ACIT, Ernakulam V. M/s.Innovative foods Ltd, Cochin

ITA 290/COCH/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2526 (ITAT-COCHIN)
• Duration Of Justice: 7 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-06-2013
• Appeal Filed By: Department
• Bench Allotted: DB
• Next Hearing Date: 08-04-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 07-11-2012
• Court: TRIBUNAL
• Department Lawyers: SUSAN GEORGE VARGHESE
• Assessee Lawyers: S RAGHUNATHAN
• Keywords: Rectification of order
• Section: 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND B.R.BASKAR AN, AM I.T.A. NO. 290/COCH/2012 ASSESSMENT YEAR : 2007-08 THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-1(2), KOCHI. VS. M/S. INNOVATIVE FOODS LTD., AMALGAM HOUSE, XXIV/1604,PLOT NO. 9, BRISTOW ROAD, W/ISLAND, COCHIN-682 003. [PAN: AAACI 5750N] (REVENUE -APPELLANT) (ASSESSEE-R ESPONDENT) REVENUE BY SMT. SUSAN GEORGE VARGHESE, SR. DR ASSESSEE BY SHRI S. RAGHUNATHAN, CA DATE OF HEARING 08/04/2013 DATE OF PRONOUNCEMENT 28/06/2013 O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE REVENUE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 06-08-2012 PASSED BY THE LD. CIT(A)-II, KOCHI AND IT RELATES T O THE ASSESSMENT YEAR 2007- 08. 2. THE REVENUE IS ASSAILING THE DECISION OF THE LD. CIT(A) IN HOLDING THAT THE PROVISIONS OF SEC. 79 OF THE ACT ARE NOT APPLICABLE TO THE ASSESSEES CASE AND CONSEQUENTLY, THE ASSESSEE IS ENTITLED TO CLAIM CAR RY FORWARD AND SET OFF OF BROUGHT FORWARD LOSS OF RS. 49,25,78,611/- INCURRED IN EARLIER YEARS. THE REVENUE IS ALSO CONTESTING THAT THE LD. CIT(A) ON T HE GROUND THAT THE FIRST APPELLATE AUTHORITY HAS GRANTED RELIEF ON A DEBATAB LE ISSUE, WHICH IS OUTSIDE THE PURVIEW OF THE ORDER PASSED BY THE ASSESSING OFFICE R UNDER SEC. 154 OF THE ACT. ITA 290/CO CH/2012 2 2 3. THE FACTS RELATING TO THE ISSUE ARE STATED IN BR IEF. THE ASSESSEE-COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURE AND MARKE TING OF FROZEN, VALUE ADDED FOOD PRODUCTS. IT FILED ITS RETURN OF INCOME FOR T HE YEAR UNDER CONSIDERATION DECLARING BUSINESS LOSS OF RS. 4.28 CRORES. DURING THE COURSE OF SCRUTINY PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT A C OMPANY NAMED M/S. AMALGAM FOODS AND BEVERAGES LTD. HAS MERGED WITH THE ASSESS EE-COMPANY CONSEQUENT TO THE SCHEME APPROVED BY BOARD FOR INDUSTRIAL AND FIN ANCIAL RECONSTRUCTION (BIFR). IT WAS ALSO NOTICED THAT ANOTHER COMPANY N AMED M/S. RESIDENCY FOODS AND BEVERAGES LTD., HAS BEEN SELECTED AS A STRATEGI C INVESTOR AND IT HAS ACQUIRED 67.93% OF SHARE HOLDING IN THE ASSESSEE-COMPANY AND ALSO THE CONTROL AND MANAGEMENT OF THE ASSESSEE-COMPANY, AS PER THE ORDE R OF BIFR. THUS THERE WAS A CHANGE IN THE SHARE HOLDING PATTERN OF THE AS SESSEE-COMPANY RESULTING IN CHANGE IN VOTING POWER EXCEEDING BY 51% OF THE TOTA L VOTING POWER. HENCE, THE ASSESSING OFFICER TOOK THE VIEW THAT THE PROVIS IONS OF SEC. 79 OF THE ACT ARE APPLICABLE IN THE INSTANT CASE. 4. UNDER THE PROVISIONS OF SEC. 79 OF THE ACT, WHERE A CHANGE IN THE SHARE HOLDING HAS TAKEN PLACE IN A PREVIOUS YEAR IN THE C ASE OF A COMPANY, NOT BEING A COMPANY IN WHICH PUBLIC ARE BEING SUBSTANTIALLY INT ERESTED , NO LOSS INCURRED IN ANY YEAR PRIOR TO THE PREVIOUS YEAR SHALL BE CARRIE D FORWARD AND SET OFF AGAINST THE INCOME OF THE PREVIOUS YEAR EXCEPT IN CERTAIN C ASES. SINCE THE ASSESSING OFFICER TOOK THE VIEW THAT THE PROVISIONS OF SEC. 7 9 ARE APPLICABLE TO THE ASSESSEE, HE HELD THAT THE LOSS BROUGHT FORWARD FRO M EARLIER YEARS CANNOT BE SET OFF AGAINST THE INCOME OF THE CURRENT YEAR AND SHAL L ALSO NOT BE ELIGIBLE TO BE CARRIED FORWARD IN THE SUCCEEDING YEARS. 5. SUBSEQUENT TO THE RECEIPT OF THE ASSESSMENT ORDE R, THE ASSESSEE FILED A RECTIFICATION PETITION DATED 05-04-2010 U/S. 154 OF THE ACT SEEKING RECTIFICATION OF MISTAKES APPARENT FROM RECORD, WHICH INTER ALIA, IN CLUDED THE MISTAKE RELATING TO THE DENIAL OF SET OFF OF BROUGHT FORWARD LOSS OF EA RLIER YEARS. THE ASSESSING ITA 290/CO CH/2012 3 3 OFFICER REJECTED THE SAID CLAIM ON THE REASONING TH AT THE SAID ISSUE IS A DEBATABLE ONE AND HENCE FALLS OUTSIDE THE PURVIEW OF MISTAKE APPARENT FROM RECORD. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEA L BEFORE THE LD. CIT(A). 6. BEFORE THE FIRST APPELLATE AUTHORITY, THE ASSE SSEE SUBMITTED THAT THE PROVISIONS OF SEC. 79 OF THE ACT IS NOT APPLICABLE TO IT, SINCE IT IS A COMPANY IN WHICH PUBLIC ARE SUBSTANTIALLY INTERESTED. THE ASS ESSEE SUBMITTED THAT THE SHARES OF THE COMPANY ARE LISTED IN COCHIN STOCK EXC HANGE AND HENCE IT SHALL BE CLASSIFIED AS A COMPANY IN WHICH PUBLIC ARE SUBSTAN TIALLY INTERESTED IN TERMS OF SEC. 2(18) OF THE ACT. IN SUPPORT OF THE SAID CLAI M; THE ASSESSEE FURNISHED A COPY OF LETTER OBTAINED FROM M/S. COCHIN STOCK EXCHA NGE LTD., CONFIRMING THE LISTED STATUS OF THE ASSESSEE-COMPANY DURING THE RE LEVANT PERIOD. THE ASSESSEE FURTHER SUBMITTED BEFORE THE LD. CIT(A) THAT THE IN VESTMENT MADE BY M/S. RESIDENCY FOODS AND BEVERAGES LTD. (RFBL) AND FURTH ER AMALGAMATION OF M/S. AMALGAM FOODS AND BEVERAGES LTD. ARE IN ACCORDANCE WITH THE ORDER PASSED BY BIFR UNDER SICK INDUSTRIAL COMPANIES (SPECIAL PROVI SIONS) ACT, 1985 (SICA). THE APPELLANT SUBMITTED THAT THE PROVISIONS OF SICA W OULD HAVE OVERRIDING EFFECT ON THE PROVISIONS OF INCOME TAX ACT. 7. IN VIEW OF SUBMISSION OF NEW POINTS, THE LD. CIT(A) CALLED FOR REMAND REPORT FROM THE ASSESSING OFFICER. THE AO, IN HIS REMAND REPORT, SUBMITTED THAT THE PUBLIC SHARE HOLDING OF THE ASSESSEE-COMPANY WA S LESS THAN 10% AND IT IS VIOLATING CLAUSE 40A OF LISTING AGREEMENT AND THE P ROVISIONS OF SECURITIES CONTRACTS (REGULATION) RULES, 1957. IN THIS REGARD , THE ASSESSING OFFICER REFERRED TO 18 TH ANNUAL REPORT OF THE ASSESSEE-COMPANY, WHEREIN IT WAS REPORTED THAT THE STRATEGIC INVESTOR RFBL WOULD HOLD 67.93% OF CAPITAL OF THE MERGED COMPANY, AMALGAM GROUP WILL HOLD 26% OF THE CAPITAL AND THE PUBLIC WILL HOLD ONLY 4.62% OF THE CAPITAL. ACCORDINGLY, THE AO SUB MITTED THAT THE PROVISIONS OF SEC. 2(18)(B)(A), WHICH DEFINES THE TERM COMPANY I N WHICH PUBLIC ARE SUBSTANTIALLY INTERESTED SHALL NOT APPLY. THE AO F URTHER POINTED OUT THAT THE ITA 290/CO CH/2012 4 4 COMPANY RFBL WAS ALLOTTED SHARES ON THE CONDITION T HAT IT WOULD ARRANGE FINANCIAL ASSISTANT FOR REHABILITATION OF THE ASSES SEE COMPANY. SINCE THE SHARES WERE ALLOTTED ON CONDITIONAL BASIS, THE AO OPINED T HAT THE PROVISIONS OF SEC. 2(18)(B)(B) SHALL ALSO NOT APPLY. ACCORDINGLY, THE ASSESSING OFFICER SUBSTANTIATED HIS STAND THAT THE ASSESSEE-COMPANY CANNOT BE CONSI DERED AS A COMPANY IN WHICH PUBLIC ARE SUBSTANTIALLY INTERESTED AND ACCOR DINGLY CONTENDED THAT THE PROVISIONS OF SEC. 79 OF THE ACT ARE APPLICABLE TO THE ASSESSEE-COMPANY. 8. THE LD. CIT(A), DURING THE COURSE OF APPELLATE P ROCEEDINGS SENT A LETTER DATED 19-07-2012 TO THE PRINCIPAL OFFICER, COCHIN S TOCK EXCHANGE SEEKING CLARIFICATION ON THE FOLLOWING TWO POINTS: (A) WHETHER THE SHARES OF THE ASSESSEE-COMPANY WERE LISTED IN THE COCHIN STOCK EXCHANGE AS ON 31-03-2007. (B) ON WHICH DATE, THE SHARES OF THE ASSESSEE COMPA NY WERE DE-LISTED FROM COCHIN STOCK EXCHANGE. IN RESPONSE TO THE ABOVE SAID LETTER, M/S. COCHIN S TOCK EXCHANGE FURNISHED THE FOLLOWING REPLY; VIDE ITS LETTER DATED 20-07-2011: (A) THE SHARES OF M/S. INNOVATIVE FOODS LTD. WERE LISTED WITH COCHIN STOCK EXCHANGE AS ON 31-03-2007. (B) THE SHARES OF M/S. INNOVATIVE FOODS LTD. WERE D E-LISTED FROM COCHIN STOCK EXCHANGE W.E.F. 25-01-2009. SINCE THE SHARES OF THE ASSESSEE COMPANY ARE LISTED IN A RECOGNISED STOCK EXCHANGE, THE LD. CIT(A) HELD THAT THE ASSESSEE-COM PANY IS A COMPANY IN WHICH PUBLIC ARE SUBSTANTIAL INTERESTED AND ACCORDINGLY H ELD THAT PROVISIONS OF SEC. 79 ARE NOT APPLICABLE TO THE ASSESSEE. THE OBSERVATION S MADE BY THE LD. CIT(A) ARE EXTRACTED BELOW: 16. I HAVE CAREFULLY PERUSED THE GROUNDS OF APPEAL , STATEMENT OF FACTS AND WRITTEN SUBMISSIONS FILED BY THE APPELLANT AS WELL AS THE IMPUGNED ORDER AND REMAND REPORT OF THE ASSESSING OFFICER WITH REF ERENCE TO THE FACTS AND CIRCUMSTANCES OF THIS CASE. I HAVE GIVEN THOUGHTFU L CONSIDERATION TO THE ITA 290/CO CH/2012 5 5 ASSESSMENT ORDER AND ARGUMENTS PUT FORTH ON BEHALF OF THE APPELLANT. MY DECISION ON THE GROUNDS RAISED IS AS UNDER: 17. THE FIRST AND MAJOR ISSUE IS REGARDING CARRY FO RWARD OF UNABSORBED BUSINESS LOSS AMOUNTING TO RS. 49,25,78,611/-. THE ASSESSING OFFICER IN THE ASSESSMENT ORDER DATED 31-12-2009 DID NOT ALLOW THE CARRY FORWARD OF THE UNABSORBED BUSINESS LOSSES BY INVOKING THE PROVISIO N OF SEC. 79 OF THE IT ACT. IT WAS HELD BY HIM THAT SINCE THERE IS CHANGE IN THE SHARE HOLDING OF THE ASSESSEE-COMPANY, IT FALLS UNDER THE PURVIEW OF SEC. 79 OF THE IT ACT. THE APPELLANT FILED 154 PETITION BEFORE THE ASSESSI NG OFFICER ON 29-01-2010 AGAINST THE APPLICABILITY OF PROVISIONS OF SEC. 79 OF THE IT ACT. HOWEVER, IN THE 154 ORDER DATED 09-04-2010 THIS ISSUE HAS NOT B EEN CONSIDERED BY THE ASSESSING OFFICER. DURING THE COURSE OF APPELLATE PROCEEDINGS IT WAS ARGUED ON BEHALF OF THE APPELLANT THAT PROVISION OF SEC. 7 9 IS NOT APPLICABLE ON THE ASSESSEE COMPANY BECAUSE IT IS A COMPANY IN WHICH T HE PUBLIC ARE SUBSTANTIALLY INTERESTED. IN THIS REGARD, PROVISIO N OF SEC. 79 READS AS UNDER: NOTWITHSTANDING ANYTHING CONTAINED IN THIS CHAPTER , WHERE A CHANGE IN SHAREHOLDING HAS TAKEN PLACE IN A PREVIOUS YEAR IN THE CASE OF A COMPANY, NOT BEING A COMPANY IN WHICH THE PUBLIC ARE SUBSTAN TIALLY INTERESTED, NO LOSS INCURRED IN ANY YEAR PRIOR TO THE PREVIOUS YEA R SHALL BE CARRIED FORWARD AND SET OFF AGAINST THE INCOME OF THE PREVI OUS YEAR UNLESS_ 18. ON PLAIN READING SEC. 79 IT IS CLEAR THAT THI S PROVISION WILL NOT APPLY IN THE CASE OF A COMPANY IN WHICH PUBLIC ARE SUBSTANTI ALLY INTERESTED. THE DEFINITION OF A COMPANY IN WHICH THE PUBLIC ARE SUB STANTIALLY INTERESTED HAS BEEN GIVEN IN SEC. 2(18) OF THE IT ACT. CLAUSE (B)( A) OF SECTION 2(18) IS RELEVANT IN THE PRESENT CASE WHICH READS AS UNDER: IF IT IS A COMPANY WHICH IS NOT A PRIVATE COMPANY AS DEFINED IN THE COMPANIES ACT, 1956 (1 OF 1956) AND THE CONDITIONS SPECIFIED EITHER IN ITEM (A) OR ITEM (B) ARE FULFILLED NAMELY _ (A) SHARES IN THE COMPANY (NOT BEING SHARES ENTITLE D TO A FIXED RATE OF DIVIDEND WHETHER WITH OR WITHOUT A FURTHER RIGHT TO PARTICIPATE IN PROFITS) WERE AS ON THE LAST DAY OF THE RELEVANT PR EVIOUS YEAR, LISTED IN A RECOGNISED STOCK EXCHANGE IN INDIA IN ACCORDAN CE WITH THE SECURITIES CONTRACTS (REGULATION) ACT, 1956 (42 OF 1956) AND ANY RULES MADE THERE UNDER. 19. ON A PERUSAL OF THE ABOVE PROVISIONS, IT IS CLE AR THAT THE ONLY REQUIREMENT FOR A COMPANY IN WHICH PUBLIC ARE SUBSTANTIALLY INTERESTED IS THAT IT SHOULD NOT BE A PRIVATE COMPANY AND SHAR ES OF THE COMPANY SHOULD BE LISTED IN A RECOGNIZED STOCK EXCHANGE ON THE LAST DAY OF THE ITA 290/CO CH/2012 6 6 RELEVANT PREVIOUS YEAR. THE SHARES OF THE APPELLAN T COMPANY WERE LISTED IN THE COCHIN STOCK EXCHANGE AS ON 31-03-2007. THEREFO RE, THE REQUIREMENT OF THE PROVISION OF SEC. 79 R.W.S. 2(18)(B)(A) IS D ULY TAKEN CARE OF IN THE CASE OF THE APPELLANT COMPANY. THE CASE OF THE APP ELLANT COMPANY, THEREFORE DOES NOT FALL UNDER THE MISCHIEF OF SEC. 79 OF THE IT ACT. THE EMPHASIS OF THE ASSESSING OFFICER IN THE REMAND REP ORT REGARDING SHARE HOLDING PATTERN AS REQUIRED IN THE LISTING AGREEMEN T IS OF NO RELEVANCE HERE. THE ONLY REQUIREMENT REGARDING THE LISTING OF SHARE S ON A RECOGNIZED STOCK EXCHANGE HAD BEEN DULY FULFILLED IN THE CASE OF THE APPELLANT COMPANY. I THEREFORE AGREE WITH THE ARGUMENTS PUT FORTH ON BEH ALF OF THE APPELLANT THAT PROVISION OF SEC. 79 IS NOT APPLICABLE IN THE CASE OF THE APPELLANT COMPANY. THE APPEAL IS THEREFORE ALLOWED ON THIS GROUND AND THE ASSESSING OFFICER IS ACCORDINGLY DIRECTED TO GIVE BENEFIT OF SET OFF OF BROUGHT FORWARD BUSINESS LOSS. AGGRIEVED BY THE ORDER OF LD CIT(A), THE REVENUE HA S FILED THIS APPEAL BEFORE US. 9. THE LD D.R SUBMITTED THAT THE ASSESSING OFFI CER HAS INVOKED THE PROVISIONS OF SEC. 79 OF THE ACT IN ORDER TO REJECT THE CLAIM OF SET OFF OF BROUGHT FORWARD LOSS, SINCE THERE WAS A CHANGE IN THE SHARE HOLDING PATTERN RESULTING IN A CHANGE IN THE VOTING RIGHTS EXCEEDING 51%. THE ASSESSEE F ILED A PETITION U/S 154 WITH A REQUEST TO RECTIFY THE ASSESSMENT ORDER WITH THE PL EA THAT THERE IS A MISTAKE APPARENT FROM THE RECORD IN APPLICATION OF SEC. 79 OF THE ACT. THE ASSESSING OFFICER REJECTED THE CLAIM OF THE ASSESSEE ON THE G ROUND THAT THE ISSUE OF APPLICABILITY OF PROVISIONS OF SEC. 79 IS A DEBATAB LE ISSUE AND HENCE THE SAME CANNOT FALL WITHIN THE PURVIEW OF THE PROVISIONS OF SEC. 154 OF THE ACT. THE LD D.R SUBMITTED THAT THE ASSESSING OFFICER WAS RIGHT IN LAW IN REJECTING THE CLAIM MADE BY THE ASSESSEE IN THE PETITION FILED U/S 154 OF THE ACT. THE LD D.R FURTHER SUBMITTED THAT THE LD CIT(A) HAS GRANTED RELIEF ON CONSIDERATION OF MATERIALS WHICH WERE NOT AVAILABLE ON RECORD AND HENCE HIS OR DER IS LIABLE TO BE SET ASIDE. 10. THE LD A.R, HOWEVER, SUBMITTED THAT THE ASS ESSING OFFICER HAS IMPROPERLY APPLIED THE PROVISIONS OF SEC. 79 OF THE ACT TO THE INSTANT CASE, THOUGH THE SAID PROVISIONS ARE NOT APPLICABLE TO THE ASSESSEE COMPA NY. BY PLACING RELIANCE ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE O F M.K.VENKATACHALAM, ITO ITA 290/CO CH/2012 7 7 VS. BOMBAY DYEING AND MANUFACTURING CO. LTD (1958)( 34 ITR 143), THE LD A.R SUBMITTED THAT THE MISTAKE OF FACT OR LAW APPARENT FROM RECORD WILL FALL WITHIN THE PURVIEW OF THE PROVISIONS OF SEC. 154 OF THE ACT. THE LD A.R THEN REITERATED THE SUBMISSIONS MADE BEFORE THE LD CIT(A) WITH REGARD T O THE LISTING STATUS OF THE ASSESSEE COMPANY IN THE COCHIN STOCK EXCHANGE. HE F URTHER SUBMITTED THAT THE CHANGE IN SHAREHOLDING PATTERN HAS TAKEN PLACE IN C ONSEQUENCE TO THE ORDERS PASSED BY BIFR. BY INVITING OUR ATTENTION TO THE CI RCULAR NO.SEBI/CFD/DIL/LA/2006/13/4 DATED APRIL 13, 2006, T HE LD A.R SUBMITTED THAT THE REQUIREMENT OF MAINTAINING THE MINIMUM LEVEL OF PUBLIC SHARE HOLDING AT 10% OF THE TOTAL NUMBER OF ISSUED SHARES SHALL NOT APPLY TO THE COMPANIES REFERRED TO THE BIFR. 11. IN THE REJOINDER, THE LD D.R SUBMITTED THAT THE ASSESSEE FILED FRESH DOCUMENTS IN THE PROCEEDINGS UNDERTAKEN U/S 154 OF THE ACT, WHICH IS PERMISSIBLE. THE LD CIT(A) HAS ALSO CONDUCTED DETA ILED ENQUIRIES, WHICH ARE NOT IN ACCORDANCE WITH THE PROVISIONS OF SEC. 154 OF TH E ACT. THE LD D.R FURTHER SUBMITTED THAT THE ASSESSEE ALSO APPLIED FOR DE-LIS TING OF ITS SHARES. ACCORDINGLY, THE LD D.R SUBMITTED THAT THE ORDER OF LD CIT(A) IS LIABLE TO BE SET ASIDE. 12. WE HAVE HEARD THE RIVAL CONTENTIONS AND PER USED THE RECORD. THE FIRST CONTENTION OF THE REVENUE IS THAT THE CLAIM OF THE ASSESSEE ABOUT THE NON- APPLICABILITY OF THE PROVISIONS OF SEC. 79 IS A DEB ATABLE ISSUE AND HENCE IT FALLS OUTSIDE THE PURVIEW OF RECTIFICATION U/S 154 OF THE ACT. THE SECOND CLAIM OF THE REVENUE IS THAT THE ASSESSEE IS NOT ENTITLED TO SET OFF AND CARRY FORWARD OF LOSSES BROUGHT FORWARD FROM EARLIER YEARS IN TERMS OF SEC. 79 OF THE ACT IN VIEW OF THE CHANGE IN THE SHARE HOLDING PATTERN RESULTING IN CH ANGE IN VOTING POWER EXCEEDING 51%. 13. WE SHALL EXAMINE WHETHER THE PROVISIONS OF SEC. 79 OF THE ACT ARE APPLICABLE TO THE ASSESSEE OR NOT. IF IT IS APPLIC ABLE, THEN THE ASSESSEE WOULD NOT ITA 290/CO CH/2012 8 8 BE ENTITLED TO SET OFF AND CARRY FORWARD OF LOSSES BROUGHT FORWARD FROM EARLIER YEARS. THERE IS NO DOUBT THAT THE PROVISIONS OF SE C. 79 ARE NOT APPLICABLE TO A COMPANY IN WHICH PUBLIC ARE SUBSTANTIALLY INTERESTE D. THE CONTENTION OF THE ASSESSEE IS THAT IT IS A COMPANY IN WHICH PUBLIC AR E SUBSTANTIALLY INTERESTED. THE TERM COMPANY IN WHICH PUBLIC ARE SUBSTANTIALLY INT ERESTED IS DEFINED IN SEC. 2(18)(B)(A) OF THE ACT, ACCORDING TO WHICH A COMPAN Y, INTER ALIA, SHALL BE TREATED AS A COMPANY IN WHICH PUBLIC ARE SUBSTANTIALLY INTE REST IF THE SHARES IN THE COMPANY WERE, AS ON THE LAST DAY OF THE RELEVANT PR EVIOUS YEAR, LISTED IN A RECOGNISED STOCK EXCHANGE IN INDIA IN ACCORDANCE WI TH THE SECURITIES CONTRACTS (REGULATION) ACT, 1956 AND ANY RULES MADE THERE UND ER. THE CLAIM OF THE ASSESSEE IS THAT ITS SHARES ARE LISTED IN COCHIN ST OCK EXCHANGE AS ON 31.3.2007, I.E., AS ON THE LAST DATE OF PREVIOUS YEAR. WE NOT ICE THAT THE ASSESSING OFFICER DID NOT DENY THIS FACTUAL ASPECT IN HIS REMAND REPORT. WE HAVE ALREADY NOTICED THAT THE LD CIT(A) HAS ASCERTAINED FROM COCHIN STOCK EXCH ANGE AND FOUND THAT THE SHARES OF THE ASSESSEE COMPANY ARE LISTED THEREIN A S ON 31.3.2007. HENCE, AS PER THE PROVISIONS OF SEC. 2(18)(B)(A) OF THE ACT, THE ASSESSEE COMPANY HAS TO BE TREATED AS A COMPANY IN WHICH PUBLIC ARE SUBSTAN TIALLY INTERESTED. IN THAT CASE, THE PROVISIONS OF SEC. 79 OF THE ACT, WHICH D EBARS SET OFF AND CARRY FORWARD OF LOSS THAT WERE BROUGHT FORWARD FROM EARLIER YEAR S, ARE NOT APPLICABLE TO THE ASSESSEE COMPANY. ACCORDINGLY, WE UPHOLD THE ORDER OF LD CIT(A). 14. THE REVENUE IS CONTENDING THAT THE IMPUGNE D ISSUE IS A DEBATABLE ONE. THE CONTENTION OF THE ASSESSEE IS THAT IT IS A COMP ANY IN WHICH PUBLIC ARE SUBSTANTIALLY INTERESTED AND THERE IS A MISTAKE IN THE ASSESSMENT ORDER VIS-A-VIS IN APPLICATION OF PROVISIONS OF SEC. 79 OF THE ACT. WE NOTICE THAT THE ASSESSING OFFICER DID NOT DISCUSS ANYTHING IN THE ASSESSMENT ORDER ABOUT THE STATUS OF THE ASSESSEE COMPANY. THOUGH THE NAME OF THE COMPANY S UGGESTS THAT IT IS NOT A PRIVATE LIMITED COMPANY, YET, THE ASSESSING OFFICER HAS PROCEEDED ON THE PRESUMPTION THAT THE ASSESSEE COMPANY IS A COMPANY IN WHICH PUBLIC ARE NOT SUBSTANTIALLY INTERESTED. THE HONBLE CALCUTTA HIG H COURT IN THE CASE OF CIT VS. ITA 290/CO CH/2012 9 9 BENGAL ASSAM STEAMSHIP COMPANY LTD (155 ITR 26) HAS HELD THAT THE MISREADING OF PROVISIONS OF THE ACT WOULD BE A MIST AKE APPARENT FROM THE RECORD AND SUCH A MISTAKE CAN BE RECTIFIED U/S 154 OF THE ACT. THE HONBLE SUPREME COURT IN THE CASE OF BOMBAY DYEING AND MANUFACTURIN G CO. LTD (REFERRED SUPRA) HAS HELD THAT THE ASSESSMENT ORDER, WHICH IS INCONS ISTENT WITH A SPECIFIC AND CLEAR PROVISION OF THE STATUTE, SHOULD BE TREATED A S A MISTAKE OF LAW APPARENT FROM THE RECORD. WE HAVE ALREADY NOTICED THAT THE ASSESSING OFFICER HAS COMMITTED ERROR IN READING THE PROVISIONS OF SEC. 7 9 OF THE ACT AND ALSO IN ITS APPLICATION IN THE HANDS OF THE ASSESSEE. ACCORDIN GLY, IN OUR VIEW, THE CLAIM OF THE ASSESSEE IS A MISTAKE APPARENT FROM RECORD AND IT WILL COME WITHIN THE PURVIEW OF THE PROVISIONS OF SEC. 154 OF THE ACT. ACCORDINGLY, WE REJECT THE CLAIM OF REVENUE ON THIS ISSUE ALSO. 15. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. PRONOUNCED ACCORDINGLY ON 28-06-2013. SD/- SD/- (N.R.S.GANESAN) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 28TH JUNE, 2013 GJ COPY TO: 1. M/S. INNOVATIVE FOODS LTD., AMALGAM HOUSE, XXIV/ 1604, PLOT NO. 9, BRISTOW ROAD, W/ISLAND, COCHIN-682 003. 2.THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE- 1(2), KOCHI 3 THE COMMISSIONER OF INCOME-TAX(APPEALS)-II, KOCHI . 4.THE COMMISSIONER OF INCOME-TAX, KOCHI. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T, COCHIN