M/s. Abad Hotels P.Ltd, Cochin V. DCIT, Ernakulam

ITA 314/COCH/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 64788 (ITAT-COCHIN)
• Duration Of Justice: 2 year(s) 4 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 05-09-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 10-05-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P SAJEEV
• Assessee Lawyers: RADESH BHATT
• Keywords: Revision of order; Depreciation; Retrospective amendment
• Section: 115JB; 263

Judgement Text

1 ITA NO.314/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.T.A NO. 314/COCH/2010 (ASSESSMENT YEAR 2005-06) M/S ABAD HOTELS INDIA PVT LTD VS THE DY.CIT, CIR .1(1) C/O VARMA & VARMA, CAS ERNAKULAM COCHIN-16 PAN : AACCA2659L (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RADESH BHATT RESPONDENT BY : SHRI P SAJEEV DATE OF HEARING : 05-09-2012 DATE OF PRONOUNCEMENT : -09-2012 O R D E R PER N.R.S. GANESAN (JM) BEING AGGRIEVED BY THE ORDER OF ADMINISTRATIVE COM MISSIONER U/S 263 OF THE ACT, THE TAXPAYER HAS FILED THE PRESENT APPEAL BEFORE THIS TRIBUNAL FOR THE ASSESSMENT YEAR 2005-06. 2. THE FIRST GROUND OF APPEAL IS WITH REGARD TO DEP RECIATION ON PRINTERS. ACCORDING TO THE LD.REPRESENTATIVE, THE TAXPAYER CL AIMED DEPRECIATION @60% ON PRINTERS. THE ASSESSING OFFICER ACCEPTED THE VIEW ON THE BASIS OF THE JUDICIAL PRONOUNCEMENT AVAILABLE AT THAT POINT OF TIME. THE LD.REPRESENTATIVE PLACED HIS 2 ITA NO.314/COCH/2010 RELIANCE ON THE DECISION OF THE SPECIAL BENCH OF TH IS TRIBUNAL IN DY.CIT VS DATACRAFT INDIA LTD (2010) 133 TTJ 377. 3. ON THE CONTRARY, THE LD.DR SUBMITTED THAT THE AS SESSMENT ORDER WAS PASSED ON 13-12-2007 AND THE IMPUGNED REVISION ORDER WAS PASSED ON 04-03- 2010. THE DECISION OF THE SPECIAL BENCH WAS PRONOU NCED ON 09-07-2010. THEREFORE, THE DECISION OF THE SPECIAL BENCH WAS NO T AVAILABLE ON THE DATE ON WHICH THE COMMISSIONER EXERCISED HIS REVISIONAL JUR ISDICTION. THEREFORE, IT IS NOT CORRECT TO SAY THAT THE ASSESSING OFFICER HAS TAKEN ONE OF THE POSSIBLE VIEWS. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND ALS O PERUSED THE MATERIAL AVAILABLE ON RECORD. AS RIGHTLY SUBMITTED BY THE L D.DR, THE DECISION OF THE SPECIAL BENCH OF THIS TRIBUNAL IN THE CASE OF DATACRAFT IND IA LTD (SUPRA) WAS PRONOUNCED ON 09-07-02010, MUCH AFTER THE IMPUGNED REVISIONAL OR DER WAS PASSED BY THE ADMINISTRATIVE COMMISSIONER. IN THE WRITTEN SUBMIS SION, THE TAXPAYER HAS REFERRED THE DECISION OF THE KOLKATTA BENCH OF THIS T RIBUNAL IN ITO VS SAMIRAN MAJUMDAR 98 ITD 119 (KOL). IN THIS CASE, THE TRIBUN AL HAD AN OCCASION TO CONSIDER THE DEPRECIATION ON COMPUTER PRINTERS. THIS TRIBUN AL AFTER FOLLOWING THE JUDGMENT OF THE APEX COURT IN THE CASE OF KARNATAKA P OWER CORPORATION (2001) 247 ITR 268 (SC)(FB) FOUND THAT PRINTER AND SCANNER ARE INTEGRAL PART OF THE COMPUTER SYSTEM; THEREFORE, THEY ARE ENTITLED TO DE PRECIATION @60%. THIS DECISION OF THE KOLKATTA BENCH OF THIS TRIBUNAL WAS D ELIVERED ON 01-08-2005. THEREFORE, THIS JUDGMENT OF THE KOLKATTA BENCH OF THI S TRIBUNAL IS AVAILABLE ON THE DATE ON WHICH THE ASSESSING OFFICER HAS PASSED THE ASSESSMENT ORDER. THEREFORE, IT IS OBVIOUS THAT THE ASSESSING OFFICER HAS TAKEN ONE OF THE POSSIBLE VIEWS WHICH WAS TAKEN BY THE KOLKATTA BENCH OF THIS TRIBUNAL. WH EN THE ASSESSING OFFICER HAS TAKEN ONE OF THE POSSIBLE VIEWS AS TAKEN BY THE KOLKATT A BENCH OF THIS TRIBUNAL, IT 3 ITA NO.314/COCH/2010 CANNOT BE SAID THAT THERE IS AN ERROR IN THE ORDER OF ASSESSING OFFICER. ACCORDINGLY, THE ORDER OF THE ADMINISTRATIVE COMMIS SIONER IS SET ASIDE ON THIS ISSUE AND THAT OF THE ASSESSING OFFICER IS RESTORED . 5. THE NEXT GROUND OF APPEAL IS WITH REGARD TO REPA IRS AND MAINTENANCE OF HOTEL TO THE EXTENT OF RS.28,63,110. 6. SHRI RADHESH BHATT, THE LD.REPRESENTATIVE FOR TH E TAXPAYER SUBMITTED THAT AS PER THE DIRECTION OF THE ADMINISTRATIVE COMMISSI ONER, THE ASSESSING AUTHORITY VERIFIED THE CORRECTNESS OF THE CLAIM OF THE TAXPAY ER TOWARDS REPAIRS AND MAINTENANCE. HOWEVER, HE HAS NOT MADE ANY ADJUSTME NT IN THE RE-ASSESSMENT PROCEEDINGS. WHEN THERE IS NO ERROR, ACCORDING TO THE LD.REPRESENTATIVE, REVISING THE ASSESSMENT ORDER IS BAD IN LAW. WE HEARD THE L D.DR ALSO. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE RECORD. ADMITTEDLY, THE TAXPAYER HAS DEBITED A SUM OF RS.28 ,63,110 TOWARDS REPAIRS AND MAINTENANCE OF THE BUILDING. IN THE ORIGINAL ASSES SMENT THERE IS NO INDICATION THAT THE ASSESSING OFFICER HAS VERIFIED THE CLAIM O F THE TAXPAYER. THE ASSESSMENT ORDER BEING A QUASI JUDICIAL ORDER IS EXPECTED TO R EFLECT THE APPLICATION OF THE MIND OF THE ASSESSING AUTHORITY WITH REGARD TO THE MATERIAL AVAILABLE ON RECORD. SINCE SUCH AN EXERCISE WAS NOT DONE BY THE ASSESSIN G OFFICER, THE COMMISSIONER OF INCOME-TAX(A) INVOKED HIS POWERS U/S 263 OF THE A CT. IN THOSE CIRCUMSTANCES, WE CANNOT FIND FAULT WITH THE ADMINISTRATIVE COMMIS SIONER IN EXERCISING HIS JURISDICTION. ACCORDINGLY THE ORDER OF ADMINISTRAT IVE COMMISSIONER U/S 263 IS UPHELD AND THE GROUND OF APPEAL IS REJECTED. 4 ITA NO.314/COCH/2010 8. THE NEXT GROUND OF APPEAL IS WITH REGARD TO COMP UTATION OF BOOK PROFIT U/S 115JB(2) OF THE ACT. THE LD.REPRESENTATIVE FOR THE TAXPAYER SUBMITTED THAT THE DEFERRED TAX IS AN ALLOWABLE DEDUCTION U/S 115JB OF THE ACT WHILE COMPUTING THE BOOK PROFIT. HOWEVER, BY FINANCE ACT, 2008 THE LEGI SLATURE MADE A RETROSPECTIVE AMENDMENT WITH EFFECT FROM 01-04-2001. ACCORDING TO THE LD.REPRESENTATIVE, THE ASSESSMENT YEAR UNDER CONSIDERATION IS 2005-06, THEREFORE, THE FINANCE ACT, 2008 WHICH WAS ASSENTED BY THE PRESIDENT ON 10-05-200 8 WITH RETROSPECTIVE EFFECT FROM 01-04-2001 CANNOT BE A BASIS FOR REVISING THE ORDER WHICH WAS PASSED BY THE ASSESSING OFFICER ON 13-12-2007. THE LD.REPRE SENTATIVE PLACED HIS RELIANCE ON THE JUDGMENT OF THE APEX COURT IN COMMISSIONER O F INCOME-TAX VS MAX INDIA LTD 295 ITR 282 (SC) AND THE JUDGEMENT OF THE KOLKATT A HIGH COURT IN BALARAMPUR CHINNI MILLS LTD 316 ITR 374 (KOL). 9. WE HEARD THE LD.DR ALSO. ACCORDING TO THE LD.DR , THE ADMINISTRATIVE COMMISSIONER HAS RIGHTLY REVISED THE ASSESSMENT ORD ER ON THE BASIS OF THE RETROSPECTIVE AMENDMENT INTRODUCED IN EXPLANATION 1 TO SECTION 115JB(2) OF THE ACT. 10. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND AL SO PERUSED THE MATERIAL AVAILABLE ON RECORD. ADMITTEDLY, THE ASSESSMENT OR DER WAS PASSED ON 13-12- 2007. ON THE DATE OF PASSING OF THE ASSESSMENT ORD ER, EXPLANATION 1(H) OF SECTION 115JB(2) WAS NOT IN THE STATUTE BOOK. ADMI TTEDLY, EXPLANATION 1(H) TO SECTION 115JB WAS INTRODUCED BY FINANCE ACT, 2008 W ITH RETROSPECTIVE EFFECT FROM 01-04-2001. THEREFORE, ON THE DATE OF PASSING OF THE ORDER, I.E. ON 13-02-2007, THE ASSESSING OFFICER WAS NOT EXPECTED TO VISUALIZE A SITUATION THAT THE LAW WOULD BE AMENDED IN FUTURE. THEREFORE, WE CANNOT SAY THE ORDER OF THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTERES T OF REVENUE WHEN IT WAS PASSED 5 ITA NO.314/COCH/2010 IN TERMS OF THE PROVISIONS OF LAW WHICH WAS IN EXIS TENCE AS ON THE DATE OF PASSING OF THE ORDER. THIS WAS HELD BY THE APEX COURT IN T HE CASE OF MAX INDIA LTD (SUPRA). THEREFORE, THIS TRIBUNAL IS OF THE CONSID ERED OPINION THAT THE SUBSEQUENT RETROSPECTIVE AMENDMENT OF THE LAW CANNOT BE A BASI S FOR REVISING THE ORDER OF THE ASSESSMENT U/S 263 OF THE ACT. ACCORDINGLY, TH E ORDER OF THE ADMINISTRATIVE COMMISSIONER IS SET ASIDE AND THAT OF THE ASSESSING OFFICER IS RESTORED ON THIS ISSUE. 11. IN THE RESULT, APPEAL OF THE TAXPAYER IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 14 TH SEPTEMBER, 2012. SD/- SD/- (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 14 TH SEPTEMBER, 2012 PK/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE COMMISSIONER OF INCOME-TAX 4. THE COMMISSIONER OF INCOME-TAX(A) 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH