Net 4 Nuts Ltd., Ahmedabad V. The ACIT., Circle-5, Ahmedabad

ITA 2683/AHD/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0145 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 01-08-2016
• Assessment Year: 2001-2002
• Appeal Filed On: 18-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S N DIVETIA
• Keywords: Depreciation; Principle of natural justice; Revised return
• Section: 143(3); 32

Judgement Text

I.T.A. NO . 2 683 /AHD/201 3 A SSESSMENT Y EAR: 200 1 - 02 PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH, SMC , AHMEDABAD [CORAM: PRAMOD KUMAR AM] I.T.A. NO. 2 683 /A HD/ 20 1 3 ASSESSMENT Y EAR : 200 1 - 02 NET 4 NUT LIMITED ..... ...... . ... . APPELLANT 1008, TLANT TOWER, GULABI TOWER, ELLISBRIDGE, AHMEDABA D. [ PAN: AA BCN 0643 E ] VS. ASSTT. COMMISSIONER OF INCOME TAX , CIRCLE - 5, AHMEDABAD. ............... . RESPONDENT APPEARANCES BY: S .N. DIVETIA FOR THE APPELLANT SATISH SOLANKI FOR THE RESPONDENT D ATE OF CONCLUD ING THE HEARING : 0 1 .0 8 .2016 DATE OF PRONOUNCING THE ORDER : 28 .10.2016 O R D E R BY WAY OF THIS APPEAL, THE ASSESSEE APPELLANT HAS CHALLENGED CORRECTNESS OF THE ORDER DATED 03.09.2013 PASSED BY THE LEARNED CIT(A) IN THE MATTER OF ASSES SMENT UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961, FOR THE ASSESSMENT YEAR 2001 - 02. 2. GRIEVANCES RAISED BY THE APPELLANT ARE AS FOLLOWS : - 1.1 THE ORDER PASSED U/S.250 ON 3 - 9 - 2013 FOR A.Y.2001 - 02 BY CIT(A) - XI, ABAD UPHOLDING THE ORDER PASSED U/S 143(3)(I) ON 29 - 10 - 2003 BY AO AND NON CONSIDERATION OF THE REVISED RETURN OF IS WHOLLY ILLEGAL, UNLAWFUL AND AGAINST THE PRINCIPLES OF NATURAL JUSTICE. 1.2 THE LD. CIT (A) HAS GRIEVOUSLY ERRED IN LAW AND OR ON FACTS IN NOT CONSIDERING FULLY AND PROPER LY THE DIRECTIONS GIVEN BY HON'BLE TRIBUNAL IN ITS ORDER DT. 7 - 11 - 2008 IN ITA NO.3388/A/2004. 2.1 THE LD.CIT (A) HAS GRIEVOUSLY ERRED IN LAW AND ON FACTS IN CONFIRMING THE VALIDITY OF THE ORDER PASSED U/S 143(3)(I) THOUGH IT WAS BEYOND THE SCOPE OF LI MITED SCRUTINY. I.T.A. NO . 2 683 /AHD/201 3 A SSESSMENT Y EAR: 200 1 - 02 PAGE 2 OF 4 2.2 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LD. CIT(A) OUGHT NOT TO HAVE UPHELD THE VALIDITY OF THE ORDER PASSED U/S 143(3)(I) . 3.1 THE LD. CIT (A) HAS ERRED IN UPHOLDING THAT THE REVISED RETURN OF I NCOME FILED ON 18 - 10 - 2002 CLAIMING R & D EXP OF RS.19,21,368 AS REVENUE EXP INSTEAD OF CAPITAL IN THE ORIGINAL RETURN OF INCOME IN VIEW OF AS - 26 OF ICAI . 3.2 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LD. CIT(A) OUGHT NOT TO HAVE HELD THE R & D EXP OF RS.14,63,480 AS CAPITAL IN NATURE AND AS SUCH INADMISSIBLE. 4.1 WITHOUT PREJUDICE TO THE ABOVE THE LOWER AUTHORITIES OUGHT TO HAVE ALLOWED DEPRECIATION U/S 32 IN RESPECT OF THE SAID EXPENSES WHEN CAPITALIZED. 3. TO ADJ UDICATE ON THIS APPEAL, ONLY A FEW MATERIAL FACTS NEED TO BE TAKEN NOTE OF. THIS CASE WAS SELECTED FOR A LIMITED SCRUTINY UNDER SECTION 143 (3)(I) ON THE FOLLOWING ISSUE : - (I) EXEMPTION U/S.10A CANNOT BE ALLOWED FOR INCOME FROM LICENSE FEE INCOME. (II) THE INCOME FROM IEC E XPORT AND PC RENT OF RS.12991/ - AND 14000/ - RESPECTIVELY FROM THE EXPENSES TO BE CAPITALIS E D WITHOUT CRED I TING TO PROFIT & LOSS ACCOUNT. 4. ON THIS ISSUE, THE ASSESSING OFFICER DID NOT MAKE ANY ADDITION. HE, NEVERTHELESS, MADE ADDI TION WITH RESPECT TO OTHER ISSUES AS EVIDENT FROM THE FOLLOWING OBSERVATION : - 3.1 THE ASSESSEE S REVISED RETURN FILED ON 18.10.2002 SHOWING LOSS OF RS.4,57,885/ - IS ON ACCOUNT OF FACT T HAT THE COMPANY HAS OPTED FOR AN EARLY ADOPTION OF AS - 26 GUIDELINES ON INTANGIBLE ASSETS AS ISSUED BY THE INSTITUTE OF CHAR TERED ACCOUNTANTS OF INDIA BY CLAIMING RESEARCH & DEVELOPMENT EXPENDITURE OF RS.19,22,368/ - WHICH IS NOT CONSIDERED A S IN TH E ORIGINAL RETURN THE ASSESSEE HAS SHOWN THE SAME A S BEING CAPIT A LISED . 5 . AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LEARNED CIT(A) BUT WITHOUT ANY SUCCESS. NOT SATISFIED, THE ASSESSEE IS IN FURTHER APPEAL BEFORE A CO - ORDINATE BENCH OF THIS T RIBUNAL WHICH REMITTED THE MATTER TO THE FILE OF THE LEARNED CIT ( A ) I.T.A. NO . 2 683 /AHD/201 3 A SSESSMENT Y EAR: 200 1 - 02 PAGE 3 OF 4 FOR FRESH ADJUDICATION, INTER ALIA, ON PRELIMINARY ISSUE AS TO WHETHER IN A LIMITED SCRUTINY CASE, OTHER ISSUES CAN BE TAKEN UP AT ALL. LEARNED CIT ( A ) HAS ONCE AGAIN REITERATED HIS FINDINGS EARLIER, BRUSHED ASIDE THIS SPECIFIC ISSUE REGARDING SCOPE OF LI MITED SCRUTINY AND OBSERVED AS FOLLOWS : - IN THE CASE OF THE APPELLANT THERE WAS NEITHER ANY OMISSION NOR ANY WRONG STATEMENT DISCOVERED IN THE ORIGINAL RETURN. HENCE IN SUCH A CASE THE ORIGINAL RETURN FILED BY THE APPELLANT CAN BE TREATED AS A VALIDLY FILED REVISED RETURN. IN THE CASE OF DEEPNARAYAN NAGU & CO. VS CIT REPORTED IN (1986) 157 ITR 37 (M.P.) HON'BLE M.P. HIGH COURT HAVE HELD THAT A REVISED RETURN FILED MERELY TO REWRITE THE ACCOUNTS ON THE BASIS OF A METHOD OTHER THAN ONE WHICH WAS ACTUALLY FOLLOWED DURING THE RELEVANT ACCOUNTING YEAR IS NOT VALID. THE RELIANCE BY THE APPELLANT ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF GOETZE INDIA IS MISPLACED. THE DECISION OF HON'BLE SUPREME COURT DOES NOT LIBERALIZE THE PROVISIONS OF S 139(5 ) AND THE APPELLANT HAS TO FILE A VALID REVISED RETURN IF IT WANTS TO MAKE A FRESH CLAIM BEFORE THE AO. IN THE INSTANT CASE IT IS JUST THE CHANGE OF ACCOUNTING TREATMENT TO A PARTICULAR EXPENDITURE WHICH IS TRIED TO BE INVOKED BY THE APPELLANT. THIS CANNOT BE PERMITTED UNDER S. 139(5). IN VIEW OF ABOVE DISCUSSIONS IT IS HELD THAT THE REVISED RETURN FILED BY THE APPELLANT IS NOT A VALIDLY FILED RETURN AND THEREFORE THE AO WAS RIGHT IN HIS APPROACH IN NOT CONSIDERING THE REVISED RETURN FOR THE PURPOSES OF THE COMPUTATION OF INCOME. THE AO HAS RIGHTLY BASED HIS COMPUTATION OF INCOME ON THE INCOME SHOWN BY THE APPELLANT IN THE RETURN. THE FIRST GROUND OF APPEAL IS ACCORDINGLY DISMISSED 6. AGGRIEVED, ASSESSEE IS ONCE AGAIN IN APPEAL BEFORE THE TRIBUNAL. 7. I HA VE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF APPLICABLE LEGAL POSITION. 8. IT IS ONLY ELEMENTARY THAT IN THE CASE OF A LIMITED SCRUTINY, THE ASSESSING OFFICER IS DENUDED OF THE POWERS TO GO BEYOND THE ASPECTS WHICH ARE SELECTED FOR SCRUTINY. IN THE PRESENT CASE, HE HAS CLEARLY DONE SO. ONCE HE HAS SATISFIED ABOUT CORRECTNESS OF THE ASSESSEE S CLAIM WITH RESPECT TO EXEMPTION UNDER SECTION 10A, AS HE INDEED WAS, IT WAS NOT OPEN TO HIM T O TOUCH THE OTHER ISSUES IN THAT ASSESSMENT. IN THIS VIEW OF THE MATTER, SO FAR AS PRESENT PROCEEDINGS ARE CONCERNED, THE ACTION OF THE ASSESSING OFFICER WAS I.T.A. NO . 2 683 /AHD/201 3 A SSESSMENT Y EAR: 200 1 - 02 PAGE 4 OF 4 VITIATED IN LAW. I, ACCORDINGLY, DELETE THE IMPUGNED ADJUSTMENTS MADE BY THE ASSESSING OFFICER I N THE COURSE OF LIMITED SCRUTINY PROCEEDINGS. ALL OTHER ISSUES RAISED IN THE APPEAL ARE THUS RENDERED ACADEMIC. 9. IN THE RESULT, THE APPEAL IS ALLOWED IN THE TERMS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT TODAY ON 28 TH DAY OF OCTOBER , 2016. SD/ - PRAMOD KUMAR (ACCOUNTANT MEMBER) DATED: THE 28 TH DAY OF OCTOBER , 2016. PBN/* COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD