FIRSTSOURCE SOLUTIONS LTD, MUMBAI V. PR CIT CIT 6, MUMBAI

ITA 2567/MUM/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2542 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2006-2007
• Appeal Filed On: 05-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANAND MOHANCIT
• Assessee Lawyers: F V IRANI SRI K K VEEL ARS
• Keywords: Rectification of order; Competent authority; Reassessment proceedings
• Section: 143(3); 147; 263; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUM BAI BEFORE SRI G. S. PANNU, ACCOUNTANT MEMBER AND SRI SANJAY GARG, JUDICIAL MEMBER ITA NO.2567/MUM/2015 (A.Y.:2006-07) FIRSTSOURCE SOLUTIONS LTD., 5 TH FLOOR, PARADIGM B MINDSPACE, NEW LINK ROAD, MALAD (WEST), MUMBAI 400 064 VS. THE PRINCIPAL COMMISSIONER OF INCOME TAX, CITY-6, AAYAKAR BHAVAN, MAHARSHI KARVE ROAD, MUMBAI 400 020 PAN:AAACI 1890 N APPELLANT .. RESPONDENT APPELLANT BY: SRI F. V. IRANI SRI K. K. VEEL, ARS RESPONDENT BY: SRI ANAND MOHAN,CIT DR DATE OF HEARING: 21-06-2016 DATE OF PRONOUNCEMENT: 20-07-2016 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE ABOVE TITLED APPEAL HAS BEEN PREFERRED BY THE A SSESSEE AGAINST THE ORDER OF THE LEARNED PRINCIPAL COMMISSI ONER OF INCOME TAX-6, MUMBAI [HEREINAFTER REFERRED TO AS THE CIT ] DATED 02-03- 2015 FOR ASSESSMENT YEAR 2006-07 PASSED U/S 263 OF THE INCOME TAX ACT, 1961 [HEREINAFTER REFERRED TO AS THE ACT ]. THE ASSESSEE HAS AGITATED THE ACTION OF THE CIT IN SETTING ASIDE THE RECTIFICATION ORDER DATED 05-03-2014 PASSED BY THE AO U/S 154 OF THE ACT. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ORIGINA L ASSESSMENT U/S 143(3) READ WITH SECTION 144C (5) OF THE ACT WA S COMPLETED DETERMINING THE ASSESSED LOSS OF RS.25,00,000/-. TH EREAFTER, REASSESSMENT PROCEEDINGS U/S 147 OF THE ACT WERE CA RRIED OUT AND ADDITION OF RS.16.49 CRORES WAS MADE BY OBSERVING T HAT WHILE COMPUTING THE DEDUCTION U/S 10A/10B OF THE ACT, BRO UGHT FORWARD ITA NO.2567/MUM/2014 2 LOSSES OF RS.16.38 CRORES WERE CONSIDERED AS AGAINS T LOSSES OF RS.18.29 CRORES SHOWN IN THE TAX AUDIT REPORT. THUS , THE LOSS OF RS.1.91 CRORES REMAINED TO BE ADJUSTED FROM THE PRO FITS, RESULTING INTO EXCESS DEDUCTION. FURTHER IT WAS OBSERVED THAT LOSS OF ONLY RS.1.80 CRORES AGAINST PROFITS OF RESPECTIVE UNIT W AS ADJUSTED. THE BALANCE LOSS OF RS.16.49 CRORES REMAINED UNADJUSTED . IT WAS FURTHER OBSERVED THAT THE SAID LOSSES WERE REQUIRED TO BE A DJUSTED FROM THE PROFITS OF THE ELIGIBLE UNITS AND, THEREFORE, THERE WAS EXCESS ALLOWANCE OF DEDUCTION AMOUNTING TO RS.16.49 CRORES . PURSUANT TO THE SAID RECTIFICATION ORDER, THE ASSESSEE MOVED AN APPLICATION U/S 154 OF THE ACT TO THE AO STATING THAT THE ADDITION OF RS.16.49 CRORES WAS MADE ON ACCOUNT OF UNADJUSTED BROUGHT FO RWARD LOSSES. HOWEVER, THERE WAS NO BROUGHT FORWARD LOSS ASSESSED , IN THE ASSESSMENT ORDER FOR ASSESSMENT YEAR 2005-06. EVEN, THE FIGURES OF RS.1.80 CRORES AND RS.16.49 CRORES REFERRED TO IN T HE REASSESSMENT ORDER DID NOT ARISE FROM ANY RECORDS OF THE ASSESSE E. THE AO CONSIDERING THE ABOVE SUBMISSIONS OF THE ASSESSEE O BSERVED THAT FROM PERUSAL OF THE RECORDS FOR ASSESSMENT YEAR 200 5-06, IT REVEALED THAT THE ASSESSEE COMPANY HAD DECLARED LOS S OF RS.18.67 CRORES. HOWEVER, THE ASSESSMENT U/S 143 (3) OF THE ACT WAS COMPLETED VIDE ORDER DATED 26-12-2008 DETERMINING T HE TOTAL INCOME OF THE ASSESSEE AT RS.2,97,49,755/-. HENCE, THERE WAS NO LOSS CARRIED FORWARD OF ASSESSMENT YEAR 2005-06 WHI CH REQUIRED TO BE ADJUSTED IN THE ASSESSMENT YEAR 2006-07. FINDING THE CONTENTIONS OF THE ASSESSEE TO BE CORRECT, THE AO P ASSED THE RECTIFICATION ORDER AND REVISED THE ASSESSED INCOME AFTER DEDUCTING THE ADDITION MADE ON ACCOUNT OF BROUGHT FORWARD LOS SES. 3. AGAINST THE SAID RECTIFICATION ORDER PASSED BY T HE AO U/S 154 OF THE ACT, THE LEARNED CIT EXERCISED HIS REVISION JURISDICTION U/S 263 OF THE ACT AND OBSERVED THAT THE AO HAS NO JURI SDICTION UNDER ITA NO.2567/MUM/2014 3 SECTION 154 TO RECTIFY THE ORDER PASSED UNDER REASS ESSMENT PROCEEDINGS WHEN THE ISSUE HAD ALREADY BEEN CONSIDE RED IN SUCH PROCEEDINGS. HE FURTHER OBSERVED THAT THE ASSESSEE HAD FILED APPEAL BEFORE THE LEARNED CIT (A) AGAINST THE ASSESSMENT O RDER FOR ASSESSMENT YEAR 2005-06 CLAIMING SET OFF OF BROUGHT FORWARD LOSSES BUT THE LEARNED CIT (A) DECLINED TO CONSIDER THE SAID CLAIM. THE LEARNED CIT FURTHER OBSERVED THAT FROM THE RECO RDS OF THE ASSESSEE, IT REVEALED THAT THE ASSESSEE HAD CLAIMED BUSINESS LOSSES IN EARLIER ASSESSMENT YEARS AND ALSO UNABSORBED DEP RECIATION. HE, THEREFORE, OBSERVED THAT THE AO HAD WRONGLY EXERCIS ED HIS JURISDICTION U/S 154 OF THE ACT ESPECIALLY WHEN THE MATTER HAS ALREADY BEEN ADJUDICATED UPON BY THE LEARNED CIT (A ) IN HIS APPELLATE ORDER FOR ASSESSMENT YEAR 2005-06. HE, TH EREFORE, SET ASIDE THE RECTIFICATION ORDER DATED 05-03-2014 OF T HE AO WITH THE DIRECTION TO RE-EXAMINE THE FULL FACTS IN THE LIGHT OF THE DISCUSSIONS MADE BY HIM. BEING AGGRIEVED BY THE ABOVE REVISION ORDER PASSED BY THE LEARNED CIT, THE ASSESSEE HAS COME IN APPEAL BEFORE US. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE ALS O GONE THROUGH THE RECORDS. THE LEARNED AR OF THE ASSESSEE SUBMITTED THAT THOUGH THE ASSESSEE HAD CLAIMED CARRY FORWARD OF TH E LOSSES, HOWEVER, DURING THE ASSESSMENT PROCEEDINGS FOR ASSE SSMENT YEAR 2005-06, ALL THE LOSSES WERE ABSORBED AND TOTAL INC OME OF THE ASSESSEE WAS ASSESSED AT RS.2,97,49,755/-. HENCE, H E INVITING OUR ATTENTION TO THE ASSESSMENT ORDER FOR ASSESSMENT YE AR 2005-06, HAS STATED THAT THERE WAS NO CARRY FORWARD LOSS ASSESSE D OF THE SAID YEAR. 5. THE LEARNED DR COULD NOT REBUT THE SAID CONTENTI ON OF THE ASSESSEE. ITA NO.2567/MUM/2014 4 6. IN THE CIRCUMSTANCES, WHEN THERE WAS NO CARRY FO RWARD LOSSES ASSESSED DURING THE ASSESSMENT YEAR 2005-06, THERE WAS NO QUESTION OF ADJUSTMENT OF THE SAME DURING THE ASSES SMENT YEAR 2006-07. THE AO, THEREFORE, HAD RIGHTLY PASSED THE RECTIFICATION ORDER. THE ACTION OF THE LEARNED CIT IN REVISING TH E SAID ORDER OBSERVING THAT THE AO HAS NO JURISDICTION TO PASS R ECTIFICATION ORDER U/S 154 OF THE ACT IS MISCONCEIVED. THE LEARNED CIT THOUGH DISCUSSED FROM THE RECORDS THAT THE ASSESSEE HAD CL AIMED BROUGHT FORWARD LOSSES OF THE EARLIER YEARS, HOWEVER, HAS N OT REBUTTED THE CONTENTION THAT ULTIMATELY NO LOSSES WERE ALLOWED T O BE CARRIED FORWARD IN THE ASSESSMENT ORDER FOR ASSESSMENT YEAR 2005-06. IN VIEW OF THIS, THE REVISION ORDER PASSED BY THE LEAR NED CIT U/S 263 OF THE ACT IS HEREBY SET ASIDE. BEFORE PARTING WITH THE ORDER, WE WISH TO CLARIFY THAT IF AT ANY TIME IN PURSUANCE TO ANY ORDER PASSED BY ANY COMPETENT AUTHORITY IN RELATION TO ASSESSMEN T YEAR 2005-06, ANY LOSS FOR ASSESSMENT YEAR 2005-06 IS DETERMINED WHICH REQUIRE TO BE CARRY FORWARD, THE AO WILL BE AT LIBERTY TO R ECTIFY THE ORDER FOR ASSESSMENT YEAR 2006-07, IF SO, PERMITTED UNDER THE PROVISIONS OF THE LAW. AS ON TODAY, SINCE, THERE IS NO CARRY FORWARD LOSSES AVAILABLE OF THE ASSESSMENT YEAR 2005-06 AS PER THE ASSESSMENT ORDER DATED 26-12-2008, HENCE, THERE IS NO QUESTION OF ADJUSTMENT OF ANY BROUGHT FORWARD LOSSES IN THE ASSESSMENT YEA R 2006-07. WITH THE ABOVE OBSERVATIONS, THE APPEAL OF THE ASSE SSEE IS HEREBY ALLOWED. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 20 JULY, 2 016 SD/- SD/- (G. S. PANNU) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 20 JULY, 2016 ITA NO.2567/MUM/2014 5 LAKSHMIKANTA DEKA/SR.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ASSISTANT REGISTRAR ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT (A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//