Shalby Hospitals Ltd., Ahmedabad V. The Dy.CIT(OSD) Circle-8, Ahmedabad

ITA 2437/AHD/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6589 (ITAT-AHMEDABAD)
• Duration Of Justice: 9 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-05-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 02-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: VIJAY RANJAN AR SHRI R K VOHRA
• Keywords: Depreciation; Retrospective amendment; Revised return
• Section: 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'B' BEFORE SHRI BHAVNESH SAINI,JM & SHRI A N PAHUJA,AM ITA NO.2437/AHD/2010 (ASSESSMENT YEAR:-2007-08) SHALBY HOSPITALS LIMITED, 6, ROOPAM SOCIETY, NEAR MEMNAGAR FIRE STATION, VIJAY CROSS ROADS, NAVRANGPURA, AHMEDABAD V/S DEPUTY COMMISSIONER OF INCOME-TAX (OSD) CIRCLE-8, 4 TH FLOOR, AJANTA COMPLEX, ASHRAM ROAD, AHMEDABAD PAN: AAICS 5593B [APPELLANT] [RESPONDENT] ASSESSEE BY :- SHRI VIJAY RANJAN, AR REVENUE BY:- SHRI R K VOHRA, DR O R D E R A N PAHUJA: THIS APPEAL BY THE ASSESSEE AGAINST AN ORDER DATE D 21-06-2010 OF THE LD. CIT(APPEALS)-XIV, AHMEDABAD, FOR THE ASSESSMENT YEAR 2007-08, RAISES THE FOLLOWING TWO GROUNDS:- 1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE LD. CIT(A) ERRED IN REJECTING THE ASSESSEES GROUND OF APPEAL RAISED BEFORE HIM THAT THE AO WAS NOT JUSTIFIED IN OVER LOOKING THE REVISED CL AIM OF DEPRECIATION MADE BY THE ASSESSEE DURING THE COURSE OF ASSESSMEN T PROCEEDINGS. 2 THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND A ND / OR WITHDRAW ANY GROUND OR GROUNDS OF APPEAL EITHER BEFORE OR DURING THE COURSE OF HEARING OF APPEAL. 2. FACTS, IN BRIEF, AS PER RELEVANT ORDERS ARE THAT RETURN DECLARING INCOME OF RS.20,85,370/- FILED ON 30-10-2007 BY THE ASSESSEE, RUNNING AN ORTHOPEDIC HOSPITAL, AFTER BEING PROCESS ED ON 13-01-2009 U/S 143(1) OF THE INCOME-TAX ACT, 1961 [HEREINAFTER REFERRED TO AS THE ACT], WAS SELECTED FOR SCRUTINY WITH THE SERVICE OF A NOTICE U/S 143(2) OF THE ACT 23-07-2008.DURING THE COURSE OF A SSESSMENT PROCEEDINGS, THE ASSESSING OFFICER[AO IN SHORT] NOT ICED THAT THE ASSESSEE DEBITED AN AMOUNT OF RS.48,88,767/- ON ACC OUNT OF PROVISION FOR DEFERRED TAX. SINCE THE ASSESSEE DID NOT ADD BACK PROVISION FOR DEFERRED TAX IN THE COMPUTATION OF IN COME WHILE 2 ITA NO.2437/AHD/2010 2 DETERMINING BOOK PROFITS U/S 115JB OF THE ACT, THE AO SHOWCAUSED THE ASSESSEE AS TO WHY THE SAID AMOUNT BE NOT ADDE D BACK. IN RESPONSE, THE ASSESSEE VIDE THEIR SUBMISSIONS DATED 6.11.2009 AGREED TO THE PROPOSED ADDITION. ACCORDINGLY, BOOK PROFITS OF RS.1,56,63,034/- WERE DETERMINED. 3. HOWEVER, THE ASSESSEE PREFERRED APPEAL BEFOR E THE LD. CIT(A) ON THE GROUND THAT THEIR REVISED CLAIM FOR DEPRECIA TION RAISED DURING THE COURSE OF ASSESSMENT PROCEEDINGS WAS NOT CONSID ERED BY THE AO. THE ASSESSEE HAD CLAIMED REVISED DEPRECIATION O F RS.1,76,25,064/- AS AGAINST THE ORIGINAL CLAIM OF R S. 1,74,86,869/- THE LEARNED CIT(A) IN THE IMPUGNED ORDER ADJUDICAT ED THE ISSUE IN THE FOLLOWING TERMS:- 2.1 THE ONLY GROUND OF APPEAL IS REGARDING NOT ALL OWING THE REVISED CLAIM OF DEPRECIATION RAISED DURING THE COURSE OF A SSESSMENT PROCEEDINGS. IT IS SEEN THAT THE AO HAS NOT DISCUSSED THIS PARTI CULAR ISSUE IN THE ASSESSMENT ORDER AND THIS GROUND IS NOT ARISEN FROM THE ASSESSMENT ORDER. 2.2 THE AR OF THE APPLICANT, DURING THE COURSE OF A PPELLATE PROCEEDINGS, HAS SUBMITTED THAT THE AO HAS PASSED T HE ASST. ORDER AND ASSESSED THE INCOME BEING THE BOOK PROFIT U/S 115JB OF RS.1,56,63,034/- AFTER ADDING BACK THE AMOUNT OF DEFERRED TAX PROVIS ION OF RS.48,88,767/- WHICH WAS REQUIRED TO BE CONSIDERED IN LIGHT OF THE RETROSPECTIVE AMENDMENT BROUGHT BY THE FINANCE ACT, 2008. THE ASS ESSEE HAS ORIGINALLY CLAIMED DEPRECIATION OF RS.1,74,86,869/- WHICH WAS SUBSEQUENTLY REVISED TO RS.1,76,25,064/-. THE APPEL LANT FURTHER CONTENDED THAT ALTHOUGH THE INCOME ASSESSED BY AO WILL REMAIN UNAFFECTED AS THE INCOME IS ASSESSED AT BOOK PROFIT, THE ABOVE OMISSI ON WOULD HOWEVER ALTER THE QUANTUM OF MAT CREDIT UNDER SEC. 115JAA OF THE ACT, WHICH THE ASSESSEE CAN CARRY FORWARD AND THUS, THE PRESENT AP PEAL IS FILED. IT WAS FURTHER SUBMITTED THAT DURING THE YEAR, THE APPELLA NT HAD COMMENCED A NEW HOSPITAL UNIT AT SG ROAD, ABAD IN THE MONTH OF MARCH, 2007, HUGE ADDITIONS TO VARIOUS CLASSES OF ASSETS WERE MADE AN D DEPRECIATION WAS WORKED OUT IN TERMS OF PROVISIONS OF THE IT ACT. IT WAS BROUGHT TO THE NOTICE OF AO THAT DEPRECIATION NEEDED TO BE REWORKED DUE T O CERTAIN ADJUSTMENTS CALLED FOR WHILE FINALIZING THE BOOK FOR THE FINANC IAL YEAR 2008-09, RELEVANT TO AY 2009-10. IT WAS CLARIFIED THAT WHILE FINALIZI NG THE BOOKS OF AY 2009- 10, IT WAS NOTED BY THE STATUTORY AUDITOR THAT THER E WERE ADVANCES AGAINST FIXED ASSETS AND ALSO SOME UNPAID LIABILITIES ON AC COUNT OF CERTAIN ASSETS HAVING BEEN PUT TO USE IN YEAR UNDER QUESTION ON WH ICH DEPRECIATION WAS CLAIMED. THAT SUCH ADVANCES HAD REMAINED TO BE DEBI TED TO THE 3 ITA NO.2437/AHD/2010 3 CORRESPONDING FIXED ASSETS ON ACCOUNT OF REASONS LI KE TRADE NEGOTIATIONS AND OTHER DISPUTES AND CONFIRMATION FROM SUCH VENDO RS. SIMILARLY, THE LIABILITIES TOO HAD REMAINED TO BE CREDITED TO THE CORRESPONDING FIXED ASSETS ACCOUNT FOR THE REASONS AFORESAID. THUS, AFTER CARR YING SUCH RECTIFICATION TO THE CORRESPONDING FIXED ASSETS AND THE REWORKING OF DEPRECIATION ON THAT AMOUNT RESULTED INTO AN INCREASE IN THE DEPRECIATIO N CLAIMED BY THE ASSESSEE FOR THE ASST. YEAR IN QUESTION. WHEN THE M ATTER WAS BROUGHT TO THE NOTICE OF AO, HE HAS FAILED TO PROVIDE REWORKED DEPRECIATION. SINCE THE RETURN FOR CURRENT FINANCIAL YEAR COULD NOT BE REVI SED DUE TO LIMITATION OF THE PROVISIONS OF SEC. 139, THESE FACTS WERE BROUGHT TO THE NOTICE OF THE AO DURING THE COURSE OF ASST. PROCEEDINGS, WHICH ARE R EPRODUCED AS UNDER:- WHILE ADJUSTING THE ADVANCES AND / OR LIABILITIES IN THE CURRENT FINANCIAL YEAR I.E. 2008-09, RELEVANT TO AY 2009-10 BY THE STATUTORY AUDITOR, THE CLAIM OF DEPRECIATIONS FOR THE RELEVAN T ASST. YEAR AY 2007-08 & 2008-09 ARE RECOMPUTED AND ACCORDINGLY TH E SAME WERE REVISED IN THE RETURN FOR AY 2008-09. HOWEVER, AS T HE TIME TO REVISE THE RETURN FOR THE ASST. YEAR IN QUESTION HAD ELAPS ED WE COULD NOT REVISE THE CLAIM FOR AY 2007-08. THUS, VIDE THIS CO MMUNICATION, WE REQUEST YOU TO KINDLY CONSIDER THE REVISED CLAIM OF DEPRECIATION AS WORKED OUT IN THE ENCLOSED ANNEXURE-I, WHICH COMES TO RS.1,76,25,064/- AS AGAINST THE ORIGINAL CLAIM OF R S.1,74,86,869/-. 2.3 I HAVE CONSIDERED THE FACTS OF THE CASE AND TH E SUBMISSIONS MADE BY THE APPELLANT. AS ALREADY MENTIONED ABOVE, THE I SSUE UNDER APPEAL HAS NOT ARISEN FROM THE BODY OF THE ASSESSMENT ORDER AN D THE AO HAS NOT DISCUSSED ANYTHING ON THE ISSUE IN HIS ASSESSMENT O RDER. THEREFORE, THE CONTENTION OF THE APPELLANT THAT SINCE THERE WAS NO TIME TO REVISE THE RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER QUESTION EF FECTING THEREBY THE CLAIM OF REVISED DEPRECIATION AND CLAIMING THE REVI SED DEPRECIATION DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE CLAIM MAY BE ALLOWED, CANNOT BE ACCEPTED, BECAUSE IT IS A SETTLED LAW THAT IN CA SE ANY REVISED CLAIM HAS TO BE MADE THAN THE CLAIM MADE AS PER THE RETURN OF INCOME, THE ONLY COURSE LEFT TO THE APPELLANT IS TO MAKE SUCH CLAIM BY FILING A REVISED RETURN OF INCOME. THIS VIEW FINDS SUPPORT FROM THE DECISIO N OF THE HON'BLE SUPREME COURT IN THE CASE OF GOETZ (INDIA) LTD., 28 4 ITR 323 (SC), WHEREIN IT HAS BEEN HELD THAT THE AO NO POWER TO EN TERTAIN THE CLAIM MADE OTHERWISE THAN BY WAY OF REVISED RETURN. I AM, THER EFORE, OF THE OPINION THAT THE AO IS QUITE JUSTIFIED IN NOT ENTERTAINING THE C LAIM OF REVISED DEPRECIATION MADE DURING THE COURSE OF ASSESSMENT PROCEEDINGS VI DE SUBMISSION. THIS GROUND OF APPEAL IS, THEREFORE, REJECTED. 4. THE ASSESSEE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF THE LEARNED CIT(A). THE LEARNED AR ON B EHALF OF THE ASSESSEE WHILE REITERATING THEIR SUBMISSIONS BEFORE THE LD. CIT(A) CONTENDED THAT THE CLAIM OF DEPRECIATION NEEDED TO BE REWORKE D DUE TO CERTAIN 4 ITA NO.2437/AHD/2010 4 ADJUSTMENTS CALLED FOR WHILE FINALIZING THE BOOKS F OR THE FINANCIAL YEAR 2008-09, RELEVANT TO THE AY 2009-10, RETURN OF WHICH WAS DUE DURING THE PERIOD OF ASSESSMENT. WHILE FINALIZING T HE BOOKS OF A.Y. 2009-10, IT WAS NOTED BY THE STATUTORY AUDITORS THA T THERE WERE ADVANCES AGAINST FIXED ASSETS AND ALSO SOME UNPAID LIABILITIES ON ACCOUNT OF CERTAIN ASSETS HAVING BEEN PUT TO USE IN YEAR UNDER QUESTION ON WHICH DEPRECIATION WAS CLAIMED. THAT SU CH ADVANCES HAD REMAINED TO BE DEBITED TO THE CORRESPONDING FIX ED ASSETS ON ACCOUNT OF REASONS LIKE TRADE NEGOTIATIONS AND OTHE R DISPUTES AND CONFIRMATION FROM SUCH VENDORS. SIMILARLY, THE LIAB ILITIES TOO HAD REMAINED TO BE CREDITED TO THE CORRESPONDING FIXED ASSETS ACCOUNT FOR THE REASONS AFORESAID. THUS, AFTER CARRYING SUC H RECTIFICATION TO THE CORRESPONDING FIXED ASSETS AND THE REWORKING OF DEPRECIATION ON THAT AMOUNT RESULTED INTO AN INCREASE IN THE DEPREC IATION CLAIMED BY THE ASSESSEE FOR THE ASSESSMENT YEAR IN QUESTION. W HILE REFERRING TO THE DECISIONS IN THE CASE OF GOETZE (INDIA) LTD. V C1T 284 ITR 323(SC),THOMAS KURIAN VS. ASSISTANT COMMISSIONER OF INCOME-TAX, 303 ITR (AT)110(COCHIN) AND KANOI INDUSTRIES (P.) LTD. VS. DCIT, 100 ITD 462(KOLKATA )MENTIONED IN THE STATEMENT OF FACTS ANNEXED TO THE APPEAL, THE LD. AR CONTENDED THAT ANY LEGAL LY VALID CLAIM MADE BY THE ASSESSEE BEFORE THE ASSESSING OFFICER O R BEFORE THE APPELLATE AUTHORITIES, HAS TO BE EXAMINED VIS-A-VIS PROVISIONS OF THE ACT AND IF SUCH CLAIM IS FOUND TO BE LEGALLY JUSTIF IED, THE INCOME-TAX AUTHORITIES ARE UNDER LEGAL OBLIGATIONS TO ALLOW SU CH CLAIM.THE LEARNED DR, ON THE OTHER HAND, SUPPORTED THE IMPUGN ED ORDER OF THE LEARNED CIT(A). 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. AS IS APPARENT FROM THE AFORESAID FACTS, THE LD. CIT(A) DID NOT ADJUDICATE THE ISSUES RAISED IN GROUND NO.1 OF THE APPEAL BEFORE HIM ON THE BASIS OF DECISION IN GOETZE (INDIA) LT D. V. CIT [2006] 284 ITR 323 (SC) .WE FIND THAT IN GOETZE INDIA LTD. (SUPRA), DEDUCTION CLAIMED BY WAY OF A LETTER BEFORE ASSESSI NG OFFICER, WAS 5 ITA NO.2437/AHD/2010 5 DISALLOWED ON THE GROUND THAT THERE WAS NO PROVISIO N UNDER THE ACT TO MAKE AMENDMENT IN THE RETURN WITHOUT FILING A RE VISED RETURN. APPEAL TO THE SUPREME COURT, AS THE DECISION WAS UP HELD BY THE TRIBUNAL AND THE HIGH COURT, WAS DISMISSED MAKING C LEAR THAT THE DECISION WAS LIMITED TO THE POWER OF ASSESSING AUTH ORITY TO ENTERTAIN CLAIM FOR DEDUCTION OTHERWISE THAN BY REVISED RETUR N, AND DID NOT IMPINGE ON THE POWERS OF THE TRIBUNAL. WE FIND TH AT IN THE CASE OF CHICAGO PNEUMATIC INDIA LTD. VS. DY. CIT (2007) 15 SOT 252 (MUMBAI), THE TRIBUNAL AFTER CONSIDERING THE DECISI ON OF HON'BLE SUPREME COURT IN THE CASE OF GOETZE (INDIA) LTD. (S UPRA) HELD THAT THE AO WAS OBLIGED TO GIVE DUE RELIEF TO THE ASSESS EE OR ENTERTAIN ITS CLAIM IF ADMISSIBLE AS PER LAW EVEN THOUGH THE ASSE SSEE HAD NOT FILED REVISED RETURN. IN THEIR DECISION, THE HON' BLE APEX COURT HAVE NOT BARRED THE ASSESSEE, RAISING ITS LEGAL CLAIM BE FORE APPELLATE AUTHORITIES, THE APEX COURT ITSELF CLARIFYING THAT THE ISSUE IN THAT CASE WAS LIMITED TO THE POWER OF THE ASSESSING AUTH ORITY AND DID NOT IMPINGE ON THE POWER OF THE INCOME-TAX APPELLATE TR IBUNAL UNDER SECTION 254 OF THE ACT . SINCE THE LD. CIT(A) R EJECTED THE CLAIM OF THE ASSESSEE MERELY ON TECHNICAL CONSIDERATIONS WIT HOUT GOING IN TO MERITS OF THE CLAIM , WE CONSIDER IT FAIR AND APP ROPRIATE TO SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THE ISSUE RAISED BY THE ASSESSEE IN GROUND NO.1 IN THEIR APPEAL, TO HIS F ILE FOR DECIDING THE MATTER AFRESH IN ACCORDANCE WITH LAW, AFTER ALLOWIN G SUFFICIENT OPPORTUNITY TO BOTH THE PARTIES. NEEDLESS TO SAY TH AT WHILE REDECIDING THE APPEAL, THE LEARNED CIT(A) SHALL PASS A SPEAKIN G ORDER, KEEPING IN MIND, INTER ALIA, THE MANDATE OF PROVISIONS OF S EC. 250(6) OF THE ACT. WITH THESE DIRECTIONS, GROUND NO. 1 IN THE APP EAL IS DISPOSED OF. 6. NO ADDITIONAL GROUND HAVING BEEN RAISED BEFORE US IN TERMS OF THE RESIDUARY GROUND NO.2 IN THE APPEAL, ACCORDINGL Y, THIS GROUND IS DISMISSED. 6 ITA NO.2437/AHD/2010 6 7. IN THE RESULT, APPEAL IS ALLOWED, BUT FOR STATIS TICAL PURPOSES. ORDER PRONOUNCED IN THE COURT TODAY ON 20 -05-2011 SD/- SD/- (BHAVNESH SAINI) JUDICIAL MEMBER (A N PAHUJA) ACCOUNTANT MEMBER DATED : 20-05-2011 COPY OF THE ORDER FORWARDED TO: 1. SHALBY HOSPITALS LIMITED, 6, ROOPAM SOCIETY, NEA R MEMNAGAR FIRE STATION, VIJAY CROSS ROADS, NAVRANGPU RA, AHMEDABAD 2. DEPUTY COMMISSIONER OF INCOME-TAX (OSD) CIRCLE- 8, AHMEDABAD 3. CIT CONCERNED 4. CIT(A)-XIV, AHMEDABAD 5. DR, ITAT, AHMEDABAD BENCH-B, AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT, AHMEDABAD