ACIT (OSD)-6, MUMBAI V. ESSAR STEEL LTD., MUMBAI

ITA 3023/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8058 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2005-2006
• Appeal Filed On: 25-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S PADMAYA
• Keywords: Depreciation; Retrospective amendment
• Section: 234B; 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES F , MUMBAI BEFORE S HRI B.R. BASKARAN (AM) AND SHRI RAM LAL NEGI (JM) ITA NO. 3023 /MUM/20 1 6 ASSESSMENT YEAR: 2005 - 06 THE ACIT (OSD) - 6, ROOM NO. 522, 5 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400 020 VS. M/S ESSAR STEEL LTD., ESSAR HOUSE , NO. 11, K.K. MARG, MAHALAXMI, MUMBAI 400034 PAN: AAACE1741P (APPELLANT) (RESPONDENT) ASSESSEE BY : MS. S PADMAYA (CIT DR) REVENUE BY : SHRI NIRAJ SHETH (A R) DATE O F HEARING: 11/12 /201 7 DATE OF PRONOUNCEMENT: 11 / 12 /201 7 O R D E R PER RAM LAL NEGI, JM THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST ORDER DATED 27/01/2016 PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 5 6 , MUMBAI , FOR THE A S S ESSMENT YEAR 2005 - 06 , WHEREBY THE LD. CIT (A) HAS ALLOWED THE APPEAL FILED BY THE ASSESSEE AGAINST ASSESSMENT ORDER PASSED BY THE AO U/S 143 (3) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE A CT). 2. BRIEF FACTS OF THE CASE ARE THAT THE A SSESSEE ENGAGED IN THE BUSINESS OF MANUFACTURING AND SALE OF HOT ROL L ED C OILS SHEETS AND PLATES, FILED RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION DECLARING NIL INCOME UNDER NORMAL PROVISIONS OF LAW AND BOOK PROFIT OF RS. 59,82,70,426/ - U/S 115JB ACT . SUBSEQUENTLY, THE RETURN WAS REVISED 2 ITA NO. 3023 / MUM/2016 ASSESSMENT YEAR: 200 5 - 0 6 DECLARING NIL INCOME UNDER NORMAL PROVISIONS AS WELL AS UNDER SECTION 115JB OF THE ACT. IN RESPONSE TO THE NOTICE U/S 142 (1), THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE APPEARED BEFORE THE AO FROM TIME T O TIME AND FILED THE DETAILS CALLED FOR BY THE AO. THE AO AFTER HEARING THE ASSESSEES REPRESENTATIVE IN THE LIGHT OF THE DETAILS FURNISHED, PASSED ASSESSMENT ORDER U/S 143 (3) OF THE ACT DETERMINING THE TOTAL TAXABLE INCOME AS NIL AFTER MAKING CERTAIN DIS ALLOWANCES AND REDUCING THE DEPRECIATION OF RS. 60,78,04,413/ - ON THE GROUND OF WAIVER OF LOAN FROM WRITTEN DOWN VALUE (WDV) OF THE PLANT AND MACHINERY HOLDING THAT IT COULD GO TO REDUCE THE COST OF PLANT AND MACHINERY. THE AO ALSO LEVIED INTEREST U/S 234B AND 234C OF THE ACT ON ACCOUNT OF SHORTFALL IN ADVANCE TAX ARISING OUT OF RETROSPECTIVE AMENDMENT OF SECTION 115JB OF THE ACT. 3. IN APPEAL THE LD. CIT(A) DELETED THE ADDITION OF RS. 60,78,04,413/ - AND DIRECTED THE AO TO ALLOW THE DEPRECIATION CLAIMED B Y THE ASSESSEE FROM THE COST OF PLANT AND MACHINERY ACQUIRED FROM THE AMOUNT CORRESPONDING TO RS. 324,16,23,540/ - , WHICH HAD BEEN WAIVED OFF BY CERTAIN LENDERS. THE LD. CIT(A) ALSO DIRECTED THE AO NOT TO LEVY INTEREST U/S 234B & 234C OF THE ACT ON ACCOUNT OF SHORTFALL IN ADVANCE TAX, ARISING OUT OF RETROSPECTIVE AMENDMENT OF SECTION 115JB OF THE ACT. 4. AGGRIEVED BY THE IMPUGNED ORDER PASSED BY THE LD. CIT (A), THE REVENUE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL ON THE FOLLOWING EFFECTIVE GROUNDS: - 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) IS NOT JUSTIFIED IN DELETING THE ADDITION OF RS. 60.78 CRORE BEING THE AMOUNT OF DISALLOWANCE FROM THE DEPRECIATION 3 ITA NO. 3023 / MUM/2016 ASSESSMENT YEAR: 200 5 - 0 6 CLAIM OF THE ASSESSEE FROM THE COST OF PLANT & MACHINERY AC QUIRED FROM THE AMOUNT CORRESPONDING TO RS. 324,16,23,540/ - WHICH HAS BEEN WAIVED OFF BY CERTAIN LENDERS IN THE YEAR PERTAINING TO A.Y. 2004 - 05. 2. ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) HAS ERRED IN DIRECTING NOT TO LEVY O F INTEREST U/S 234B & 234C OF THE INCOME TAX ACT ON ACCOUNT OF SHORT FALL IN ADVANCE TAX, ARISING OUT OF RETROSPECTIVE AMENDMENT OF SECTION 115JB OF INCOME TAX ACT. 5. THE FIRST GROUND PERTAINS TO ADDITION OF RS. 60.78 CRORES BEING THE AMOUNT OF DISALLO WANCE FROM DEPRECIATION CLAIMED BY THE ASSESSEE FROM THE COST OF PLANT AND MACHINERY ACQUIRED FROM THE AMOUNT CORRESPONDING TO RS. 324,16,23,540/ - , WHICH HAD BEEN WAIVED OFF BY CERTAIN LENDERS IN THE YEAR PERTAINING TO THE ASSESSMENT YEAR UNDER CONSIDERATI ON. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS GROUND OF APPEAL IS SQUARELY COVERED BY THE ORDER OF THE ITAT PASSED IN ITA NO. 5086/MUM/2007 DATED 22/03/2013 . THE LD. COUNSEL FURTHER POINTED OUT THE ITAT HAS DECIDED THE IDENTICAL ISSUE IN FAVOUR OF THE ASSESSEE IN ASSESSEES OWN CASE ITA NO. 7415/MUM/2011 FOR THE ASSESSMENT YEAR 2 007 - 08. SINCE, THE FINDINGS OF THE LD. CIT (A) ARE BASED ON THE DECISIONS OF ITAT REFERRED ABOVE , THE SAME DOES NOT WARRANT ANY INTERFERE. T H EREFORE , THERE IS NO MERIT IN THE APPEAL OF THE REVENUE. ON THE OTHER HAND, THE LD. DR RELIED ON THE ASSESSMENT ORDER. 6 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PERUSED THE MATERIAL ON RECORD INCLUDING THE CASES RELIED UPON BY THE AUTHORITIES BELOW. WE NOTICE THAT THE FINDINGS OF THE LD. CIT (A) ARE BASED ON THE DECISIONS OF THE CO - ORDINATE BENCH RENDERED IN ASSESSEES OWN CASE ITA NO. 4 ITA NO. 3023 / MUM/2016 ASSESSMENT YEAR: 200 5 - 0 6 7415/MUM/2011 FOR THE ASSESSMENT YEAR 2007 - 08 . WE FURTHER NOTICE THAT THE COORDINATE BENCH OF THE ITAT HA S DISMISSED THE REVENUES APPEAL ON IDE NTICAL ISSUE, IN ASSESSEES OWN CASE PERTAINING TO THE A.Y. 2001 - 02 AND 2004 - 05. SINCE, THE FINDINGS OF THE LD. CIT (A) ARE IN ACCORDANCE WITH THE DECISION OF THE COORDINATE BENCH RENDERED IN THE ASSESSEES OWN CASE FOR EARL IER AND SUBSEQUENT ASSESSMENT YE AR S, W E DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT (A). WE ACCORDINGLY DISMISS THIS GROUND OF APPEAL OF THE REVENUE. 7 . THE SECOND GROUND PERTAINS TO LEVY OF INTEREST U/ S 234B AND 234C OF THE INCOME TAX ACT ON ACCOUNT OF SHORT FALL IN ADVANCE TAX ARISING OUT OF RETROSPECTIVE AMENDMENT OF SECTION 115JB OF THE ACT. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT SINCE THE TAX PAYABLE U/S 115JB WAS NIL AS PER THE EXISTING LAW IN THE FINANCIAL YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION, T HE APPELLANT CANNOT BE EXPECTED TO PAY ADVANCE TAX UNDER THESE CIRCUMSTANCES ON RETROSPECTIVE AMENDMENT IN LAW. THEREFORE, INTEREST U/S 234B OR 234C CANNOT BE LEVIED ON TAX PAYABLE DUE TO RETROSPECTIVE AMENDMENT IN LAW. ON THE OTHER HAND, T HE LD. DR RELIED ON THE ORDER PASSED BY THE AO. 8 . WE NOTICE THAT THE LD. CIT (A) HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE RELYING ON THE DECISION OF ITAT, CHENNAI IN THE CASE OF M/S SREEJA HOSIERY AND OTHERS VS. CIT (A) 2008 TIOL 622 ITAT (MAD ) AN D THE DECISION OF DELHI BENCH IN THE CASE OF HARYANA WAREHOUSING CORPORATION VS. DCIT 75 ITD 155 WHEREIN IT HAS BEEN HELD THAT INTEREST U/S 234B CANNOT BE LEVIED IF THE LIABILITY IS FASTENED ON THE ASSESSEE ON ACCOUNT OF RETROSPECTIVE AMENDMENT. THE LD. CI T(A) HAS FURTHER POINTED OUT THAT THE 5 ITA NO. 3023 / MUM/2016 ASSESSMENT YEAR: 200 5 - 0 6 TRIBUNAL HAS DECIDED THE IDENTICAL ISSUE IN FAVOUR OF THE ASSESSEE IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2007 - 08 HOLDING THAT THE INTEREST CANNOT BE LEVIED U/S 234B OF THE ACT ON ACCOUNT OF RETROSPECTIVE AMEND MENT IN SECTION 115JB. SINCE, THIS GROUND IS COVERED BY THE DECISION OF THE ITAT IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2007 - 08, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A). WE, THEREFORE, UPHOLD THE FINDINGS OF THE L D. CIT(A) AND DISMISS THIS GROUND OF APPEAL OF THE ASSESSEE. IN THE RESULT, APPEAL FILED BY THE REVENUE FOR A SSESSMENT YEAR 200 5 - 200 6 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH DECEMBER , 2017 . SD/ - SD/ - (B.R. BASKARAN ( RAM LAL NEGI ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; DATED: 11 / 1 2 / 2017 ALINDRA, PS / COPY OF THE ORDER F ORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . 6 ITA NO. 3023 / MUM/2016 ASSESSMENT YEAR: 200 5 - 0 6 / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI