DCIT 10(3), MUMBAI V. SULZER PUMPS INDIA LTD, NAVI MUMBAI

ITA 2418/MUM/2014

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0626 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 9 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-02-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 29-08-2017
• Assessment Year: 2004-2005
• Appeal Filed On: 10-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: HEENA DOSHI SHRI V JUSTIN
• Keywords: Retrospective amendment; Reason to believe
• Section: 143(3); 80HHC; 115JB; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA , AM AND SHRI AMARJIT SINGH , JM / I .T.A. NO S . 2418 / M/ 2014 & 1910 / M/ 20 15 ( / ASSESSMENT YEAR: 20 04 - 05 ) DCIT 10(3) R.NO. 451, 4 TH FLOOR, AAYAKAR BHAVAN, MAHARSHI KARV ROAD, MUMBAI - 400020 / VS. M/S. SULZER PUMPS INDIA LIMITED MIDC, THANE - BELAPUR ROAD, DIGHA, NAVI MUMBAI - 400708 C.O. NO. 133 /M/1 5 (ARISING I .T.A. NO. 2418 /M/20 14 ) ( / ASSESSMENT YEAR: 200 4 - 05 ) M/S. SULZER PUMPS INDIA LIMITED MIDC, THANE - BELAPUR ROAD, DIGHA, NAVI MUMBAI - 400708 / VS. DCIT 10(3) R.NO. 451, 4 TH FLOOR, AAYAKAR BHAVAN, MAHARSHI KARV ROAD, MUMBAI - 400020 ./ ./ PAN/GIR NO. : AAACK 2238 F ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING : 30 .11 . 2017 / DATE OF PRONOUNCEMENT : 0 9 .0 2 . 2018 / O R D E R PER AMARJIT SINGH, JM: THE ASSESSEE AS WELL AS REVENUE HAVE FILED THE ABOVE MENTIONED APPEAL /CROSS - OBJECTION AGAINST THE DIFFERENT ORDER PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 22 , MUMBAI ASSESSEE BY: MS. HEENA DOSHI DEPARTMENT BY: SHRI V. JUSTIN (DR) ITA NO. 2418/M/2014, 1910/M/15 & C.O.133 /M/1 5 A.Y. 2004 - 05 2 [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO THE ASSESSMENT YEAR 200 4 - 0 5 . ITA. NO. 2418/M/2014 : - 2 . THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 08.01.2014 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 22, MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO THE ASSESSMENT YEAR 2004 - 05. 3. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN HOLDING THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 80HHC FROM THE BOOK PROFIT U/S 115JB WHEN NO SUCH DEDUCTION IS ALLOWABLE UNDER THE NORMAL PROVISIONS OF THE ACT. 2. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, VARY, OMIT OR SUBSTITUTE ANY OF THE AFORESAID GROUNDS OF APPEAL AT ANY TIME BEFORE OR AT THE TIME OF HEARING OF APPEAL. 3. THE APPELLANT PRAYS THAT THE ORDER OF LD. CIT(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE ASSESSING OFFER BE RESTORED. 4 . THE BRIEF FACTS OF THE C ASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME ON 30.10.2004 DECLARING TOTAL INCOME TO THE TUNE OF RS . NIL AFTER CLAIMING SET - OFF OF BROUGHT FORWARD LOSSES OF RS.30,92,342/ - AND BOOK PROFIT U/S 115JB OF THE ACT AT RS.1,42,62,460/ - . THE RETURN WAS PRO CESSED U/S 143(1) OF THE I. T. ACT, 1961 ON 07.01.2005. THEREAFTER THE ASSESSMENT U/S 143(3) OF THE ACT ON 27.12.2006 ASSESSING THE TOTAL ITA NO. 2418/M/2014, 1910/M/15 & C.O.133 /M/1 5 A.Y. 2004 - 05 3 INCOME AS DECLARED IN THE RETURN FILED. THEREAFTER, THE CASE WAS REOPENED U/S 147 OF THE ACT ON FOLLOWING GROUNDS: - IN THE INSTANT CASE, ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT ON 27.12.2006 ASSESSING TOTAL INCOME AT NIL AFTER SET - OFF OF B/F LOSSES. BOOK PROFIT U/S 115JB OF THE ACT WAS COMPUTED BY THE ASSESSEE AT RS.1,42,62,460/ - . SUBSEQUENTLY, IT IS NOTICED TH AT THE ASSESSEE HAS CLAIMED DEDUCTION U/S 80HHC OF THE ACT AT RS.1,57,53,546/ - WHILE COMPUTING BOOK PROFIT U/S 115JB WHEREAS THERE WAS NO DEDUCTION ALLOWABLE UNDER THENORMAL PROVISIONS OF THE ACT. AFTER SET - OFF OF BROUGHT FORWARD BUSINESS LOSS/UNABSORBED D EPRECIATION, THERE WAS NO INCOME LEFT FOR CLAIM/ ALLOW ABILITY OF DEDUCTION U/S80HHC. THEREFORE, I HAVE REASON TO BELIEVE THAT INCOME TO THE EXTENT OF RS.1,57,53,546/ - HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE ACT DUE TO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE TRULY AND FULLY ALL MATERIAL FACTS. 5. AFTER THE REPLY FILED BY THE ASSESSEE , THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ASSESSEE DID NOT CLAIM DEDUCTION U/S 80 - HHC WHILE COMPUTING THE NORMAL PROVISION OF THE ACT AND CLAIMED THE DEDUCTION U/S 80 - HHC OF THE ACT IN VIEW OF THE PROVISION U/S 115JB OF THE ACT. SINCE THE ASSESSEE DID NOT RAISE ANY CLAIM U/S 80 - HHC UNDER THE NORMAL PROVISION OF THE ACT BUT RAISED THE CLAIM WHILE ASSESSING THE INCOME U/S 115JB OF THE ACT, T HEREFORE, THE CLAIM OF DEDUCTION U/S 80 - HHC OF THE ACT WAS NOT ALLOWED. THEREFORE, THE INCOME OF THE ASSESSEE WAS ASSESSED AT NIL ON ACCOUNT OF NORMAL PROVISION OF THE ACT AND BOOK PROFIT U/S 115JB OF THE ACT WAS ASSESSED TO THE TUNE OF RS. 1,57,53,546/ - . F EELING AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE LEARNED CIT(A ) WHO ALLOWED THE CLAIM ITA NO. 2418/M/2014, 1910/M/15 & C.O.133 /M/1 5 A.Y. 2004 - 05 4 OF THE ASSESSEE, THEREFORE, THE REVENUE HAS FILED THE PRESENT APPEAL BEFORE US. ISSUE NO.1: - 6 . UNDER THIS ISSUE THE REVENUE HAS CHALLENGED THE ALLOWANCES OF DEDUCTI ON U/S 80 - HHC OF THE ACT FROM THE BOOK PROFIT U/S 115JB OF THE ACT WHEN NO SUCH DEDUCTION WAS CLAIMED UNDER THE NORMAL PROVISION OF THE ACT. THE LD. REPRESENTATIVE OF THE REVENUE HAS ARGUED THAT THE CIT(A) HAS WRONGLY ALLOWED THE CLAIM OF THE ASSESSEE WHIL E IN FACT THE ASSESSEE DID NOT CLAIM ANY DEDUCTION U/S 80 - HHC OF THE ACT UNDER THE NORMAL PROVISION OF THE ACT AND RAISE THE DEDUCTION U/S 80 - HHC OF THE ACT UNDER BOOK PROFIT U/S 115JB OF THE ACT. HOWEVER, ON THE OTHER HAND, THE LD. REPRESENTATIVE OF THE ASSESSEE HAS REFUTED THE SAID CONTENTIONS. BEFORE GOING FURTHER, WE DEEMED IT NECESSARY TO ADVERT THE FINDING OF THE CIT(A) ON RECORD: - 3.3 I HAVE CAREFULLY CONSIDERED THE ABOVE SUBMISSION OF THE APPELLANT AND THE IMPUGNED ASSESSMENT ORDER. SECTION 115JB WAS AMENDED BY FINANCE ACT, 2011 AND CLAUSE (IV),(V) AND (VI) TO EXPLANATION 1 WAS OMITTED WITH RETROSPECTIVE EFFECT FROM 01.04.2005. CLAUSE (IV) PROVIDES THAT THE BOOK PROFIT SHALL BE REDUCED BY PROFIT FROM EXPORTS DEDUCTIBLE U/S 80HHC. THIS AMENDMENT WAS BROUGHT TO NEGATE THE DECISION OF THE SUPREME COURT IN THE CASE OF M/S. AJANTA PHARMA LTD. (SUPRA). HOWEVER, I FIND THE AMENDMENT TAKES EFF ECT ONLY FROM THE A.Y. 2005 - 06 ONWARDS WHEREAS IN THE PRESENT CASE, THE ASSESSMENT YEAR INVOLVED IS 2004.05. IN VIEW OF THIS, THE CLAIM OF THE APPELLANT THAT THE ELIGIBLE DEDUCTION OFRS.1,57,53,546/ - WORKED OUT U/S 80HHC HAS TO BE REDUCED FROM THE BOOK PRO FIT IS FOUND TO BEING ORDER AND HENCE, THE ACTION OF THE AO CANNOT BE SUSTAINED. ITA NO. 2418/M/2014, 1910/M/15 & C.O.133 /M/1 5 A.Y. 2004 - 05 5 7. ON APPRAISAL OF THE ABOVE MENTIONED FINDING, WE NOTICED THAT THE CIT(A) HAS ALLOWED THE CLAIM OF THE ASSESSEE IN VIEW OF THE AMENDMENT IN SECTION 115JB BY FINANCE ACT 2011 BEING EFFECTIVE FOR A.Y. 2005 - 06 ONWARDS . THE MATTER OF CONTROVERSY PRIOR TO AMENDMENT HAS ALSO BEEN ADJUDICATED BY HONBLE SUPREME COURT IN THE CASE OF M/S AJANTA PHARMA LTD. REPORTED 327 ITR 305 (SC) IN FAVOUR OF THE ASSESSEE . NO DISTINGUISHABLE MATERIA L HAS BEEN PRODUCED BEFORE US. NO LAW AND PROVISION CONTRARY TO THE LAW RELIED BY THE CIT(A) HAS BEEN PRODUCED BEFORE US TO DEVIATE THE FINDING OF THE CIT(A) IN QUESTION. ACCORDINGLY, WE ARE OF THE VIEW THAT THE CIT(A) HAS DECIDED THE MATTER OF CONTROVERSY JUDICIOUSLY AND CORRECTLY WHICH IS NOT LIABLE TO BE INTERFERE WITH AT THIS APPELLATE STAGE. ACCORDINGLY, THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. IN RESULT, APPEAL FILED BY THE REVENUE IS HEREBY ORDERED TO BE DISMISSED. ITA. NO. 1910 /MUM/201 5 8 . THE REVENUE HAS FILED AN APPEAL AGAINST THE ORDER DATED 15.01.2015 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 24 , MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO THE ASSESSMENT YEAR 2004 - 05. 9 . THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: - ITA NO. 2418/M/2014, 1910/M/15 & C.O.133 /M/1 5 A.Y. 2004 - 05 6 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN HOLDING THAT THE RECTIFICATION CARRIED OUT BY THE AO DISALLOWING THE CLAIM OF DEDUCTION U/S 80HHC AMOUNTING TO RS.1,57,53,546/ - WHILE CO MPUTING THE BOOK PROFIT U/S 115JB IS NOT AS PER THE PROVISIONS OF THE ACT. 2. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, VARY, OMIT OR SUBSTITUTE ANY OF THE AFORESAID GROUNDS OF APPEAL AT ANY TIME BEFORE OR AT THE TIME OF HEARING OF APPEAL. 3. THE APPELLA NT PRAYS THAT THE ORDER OF LD. CIT(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE ASSESSING OFFER BE RESTORED. 10 . THE FACTS OF THE PRESENT CASE ARE QUITE SIMILAR TO THE FACTS OF THE CASE AS NARRATED ABOVE IN THE APPEAL BEARING NO. 2418/M/2014, THER EFORE, THERE IS NO NEED TO REPEAT THE SAME. THE MATTER OF CONTROVERSY IS ALSO THE SAME. THIS ISSUE IS ALSO DECIDED IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE ON THE SIMILAR LINE S AS NARRATED ABOVE WHILE DECIDING THE CONTROVERSY IN ITA. NO.2418/M/2014. ACCORDINGLY, THE APPEAL OF THE REVENUE IS HEREBY ORDERED TO BE DISMISSED. CROSS OBJECTION. 133/M/2015: - 11. THE ASSESSEE HAS RAISED THE FOLLOWING CROSS OBJECTION: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONE R OF INCOME - TAX (APPEALS) (HEREINAFTER REFERRED TO AS CIT(A)) HAS ERRED IN NOT HOLDING THAT NOTICE U/S.148 DATED 25 IR MARCH, 2011 IS BAD IN LAW HE OUGHT NOT TO HAVE DONE SO. ITA NO. 2418/M/2014, 1910/M/15 & C.O.133 /M/1 5 A.Y. 2004 - 05 7 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW. THE LEARNED CI T(A} HAS ERRED IN NOT DIRECTING TO CANCEL THE ORDER PASSED U/S. 143(3) READ WITH SECTION 147. HE OUGHT NOT TO HAVE DONE SO. 3 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW. THE LEARNED CIT{A) OUGHT TO HAVE HELD THAT THE ORDER PASSED UNDER SE CTION 143(3) READ WITH SECTION 147 WAS BAD IN LAW SINCE IT WAS PASSED IN THE ABSENCE OF PROVIDING THE ACTUAL COPY OF THE REASONS RECORDED. 4 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) OUGHT TO HAVE HELD THAT THE ORDER PASSED WITHOUT FOLLOWING THE PROCEDURE LAID DOWN BY THE HON'BLE SUPREME COURT WAS BAD IN LAW, 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN NOT FOLLOWING THE DECISION OF THE SUPREME COURT IN THE AJANTA PHA RMACALS V/S. CIT (327 ITR 305) FOR COMPUTATION OF BOOK PROFITS U/S 115JB OF THE ACT HE OUGHT NOT TO HAVE DONE SO. 6. YOUR APPELLANTS CRAVE LEAVE TO ADD. TO MODIFY, OR TAKE ADDITIONAL GROUNDS AS NEED BE. 12 . SINCE THE ISSUE ON MERITS HAS ALREADY BEEN DECID ED IN FAVOUR OF THE ASSESSEE IN THE APPEALS BY THE REVENUE, THE ADJUDICATION OF CHALLENGED OF REOPENING HAS BECOME ONLY ACADEMIC IN NATURE, HENCE, THE APPEAL OF THE ASSESSEE IS DISMISSED AS INFRUCTUOUS . 13 . ACCORDINGLY, APPEAL S OF THE REVENUE ARE HEREBY ORDERED TO BE DISMISSED AND CROSS OBJECTION OF THE ASSESSEE IS ALSO DISMISSED BEING INFRUCTUOUS . ITA NO. 2418/M/2014, 1910/M/15 & C.O.133 /M/1 5 A.Y. 2004 - 05 8 ORDER PRONOUNCED IN THE OPEN COURT ON 09. 0 2. 201 8 SD/ - SD/ - ( SHAMIM YAHYA ) (AMARJIT SINGH) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; DATED : 09. 02. 2018 VIJAY / 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. / BY ORDER, //TRUE COPY// / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI