CARGOTEC INDIA P.LTD, NAVI MUMBAI V. DCIT 10(3), MUMBAI

ITA 2346/MUM/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2307 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 08-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RADHA KATYAL NARAN G
• Assessee Lawyers: KETAN K VED
• Keywords: Depreciation; Deemed to accrue or arise in india; Revised return; Unabsorbed depreciation
• Section: 43B

Judgement Text

, LH LHLH LH INCOME TAX APPELLATE TRIBUNAL,MUMBAI - C BENCH , IOU FLAG IOU FLAG IOU FLAG IOU FLAG BEFORE S/SH. RAJENDRA,ACCOUNTANT MEMBE R & PAWAN SINGH,JUDICIAL MEMBER /.ITA NO.2346/MUM/2014, /ASSESSMENT YEAR-2008-09 CARGOTEC INDIA PVT. LTD. KESAR SOLITARE, 3 RD FLOOR, OFFICE NOS. 301-306, PLOT NO.5, SECTOR NO.19, SANPADA, NAVI MUMBAI-400705. PAN:AABCH8289A VS ACIT 10(3), AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400020 ( / ASSESSEE) ( / RESPONDENT) /ASSESSEE BY : SHRI KETAN K. VED (AR) / REVENUE BY : MS. RADHA KATYAL NARANG (DR) ' / DATE OF HEARING : 27 - 06 -2016 / DATE OF PRONOUNCEMENT : 27 -07-2016 ORDER/ % & IOU FLAG IOU FLAG IOU FLAG IOU FLAG PER PAWAN SINGH, JM - 1. PRESENT APPEAL IS FILED BY ASSESSEE AGAINST THE ORD ER OF CIT(A)-22, MUMBAI DATED 3RD FEBRUARY 2014 FOR ASSESSMENT YEAR 2000-09. THE ASSE SSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL. APPLICATION OF SECTION 72A (1) THE LEARNED COMMISSIONER (APPEALS) ERRED IN REJECTI NG THE APPELLANTS CLAIM TO CARRY FORWARD ACCOMMODATED LOSSES/ ABSORBED DEPRECIATION OF THE AMALGAMATING COMPANIES THAT IS CARGO TECH MANUFACTURING INDIA PR IVATE LIMITED( CM IPL) AND KALMAR INDIA PRIVATE LIMITED(KIPL) IN THE HANDS OF APPELLANT. (2) THE LEARNED COMMISSIONER (APPEALS) OUGHT TO HAVE PR OVIDED THE APPELLANT AN OPPORTUNITY OF DEMONSTRATIVE THAT THE CONDITION LAI D DOWN IN SECTION 72A(2) HAD BEEN FULFILLED. (3) THE LD COMMISSIONER (APPEALS) OUGHT TO HAVE DIRECTE D THE LEARNED ASSESSING OFFICER, QUANTIFIED AND SPECIFICALLY ALLOW THE CARRY FORWARD OF ACCOMMODATED LOSSES/UNABSORBED DEPRECIATION OF THE AMALGAMATING COMPANIES THAT IS CMIPL AND KIPL IN THE HANDS OF APPELLANT. (4) THE LEARNED COMMISSIONER (APPEALS) ERRED IN DIRECTI NG THE LANDED ASSESSING OFFICER TO INVOKE PROVISION OF SECTION 72A(3) AND BRING TO TAX, THE DEEMED INCOME IN THE HANDS OF APPELLANT. DISALLOWANCE IN THE HANDS OF CMIPL (5). THE LEARNED COMMISSIONER (APPEALS) ERRED IN CONFIRMING THE ACTION OF LANDED ASSESSING OFFICER OF NOT ALLOWING DEDUCTION FOR THE AMOUNT OF RS. 90,35,825/- DISALLOWED UNDER SECTION 43B IN THE HANDS OF CMIPL 2 ITA NO.2346/M/2014 FOR AY 2008-09 CARGOTEC INDIA PRIVATE LTD. DISALLOWANCE IN THE HANDS OF KIPL (6). THE LEARNED COMMISSIONER (APPEALS) ERRED IN CONFIRMING THE ACTION OF LANDED ASSESSING OFFICER OF NOT ALLOWING DEDUCTION FOR THE AMOUNT OF RS. 40,79,401/-AND RS. 43,06,040/- DISALLOWED UNDER SECTION 43B AND 40(A)( IA), RESPECTIVELY, IN THE HANDS OF KIPL. EXPENDITURE DISALLOWED (7). THE LEARNED COMMISSIONER APPEALS ERRED IN CO NFIRMING THE DISALLOWANCE OF EXPENDITURE OF RS 141,911/- CLAIMED UNDER SECTION 3 7(1). (8) WITHOUT PREJUDICE TO THE ABOVE, THE LD COMMI SSIONER (APPEALS) ERRED IN HOLDING THAT EXPENDITURE TREATED TO REGISTRATION CHARGES TOWARD THE PUNE PROPERTY, CHAINS OF THE COMPANY RESTORATION AND THE VALUATION OF EQUITY SHA RE ARE CAPITAL IN NATURE AND WOULD NOT FALL WITHIN THE PURVIEW OF SECTION 35DD. DEPRECIATION DISALLOWED (9). THE LEARNED COMMISSIONER APPEALS ERRED IN CONFIRMING THE DISALLOWANCE OF DEPRECIATION OF RS. 7828/- 2. AT THE TIME OF MAKING SUBMISSION LANDED AR OF THE A SSESSEE MADE THE STATEMENT THAT HE IS NOT PRESSING GROUND NO. 7 TO 9 DUE TO THE SMA LLNESS AMOUNT. THUS, THE GROUND NOS. 7 TO 9 RAISED IN THE PRESENT APPEAL ARE DISMIS SED AS NOT PRESSED. 3. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE FILED RET URN OF INCOME FOR THE RELEVANT ASSESSMENT YEAR ON 29 SEPTEMBER 2008. THE RETURN OF INCOME WAS SELECTED FOR SCRUTINY AND WHILE FRAMING ASSESSMENT, IT WAS OBSER VED THAT ASSESSEE COMPANY HAD FILED AN APPLICATION FOR MERGER BEFORE HONORABLE HI GH COURT OF KARNATAKA FOR AMALGAMATION OF M/S CARGOTEC MANUFACTURING INDIA PV T. LTD. AND KALMAR INDIA PVT. LTD. THE HONBLE HIGH COURT ALLOWED THE PETITION OF ASSESSEE WITH EFFECT FROM 1 ST JANUARY 2008. ACCORDINGLY, THE ASSESSEE COMPANY FIL ED ITS REVISED RETURN OF INCOME FROM 1 ST JANUARY 2008 ON 30 TH MARCH 2010. IN THE REVISED RETURN OF INCOME THE ASSESSEE COMPANY REVISED ITS LOSSES AT RS. 2675, 92 05/-AFTER ADOPTING THE SALES, EXPENDITURE AND THE DEPRECIATION FOR THE PERIOD FRO M 1 ST JANUARY, 2008 TO 31 ST MARCH 2008 IN RESPECT OF AMALGAMATING COMPANIES. WHILE FR AMING ASSESSMENT THE AO NOT ALLOWED CARRY FORWARD ACCUMULATED LOSS/UNABSORBED D EPRECIATION OF AMALGAMATING COMPANIES, DISALLOWED DEDUCTION OF RS. 90,35,825/- UNDER SECTION 43B IN THE HANDS OF CMIPL AND FURTHER DISALLOWED DEDUCTION OF RS.40, 79,401/- UNDER SECTION 43B AND RS. 430,6,040/- UNDER SECTION 4O(A) (IA) IN THE HAN DS OF KIPL. AGGRIEVED BY THE 3 ITA NO.2346/M/2014 FOR AY 2008-09 CARGOTEC INDIA PRIVATE LTD. ORDER OF AO ASSESSEE FILED APPEAL BEFORE THE CIT(A) BUT WITHOUT ANY SUCCESS. FURTHER AGGRIEVED BY THE ORDER OF CIT(A), THE PRESENT APPEA L IS FILED BEFORE US. 4. GROUND NOS. 1 TO 4 RAISED IN THE PRESENT APPEAL IS RELATED WITH THE DISALLOWANCE OF CLAIMS OF ASSESSEE TO CARRY FORWARD ACCUMULATED LOS S AND UNABSORBED DEPRECIATION OF THE AMALGAMATING COMPANIES. GROUND NO. 5 TO 6, ARE RELATED WITH THE DISALLOWANCE OF DEDUCTION UNDER SECTION 43B AND SECTION 40(A) (I A) OF THE ACT. WE HAVE HEARD LD. AR OF ASSESSEE AND LD. DR FOR REVENUE AND PERUSED T HE MATERIAL AVAILABLE ON RECORD. LD AR OF THE ASSESSEE ARGUED THAT THE ASSESSEE IS E NTITLED FOR CARRY FORWARD ACCUMULATED LOSS AND UNABSORBED DEPRECIATION OF THE AMALGAMATING COMPANIES, AS THE ASSESSEE COMPANY HAS ACQUIRED ALL THE RIGHT AND LIABILITIES, IN ACCORDANCE WITH THE SCHEME OF ARRANGEMENT APPROVED BY HIGH COURT. THE A O HAS NOT BASICALLY, QUANTIFIED AND ALLOWED THE LOSSES OF THE AMALGAMATI NG COMPANIES TO CARRY FORWARD FOR SET OFF IN THE SUBSEQUENT YEAR. THE AO HAS NOT PROVIDED ANY REASON FOR NOT ALLOWING THE LOSS OF THE AMALGAMATING COMPANIES, NO R ANY QUESTION WAS RAISED DURING THE ASSESSMENT PROCEEDING SO THAT THE ASSESS EE COULD SUBSTANTIATE THE CLAIM FOR CARRY FORWARD OF LOSSES OF THE AMALGAMATING CO MPANY. SIMILAR ARGUMENTS WERE MADE IN RESPECT OF OTHER GROUNDS RAISED IN THE PRES ENT APPEAL. LD AR FOR ASSESSEE FURTHER ARGUED THAT AT THE STAGE OF FIRST APPEAL LD CIT (A) NOT PROVIDED OPPORTUNITY TO EXPLAIN THAT THE CONDITION LAID DOWN IN SECTION 72A(2) HAS BEEN FULFILLED. LD DR FOR REVENUE STRONGLY SUPPORTED THE ORDERS OF AUTHOR ITIES BELOW. 5. WE HAVE CONSIDERED THE RIVAL CONTENTION OF THE PART IES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE NOTICED THAT WHILE FRA MING THE ASSESSMENT ORDER AO HAS NOT GIVEN ANY SHOW CAUSE NOTICE TO THE ASSESSEE AS TO WHY ACCUMULATED LOSS OR UNABSORBED DEPRECIATION SHOULD NOT BE DISALLOWED. S IMILARLY NO QUESTION WAS RAISED WITH REGARD TO OTHER DISALLOWANCE WITH RESPECT TO T HE CONTRIBUTION OF ESI, PF AND OTHER DISALLOWANCE OF SECTION 43B AND 40(A) AND (IA ) BY THE AO. NO REASONS /GROUNDS WERE MENTIONED FOR DISALLOWANCE OR FOR NOT ALLOWING CARRYING FORWARD LOSSES OF THE AMALGAMATED COMPANIES AND IN RESPECT OF DISALLOWANC E OF SECTION 43B AND 40(A) AND (IA) BY THE AO. THE LD. CIT(A) WHILE CONSIDERING TH E CLAIMS OF THE ASSESSEE REFERRED THAT AO DULY CONSIDERED THE REVISED RETURN FILED BY THE ASSESSEE AND ACCORDINGLY 4 ITA NO.2346/M/2014 FOR AY 2008-09 CARGOTEC INDIA PRIVATE LTD. COMPUTED THE CORRECT INCOME. ALMOST IDENTICAL FINDI NGS ARE GIVEN IN RESPECT OF ALL THE GROUNDS RAISED BEFORE THE CIT(A). LD CIT(A) HAS ALS O NOT GIVEN OPPORTUNITY AT THE STAGE OF FIRST APPELLATE STAGE TO EXPLAIN THAT THE CONDITION LAID DOWN IN SECTION 72A(2) AND DIRECTED THE AO TO INVOKE THE PROVISION OF SECTION 72A(3) OF THE ACT. WE HAVE NOTICED THAT THE AO HAS NOT GIVEN ANY REASO N FOR DISALLOWANCE NOR DISCUSSED THE VARIOUS CLAIMS MADE IN THE REVISED RE TURN OF INCOME FILED BY THE ASSESSEE, AFTER APPROVAL OF THE SCHEME OF AMALGAMAT ION BY THE HIGH COURT OF KARNATAKA. THE ORDER OF AO AS WELL AS OF COMMISSION ER OF INCOME TAX APPEAL IS NOT SUSTAINABLE IN THE EYES OF LAW. AS THE SAME WAS PAS SED WITHOUT CONSIDERING THE VARIOUS LEGAL AND FACTUAL CONTENTIONS RAISED BY THE ASSESSEE PARTICULARLY AFTER PASSING THE ORDER OF AMALGAMATION BY HONBLE KARNATAKA HIGH COURT. HENCE, WE DEEM IT APPROPRIATE TO RESTORE THE GROUND NOS. 1 TO 6 TO TH E FILE OF AO TO RECONSIDER THE CLAIM OF ASSESSEE AND PASS DETAILED REASONED ORDER IN RESPECT OF EACH AND EVERY CLAIM SEPARATELY BY AFFORDING REASONABLE OPPORTUNITY OF H EARING TO THE ASSESSEE. WITH THESE OBSERVATIONS THE APPEAL FILED BY ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSE. AS A RESULT, APPEAL FILED BY THE ASSESS EE IS ALLOWED FOR STATISTICAL PURPOSE. '#$%&'$($)$$*+$$,-.$/(0 DS FY, DS FY, DS FY, DS FY, 1, 2 $$$34. $$$$$$$$$$$$$$$$$ ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH JULY,2016. $$$ 7$$$ 8 $$19$:%, 27 YK YKYK YK +,20 16 $$*+$> SD/- SD/- ( /RAJENDRA) ( IOU FLAG IOU FLAG IOU FLAG IOU FLAG / PAWAN SINGH) & / ACCOUNTANT MEMBER / JUDICIAL MEMBER 1 8 ,+ /MUMBAI, :%, /DATE: 27.07.2016 SK ' ()* +* / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ ,(& 8 @ , 4. THE CONCERNED CIT / ,(& 8 @ 5. DR C BENCH, ITAT, MUMBAI / AB* %C& , LH LHLH LH , , . . . 1 8 ,+ 6. GUARD FILE/ * '+ A //TRUE COPY// 7% 8 / BY ORDER, / / 3 , DY./ASST. REGISTRAR C& , 1 8 ,+ /ITAT, MUMBAI.