Parisons Infrastructure P.Ltd, Calicut V. ACIT, Calicut

ITA 298/COCH/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58329 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-02-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 15-02-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 06-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAYAPRABHA
• Assessee Lawyers: A S NARAYANAMOORTHY
• Keywords: Depreciation; Revenue expenditure
• Section: 263; 154

Judgement Text

1 ITA NO.298/COCH/2010 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI B.R. BASKARA N(AM) I.TA NO. 298/COCH/2010 (ASSESSMENT YEAR 2005-06) PARISONS INFRASTRUCTURE PRIVATE LIMITED VS A.C.I. T., CIRCLE 1(1) 7/1183, KUNHIPARI BLDG CALICUT CHEROOTY ROAD, CALICUT-673 032 PAN : AADCP1529M (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI A.S. NARAYANAMOORTHY RESPONDENT BY : SMT. VIJAYAPRABHA DATE OF HEARING : 15-02-2012 DATE OF PRONOUNCEMENT : 29-02-2012 O R D E R PER N.R.S. GANESAN (JM) THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE ADMINISTRATIVE COMMISSIONER U/S 263 OF THE INCOME-T AX ACT, 1961 DATED 30-03- 2010 FOR THE ASSESSMENT YEAR 2005-06. 2. SHRI A.S. NARAYANANMOORTHY, THE LD.REPRESENTATIV E FOR THE ASSESSEE SUBMITTED THAT ON THE BASIS OF THE AUDIT REPORT, TH E ASSESSING OFFICER INITIATED PROCEEDINGS U/S 154 OF THE ACT INITIALLY. ON THE B ASIS OF THE OBJECTION RAISED BY THE ASSESSEE, THE ASSESSING OFFICER DROPPED THE PRO CEEDINGS INITIATED U/S 154 OF THE ACT. HOWEVER, THE ASSESSING OFFICER REQUESTED THE COMMISSIONER OF INCOME- 2 ITA NO.298/COCH/2010 TAX TO INITIATE PROCEEDINGS U/S 263 OF THE ACT. ON THE BASIS OF THE REQUEST OF THE ASSESSING OFFICER, THE COMMISSIONER INITIATED THE P ROCEEDINGS U/S 263 OF THE INCOME-TAX ACT. REFERRING TO THE PROVISIONS OF SECT ION 263 OF THE INCOME-TAX ACT AND THE ORDER PASSED BY THE COMMISSIONER U/S 263 TH E LD.REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE COMMISSIONER CAN INVOKE HIS JURISDICTION ON HIS OWN AFTER EXAMINING THE RECORDS OF THE ASSESSMENT. IN THIS CASE, THE COMMISSIONER INITIATED THE PROCEEDINGS ON THE BASIS OF THE REQUE ST MADE BY THE ASSESSING OFFICER. THEREFORE, THE INITIATION OF THE PROCEEDI NGS IS INVALID. THE LD.REPRESENTATIVE FURTHER SUBMITTED THAT THE ADMINI STRATIVE COMMISSIONER INITIALLY IN THE ORDER STATED THAT THE ORDER OF THE ASSESSING OFFICER IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF THE RE VENUE. ACCORDING TO THE LD.REPRESENTATIVE, BOTH CONDITIONS THAT THE ASSESSM ENT HAS NECESSARILY TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE HAVE TO BE SATISFIED CUMULATIVELY. IN THE ABSENCE OF ANY FINDING BY THE COMMISSIONER THAT THE ORDER OF THE REVENUE IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE, THE COMMISSIONER CANNOT INVOKE HIS JURISDICTION U/S 263. THEREFORE, THE ORDER U/S 263 IS INVALID. REFERRING TO THE MERIT OF THE CASE , THE LD.REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER HAS O RIGINALLY ALLOWED THE CLAIM OF THE ASSESSEE WITH REGARD TO AMORTISING THE LEASE LA ND FOR THE RELEVANT PERIOD. ACCORDING TO THE LD.REPRESENTATIVE, AS PER THE AGRE EMENT, THE ASSESSEE HAS PAID RS.5,76,80,850 AS ONE TIME AFFRONT PREMIA FOR OBTAI NING THE LAND AND THE SAID PREMIUM IS NON REFUNDABLE. THE TIME OF LEASE IS FO R A PERIOD OF 30 YEARS. THEREFORE, THE AMOUNT PAID IS FOR THE ENTIRE 30 YEA RS PERIOD. THEREFORE, IT HAS TO BE AMORTISED OVER THE PERIOD OF 30 YEARS. THEREFOR E, THE ENTIRE AMOUNT HAS TO BE ALLOWED AS REVENUE EXPENDITURE. ACCORDING TO THE L D.REPRESENTATIVE, THE ASSESSING OFFICER AS WELL AS THE COMMISSIONER MISUN DERSTOOD THE CASE AS IF THE ASSESSEE WAS CLAIMING DEPRECIATION ON THE LAND. TH E LD.REPRESENTATIVE FOR THE 3 ITA NO.298/COCH/2010 ASSESSEE HAS PLACED RELIANCE ON THE VARIOUS DECISIO NS OF THE HIGH COURTS AND SUPREME COURT INCLUDING THE DECISION OF JAIPUR BENC H OF THIS TRIBUNAL IN THE CASE OF RAJIV ARORA VS COMMISSIONER OF INCOME-TAX (2011) 131 ITD 58 (JP). 3. ON THE CONTRARY, SMT. VIJAYAPRABHA, THE LD.DR SU BMITTED THAT THE ASSESSEE CLAIMED DEPRECIATION ON THE LEASEHOLD LAND TO THE E XTENT OF RS.15,54,735. THE ASSESSING OFFICER, WITHOUT ANY EXAMINATION, ALLOWED THE CLAIM OF THE ASSESSEE. THEREFORE, THE INTERNAL AUDIT PARTY OF THE DEPARTME NT OBJECTED TO THE ACTION OF THE ASSESSING OFFICER. THE ASSESSING OFFICER INITI ATED PROCEEDINGS U/S 154 AND SINCE THE ASSESSEE OBJECTED TO THE SAME, THE PROCEE DINGS WERE DROPPED. SUBSEQUENTLY, THE ASSESSING OFFICER HAS SENT A PROP OSAL TO THE COMMISSIONER TO INITIATE PROCEEDINGS U/S 263 OF THE ACT. REFERRING TO THE ASSESSMENT ORDER, THE LD.DR SUBMITTED THAT THE COMMISSIONER HAD EXAMINED ALL THE RELEVANT RECORDS AND FOUND THAT THE ASSESSING OFFICER HAS COMMITTED AN ERROR IN GRANTING DEPRECIATION ON THE LEASEHOLD LAND. REFERRING TO T HE PROVISIONS OF SECTION 263 OF THE INCOME-TAX ACT, THE LD.DR SUBMITTED THAT THE COM MISSIONER CAN CALL FOR ANY RECORDS FROM THE ASSESSING OFFICER AND IF HE FOUND THE ASSESSMENT ORDER ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE, HE CAN INVOKE HIS JURISDICTION U/S 263 OF THE ACT. ON A QUERY FROM T HE BENCH WHETHER THE COMMISSIONER HAS RECORDED ANY REASON WITH REGARD TO THE TWIN CONDITIONS OF THE ASSESSMENT ORDER BEING ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE, THE LD.DR SUBMITTED THAT THE ORDER OF THE ASSESSING OFFICER IS TOTALLY ERRONEOUS SINCE THE LEASE LAND IS NOT ENTITLED FOR DEPRECIATI ON. THEREFORE, IT IS TO BE PRESUMED THAT THE ORDER OF THE ASSESSING OFFICER IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. 4 ITA NO.298/COCH/2010 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THERE ARE TWO OB JECTIONS FROM THE ASSESSEE WITH REGARD TO THE ORDER PASSED BY THE COMMISSIONER U/S 263 OF THE ACT. THE FIRST OBJECTION IS THAT THE COMMISSIONER CANNOT INVOKE HIS JURISDICTION U/S 263 BASED ON THE PROPOSAL MADE BY THE ASSESSING OFFICER. THE SECOND OBJECTION IS THAT THE COMMISSIONER HAS NOT RECORDED ANY FINDING AS TO HOW THE ASSESSMENT ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE. 5. LET US FIRST EXAMINE THE FIRST OBJECTION WITH RE GARD TO INITIATION OF PROCEEDINGS U/S 263 OF THE ACT ON THE BASIS OF PROP OSAL MADE BY THE ASSESSING OFFICER. A PRIMA FACIE READING OF THE IMPUGNED ORD ER OF THE ADMINISTRATIVE COMMISSIONER REVEALS THAT THE PROCEEDINGS WERE INIT IATED ON THE BASIS OF THE PROPOSAL MADE BY THE ASSESSING OFFICER. THE COMMIS SIONER ISSUED NOTICE TO THE ASSESSEE U/S 263 WITHOUT EVEN EXAMINING THE RECORDS . WE HAVE CAREFULLY GONE THROUGH THE DECISION OF THE JAIPUR BENCH OF THIS TR IBUNAL IN THE CASE OF RAJIV ARORA (SUPRA). IN THE CASE BEFORE THE JAIPUR BENCH OF TH IS TRIBUNAL, THE ASSESSING OFFICER REFERRED THE MATTER TO THE COMMISSIONER FOR INITIAT ING PROCEEDINGS U/S 263 OF THE INCOME-TAX ACT. THE COMMISSIONER ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE. THE ASSESSEE EXPLAINED THE QUERY RAISED BY THE COMM ISSIONER. THE COMMISSIONER REJECTED THE EXPLANATION OF THE ASSESS EE AND SET ASIDE THE ORDER OF THE ASSESSING OFFICER. THE JAIPUR BENCH OF THIS TR IBUNAL, AFTER CONSIDERING THE FACTS OF THE CASE HAS OBSERVED AS FOLLOWS AT PARAGR APH 11 ON PAGE 59 OF THE ITD. FOR THE PURPOSE OF CONVENIENCE, WE ARE REPRODUCING BELOW THE OBSERVATION MADE BY THE JAIPUR BENCH OF THIS TRIBUNAL IN THE CASE OF RAJIV ARORA (SUPRA): THE PROVISIONS OF SECTION 263 ITSELF PROVIDE THAT THE COMMISSIONER MAY EXAMINE THE RECORDS. HOWEVER, IN THE INSTANT C ASE, THE LD.COMMISSIONER HAD NOT APPLIED HIS MIND BUT THE MA TTER WAS 5 ITA NO.298/COCH/2010 REFERRED BY THE ASSESSING OFFICER THROUGH ADDITIONA L COMMISSIONER FOR INITIATING PROCEEDINGS U/S 263. AFTER OBSERVING THE FACTS AS ABOVE, THE TRIBUNAL FO UND THAT THE APPROACH OF THE COMMISSIONER IS NOT LEGALLY WELL FOUNDED. IN THIS CASE ALSO, THE COMMISSIONER, ON THE BASIS OF THE PROPOSAL MADE BY THE ASSESSING OFF ICER ISSUED NOTICE U/S 263 OF THE INCOME-TAX ACT FOR REVISING THE ASSESSMENT ORDER . BEFORE ISSUING NOTICE U/S 263, THE COMMISSIONER HAS NOT EXAMINED THE RECORDS OF THE ASSESSING OFFICER AND CAME TO THE CONCLUSION THAT THE ORDER OF THE ASSESS ING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE IM PUGNED ORDER OF THE COMMISSIONER DOES NOT SHOW ANY APPLICATION OF MIND BEFORE ISSUING NOTICE U/S 263 OF THE ACT. SIMPLY REFERRING TO THE PROPOSAL M ADE BY THE ASSESSING OFFICER, HE ISSUED NOTICE U/S 263 OF THE INCOME-TAX ACT. THE M ATTER WOULD HAVE BEEN ENTIRELY DIFFERENT IF THE COMMISSIONER HAD CALLED F OR THE ENTIRE RECORDS OF THE ASSESSING OFFICER ON THE BASIS OF THE PROPOSAL AND EXAMINED THE SAME AND CAME TO A CONCLUSION THAT ON EXAMINATION OF THE RECORDS HE FOUND THAT THE ORDER OF THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO T HE INTEREST OF THE REVENUE. IN THE ABSENCE OF ANY SUCH EXAMINATION BEFORE ISSUE OF NOTICE U/S 263, IN OUR OPINION, THE EXERCISE OF JURISDICTION U/S 263 IS NO T JUSTIFIED AT ALL. THE POWER TO REVISE THE ORDER IS EXCLUSIVELY CONFERRED ON THE CO MMISSIONER AND THE PROCEEDINGS BEFORE THE COMMISSIONER IS QUASI JUDICI AL NATURE; THEREFORE, THE COMMISSIONER HAS TO BE INDEPENDENTLY SATISFIED AFTE R EXAMINING THE RECORDS THAT THE ORDER OF THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. IN THE ABSENCE OF ANY SUCH EXAMINATIO N BEFORE ISSUING NOTICE U/S 263, IN OUR OPINION, THE ORDER OF COMMISSIONER IS N OT JUSTIFIED AT ALL. 6. NOW COMING TO THE SECOND OBJECTION OF THE ASSESS EE THAT THE COMMISSIONER HAS NOT RECORDED ANY FINDING WITH REGA RD TO THE ASSESSMENT ORDER 6 ITA NO.298/COCH/2010 IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE, WE HAVE CAREFULLY GONE THROUGH THE IMPUGNED ORDER OF THE COMMISSIONER . THE COMMISSIONER NOWHERE IN HIS ORDER STATED THAT THE ASSESSMENT ORD ER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE LD . DR SUBMITTED THAT SINCE THE GRANT OF DEPRECIATION ON LEASEHOLD LAND IS ERRONEOU S, IT IS TO BE PRESUMED THAT IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE PROCEEDINGS BEFORE THE COMMISSIONER ARE QUASI JUDICIAL PROCEEDINGS AND TH E ORDER OF THE COMMISSIONER U/S 263 IS A JUDICIAL ORDER. THEREFORE, THE REASON S AND CONCLUSIONS ARRIVED AT BY THE COMMISSIONER HAVE TO BE MENTIONED IN THE ORDER ITSELF. WE CANNOT PRESUME SOMETHING FROM THE FACTS NARRATED BY THE COMMISSION ER. THE COMMISSIONER HAS TO RECORD HIS FINDING WITH REASONS FOR INVOKING THE JURISDICTION U/S 263 AND AS TO HOW THE ORDER OF THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. IN THE ABSENCE OF ANY FINDING WITH REGARD TO THE ASSESSMENT ORDER BECOMING ERRONEOUS AND PREJUDICIAL TO THE INT EREST OF THE REVENUE, THE COMMISSIONER CANNOT REVISE THE ORDER OF THE ASSESSI NG OFFICER. IN VIEW OF THE ABOVE, WE ARE UNABLE TO UPHOLD THE ORDER U/S 263 OF THE ACT PASSED BY THE COMMISSIONER. ACCORDINGLY, THE SAME IS SET ASIDE. 7. IN THE RESULT, APPEAL OF THE ASSESSEE STANDS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 29 TH DAY OF FEBRUARY, 2012. SD/- SD/- (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 29 TH FEBRUARY, 2012 PK/- 7 ITA NO.298/COCH/2010 COPY TO: 1. PARISONS INFRASTRUCTURE PRIVATE LIMITED, 6/1183, KUN HIPARI BLDG, CHEROOTY ROAD, CALICUT 2. ASSIST.COMMISSIONER OF INCOME-TAX, CIR.1(1), CALIC UT 3. THE C.I.T., CALICUT 4. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH