The Mathrubhumi Printing & Publishin Co.Ltd, Calicut V. The ACIT, Calicut

ITA 266/COCH/2014

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7262 (ITAT-COCHIN)
• Duration Of Justice: 2 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 26-08-2014
• Assessment Year: misc
• Appeal Filed On: 06-06-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: LATHA V KUMAR
• Assessee Lawyers: T M SREEDHARANLD SR COUNSE L
• Keywords: Rectification of order; Period of limitation
• Section: 143(3); 154

Judgement Text

1 ITA NO.266/COCH/2014 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI CHANDRA PO OJARI (AM) I.T.A NO. 266/COCH/2014 (ASSESSMENT YEAR 1988-89) THE MATHRUBHUMI PRINTING & VS ACIT, CIR.1(1) PUBLISHING CO. LTD KOZHIKODE K.P. KESAVA MENON ROAD KOZHIKODE-673 001 PAN : AAACT8521G (APPELLANT) (RESPONDENT) APPELLANT BY :SHRI T.M SREEDHARAN, LD.SR.COUNSE L RESPONDENT BY : SMT. LATHA V KUMAR DATE OF HEARING : 26-08-2014 DATE OF PRONOUNCEMENT : 28-08-2014 O R D E R PER N.R.S. GANESAN (JM) THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF CIT(A), KOZHIKODE DATED 09-04-2014 AND PERTAINS TO ASSESSME NT YEAR 1988-89. 2. SHRI T.M. SREEDHARAN, THE LD.SENIOR COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSMENT FOR THE ASSESSMENT YE AR 1988-89 WAS COMPLETED U/S 143(3) OF THE ACT BY AN ORDER DATED 1 9-12-1990 DETERMINING THE TOTAL INCOME AT RS.69,53,137 U/S 115J OF THE AC T. SUBSEQUENTLY, THE 2 ITA NO.266/COCH/2014 ASSESSING OFFICER BY AN ORDER DATED 12-03-1992 U/S 154 OF THE ACT DETERMINED THE TOTAL INCOME AT RS.37,48,830. THE A SSESSEE CHALLENGED THE CORRECTNESS OF THE ORDER PASSED BY THE ASSESSIN G OFFICER U/S 154 ON 12-03-2014 BEFORE THE CIT(A). ACCORDING TO THE LD. SENIOR COUNSEL, THE ASSESSEE CLAIMED DEDUCTION 32A AND U/S 32AB OF THE ACT. THOUGH IT WAS ALLOWED ORIGINALLY, THE ASSESSING OFFICER BY AN ORD ER DATED 12-03-1992 PASSED U/S 154 OF THE ACT FOUND THAT DEDUCTION U/S 32A CANNOT BE CLAIMED SIMULTANEOUSLY ALONGWITH DEDUCTION U/S 32AB. ACCOR DINGLY, THE DEDUCTION ALREADY GRANTED U/S 32A WAS WITHDRAWN. ON APPEAL B Y THE ASSESSEE, THE CIT(A) DIRECTED THE ASSESSING OFFICER TO ALLOW THE CLAIM OF THE ASSESSEE U/S 32A OF THE ACT. ON FURTHER APPEAL BEFORE THIS TRIB UNAL, THE TRIBUNAL FOUND THAT THERE ARE TWO VIEWS POSSIBLE, THEREFORE, IT CA NNOT BE AMENDED U/S 154 OF THE ACT. THE REVENUE CARRIED THE MATTER BEFORE THE HIGH COURT. THE HIGH COURT, BY JUDGMENT DATED 11-02-2008 IN IT NO.4 5 OF 2008 FOUND THAT THE ASSESSEE CANNOT CLAIM DEDUCTION U/S 32A AND 32A B SIMULTANEOUSLY IN VIEW OF SECTION 32A(8B) OF THE ACT. THE HIGH COURT FURTHER FOUND THAT THE SCOPE OF SECTION 32A(8B) IS THAT IF IN THE COURSE O F ASSESSMENT THE ASSESSING OFFICER NOTICES THAT THE ASSESSEE HAS CLA IMED DEDUCTION /S 32AB FOR THE SAME YEAR, THERE IS NO NEED TO PROCESS THE CLAIM U/S 32A BUT TO REJECT THE CLAIM OF DEDUCTION OF INVESTMENT ALLOWAN CE. IF RELIEF IS GRANTED CONTRARY TO THE STATUTORY PROVISION THEN SUCH ORDER IS A MISTAKEN ORDER AND ASSESSING OFFICER IS ENTITLED TO RECTIFY SUCH ORDER IN PROCEEDINGS U/S 154 OF 3 ITA NO.266/COCH/2014 THE ACT. ACCORDINGLY, THE HIGH COURT RESTORED THE ORDER OF THE ASSESSING OFFICER. THE ASSESSING OFFICER GAVE EFFECT TO THE JUDGMENT OF THE HIGH COURT BY AN ORDER DATED 19-11-2008. THEREAFTER THE ASSES SEE FILED AN APPLICATION U/S 154 OF THE ACT ON 09-02-2009. THE ASSESSEE CLAIMED INVESTMENT ALLOWANCE FOR THE ASSESSMENT YEAR 1988-8 9. THE CLAIM OF THE ASSESSEE WAS DISALLOWED ONLY ON THE BASIS THAT A CL AIM U/S 32AB WAS ALSO MADE. AT THE VERY SAME TIME, THE UNABSORBED INVEST MENT ALLOWANCE WHICH COULD NOT BE ALLOWED FOR THE ASSESSMENT YEAR 1988-8 9 IS ELIGIBLE TO BE CARRIED FORWARD FOR THE SUBSEQUENT ASSESSMENT YEARS . 3. ACCORDING TO THE LD.SENIOR COUNSEL, EVEN THOUGH THE UNABSORBED INVESTMENT ALLOWANCE TO THE EXTENT OF RS.49,71,508 WAS NOT ADMISSIBLE FOR THE YEAR 1988-89, THE SAME SHOULD BE ALLOWED TO BE CARRIED FORWARD TO SET OFF AGAINST THE FUTURE INCOME. ACCORDING TO THE LD .SENIOR COUNSEL, THE OMISSION TO RECORD A FINDING TO THAT EFFECT IN THE ORDER DATED 19-11-2008 WHILE GIVING EFFECT TO THE ORDER OF THE HIGH COURT IS A MISTAKE APPARENT ON THE FACE OF THE RECORD. THEREFORE, THE ASSESSEE FI LED AN APPLICATION ON 09- 02-2009 ON THE GROUND THAT WHAT WAS PROHIBITED IS T HAT IN CASE OF A CLAIM MADE BY THE ASSESSEE U/S 32AB, CLAIM OF INVESTMENT ALLOWANCE SHOULD NOT BE ALLOWED. HOWEVER, THE ASSESSEE IS ELIGIBLE FOR CARRY FORWARD OF THE INVESTMENT ALLOWANCE ALLOWABLE FOR THE YEAR UNDER C ONSIDERATION TO BE SET OFF WITH THE INCOME OF THE SUBSEQUENT ASSESSMENT YE AS. THE FAILURE OF THE 4 ITA NO.266/COCH/2014 ASSESSING OFFICER TO RECORD A FINDING TO CARRY FORW ARD THE INVESTMENT ALLOWANCE TO THE SUBSEQUENT ASSESSMENT YEARS, ACCOR DING TO THE LD.SENIOR COUNSEL, IS AN ERROR APPARENT ON THE FACE OF THE RE CORD. THE LD.SENIOR COUNSEL PLACED HIS RELIANCE ON THE CIRCULAR ISSUED BY THE CBDT IN CIRCULAR NO.461 DATED 09-07-1986 AND SUBMITTED THAT NO DEDUC TION BY WAY OF INVESTMENT ALLOWANCE SHALL BE ALLOWED IN CASE OF AN ASSESSEE, WHOSE CLAIM OF DEDUCTION U/S 32AB OF THE ACT WAS ALLOWED. HOWEVER, THE BENEFIT OF SET OFF OF UNABSORBED INVESTMENT ALLOWANCE FOR A N EARLIER YEAR WILL NOT BE DENIED. 4. THE LD.SENIOR COUNSEL HAS ALSO PLACED RELIANCE O N THE JUDGMENT OF THE DELHI HIGH COURT IN CIT VS TONY ELECTRONICS LTD (2010) 320 ITR 378 (DEL) AND SUBMITTED THAT WHEN THE APPELLATE AUTHORI TY PASSES THE ORDER, THE ORDER OF THE ORIGINAL AUTHORITY CEASES TO EXIST. T HEREFORE, FOR THE PURPOSE OF LIMITATION U/S 154(7), THE APPELLATE ORDER SHALL BE TAKEN INTO CONSIDERATION. ACCORDING TO THE LD.SENIOR COUNSEL, THE HIGH COURT ULTIMATELY ALLOWED THE APPEAL OF THE DEPARTMENT ON 11-02-2008. EVEN THOUG H THE ORIGINAL RECTIFICATION ORDER WAS MADE BY THE ASSESSING OFFIC ER ON 12-03-1992 THE PROCEEDINGS ONLY ATTAINED FINALITY BY THE JUDGMENT OF THE HIGH COURT ON 11- 02-2008. ACCORDING TO THE LD.SENIOR COUNSEL, THE APPELLATE PROCEEDINGS BEFORE THE CIT(A), ITAT AND HIGH COURT ARE CONTINUA TION OF THE ORIGINAL PROCEEDINGS INITIATED BY THE ASSESSING OFFICER U/S 154, THEREFORE, THE 5 ITA NO.266/COCH/2014 LIMITATION HAS TO BE READ ONLY FROM THE DATE OF THE JUDGMENT OF THE HIGH COURT, I.E. 11-02-2008. THEREFORE, THE ASSESSING O FFICER IS NOT CORRECT IN SAYING THAT THE PERIOD OF LIMITATION HAS TO BE COUN TED FROM THE ORIGINAL ORDER DATED 12-03-1992. 5. ON THE CONTRARY, SMT. LATHA V KUMAR, THE LD.DR S UBMITTED THAT ORIGINALLY THE ASSESSING OFFICER ALLOWED THE CLAIM OF THE ASSESSEE U/S 32A AND 32AB OF THE ACT WITH REGARD TO INVESTMENT ALLOW ANCE AND INVESTMENT DEPOSIT ACCOUNT. SUBSEQUENTLY, THE ASSESSING OFFIC ER FOUND THAT IN VIEW OF SECTION 32A(8B), THE ASSESSEE IS NOT ELIGIBLE FOR D EDUCTION U/S 32A IN CASE IT CLAIMS DEDUCTION U/S 32AB OF THE ACT. SINCE THE RELIEF WAS GIVEN CONTRARY TO THE PROVISIONS OF THE ACT BY AN ORDER DATED 12-0 3-1992 U/S 154 WITHDREW THE DEDUCTION GRANTED U/S 32A OF THE ACT. THIS OR DER WAS CHALLENGED BEFORE THE CIT(A), ITAT AND HIGH COURT. THE HIGH C OURT FINALLY UPHELD THE ORDER OF THE ASSESSING OFFICER ON THE GROUND THAT T HE CLAIM WAS ALLOWED CONTRARY TO THE PROVISIONS OF THE ACT, THEREFORE, T HE SAME COULD BE RECTIFIED U/S 154 OF THE ACT. WHILE GIVING EFFECT TO THE JUD GMENT OF THE HIGH COURT, THE ASSESSING OFFICER RESTORED THE DISALLOWANCE MAD E IN THE ORDER DATED 19-12-1992 AND ALSO COMPUTED THE INTEREST UNDER THE ACT. ACCORDING TO THE LD.DR, THE CARRY FORWARD OF UNABSORBED INVESTME NT ALLOWANCE WAS DENIED IN THE ORDER PASSED U/S 154 OF THE ACT ON 19 -10-1992. IT WAS NOT DENIED FOR THE FIRST TIME WHILE GIVING EFFECT TO TH E JUDGMENT OF THE HIGH 6 ITA NO.266/COCH/2014 COURT. CARRY FORWARD OF UNABSORBED INVESTMENT ALLO WANCE WAS NOT SUBJECT MATTER OF APPEAL BEFORE THE HIGH COURT ALSO. THERE FORE, THE DISALLOWANCE MADE BY THE ASSESSING OFFICER BY AN ORDER DATED 12- 03-1992 IN A PROCEEDING U/S 154 OF THE ACT ATTAINED FINALITY. I F AT ALL THERE IS ANY MISTAKE IT WAS FOR THE ASSESSEE TO CHALLENGE THE SAME BEFOR E THE APPELLATE AUTHORITY OR FILE AN APPLICATION FOR RECTIFICATION WITHIN A PERIOD OF FOUR YEARS. ADMITTEDLY, THE CARRY FORWARD OF UNABSORBED INVESTM ENT ALLOWANCE WAS NEITHER CHALLENGED BEFORE THE APPELLATE AUTHORITY N OR FILED AN APPLICATION FOR RECTIFICATION U/S 154 ONCE AGAIN WITHIN A PERIOD OF FOUR YEARS. ONLY AFTER RECEIPT OF THE JUDGMENT OF THE HIGH COURT, THAT TOO , AFTER GIVING EFFECT TO THE JUDGMENT OF THE HIGH COURT BY THE ASSESSING OFFICER , THE ASSESSEE FILED APPLICATION U/S 154 ON 09-02-1999. ACCORDING TO TH E LD.DR, THIS CLAIM WAS BARRED BY LIMITATION SINCE THE ASSESSING OFFICER CA NNOT RECTIFY THE ORDER AFTER FOUR YEARS. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. IN THE O RIGINAL ASSESSMENT, THE ASSESSING OFFICER ALLOWED THE CLAIM OF THE ASSESSEE FOR INVESTMENT ALLOWANCE U/S 32A AND DEDUCTION U/S 32AB TOWARDS IN VESTMENT DEPOSIT ACCOUNT. SUBSEQUENTLY, THE ASSESSING OFFICER BY AN ORDER DATED 12-03- 1992 FOUND THAT THE ASSESSEE IS NOT ELIGIBLE FOR DE DUCTION U/S 32A BECAUSE THE ASSESSEE AVAILED DEDUCTION U/S 32AB OF THE ACT. THE DEDUCTION 7 ITA NO.266/COCH/2014 ALLOWED U/S 32A FOR THE YEAR UNDER CONSIDERATION WA S, THEREFORE, WITHDRAWN VIDE ORDER DATED 12-03-1992 PASSED U/S 154 OF THE A CT. THE ASSESSEE CHALLENGED THE CORRECTNESS OF THIS ORDER BEFORE THE CIT(A) AND ALSO BEFORE THE ITAT. HOWEVER, ON FURTHER APPEAL BY THE REVENU E BEFORE THE HIGH COURT, THE ORDER OF THE ASSESSING OFFICER WAS RESTO RED BY SETTING ASIDE THE ORDERS OF THE CIT(A) AND ITAT. IN OTHER WORDS, THE ORDER OF THE ASSESSING OFFICER DATED 12-03-1992 WITHDRAWING DEDUCTION U/S 32A IS CONFIRMED BY THE HIGH COURT. 7. THE ASSESSEE SUBSEQUENT TO THE ABOVE NARRATED EV ENTS FILED AN APPLICATION ON THE STRENGTH OF A CIRCULAR ISSUED BY CBDT IN CIRCULAR NO.461 DATED 09-07-1996 CLAIMING THAT THE BENEFIT OF SET O FF OF UNABSORBED INVESTMENT ALLOWANCE FOR EARLIER YEAR WILL NOT BE D ENIED. IN FACT, THE UNABSORBED INVESTMENT ALLOWANCE FOR EARLIER ASSESSM ENT YEARS, I.E. 1986- 87 AND 1987-88 WAS ALLOWED BY THE ASSESSING OFFICER AFTER CARRYING FORWARD THE SAME. FOR THE YEAR UNDER CONSIDERATION, THE HI GH COURT FOUND THAT THE ASSESSEE IS NOT ELIGIBLE FOR INVESTMENT ALLOWANCE U /S 32A SINCE THE ASSESSEE CLAIMED INVESTMENT DEVELOPMENT DEPOSIT U/S 32AB OF THE ACT. ONCE THE HIGH COURT FOUND THAT THE ASSESSEE IS NOT ENTITLED FOR DEDUCTION OF INVESTMENT ALLOWANCE U/S 32A, THE QUESTION OF CA RRYING FORWARD THE SAME DOES NOT ARISE FOR CONSIDERATION. THE QUESTIO N OF CARRYING FORWARD WILL ARISE FOR CONSIDERATION PROVIDED THAT THE ASSE SSEE IS ENTITLED FOR THE 8 ITA NO.266/COCH/2014 ALLOWANCE AND SUFFICIENT PROFIT IS NOT AVAILABLE FO R SETTING OFF THE SAME. IN THIS CASE, THOUGH SUFFICIENT PROFIT IS AVAILABLE, T HE HIGH COURT FOUND THAT THE ASSESSEE IS NOT ENTITLED FOR DEDUCTION U/S 32A OF T HE ACT. THEREFORE, THE QUESTION OF CARRYING FORWARD THE INVESTMENT ALLOWAN CE U/S 32A DOES NOT ARISE. 8. IN VIEW OF THE ABOVE DISCUSSION, THIS TRIBUNAL I S OF THE CONSIDERED VIEW THAT THE CIT(A) HAS RIGHTLY UPHELD THE ORDER O F THE ASSESSING OFFICER REJECTING THE APPLICATION FILED FOR RECTIFICATION U /S 154 OF THE ACT. THE ORDER OF CIT(A) IS UPHELD 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 28 TH AUGUST, 2014. SD/- SD/- (CHANDRA POOJARI) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 28 TH AUGUST, 2014 PK/- COPY TO: 1. THE MATHRUBHUMI PRINTING & PUBLISHING CO LTD, K. P. KESAVA MENON ROAD, KOZHIKODE 673 001 2. THE A.C.I.T., CIR.1(1), KOZHIKODE 3. THE COMMISSIONER OF INCOME-TAX, KOZHIKODE 4. THE COMMISSIONER OF INCOME-TAX(A), KOZHIKODE 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH