQUIRED TO BE ASSESSED AS AOP AND NOT AS FIRM AND ACCORDINGLY THE ASSESSEE IS NOT ENTITLE O SET OFF BROUGHT FORWARD BUSINESS LOSS OF RS.20,66,939/- AGAINST INC OME OF THE CURRENT YEAR OF RS.6,84,822/-. PENALTY PROCEEDINGS U/S.271(1)(C) IS INITIATED FOR CONCEALMENT OF INCOME. ON APPEAL, THE CIT(A) DIRECTED THE AO TO ALLOW SET OFF OF THE CARRY FORWARD LOSS OF THE EARLIER YEAR. THE REVENUE AGGR IEVED WITH THE ORDER OF THE CIT(A) IS IN APPEAL BEFORE US. 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL PLACED BEFORE US. SECTION 185 OF THE IT ACT PROVIDES CONS EQUENCE OF NON- COMPLIANCE OF SECTION 184, WHICH READS AS UNDER: 185. ASSESSMENT WHEN SECTION 184 NOT COMPLIED WITH. NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PRO VISION OF THIS ACT, WHERE A FIRM DOES NOT COMPLY WITH THE PRO VISIONS OF SECTION 184 FOR ANY ASSESSMENT YEAR, THE FIRM SHALL BE SO ASSESSED THAT NO DEDUCTION BY WAY OF ANY PAYMENT OF INTEREST, SALARY, BONUS, COMMISSION OR REMUNERATION, BY WHATE VER NAME CALLED, MADE BY SUCH FIRM TO ANY PARTNER OF SUCH FI RM SHALL BE ALLOWED IN COMPUTING THE INCOME CHARGEABLE UNDER TH E HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION AND S UCH INTEREST, SALARY, BONUS, COMMISSION OR REMUNERATION SHALL NOT BE CHARGEABLE TO INCOME-TAX UNDER CLAUSE (V) OF SECTIO N 28. ITA NO.2230/AHD/2009 -3- 5. FROM THE ABOVE PERUSAL, IT IS CLEAR THAT IF THE ASSESSEE HAS FAILED TO COMPLY WITH THE PROVISIONS OF SECTION 184, THE FIRM SHALL BE ASSESSED AS A FIRM BUT NO DEDUCTION BY WAY OF PAYMENT OF INTEREST , SALARY, BONUS, COMMISSION OR REMUNERATION TO THE PARTNER SHALL BE ALLOWED. THUS, THE FINDINGS OF THE AO THAT SINCE THE ASSESSEE HAS NOT COMPLIED WITH THE PROVISIONS OF SECTION 184, IT WILL BE ASSESSED AS A OP AND THE SET OFF OF THE CARRY FORWARD OF THE LOSS OF THE EARLIER YEAR WOULD NOT BE APPLICABLE, IS CONTRARY TO THE PROVISIONS OF SECTION 185 OF THE IT ACT. IN VIEW OF THE ABOVE, WE UPHOLD THE ORDER OF THE CIT(A) AND DISMIS S THE APPEAL OF THE REVENUE. 6. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED . ORDER PRONOUNCED IN OPEN COURT ON 30 TH JUNE, 2011 SD/- SD/- (BHAVNESH SAINI) JUDICIAL MEMBER (G.D. AGARWAL) VICE-PRESIDENT PLACE : AHMEDABAD DATE : 30-06-2011 C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD