STCI FINANCE LTD, MUMBAI V. DCIT RG (OSD) 1(2), MUMBAI

ITA 2828/MUM/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100901 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2010-2011
• Appeal Filed On: 12-05-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MANJUNATHA R SWAMY
• Assessee Lawyers: BHAVIN SHAH MS VAIBHAVI PATEL
• Keywords: Depreciation
• Section: 143(3); 142(1); 14A; 115JB; 263

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI N.K . BILLAIYA, ACCOUNTANT MEMBER AND RAM L AL NEGI, JUDICIAL MEMBER / I .T.A. NO. 2828/MUM/2015 ( / ASSESSMENT YEAR : 2010 - 11 M/S. STCI FINANCE LTD., A/B - 1 - 802, A - WING, 8 TH FLOOR,MARATHON INNOVA MARATHON NEXTGEN COMPOUND,OFF GANPATRAO KADAM MARG, LOWER PAREL(W), MUMBAI - 400 013 / VS. THE CIT - 1, AAYAKAR BHAVAN, MUMBAI - 400 020 ./ ./ PAN/GIR NO. : AAGCS 9709K ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY: SHRI BHAVIN SHAH MS. VAIBHAVI PATEL / RESPONDENT BY: SHRI MANJUNATHA R. SWAMY / DATE OF HEARING : 0 7 .0 9 .2015 / DATE OF PRONOUNCEMENT : 0 7 .0 9 .2015 / O R D E R PER N.K. BILLAIYA, AM: THIS IS AN APPEAL BY THE ASSESSEE PREFERRED AGAINST THE ORDER OF THE LD. CIT - I , MUMBAI D ATED 1 2 . 3 .201 5 PERTAINING TO ASSESSMENT YEAR 20 1 0 - 11 . ITA. NO. 2828/M/2015 2 2. THE SUM AND SUBSTANCE OF THE GRIEVANCE OF THE ASSESSEE IS THAT THE LD. CIT ERRED IN INVOKING THE PROVISIONS OF SEC. 263 OF THE ACT IN RESPECT OF A COMPLETED ASSESSMENT MADE U/S. 143(3) OF THE ACT. 3. AT THE VERY OUTSET, THE LD. COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TO THE NOTICE U/S. 142(1) OF THE ACT SERVED BY THE ASSESSING OFFICER DATED 28.8.2012 REFERRING TO ITEM VIII & IX , T HE LD. COUNSEL STATED THAT A VERY SPECIFIC QUERY WAS RAISED BY THE AO ASKING THE ASSESSEE WHY DISALLOWANCE U/S. 14A R.W. RULE 8D SHOULD NOT BE MADE ON ACCOUNT OF DIVIDEND INCOME OF RS. 83,32,962/ - . FURTHER REFERRING TO ITEM - IX, THE LD. COUNSEL POINTED OUT THAT THE AO FURTHER A SKED WHY THE SAME SHOULD NOT BE ADDED TO THE BOOK PROFIT UNDER MAT IN THE LIGHT OF THE PROVISIONS OF SEC. 115JB OF THE ACT. 3.1. TO THIS SPECIFIC QUERY, A DETAILED REPLY WAS FILED BY THE ASSESSEE WHICH IS EXHIBITED AT PAGES 4 & 5 OF THE PAPER BOOK. REF ERRING TO THE NOTICE ISSUED BY THE CIT U/S. 263 OF THE ACT, THE LD. COUNSEL POINTED OUT TO CLAUS E (I) OF THE SAID NOTIC AND POINTED OUT THAT AN IDENTICAL QUESTION HAS BEEN RAISED BY THE CIT FOR INVOKING THE POWERS VESTED UPON HIM U/S. 263 OF THE ACT. 3.2. REFERRING TO THESE FACTS ON RECORD, IT IS THE SAY OF THE LD. COUNSEL THAT ONCE THE AO HAS CONSIDERED THE ISSUE AND HAS TAKEN A VIEW AS PER THE PROVISIONS OF THE LAW, THE CIT GROSSLY ERRED IN INVOKING THE POWERS VESTED UPON HIM BY SEC. 263 OF THE ACT. 4. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE FACTUAL MATRIX CONSIDERED SO FAR. THE HONBLE SUPREME COURT IN MALABAR INDUSTRIAL CO. LTD. 243 ITR 83 HAS LAID DOWN THE FOLLOWING RATIO: - ITA. NO. 2828/M/2015 3 A BARE READING OF SECTION 263 OF THE INCOME - TAX ACT, 1961, MAKES IT CLEAR THAT THE PREREQUISITE FOR THE EXERCISE OF JURISDICTION BY THE COMMISSIONER SUO MOTU UNDER IT, IS THAT THE ORDER OF THE INCOME - TAX OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE COMMISSIONER HAS TO BE SATISFIE D OF TWIN CONDITIONS, NAMELY, (I) THE ORDER OF THE ASSESSING OFFICER SOUGHT TO BE REVISED IS ERRONEOUS ; AND (II) IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IF ONE OF THEM IS ABSENT IF THE ORDER OF THE INCOME - TAX OFFICER IS ERRONEOUS BUT IS NOT PRE JUDICIAL TO THE REVENUE OR IF IT IS NOT ERRONEOUS BUT IS PREJUDICIAL TO THE REVENUE RECOURSE CANNOT BE HAD TO SECTION 263(1) OF THE ACT. THE PROVISION CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE ASSESSING OFFICER, IT IS ONLY WHEN AN ORDER IS ERRONEOUS THAT THE SECTION WILL BE ATTRACTED. AN INCORRECT ASSUMPTION OF FACTS OR AN INCORRECT APPLICATION OF LAW WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOUS 5. NOW, LET US SEE IN THE LIGHT OF THE ABOVE RATIO WHETHER THE ASSESSMENT HAS BEEN MADE ON AN INCORRECT ASSUMPTION OF FACTS OR AN INCORRECT APPLICATION OF LAW. 5.1. AS MENTIONED ELSEWHERE, THE ISSUE RELATING TO THE DISALLOWANCE U/S. 14A OF THE ACT R.W. RU LE 8D WAS THOROUGHLY CONSIDERED BY THE AO AND HAS BEEN SPECIFICALLY REPLIED BY THE ASSESSEE. WE, THEREFORE, DO NOT FIND ANY REASON FOR THE REVISION OF THE ASSESSMENT ORDER BY THE CIT U/S. 263 OF THE ACT. TO THIS EXTENT, THE ORDER U/S. 263 IS SET ASIDE. 6. THE SECOND ISSUE RELATES TO THE BUSINESS LOSSES AND DEPRECIATION AND ALSO CAPITAL LOSS. 7. THE LD. COUNSEL FOR THE ASSESSEE FAIRLY CONCEDED THAT THIS ISSUE WAS NOT CONSIDERED BY THE AO WHILE MAKING THE ASSESSMENT U/S. 143(3) OF THE ACT. IT IS THE SA Y OF THE LD. COUNSEL THAT TO THIS EXTENT, THE CIT HAS RIGHTLY INVOKED THE POWERS VESTED UPON HIM BY SEC. 263 OF THE ACT. CONSIDERING THIS CONCESSION MADE BY THE LD. COUNSEL, WE MODIFY THE ITA. NO. 2828/M/2015 4 ORDER OF THE CIT MADE U/S. 263 AND DIRECT THE AO TO ONLY CONSIDER T HE SECOND ISSUE RELATING TO BUSINESS LOSSES AND DEPRECIATION AND ALSO CAPITAL LOSS. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ON 7 TH SEPTEMBER , 2015 SD/ - SD/ - ( RAM L AL NEGI ) (N.K. BILLAIYA) /JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 7 TH SEPTEMBER , 2015 . . ./ RJ , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI