The Jt.CIT.,(OSD)Circle-4, Surat V. M/s Sanwariya Processors Pvt.Ltd., Surat

ITA 2896/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94223 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 31-07-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 22-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D C MISHRA
• Keywords: Business income; Depreciation; Income from undisclosed sources; Unabsorbed depreciation
• Section: 69C; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH BEFORE: S H RI ANIL CHATURVEDI , ACCOUNTANT MEMBER AND SHR I S.S. GODARA , JUDICIAL MEMBER JCIT (OSD), CIRCLE - 4, ROOM NO. 223, AAYAKAR BHAVAN, SURAT (APPELLANT) VS M/S. SANWARIYA PROCESSORS PVT. LTD. 405, GIDC, PANDESARA, SURAT - 395008 PAN: AAHCS8277K (RESPONDENT) REVENUE BY : S H RI D.C. MISH R A , SR. D . R. ASSESSEE BY: NONE DATE OF HEARING : 31 - 07 - 2 015 DATE OF PRONOUNCEMENT : 07 - 08 - 2 015 / ORDER P ER : S. S. GODARA , JU DICIAL MEMBER : - THIS R EVENUE S APPEAL FOR A.Y. 2008 - 09, ARISES FROM ORDER OF THE CIT(A) - IV, SURAT DATED 1 4 - 07 - 2011 IN APPEAL NO. CAS - IV/215/10 - 11 , IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. I T A NO . 289 6 / A HD/20 11 A SSESSMENT YEAR 200 8 - 09 I.T.A NO. 2896 /AHD/2 011 A.Y. 2008 - 09 PAGE NO JCIT VS. M/S. SANWARIYA PROCESSORS PVT. LTD 2 2. THE REVENUE S SUB STANTIVE GROUNDS ARE AS UNDER : - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) - IV, SURAT HAS ERRED IN DELETING THE DISALLOWANCE OF RS. 2,48,058/ - MADE BY THE ASSESSING OFFICER ON ACCOUNT OF NOT ALLOWING THE SET OFF OF CURRENT YEAR S DEPRECIATION. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE IN LAW, THE CIT(A) - IV, SURAT HAS ERRED IN DELETING THE DISALLOWANCE OF RS. 60,89,971/ - MADE BY THE ASSESSING OFFICER ON ACCOUNT OF NOT ALLOWING BROUGHT FORWARD DEPRECIATION LOSS. 3. THE REVENUE S STRONGLY REITERATES THE ABOVE SAID PLEADINGS AND ARGUES THAT THE CIT(A) HAS ERRED IN ALLOWING ASSESSEE S CLAIM OF CURRENT YEAR DEPRECIATION AND BROUGHT FORWARD LOSSES TO BE SET OFF AGAINST ITS UNDISCLOSED INCOME OF RS . 1,49, 94,169/ - DETEC TED DURING SURVEY. IT PRESSES FOR ACCEPTANCE OF ITS APPEAL. 4 THE ASSESSEE DOES NOT APPEAR DESPITE SERVICE OF RPAD NOTICE PLACED ON RECORD. IT IS ACCORDINGLY PROCEEDED EX - PARTE. 5. THE ASSESSEE COMPANY IS IN DYING AND PRINTING OF CLOTH BUSINE SS. T HE D EPARTMENT CARRIED OUT A SURVEY DATED 19 - 09 - 2007 IN ITS BUSINESS PREMISES. IT DISCLOSED A SUM OF RS. 1,49,94,169/ - ON ACCOUNT OF EXCESS STOCK AND UNACCOUNTED RECEIVABLES. THIS WAS FOLLOWED BY ITS RETURN DATED 29 - 09 - 2008 ADMITTING INCOME OF RS. 1,47,46 ,111/ - . THE ASSESSEE SOUGHT TO SET OFF ITS UNABSORBED DEPRECIATION /LOSS OF EARLIER YEARS AMOU NTING TO RS. 60,89,97/ - WITH CURRENT YEAR DEPRECIATION OF RS 2,48,058/ - AGAINST THE ABOVE STATED UNACCOUNTED INCOME ADMITTED IN SURVEY. THE ASSESSING OFFICER FRA MED A REGULAR ASSESSMENT ON 10 - 12 - 2010 INTER ALIA HOLDING THAT I.T.A NO. 2896 /AHD/2 011 A.Y. 2008 - 09 PAGE NO JCIT VS. M/S. SANWARIYA PROCESSORS PVT. LTD 3 THE ABOVE STATED UNDISCLOSED INCOME WAS TO BE SEPARATELY ASSESSED AND NOT TO BE ALLOWED FOR SET OFF BENEFITS; BE IT INTER HEAD OR INTRA HEAD ADJUSTMENT S . HE QUOTED CASE LAW OF H ON BLE JURISDIC TIONAL HIGH COURT 2001 247 ITR 290 (GUJ) FAQIR MOHHMAD HAJI HASAN VS. CIT AND OBSERVED THAT THERE WAS NO PROOF ON RECORD THAT AS SESSEE S UNDISCLOSED INCOME HAD ARISEN FROM BUSINESS ACTIVITIES. HE DECLINED ASSESSEE S SET OFF CLAIM ACCORDINGLY. 6. THE AS SESSEE PREFERRED APPEAL. THE CIT(A) HAS ACCEPTED ITS CONTENTION IN SUPPORT OF IMPUGNED SET OFF CLAIM AS UNDER: - 4. I HAVE GONE THROUGH THE FACTS OF THE CASE, THE ASSESSMENT ORDER AND SUBMISSIONS OF THE APPELLANT. AS PER THE SCHEME OF THE ACT, INCOME CAN BE TAXED ONLY IF IT FALLS UNDER ANY HEADS SPECIFIED IN SECTION - 14. THE UNDISCLOSED INCOME OFFERED IN ADDITION TO REGULAR INCOME CAN BE TAXED ONLY IF ITS FALLS UNDER ONE OF THE HEADS OF INCOME. THERE CANNOT BE ANY TAXABLE INCOME UNDER A HEAD NOT SPECIFIE D IN SECITON - 14. IT IS NOBODY S CASE THAT THE INCOME OFFERED DURING THE COURSE OF SURVEY WAS NOT TAXABLE. ONCE THIS ADDITIONAL INCOME IS CONSIDERED FOR TAX PURPOSES, IT IS TO BE NECESSARILY CONSIDERED AS FALLING UNDER ONE OF T HE SPECIFIED HEADS. IT CLEA R F R OM THE NATURE OF DISCLOSURE THAT THE HEAD CAN BE EITHER BUSINESS OR OTHER SOURCES . THERE IS NO BAR ON SET OFF OF B USINESS LOSS F R O M ONE SOURCE AGAINST BUSINESS INCOME F R O M ANOTHER SOURCE. THERE IS ALSO NO BAR ON SET OFF OF BUSINESS LOSS AGAINST I NCOME FROM OTHER SOURCES IN THE SAME YEAR. F URTHER, AS PER PROVISIONS OF SEC T I ON - 32(2), BROUGHT FORWARD DEPRECIATION IS DEEMED TO BE PART OF THE DEPRECIATION ALLOWANCE FOR THE CURRENT YEAR. THEREFORE, WHETHER WE CONSIDER THE ADDITIONAL INCOME DISCLOSE D DURING SURVEY TO FALL UNDER BUSINESS HEAD OR INCOME FROM OTHER SOURCES, THE BROUGHT FORWARD AND CURRENT YEAR S DEPRECIATION IS ALLOWED TO BE SET OFF AGAINST IT. THE ASSESSEE IS THEREFORE ENTITLED TO SET OFF OF BROUGHT FORWARD AND CURRENT YEARS DEPRECIAT ION AGAINST THE ADDITIONAL INCOME DISCLOSED DURING SURVEY. THE AO IS DIRECTED TO ALLOW SET OFF OF BROUGHT FORWARD AND CURRENT YEAR DEPRECIATION AGAINST INCOME DISCLOSED DURING SURVEY. I.T.A NO. 2896 /AHD/2 011 A.Y. 2008 - 09 PAGE NO JCIT VS. M/S. SANWARIYA PROCESSORS PVT. LTD 4 7. WE HAVE HEARD THE REVENUE AND GONE THROUGH THE CASE FILE. RELEVAN T FACTS OF THE CASE STAND NARRATED IN PRECEDING PARAGRAPH. THE SAME ARE NOT RE PEATED FOR THE SAKE OF BREVITY. THE REVENUE S SOLE ARGUMENT IS IN LINE WITH FAQIR MOHHMAD CASE (SUPRA) DECISION THAT THE ASSESSEE S UNDISCLOSED INCOME IN QUESTION HAS BEEN WRONG LY ALLOWED TO BE ADJUSTED AGAINST BROUGHT FORWARD UNABSORBED DEPRECIATION /BUSINESS LOSSES . WE FIND THAT THE CIT(A) QUOTES SUBSEQUENT DECISIONS I.E. KRISHNA TEXTILE VS. CIT ( 2009) 310 ITR 227 (GUJ) H OLDING THAT THE FORMER CASE LAW IS ONLY AN OBITER AND NO T RATIO FOR THE PURPOSE OF SECTION 69C ADDITION. THEREAFT ER COMES YET ANOTHER JUDGMENT IN DCIT VS. RADHE DEVELOPERS INDIA LTD ( 2010 ) 329 ITR 01 (GUJ) WHEREIN THEIR LORDSHIP S OBSERVE AFTER TAKING INTO ACCOUNT BOTH OF THE ABOVE STATED DECISIONS THAT THE AC T DOES NOT ENVISAGE TAXING OF ANY INCOME UNDER ANY HEAD NOT SPECIFIED IN SECTION 14 OF THE ACT. SUFFICE TO SAY, THE ASSESSEE S UNDISCLOSED INCOME HAS BEEN HELD TO BE TREATED AS THE ONE FALLING UNDER SECTION 14 OF THE ACT ONLY AND NOT BEYOND THAT . THIS IS NOT THE REVENUE S CASE THAT ANY SUCH INCOME U/S. 14 IS NOT ENTITLED TO BE ADJUSTED AGAINST ANY BROUGHT FORWARD UNABSORBED D EPRECIATION/LOSSES IN QUESTION. WE REJECT THE REVENUE S ARGUMENT ACCORDINGLY. THE CIT(A) ORDER UNDER CHALLENGE IS CONFIRMED. 8. THIS REVENUE S APPEAL IS DISMISSED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 07 - 08 - 2015 SD/ - SD/ - ( ANIL CHATURVEDI ) ( S.S. GODARA ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD : DATED 0 7 /08 /2015 AK I.T.A NO. 2896 /AHD/2 011 A.Y. 2008 - 09 PAGE NO JCIT VS. M/S. SANWARIYA PROCESSORS PVT. LTD 5 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,