AI Insights
Shapoorji Pallonji Oil and Gas Pvt. Ltd. appealed against the final assessment order passed by the National Faceless Assessment Centre (NaFAC), which did not comply with the directions of the Dispute Resolution Panel (DRP) and incorrectly assessed the company's losses and ignored a long-term capital loss claim. The Tribunal found procedural lapses in the handling of the rectification application regarding the assessed losses and the claim for long-term capital loss. The Tribunal directed the Assessing Officer to address these issues promptly.
Appeal Details
Counselvise Citation
[2023] 140 COUNSELVISE.COM (IT) 123586 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
7 month(s) 19 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
10-05-2023
Appeal Filed By
Assessee
Order Result
PartlyAllowed
Bench Allotted
G
Next Hearing Date
01-05-2023
Assessment Year
2018-2019
Appeal Filed On
21-09-2022
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “G” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND MS. KAVITHA RAJAGOPAL (JUDICIAL MEMBER) ITA No. 2434/MUM/2022 Assessment Year: 2018-2019 Shapoorji Pallonji Oil and Gas Pvt. Ltd., 41/44 Shapoorji Pallonji Centre, Minoo Desai Marg, Colaba, Mumbai-400 005. Vs. The National Faceless Assessment Centre, Mumbai. PAN No. AAECC 9599 B Appellant Respondent Assessee by : Mr. Gautam Thacker Revenue by : Dr. Kishor Dhule, CIT-DR Date of Hearing : 02/05/2023 Date of pronouncement : 11/05/2023 ORDER PER OM PRAKASH KANT, AM This appeal by the assessee is directed against final assessment order dated 22.07.2022 passed by the Assessing Officer of National Faceless Appeal assessment unit, pursuant to the direction of the Ld. Dispute Resolution Panel (DRP) dated 02.03.2022. The grounds raised by the assessee are reproduced as under: “Ground No. 1: The assessment Order under section 143(3) read with section 144C(13) read by the NaFAC is bad in law since it is not in compliance with the directions issued by the Hon'ble Dispute Resolution Panel-2, Mumbai ('DRP'). It is prayed that the assessment Order be quashed and cancelled. Ground No. 2 On the facts and circumstances of the case and in law, the NaFAC erred in assessing the loss at Rs. 9,05,39,173 on the basis of the intimation issued under section 143(1) of the Act dated 12 December 2019 instead of considering the total loss of Rs. 14,80,17,785 as per the revised return of income filed by the Appellant on 22 March 2019. The NaFAC erred in not complying with the specific directions of the Hon'ble DRP. It is prayed that the NaFAC be directed to consider the total loss of Rs. 14,80,17,7 filed by the Appellant. Ground No. 3: 3.1 On the facts and circumstances of the case and in law, the NaFAC and the Hon'ble DRP has erred in ignoring the long-term capital loss amounting to Rs. 22,79,65,217 (computed in USD terms in accordance with Rule 115 of the Income-tax Rules, 1962) claimed by the Appellant during the assessment proceedings. 3.2 On the facts and circumstances of the case and in law, the NaFAC and the Hon ble DRP has erred in not allowing to carry forward the long claimed by the Appellant. 3.3 On the facts and circumstances of the case and in law, the DR has erred in not adjudicating upon the claim for long term capital loss of Rs. 22,79,65,217 claimed by the Appellant in the course of assessment proceedings. Shapoorji Pallonji Oil and Gas Pvt. Ltd. The assessment Order under section 143(3) read with section 144C(13) read with section 144B of the Act passed by the NaFAC is bad in law since it is not in compliance with the directions issued by the Hon'ble Dispute Resolution 2, Mumbai ('DRP'). It is prayed that the assessment Order be quashed and Ground No. 2: On the facts and circumstances of the case and in law, the NaFAC erred in assessing the loss at Rs. 9,05,39,173 on the basis of the intimation issued under section 143(1) of the Act December 2019 instead of considering the total loss of Rs. 14,80,17,785 as per the revised return of income filed by the Appellant on 22 March 2019. The NaFAC erred in not complying with the specific directions of the Hon'ble DRP. It is prayed that the NaFAC be directed to consider the total loss of Rs. 14,80,17,785 as per the revised return of income filed by the Appellant. Ground No. 3: On the facts and circumstances of the case and in law, the NaFAC and the Hon'ble DRP has erred in ignoring the term capital loss amounting to Rs. 22,79,65,217 n USD terms in accordance with Rule 115 of the tax Rules, 1962) claimed by the Appellant during the assessment proceedings. On the facts and circumstances of the case and in law, the NaFAC and the Hon ble DRP has erred in not allowing to orward the long-term capital loss of Rs. 22,79,65,217 claimed by the Appellant. On the facts and circumstances of the case and in law, the DR has erred in not adjudicating upon the claim for long term capital loss of Rs. 22,79,65,217 claimed by the ellant in the course of assessment proceedings. Shapoorji Pallonji Oil and Gas Pvt. Ltd. 2 ITA No. No. 2434/M/2022 The assessment Order under section 143(3) read with with section 144B of the Act passed by the NaFAC is bad in law since it is not in compliance with the directions issued by the Hon'ble Dispute Resolution It is prayed that the assessment Order be quashed and On the facts and circumstances of the case and in law, the NaFAC erred in assessing the loss at Rs. 9,05,39,173 on the basis of the intimation issued under section 143(1) of the Act December 2019 instead of considering the total loss of Rs. 14,80,17,785 as per the revised return of income filed by the The NaFAC erred in not complying with the specific directions It is prayed that the NaFAC be directed to consider the total 85 as per the revised return of income On the facts and circumstances of the case and in law, the NaFAC and the Hon'ble DRP has erred in ignoring the term capital loss amounting to Rs. 22,79,65,217 n USD terms in accordance with Rule 115 of the tax Rules, 1962) claimed by the Appellant during the On the facts and circumstances of the case and in law, the NaFAC and the Hon ble DRP has erred in not allowing to term capital loss of Rs. 22,79,65,217 On the facts and circumstances of the case and in law, the DR has erred in not adjudicating upon the claim for long- term capital loss of Rs. 22,79,65,217 claimed by the ellant in the course of assessment proceedings. It is prayed that the NaFAC be directed to consider and allow the long-term capital loss as claimed by the Appellant. 3.4 Without prejudice to above, if the Appellant's claim for long term capital loss of Rs. then, the long (computed in Rupee terms) and short 2,24,00,000 (computed in Rupee terms) should be allowed to the Appellant. It is prayed that the NaFAC be the long-term capital loss of Rs.6,19,79,028 and short capital loss of Rs. 2,24,00,000 as claimed by the Appellant. 2. At the outset, the Ld. Counsel of the assessee submitted that appeal was filed with the delay of thr application of the assessee, which is supported by affidavit by the director of the assessee company. He submitted that due to some personal exigency of the director of the assessee company resulted in delay, which was neither d rival submission we are of the opinion that the assessee had sufficient cause for not presenting the appeal within the prescribed limitation period. Accordingly, we condoned the delay of three days in filing the appeal and the appeal was admitted for adjudication. 3. Briefly stated, facts of the case are that the assessee company was engaged in business of providing onshore, offshore and related services in oil and gas sector to various entities including Associated Enterprises assessee filed return of income Processing Centre (CPC) section 143(1)(a) of the Income Shapoorji Pallonji Oil and Gas Pvt. Ltd. It is prayed that the NaFAC be directed to consider and allow term capital loss as claimed by the Appellant. Without prejudice to above, if the Appellant's claim for long term capital loss of Rs. 22,79,65,217 is not allowed then, the long-term capital loss amounting to Rs. 6,19,79,028 (computed in Rupee terms) and short-term capital loss of Rs. 2,24,00,000 (computed in Rupee terms) should be allowed to the Appellant. It is prayed that the NaFAC be directed to consider and allow term capital loss of Rs.6,19,79,028 and short capital loss of Rs. 2,24,00,000 as claimed by the Appellant. , the Ld. Counsel of the assessee submitted that appeal was filed with the delay of three days. He referred to the application of the assessee, which is supported by affidavit by the director of the assessee company. He submitted that due to some personal exigency of the director of the assessee company resulted in delay, which was neither deliberate nor wilful. After considering rival submission we are of the opinion that the assessee had sufficient cause for not presenting the appeal within the prescribed limitation period. Accordingly, we condoned the delay of three days al and the appeal was admitted for adjudication. Briefly stated, facts of the case are that the assessee company was engaged in business of providing onshore, offshore and related services in oil and gas sector to various entities including nterprises (AEs). For the year under consideration, the assessee filed return of income, which was processed by the Central Processing Centre (CPC), Bangalore on 12.11.2019 in terms of section 143(1)(a) of the Income-tax Act, 1961 (in short ‘the Act’). Th Shapoorji Pallonji Oil and Gas Pvt. Ltd. 3 ITA No. No. 2434/M/2022 It is prayed that the NaFAC be directed to consider and allow term capital loss as claimed by the Appellant. Without prejudice to above, if the Appellant's claim for 22,79,65,217 is not allowed term capital loss amounting to Rs. 6,19,79,028 term capital loss of Rs. 2,24,00,000 (computed in Rupee terms) should be allowed to directed to consider and allow term capital loss of Rs.6,19,79,028 and short-term capital loss of Rs. 2,24,00,000 as claimed by the Appellant. , the Ld. Counsel of the assessee submitted that ee days. He referred to the application of the assessee, which is supported by affidavit by the director of the assessee company. He submitted that due to some personal exigency of the director of the assessee company resulted eliberate nor wilful. After considering rival submission we are of the opinion that the assessee had sufficient cause for not presenting the appeal within the prescribed limitation period. Accordingly, we condoned the delay of three days al and the appeal was admitted for adjudication. Briefly stated, facts of the case are that the assessee company was engaged in business of providing onshore, offshore and related services in oil and gas sector to various entities including . For the year under consideration, the which was processed by the Central on 12.11.2019 in terms of tax Act, 1961 (in short ‘the Act’). The return of income was international transactions carried out by the assessee with its the matter of determination of the arm’s length price of the international transaction was referred to the Ld. Transfer Officer (TPO). The Ld. TPO proposed transfer pricing adjustment of Rs.7,53,62,289/-. However, on further objection raised by the assessee before the Ld. DRP, the transfer pricing adjustment was deleted. But, the Ld DRP rejected a fresh claim of all loss to the assessee. passed by the Assessing Officer DRP, no adjustment has been made and income has been asse at a loss of Rs.9,05,39,173 143(1) of the Act. The assessee is aggrieved with the amount of loss assessed as well as not admitting one of the 4. We have heard rival submission of the parties on the issue dispute and perused the relevant material on record including the Paper Book filed by the assessee consisting of pages 1 to 366. 4.1 The Ground No. required to adjudicate appeal, the assessee is aggrieved for non return of income while computing the assessed loss. Before us, the Ld. Counsel of the assessee referred to page No. 152 of the Paper Book and submitted that rectification application filed before the Assessing Officer on 18.06.2020 Shapoorji Pallonji Oil and Gas Pvt. Ltd. return of income was furher selected for scrutiny and in view of international transactions carried out by the assessee with its matter of determination of the arm’s length price of the international transaction was referred to the Ld. Transfer Officer (TPO). The Ld. TPO proposed transfer pricing adjustment of . However, on further objection raised by the assessee before the Ld. DRP, the transfer pricing adjustment was , the Ld DRP rejected a fresh claim of all loss to the assessee. In the impugned final assessment order passed by the Assessing Officer, pursuant to the direction of the Ld. no adjustment has been made and income has been asse loss of Rs.9,05,39,173/, which was computed under section The assessee is aggrieved with the amount of loss assessed as well as not admitting one of the claims by the Ld. DRP. We have heard rival submission of the parties on the issue sed the relevant material on record including the Paper Book filed by the assessee consisting of pages 1 to 366. No. 1 is general in nature; therefore, we are not adjudicate specifically. In the ground No. 2 of the ssessee is aggrieved for non-considering the revised return of income while computing the assessed loss. Before us, the Ld. Counsel of the assessee referred to page No. 152 of the Paper Book and submitted that rectification application filed before the essing Officer on 18.06.2020 for considering the loss as per Shapoorji Pallonji Oil and Gas Pvt. Ltd. 4 ITA No. No. 2434/M/2022 selected for scrutiny and in view of international transactions carried out by the assessee with its AEs, matter of determination of the arm’s length price of the international transaction was referred to the Ld. Transfer Pricing Officer (TPO). The Ld. TPO proposed transfer pricing adjustment of . However, on further objection raised by the assessee before the Ld. DRP, the transfer pricing adjustment was , the Ld DRP rejected a fresh claim of allowing capital impugned final assessment order pursuant to the direction of the Ld. no adjustment has been made and income has been assessed /, which was computed under section The assessee is aggrieved with the amount of loss by the Ld. DRP. We have heard rival submission of the parties on the issue-in- sed the relevant material on record including the Paper Book filed by the assessee consisting of pages 1 to 366. therefore, we are not he ground No. 2 of the considering the revised return of income while computing the assessed loss. Before us, the Ld. Counsel of the assessee referred to page No. 152 of the Paper Book and submitted that rectification application filed before the for considering the loss as per revised return is still pending and which has not been disposed off. We note from the impugned order of the Ld. DRP that the Assessing Officer has been directed for verification and disposal of t rectification application observing as under: “11. We have gone through the objection of the assessee as well as the written submissions of the assessee. We find that the objection relates to certain adjustments done by the CPC in the processing of retu The assessee has also filled rectification application with the jurisdictional assessing officer vide letter dated 18.06.2020. It seems that the same is pending. We direct the assessing officer to consider the rectificat the same at an early date. The ground of objection no. 5 is disposed off accordingly. 4.2 Since the ld DRP already directed the verification, despite the Assessing Officer omitted to give effect to the direction in the impugned final assessment order. opinion that this issue of non in the revised return of income by the Assessing Officer while passing the final assessment order is a subject matter of rectification and for which the assessee is already before the Assessing Officer. Therefore, the ground raised before us, is infructuous. However, we direct the Ld. Assessing Officer to dispose off the rectification of the application of the assessee on prio as to resolve the grievance of the assessee raised in the ground No. 2 before us. The ground of appeal is accordingly allowed partly for statistical purposes. Shapoorji Pallonji Oil and Gas Pvt. Ltd. is still pending and which has not been disposed off. We note from the impugned order of the Ld. DRP that the Assessing Officer has been directed for verification and disposal of t rectification application observing as under: We have gone through the objection of the assessee as well as the written submissions of the assessee. We find that the objection relates to certain adjustments done by the CPC in the processing of return of income us. 143(1) of the Act. The assessee has also filled rectification application with the jurisdictional assessing officer vide letter dated 18.06.2020. It seems that the same is pending. We direct the assessing officer to consider the rectification application and dispose off the same at an early date. The ground of objection no. 5 is disposed off accordingly.” Since the ld DRP already directed the Assessing verification, despite the Assessing Officer omitted to give effect to direction in the impugned final assessment order. opinion that this issue of non-considering the income/loss declared in the revised return of income by the Assessing Officer while passing the final assessment order is a subject matter of ctification and for which the assessee is already before the Therefore, the ground raised before us, is infructuous. However, we direct the Ld. Assessing Officer to dispose off the rectification of the application of the assessee on prio as to resolve the grievance of the assessee raised in the ground No. 2 before us. The ground of appeal is accordingly allowed partly for Shapoorji Pallonji Oil and Gas Pvt. Ltd. 5 ITA No. No. 2434/M/2022 is still pending and which has not been disposed off. We note from the impugned order of the Ld. DRP that the Assessing Officer has been directed for verification and disposal of the We have gone through the objection of the assessee as well as the written submissions of the assessee. We find that the objection relates to certain adjustments done by the CPC rn of income us. 143(1) of the Act. The assessee has also filled rectification application with the jurisdictional assessing officer vide letter dated 18.06.2020. It seems that the same is pending. We direct the assessing ion application and dispose off the same at an early date. The ground of objection no. 5 is Assessing Officer for verification, despite the Assessing Officer omitted to give effect to direction in the impugned final assessment order. We are of the considering the income/loss declared in the revised return of income by the Assessing Officer while passing the final assessment order is a subject matter of ctification and for which the assessee is already before the Therefore, the ground raised before us, is infructuous. However, we direct the Ld. Assessing Officer to dispose off the rectification of the application of the assessee on priority so as to resolve the grievance of the assessee raised in the ground No. 2 before us. The ground of appeal is accordingly allowed partly for 4.3 The ground No. 3 long term capital loss amounting to Rs.22,79,65,217/ been rejected by the Ld. DRP observing as under: “13. We have gone through the objection of the assessee as well as the written submissions on the sam note that the assessee is claiming capital loss arising from redemption of preferenceshares to be allowed to it. Apparently, the assessee has not claimed the same in the return of income us. 139(1) of the Act. We note that the Hon'ble SC in ITR 323, SC) held that assessing officer does not have authority to entertain a claim otherwise than by filing a revised return. The assessee in the instant case has not claimed the loss in the return of inc Act. The assessee has filed a letter before the assessing officer as well as before us requesting for allowance of the capital loss. We note that we are extension of the assessment proceedings as provided in the scheme of the Act regarding the functioning of DRP. The same position about the DRP has been upheld by the Hon'ble Bombay HC in the case of M/s. Vodafone India Services Pvt. Ltd (2014, 361 ITR 0531, Bom).Therefore, in view of the decision of the Hon'ble SC in the Goetze case dismissed.” 4.4 We find that the Ld. DRP has rejected the claim of the assessee in view of the decision of the Hon’ble Supreme Court in the case of Goetze (India) Ltd. ground that proceedings under Ld. DRP are extension of the assessment proceedings. However, the Hon’ble Supreme Court in the case of Goetze (India) Ltd. (supra) has not appellate authorities by the assessee. In the facts and circumstances of the case the interest of substantial justice Shapoorji Pallonji Oil and Gas Pvt. Ltd. The ground No. 3 of the assessee relates to a fresh claim of long term capital loss amounting to Rs.22,79,65,217/ been rejected by the Ld. DRP observing as under: 13. We have gone through the objection of the assessee as well as the written submissions on the same objection. We note that the assessee is claiming capital loss arising from redemption of preferenceshares to be allowed to it. Apparently, the assessee has not claimed the same in the return of income us. 139(1) of the Act. We note that the Hon'ble SC in the case of M/s. Goetze (India) Ltd. (2006, 284 ITR 323, SC) held that assessing officer does not have authority to entertain a claim otherwise than by filing a revised return. The assessee in the instant case has not claimed the loss in the return of income u/s. 139 (1) of the Act. The assessee has filed a letter before the assessing officer as well as before us requesting for allowance of the capital loss. We note that we are extension of the assessment proceedings as provided in the scheme of the Act garding the functioning of DRP. The same position about the DRP has been upheld by the Hon'ble Bombay HC in the case of M/s. Vodafone India Services Pvt. Ltd (2014, 361 ITR 0531, Bom).Therefore, in view of the decision of the Hon'ble SC in the Goetze case (supra), the ground of objection no. 6 is We find that the Ld. DRP has rejected the claim of the assessee in view of the decision of the Hon’ble Supreme Court in the Goetze (India) Ltd. [(2006, 284 ITR 323, (SC) ground that proceedings under Ld. DRP are extension of the assessment proceedings. However, the Hon’ble Supreme Court in the case of Goetze (India) Ltd. (supra) has not appellate authorities including ITAT from entertaining assessee. In the facts and circumstances of the case interest of substantial justice, we feel it appropriate to restore Shapoorji Pallonji Oil and Gas Pvt. Ltd. 6 ITA No. No. 2434/M/2022 the assessee relates to a fresh claim of long term capital loss amounting to Rs.22,79,65,217/- which has 13. We have gone through the objection of the assessee as e objection. We note that the assessee is claiming capital loss arising from redemption of preferenceshares to be allowed to it. Apparently, the assessee has not claimed the same in the return of income us. 139(1) of the Act. We note that the the case of M/s. Goetze (India) Ltd. (2006, 284 ITR 323, SC) held that assessing officer does not have authority to entertain a claim otherwise than by filing a revised return. The assessee in the instant case has not ome u/s. 139 (1) of the Act. The assessee has filed a letter before the assessing officer as well as before us requesting for allowance of the capital loss. We note that we are extension of the assessment proceedings as provided in the scheme of the Act garding the functioning of DRP. The same position about the DRP has been upheld by the Hon'ble Bombay HC in the case of M/s. Vodafone India Services Pvt. Ltd (2014, 361 ITR 0531, Bom).Therefore, in view of the decision of the Hon'ble (supra), the ground of objection no. 6 is We find that the Ld. DRP has rejected the claim of the assessee in view of the decision of the Hon’ble Supreme Court in the (2006, 284 ITR 323, (SC)], on the ground that proceedings under Ld. DRP are extension of the assessment proceedings. However, the Hon’ble Supreme Court in the case of Goetze (India) Ltd. (supra) has not restricted the from entertaining a fresh claim assessee. In the facts and circumstances of the case and in , we feel it appropriate to restore the matter back to the file of the Assessing Officer for examining the claim of the assessee in accordance with law. the appeal is accordingly allowed for statistical purposes. 5. In the result, the appeal is allowed partly for statistical purposes. Order pronounced in the open Court on Sd/ (KAVITHA RAJAGOPAL JUDICIAL MEMBER Mumbai; Dated: 11/05/2023 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// Shapoorji Pallonji Oil and Gas Pvt. Ltd. back to the file of the Assessing Officer for examining the claim of the assessee in accordance with law. The ground No. 3 of the appeal is accordingly allowed for statistical purposes. In the result, the appeal is allowed partly for statistical nounced in the open Court on 11/05/2023. Sd/- Sd/ KAVITHA RAJAGOPAL) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER Copy of the Order forwarded to : BY ORDER, (Assistant Registrar) ITAT, Mumbai Shapoorji Pallonji Oil and Gas Pvt. Ltd. 7 ITA No. No. 2434/M/2022 back to the file of the Assessing Officer for examining the The ground No. 3 of the appeal is accordingly allowed for statistical purposes. In the result, the appeal is allowed partly for statistical /05/2023. Sd/- OM PRAKASH KANT) ACCOUNTANT MEMBER BY ORDER, (Assistant Registrar) ITAT, Mumbai
Other Referred Cases
Goetze (India) Ltd. vs. ITR 323, SC, Vodafone India Services Pvt. Ltd. vs. 361 ITR 0531, Bom
Laws Referred To
Income-tax Act, 1961
1:1 Consultation on Tax Litigation
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Consultation on Entity Formation
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1:1 Consultation on Legal Requirements
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Memorandum Amendment Resolution
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Startup Dissolution Resolution
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