ITO, New Delhi V. M/s Visisth Chay Vyapar Ltd, New Delhi

ITA 2325/DEL/2009

• Counselvise Citation: [2010] 119 COUNSELVISE.COM (IT) 5545 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2010
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: H
• Next Hearing Date: 08-02-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 29-05-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V K TIWARI
• Assessee Lawyers: PREMJIT S KASHYAP
• Keywords: Depreciation; Unabsorbed depreciation
• Section: 143(3); 115JB; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH H DELHI BEFORE SHRI K.G. BANSAL AND SHRI GEORGE MATHAN ITA NO. 2325(DEL)/2009 ASSESSMENT YEAR: 2006-07 INCOME-TAX OFFICER, M/ S VISISTH CHAY VYAPAR LTD., WARD 17(4), NEW DELHI VS. 137, ANAR KALI COMPLEX, JHANDEWALAN, NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI V.K. TIWARI, CIT, DR RESPONDENT BY : SHRI PREMJIT S. K ASHYAP, C.A. ORDER PER K.G. BANSAL : AM THIS APPEAL OF THE REVENUE EMANATES FROM THE O RDER OF THE CIT(APPEALS)-XIX, NEW DELHI, PASSED ON 30.3.2009 IN APPEAL NO. 49/2008-09 AND IT PERTAINS TO ASSESSMENT YEAR 2006-07. THE CORRESPONDING ORDER WAS FRAMED BY THE INCOME-TAX OFFICER, WARD 17(4), NEW DELHI, ON 22.10.2008 UNDER THE PROVISIONS OF SECTION 154 OF THE INCOME-TAX ACT, 1961. THE REVENUE HAS TAKEN TWO GROUNDS TO THE EFFECT THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. CIT(APPEALS) ERRED IN ALLOWING (I) SET OFF OF BROUGHT FORWARD LOSSES WHILE COMPUTING INCOME U/S 115JB OF THE INCOME -TAX ACT, 1961; AND (II) CREDIT OF THE AMOUNT OF RS. 3,23,84,667/- I N RESPECT OF TAX DEDUCTED AT SOURCE. ITA NO. 2325(DEL)/2009 2 2. IN THE COURSE OF HEARING BEFORE US, THE LD. D R FURNISHED WRITTEN SUBMISSIONS FROM THE ASSESSING OFFICER DATED 2 3.10.2009 AND 4.12.2009. IN REPLY, THE LD. COUNSEL FOR THE ASSESSEE AL SO FURNISHED WRITTEN SUBMISSIONS, ENCLOSING THEREWITH INTER-ALIA A COPY OF LETTER DATED 4.12.2010 ADDRESSED TO THE AO. THE RESPECTIVE ARGUMENTS WERE BASED UPON THESE WRITTEN SUBMISSIONS. 3. IN REGARD TO GROUND NO 1, THE BRIEF HISTORY OF THE CASE WAS NARRATED IN ASSESSING OFFICERS LETTER DATED 2 3.10.2009. IT WAS MENTIONED THAT THE ASSESSEE HAD ADVANCED A LO AN TO SHAW WALLACE & CO. ( SWC FOR SHORT) AND IT WAS CLAIMED THAT T HE LOAN BECAME A NON- PERFORMING ASSET (NPA FOR SHORT). THE INTERE ST WAS BEING ACCOUNTED FOR ON MERCANTILE SYSTEM OF ACCOUNTING, BUT I N VIEW OF THE FACT THAT THE PRINCIPAL AMOUNT ITSELF BECAME NPA, INTEREST WAS NOT ACCOUNTED FOR IN THE BOOKS FOR ASSESSMENT YEAR 2000-01 AND ONW ARDS. THE DISPUTE BETWEEN THE ASSESSEE AND THE SWC WAS SETTLE D IN THIS YEAR UNDER WHICH THE ASSESSEE RECEIVED INTEREST OF RS. 20,47,5 9,064/-. OUT OF THIS, AN AMOUNT AGGREGATING TO RS. 10,27,87,690/- HAD ALR EADY BEEN ACCOUNTED FOR ON MERCANTILE BASIS. THUS, THE BALANCE AMOUN T OF RS. 10,19,71,454/- WAS ACCOUNTED FOR IN THIS YEAR AND THE SAME W AS SET OFF AGAINST THE ITA NO. 2325(DEL)/2009 3 BROUGHT FORWARD LOSSES, THEREBY COMPUTING THE INCOME AT NIL. THE ASSESSEE ALSO CLAIMED CREDIT FOR TAX DEDUCTED A T SOURCE AMOUNTING TO RS. 3,25,60,596/-, OUT OF WHICH A SUM OF RS. 3,23,84 ,667/- WAS DEDUCTED BY THE SWC. THIS RETURN WAS PROCESSED ON 2 9.1.2008. THE ASSESSEE APPLIED FOR RECTIFICATION OF THE INTIMATION UND ER THE PROVISION OF SECTION 154. THE INTIMATION WAS RECTIFIED ON 9.4.2008, IN WHICH CREDIT OF THE TDS MADE BY THE SWC WAS GRANTED. THEREAFTER, ONE MORE ORDER WAS PASSED U/S 154 IN WHICH SUCH CREDIT WAS REFU SED. THE BOOK PROFIT WAS ALSO TAKEN AT RS. 10,60,94,379/-. THE CASE WAS PICKED UP FOR SCRUTINY AND ORDER U/S 143(3) WAS PASSED ON 29.12.2008. AS MENTIONED EARLIER, INTEREST INCOME OF RS. 10,19,71,454/- WAS DECL ARED IN THIS RETURN AS INTEREST FROM THE SWC. THIS AMOUNT WAS TAX ED ON PROTECTIVE BASIS. SET OFF FOR THE CARRIED FORWARD WAS ALSO ALL OWED, THUS, RESULTING IN NIL TOTAL INCOME. HOWEVER, CREDIT FOR TDS WAS NO T ALLOWED AND THE BOOK PROFIT WAS ASSESSED AT RS. 12,90,36,466/-. IN THE CONTEXT OF AFORESAID FACTS, IT WAS MENTIONED THAT THE GRIEVANCE OF TH E ASSESSEE WAS SETTLED WHEN THE ORDER WAS PASSED U/S 143(3) ON 29 .12.2008 ALLOWING THE SET OFF OF BROUGHT FORWARD LOSSES OF RS. 10,60,94,37 9/-, PERTAINING TO ASSESSMENT YEARS 1998-99 AND 1999-00. IN VIEW O F THE AFORESAID SUBMISSION, THE CASE OF THE LD. DR WAS THAT SI NCE THE GRIEVANCE OF THE ITA NO. 2325(DEL)/2009 4 ASSESSEE STOOD SETTLED, GROUND NO. 1 OF THE APPEA L OF THE REVENUE COULD BE DECIDED ACCORDINGLY. IN REPLY, THE LD. COUNS EL RELIED ON THE ORDER OF THE LD. CIT(APPEALS). IN THE ORDER, IT IS MENTIONED THAT THE AO HAS NOT GIVEN ANY PROPER REASONS FOR NOT ALLOWING THE BROUG HT FORWARD LOSS ALTHOUGH THE SAME HAD BEEN ALLOWED IN COMPUTING THE TOTA L INCOME U/S 143(3). SINCE THE BROUGHT FORWARD LOSSES HAD BEEN ASC ERTAINED, THERE WAS NO REASON NOT TO ALLOW THE SAME BY WAY OF A RECTIF ICATION ORDER. 3.1 WE HAVE CONSIDERED THE FACTS OF THE CASE A ND RIVAL SUBMISSIONS. CLAUSE (III) OF EXPLANATION-I TO SECTION 115JB REQUIRES THAT THE BOOK PROFIT IN PROFIT AND LOSS ACCOUNT PREPARED AS PER COMPANIES ACT HAS TO BE REDUCED BY THE AMOUNT OF LOSS BROUGHT FORWA RD OR UNABSORBED DEPRECIATION, WHICHEVER IS LESS, AS PER THE BOO KS OF ACCOUNT. THE ORDER OF THE LD. CIT(APPEALS) DOES NOT MENTION ABOUT THE BROUGHT FORWARD DEPRECIATION AS PER BOOKS. FURTHER, IT IS MENTI ONED THAT THE BROUGHT FORWARD LOSSES HAS BEEN ASCERTAINED AND DETER MINED, BUT NO MENTION IS MADE WHETHER THE LOSS UNDER CONSIDERATION WAS AS PER BOOKS OR AS PER ASSESSMENTS MADE U/S 143(3). IN VIEW THEREO F, WE THINK IT FIT TO RESTORE THIS MATTER TO THE FILE OF THE AO TO DETE RMINE THE BROUGHT FORWARD LOSS AS PER BOOKS AND UNABSORBED DEPRECIATIO N AS PER BOOKS AND ITA NO. 2325(DEL)/2009 5 THEREAFTER REDUCE THE AMOUNT FROM THE PROFITS AS PER PROFIT AND LOSS ACCOUNT IN ACCORDANCE WITH CLAUSE (III) OF THE EXPLANATION-I. THUS, THIS GROUND IS TREATED AS ALLOWED FOR STATISTICA L PURPOSES. 4. IN REGARD TO GROUND NO. 2, IT HAS ALREADY BEE N MENTIONED THAT CREDIT FOR TAX DEDUCTION AT SOURCE MADE BY SWC, A MOUNTING TO RS. 3,23,84,669/-, WAS NOT ALLOWED. IN LETTER DA TED 4.12.2009 THE REASONS HAVE BEEN MENTIONED AS UNDER:- A.Y AMOUNT (RS.) REMARKS 1998-99 7269902/- ORIGINALLY THE ASSESSEE CLAIMED TDS CREDIT FOR R S. 10653111/- IN THE RETURN FILED. NOW THE CLAIM IS MADE FOR RS. 7269902/-. THIS AMOUNT COULD NOT BE VERIFIED WHETHER M/S SHAW WALLACE CO. LTD. DEPOSITED THE TDS AMOUNT IN GOVERNMENT ACCOUNT OR NOT FROM THE BANK. THE MATTER HAS BEEN TAKE N UP FOR VERIFICATION. 1999-00 7299600/- ORIGINALLY THE ASSESSEE CLAIMED TDS CREDIT FOR R S. 12442834/- IN THE RETURN FILED. NOW THE CLAIM IS MADE FOR RS. 7299600/-. CREDIT FOR THIS AMOUNT HA S BEEN ALLOWED VIDE ORDER DATED 17.06.02 UNDER SECTION 154. 2000-01 8024060/- THIS AMOUNT COULD NOT BE VERIFIED WHETHER M/S SHAW WALLACE CO. LTD. DEPOSITED THE TDS AMOUNT IN GOVERNMENT ACCOUNT OR NOT FROM THE BANK. AS P ER LETTER DATED 28.3.03 OF ACIT, CIRCLE 5 7, CALCUTTA, M/S SHAW WALLACE HAS SHOWN THIS AMOUNT AS NOT DEPOSITED IN GOVERNMENT ACCOUNT. THE MATTER HAS BEEN AGAIN TAKEN UP FOR VERIFICATION. 2001-02 5542482/- THIS AMOUNT HAS NOW BEEN VERIFIED. 2002-03 4248923/- THE ASSESSEE HAS MADE C LAIMED FOR CREDIT OF THIS TDS AMOUNT FOR THE FIRST TIME. THE MATTER HAS BEE N TAKEN UP FOR VERIFICATION. ITA NO. 2325(DEL)/2009 6 IT WAS MENTIONED THAT AS SOON AS THE PROCES S OF VERIFICATION IS COMPLETED, THE CREDIT WOULD BE ALLOWED. 4.1 IN REPLY, THE LD. COUNSEL SUBMITTED TH AT AS PER THE AFORESAID LETTER OF THE AO PAYMENTS TO THE CREDIT OF THE CENTRAL GOVERNMENT BY THE SWC IN RESPECT OF TWO AMOUNTS OF RS. 72, 99,600/- AND RS. 55,42,482/- PERTAINING TO ASSESSMENT YEARS 199 9-00 AND 2001-02 HAVE ALREADY BEEN VERIFIED. THEREFORE, THE CREDIT FOR THIS AMOUNT MAY BE ALLOWED AND THE REFUND MAY BE ISSUED IMMEDIATELY . IN REGARD TO THE OTHER AMOUNTS, HE REFERRED TO THE PROCEEDINGS BEFORE THE HONBLE HIGH COURT OF CALCUTTA IN LITIGATION PROCEEDINGS WIT H SWC, IN WHICH THE DEBTOR HAD CONFIRMED THAT ALL THE PAYMENTS HAD BEEN MADE OVER TO THE GOVERNMENT. IN THIS CONNECTION, HE REFERRED TO THE TWO CHALLANS OF RS. 1.50 CRORE AND RS. 2.00 CRORE PLACED ON THE RECORD OF THE AO WITH ASSESSEES LETTER DATED 4.2.2010. IT WAS HIS CASE THAT THESE PAYMENTS WERE RECOVERED BY THE ITO, TDS AND THE TRO RESPECTIVELY. OTHER PAYMENTS WERE ALSO RECOVERED BY THE TRO. THU S, IT WAS ARGUED THAT WHILE PART REFUND MAY BE ALLOWED IMMEDIATELY WITH INTEREST, THE ITA NO. 2325(DEL)/2009 7 BALANCE REFUND MAY BE ALLOWED WITHIN A REASO NABLE TIME, SAY WITHIN THREE MONTHS OF THE RECEIPT OF THIS ORDER OF THE TRIBUNAL. 4.2 WE HAVE CONSIDERED THE FACTS OF THE CASE AND RIVAL SUBMISSIONS. SECTION 199 PERMITS THE GRANT OF CREDIT FOR THE TDS WHERE ANY DEDUCTION IS MADE IN ACCORDANCE WITH THE PROVISIO NS CONTAINED IN CHAPTER XVII AND IT IS PAID TO THE CENTRAL GOVERNMENT. TH US, UNLESS IT IS SHOWN THAT THE DEDUCTOR HAD MADE PAYMENT TO THE CENTRA L GOVERNMENT, THE CREDIT CANNOT BE GIVEN. IN THIS CASE, THE AO HAS ACCEPTED THAT TWO PAYMENTS HAVE ALREADY BEEN RECEIVED BY THE CENTR AL GOVERNMENT. THEREFORE, WE DO NOT SEE ANY DIFFICULTY IN GIV ING CREDIT FOR THESE AMOUNTS. THE AO IS DIRECTED TO GIVE CREDIT IMME DIATELY ON RECEIPT OF THIS ORDER. IT IS ALSO MENTIONED BY THE ASSE SSEE THAT THE BALANCE THREE PAYMENTS WERE COLLECTED BY THE TRO THROUGH THE RESERVE BANK OF INDIA. IN VIEW THEREOF, THERE SHOULD BE NO DIFFICULT Y IN VERIFYING THESE PAYMENTS FOR GIVING CREDIT. THEREFORE, THE AO IS DIRECTED TO EXPEDITIOUSLY VERIFY AND PREFERABLY DECIDE TH E MATTER WITHIN THREE MONTHS OF RECEIPT OF THIS ORDER BY THE COMMISSION ER OF INCOME-TAX. ACCORDINGLY, THIS GROUND IS TREATED AS DISMISSE D FOR STATISTICAL PURPOSE. ITA NO. 2325(DEL)/2009 8 5. IN THE RESULT, THE APPEAL IS TREATED AS P ARTLY ALLOWED FOR STATISTICAL PURPOSES. 6. THE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 12 FEBRUARY, 2010. SD/- SD/- (GEORGE MATHAN) (K.G.BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE OF ORDER: 12TH FEBRUARY, 2010. SP SATIA COPY OF THE ORDER FORWARDED TO:- 1. RESPONDENT ASSESSEE-M/S VISISTH CHAY VYAPAR LTD ., NEW DELHI. 2. APPLICANT-ITO, WARD 17(4), NEW DELHI. 3. CIT(A) 4. CIT, NEW DELHI. 5. DR, ITAT, NEW DELHI. ASSISTANT REGISTRA R.