Asst. Commissioner of Income Tax, Circle-1, Kadapa V. Zuari Cement Limited , Kadapa

ITA 2235/Hyd/2018

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 2763 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 6 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-06-2021
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 16-06-2021
• Assessment Year: 2007-2008
• Appeal Filed On: 03-12-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: CHYTHANYA K K
• Assessee Lawyers: P CHANDRA SEKHAR
• Keywords: Depreciation; Additional evidence; Unabsorbed depreciation; Set aside
• Section: 143(3)

Judgement Text

ITA NO 2235 OF 2018 ZUARI CEMENT LTD KADAPA PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD (THROUGH VIDEO CONFERENCING) BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NO 2235./HYD/2018 ASSESSMENT YEAR: 2007-08 ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-1 KADAPA VS. M/S. ZUARI CEMENT LTD KADAPA PAN: AAACZ1270E (APPELLANT) (RESPONDENT) ASSESSEE BY: SRI P. CHANDRA SEKHAR REVENUE BY : SRI CHYTHANYA K.K. DR DATE OF HEARING: 16/06/2021 DATE OF PRONOUNCEMENT: 23/06/2021 ORDER PER SMT. P. MADHAVI DEVI, J.M. THIS IS REVENUES APPEAL FOR THE A.Y 2007-08 AGAINS T THE ORDER OF THE CIT (A)-KURNOOL, DATED 6.9.2018. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY WHICH IS INTO MANUFACTURE AND TRADING OF CEMENT, FI LED ITS RETURN OF INCOME THROUGH E-FILING FOR THE A.Y 2007-08 ON 31.10.2007 DECLARING TOTAL INCOME AT RS.NIL AFTER SETTING OF F OF BROUGHT FORWARD BUSINESS LOSSES AND UNABSORBED DEPRECIATION TO THE EXTENT OF RS.226,10,69,195/-. HOWEVER, THE ASSESSEE HAS PAID MINIMUM ALTERNATE TAX (MAT) OF RS.17,08,71,924/-. 3. DURING THE ASSESSMENT PROCEEDINGS U/S 143(3) OF THE ACT, THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO PROVE THE ITA NO 2235 OF 2018 ZUARI CEMENT LTD KADAPA PAGE 2 OF 6 GENUINENESS OF THE EXPENDITURE CLAIM TO THE EXTENT OF RS.3,78,84,583/-. SINCE THE ASSESSEE COULD NOT SUBS TANTIATE THE SAID EXPENSES WITH EVIDENCE, THE ASSESSING OFFICER MADE THE ADDITION OF RS.3,78,84,583/-. SIMILARLY, HE ALSO MA DE AN ADDITION OF RS.2,85,57,298/- BEING THE EXPENDITURE UNDER THE HEAD CONSUMPTION OF STORES AND SPACE. THE ASSESSING OF FICER MADE SIMILAR OTHER ADDITIONS, THE TOTAL OF WHICH CAME TO RS.17,07,94,505/-. 4. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFO RE THE CIT (A) WHO GRANTED PARTIAL RELIEF AGAINST WHICH BO TH THE PARTIES FILED APPEALS BEFORE THE ITAT. THE REVENUE HAD FILE D APPEAL IN ITA NO.1057/HYD/2012, WHILE THE ASSESSEE FILED CROSS OB JECTION NO.120/HYD/2012 AND VIDE ORDERS DATED 31.10.2012, I TAT SET ASIDE THE ISSUE TO THE FILE OF THE CIT (A) FOR RE-E XAMINATION OF THE ISSUE AFRESH AFTER CALLING FOR A REMAND REPORT FROM THE ASSESSING OFFICER FOR VERIFICATION OF THE DETAILS FILED BY TH E ASSESSEE IN RESPECT OF THE EXPENSES CLAIMED. 5. ACCORDINGLY, THE MATTER WAS TAKEN UP BY THE CIT (A), BEFORE WHOM, THE ASSESSEE FILED AN APPLICATION FOR ADMISSION OF ADDITIONAL EVIDENCE. THE CIT (A) CALLED FOR ASSESSI NG OFFICERS COMMENTS ON THIS PETITION AND THE ASSESSING OFFICER OBJECTED TO THE ADMISSION OF THE ADDITIONAL EVIDENCE. THE ASSES SEE HAD ALSO FILED THE ADDITIONAL EVIDENCE BEFORE THE CIT (A), B UT NO REMAND REPORT WAS CALLED FOR FROM THE ASSESSING OFFICER ON SUCH ADDITION AND BY OBSERVING THAT THE ASSESSING OFFICER HAS NOT COMMENTED ADVERSELY AGAINST THE ADDITIONAL EVIDENCE, THE CIT (A) GRANTED PARTIAL RELIEF AND THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE FOLLOWING GROUNDS OF APPEAL: ITA NO 2235 OF 2018 ZUARI CEMENT LTD KADAPA PAGE 3 OF 6 1. THE ORDER OF THE LEARNED CIT (A) IS ERRONEOUS B OTH ON FACTS AND IN LAW. 2. THE LEARNED CIT (A) ERRED IN NOT FOLLOWING THE D IRECTIONS OF THE HON'BLE ITAT, HYDERABAD GIVEN IN ITS ORDER I N ITA NO.1057/HYD/2011-12 DATED 31.10.2012 IN THE ASSESSEES CASE FOR THE ABOVE YEAR IN GRANTING RELI EF OF RS.17.07 CRORES. THE HON'BLE ITAT IN THE ABOVE REFE RRED ORDER SPECIFICALLY STATED THAT THE CIT (A) GROSSLY ERRED IN NOT CALLING FOR REMAND REPORT FROM THE ASSESSING OF FICER AS THE ASSESSEE HAD PRODUCE DETAILS OF EXPENSES AND AL SO EVIDENCES LIKE BILLS, VOUCHERS ETC., BEFORE THE CIT (A) AND THE CIT (A) OUGHT TO HAVE REMANDED THEM TO THE ASSE SSING OFFICER FOR HIS OPINION UNDER RULE 46A OF THE ACT. IN THESE CIRCUMSTANCES, WE REMIT THE MATTER TO THE FILE OF T HE CIT (A) WITH A DIRECTION TO CALL FOR THE REMAND REPORT FROM THE ASSESSING OFFICER AND DECIDE THE ISSUE AFTER EXAMIN ING THE REMAND REPORT OF THE ASSESSING OFFICER AND IN ACCOR DANCE WITH THE LAW AFTER PROVIDING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. THE ASSESSEE HASNT PRODU CED ANY BILLS OR VOUCHERS BEFORE THE ASSESSING OFFICER FOR VERIFICATION WHICH WERE PRODUCED BEFORE THE CIT (A) . THE CIT (A) ONCE AGAIN GIVEN THE RELIEF WITHOUT ANY REM AND REPORT FROM THE ASSESSING OFFICER ON THIS ISSUE, WH ICH IS CONTRARY TO THE SPECIFIC DIRECTIONS OF THE HON'BLE ITAT. 3. THE LEARNED CIT (A) ERRED IN DIRECTING THE ASSES SING OFFICER TO ALLOW DEPRECIATION ON GOODWILL VALUES AT RS.179CRS WHICH WASNT SUBJECT MATTER OF APPEAL REM ITTED BACK BY THE HON'BLE ITAT TO THE CIT (A). THE POWERS OF THE CIT (A) ARE LIMITED ONLY TO THE ISSUES REMITTED BAC K BY THE ITAT AND THE CIT (A) CANNOT ENHANCE THE SCOPE OF AP PEAL & ADMIT THE NEW RELIEF WHICH IS NOT SUBJECT MATTER OF APPEAL BEFORE THE ITAT. RELIANCE IS PLACED ON THE JURISDIC TIONAL HON'BLE A.P HIGH COURT IN THE CASE OF PULIPATHI SUB BARAO & CO. VS. AAC 35 ITR 673 AND THE HON'BLE M.P HIGH COU RT DECISION IN THE CASE OF CIT VS. HOPE TEXTILES LTD ( 1997) 225 ITR 993. 4. THE CIT (A) FAILED TO APPRECIATE THE HON'BLE SUP REME COURT DECISION IN THE CASE OF HUKUMCHAND MILLS LTD VS. CIT 63 ITR 232 THAT POWER OF TRIBUNAL IS RESTRICTED TO THE SUBJECT MATTER OF APPEAL ALONE THE WORDS THEREON RESTRICTS THE JURISDICTION. HENCE, WHEN ITAT REMITS AN ISSUE TO THE CIT (A), HE WILL HAVE SAME POWERS OR RESTRICTIONS AS THE ITAT AND HIS POWERS ARE RESTRIC TED TO SUBJECT MATTER OF APPEAL REMITTED BACK BY THE ITAT AND HE CANNOT HAVE MORE POWERS THAN ITAT. 5. THE CIT (A) FAILED TO APPRECIATE THE HON'BLE SUP REME COURT DECISION IN THE CASE OF ADDL.CIT VS. GURJAGRA VURES PVT LTD 111 ITR 1 THAT WHEN A CLAIM OF EXEMPTION NO T MADE BEFORE ITO NO MATERIAL ON RECORD SUPPORTING SU CH ITA NO 2235 OF 2018 ZUARI CEMENT LTD KADAPA PAGE 4 OF 6 CLAIM AAC CANNOT ENTERTAIN SUCH CLAIM IN APPEAL PROCEEDINGS. 6. THE LEARNED CIT (A) ERRED IN NOT FOLLOWING THE B INDING DECISION OF THE SUPREME COURT THAT ASSESSEE WAS NOT ENTITLED TO CLAIM EXEMPTION WHICH WAS NOT MADE IN T HE RETURN AS HELD IN THE CASE OF CIT VS. GOETZE INDIA LTD BY DIRECTING THE ASSESSING OFFICER TO ALLOW DEPRECIATI ON ON GOODWILL. IN THIS CASE THE ASSESSEE NOT CLAIMED ANY DEPRECIATION ON GOODWILL IN THE RETURN OF INCOME FI LED. 7. WHETHER CIT(A) IS RIGHT IN DIRECTING THE ASSESSI NG OFFICER TO ALLOW THE DEPRECIATION ON THE GOODWILL, UNDER TH E FACTS AND CIRCUMSTANCES OF THE CASE. 8. WHETHER THE CIT (A) IS RIGHT IN NOT CONSIDERING THE ASSESSING OFFICERS REQUEST VIDE LETTER DATED 19.11 .2015 AND CIT (A)S LETTER DATED 25.01.2016 ISSUED TO THE ASSESSEE FOR RECTIFICATION OF APPARENT MISTAKES IN COMPUTATION OF INCOME/OTHER ISSUES WHICH ARE ARISIN G OUT OF ORIGINAL ASSESSMENT PROCEEDINGS ON THE GROUND TH AT HE DID NOT INTEND TO TRAVEL BEYOND THE MATTERS ARISING OUT OF ASSESSMENT PROCEEDINGS AND AT THE SAME TIME ADMITTI NG THE ASSESSEES NEW GROUND OF RELIEF VIZ., ALLOWING OF DEPRECIATION OF GOODWILL WHICH IS ALSO NOT ARISING OUT OF ORIGINAL ASSESSMENT PROCEEDINGS. 9. ANY OTHER ADDITIONAL GROUND THAT MAY BE URGED AT THE TIME OF APPEAL HEARING. 6. THE LEARNED DR SUBMITTED THAT IN RESPECT OF THE EVIDENCE FILED BY THE ASSESSEE IN SUPPORT OF THE EX PENDITURE WHICH HAVE BEEN DISALLOWED BY THE ASSESSING OFFICER, NO V ERIFICATION HAS BEEN DONE BY THE ASSESSING OFFICER. THEREFORE, THE CIT (A) HAS NOT FOLLOWED THE DIRECTIONS OF THE ITAT AND HENCE THE R ELIEF GRANTED BY THE CIT (A) CANNOT BE SUSTAINED. 7. THE LEARNED COUNSEL FOR THE ASSESSEE SUPPORTED T HE ORDERS OF THE CIT (A). 8. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, WE FIND THAT IN THE APPEAL PROCEEDINGS B EFORE THE ITAT, THE ITAT HAD TAKEN NOTE OF THE EVIDENCE FILED BY TH E ASSESSEE AND ITA NO 2235 OF 2018 ZUARI CEMENT LTD KADAPA PAGE 5 OF 6 ALSO THAT THE ASSESSING OFFICER HAS NOT VERIFIED SU CH EVIDENCE. THEREFORE, ITAT THOUGHT IT FIT AND PROPER TO REMAND THE ISSUE TO THE FILE OF THE CIT (A) AND DIRECTED HIM TO CALL FO R A REMAND REPORT FROM THE ASSESSING OFFICER ON THE EVIDENCE FILED BY THE ASSESSEE. WE FIND THAT IN THE REMAND PROCEEDINGS BEFORE THE C IT (A) , THE ASSESSEE HAD FILED AN APPLICATION FOR ADMISSION OF ADDITIONAL EVIDENCE AND ALSO THE ADDITIONAL EVIDENCE. HOWEVER, THE CIT (A) HAD CALLED FOR THE COMMENTS OF THE ASSESSING OFFICE R ONLY ON THE PETITION FOR ADMISSION FOR ADDITIONAL EVIDENCE AND DID NOT FORWARD THE ADDITIONAL EVIDENCE TO THE ASSESSING OFFICER AN D THEREFORE, THE ASSESSING OFFICER HAS SUBMITTED HIS REMAND REPORT O NLY ON THE PETITION FOR ADMISSION OF THE ADDITIONAL EVIDENCE. THUS, IT IS CLEAR THAT THE ADDITIONAL EVIDENCE HAS NOT BEEN VERIFIED EITHER BY THE ASSESSING OFFICER OR THE CIT (A) AND HENCE THE DIRE CTIONS OF THE ITAT HAVE NOT BEEN FOLLOWED IN ITS LETTER AND SPIRI T. THEREFORE, WE DEEM IT FIT AND PROPER TO REMAND THE ISSUE TO THE F ILE OF THE ASSESSING OFFICER FOR VERIFICATION AND DENOVO CONS IDERATION OF THE ISSUE IN ACCORDANCE WITH LAW. ALL THE CONTENTIONS O F THE ASSESSEE WHICH ARE RAISED BEFORE THE TRIBUNAL ARE LEFT OPEN AND THE ASSESSEE IS AT LIBERTY TO MAKE SUCH CLAIMS BEFORE T HE ASSESSING OFFICER, WHO SHALL DECIDE THE SAME IN ACCORDANCE WI TH LAW. 9. IN THE RESULT, REVENUES APPEAL IS TREATED AS AL LOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD JUNE, 2021. SD/- SD/- (A. MOHAN ALANKAMONY) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 23 RD JUNE, 2021. VINODAN/SPS ITA NO 2235 OF 2018 ZUARI CEMENT LTD KADAPA PAGE 6 OF 6 COPY TO: S. NO ADDRESS ES 1 ACIT, CIRCLE-1 AAYAKAR BHAVAN, NO.2-430-8 NAGARAJ UPET, KADAPA 2 M/S.ZUARI CEMENTS LTD, KRISHNA NAGAR, YERRAGUNTLA , YSR KADAPA DISTRICT 516311 3 CIT (A ) KURNOOL 4 PR. CIT KURNOO L 5 DR, ITAT HYDERABAD BENCHES 6 GUARD FILE BY ORDER