ITO, CHENNAI V. Vean Management Consultants Pvt Ltd., CHENNAI

ITA 3298/CHNY/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4666 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-05-2017
• Appeal Filed By: Department
• Bench Allotted: D
• Next Hearing Date: 13-03-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 05-12-2016
• Court: TRIBUNAL
• Department Lawyers: R DURAIPANDIAN
• Assessee Lawyers: R SIVARAMAN
• Keywords: Depreciation; Rectification of order; Advance ruling
• Section: 143(3); 260A; 115JB; 147; 54; 154

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : CHENNAI , ! ' ! # . $ % &' BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ./ I.T.A.NO.3298/MDS./2016 / ASSESSMENT YEAR :2007-08 THE INCOME TAX OFFICER, CORPORATE WARD 3(4), CHENNAI 600 034. VS. M/S.VEAN MANAGEMENT CONSULTANTS PVT LTD ., MOOKAMBIKA COMPLEX, NO.4, LADY DESIKA ROAD, MYLAPORE, CHENNAI 600 004. [PAN AAACS 4928 A ] ( () / APPELLANT) ( *+() /RESPONDENT) / APPELLANT BY : MR.R.DURAIPANDIAN, JCIT, DR /RESPONDENT BY : MR.R.SIVARAMAN, ADVOCATE / DATE OF HEARING : 13.03.2017 / DATE OF PRONOUNCEMENT : 01 - 05 - 2017 , / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-11, CHENN AI DATED 12.09.2016 PERTAINING TO ASSESSMENT YEAR 2007-08. ITA NO.3298/16 :- 2 -: 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS FO R OUR CONSIDERATION. 1. THE ORDER OF LD.CIT(A) IS CONTRARY TO LAW AND F ACTS AND CIRCUMSTANCES OF THE CASE. 2.1 THE LEARNED CIT(A) ERRED IN ALLOWING THE ASSESS EES APPEAL BY ANNULLING THE RECTIFICATION ORDER PASSED BY THE ASSESSING OFF ICER WITHOUT DECIDING CASE ON MERITS. 2.2 THE LD.CIT(A) ERRED IN ANNULLING THE RECTIFICAT ION ORDER U/S 154 FOR THE REASON THAT THE ORDER ON WHICH RECTIFICATION ORDER PASSED HAS BEEN STRUCK DOWN BY THE HONBLE TRIBUNAL THOUGH THE HONBLE TRI BUNALS ORDER HAS NOT BEEN ACCEPTED BY THE DEPARTMENT AND APPEAL FILED U/ S 260A IS PENDING BEFORE THE HONBLE HIGH COURT. 2.3 THE ID. CIT(A) OUGHT TO HAVE SEEN THAT THE ASSE SSING OFFICER S ORDER OF RECTIFICATION OF MISTAKE APPARENT FROM RECORD IS WE LL SUPPORTED BY THE DECISION OF THE AUTHORITY FOR ADVANCE RULING IN THE CASE OF MIS. RASHTRIYA ISPHAT NIGAM LIMITED REPORTED IN 285 ITR 1. 2.4 THE CIT(A) OUGHT TO HAVE SEEN THAT THE ASSESSEE HAS INCOME FROM BUSINESS FOR THE AY 2004-05, 2005-06 AND AY 2006-07 AND HENC E THE ENTIRE CARRY FORWARDED DEPRECIATION LOSSOF RS. 1,06,57,113/- HAS ALREADY BEEN ABSORBED IN THE AY 2006-07 AND ASSESSEE IS NOT ELIGIBLE FOR SETTING OFF OF DEPRECIATION LOSS WHILE CALCULATING TAX U/S 115JB(T ABLE SHOWING THE DEPRECIATION LOSS AN BOOKS LOSS ENCLOSED FOR KIND R EFERENCE). 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSMENT ORDER WAS PASSED AN ORDER U/S 143(3) DATED 16-12-2009 AFTER DISALLOW ING THE CARRY FORWARD DEPRECIATION LOSS AND THE BOOK PROFIT U/S 115JB WAS BROUGHT TO NIL. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE ACCEPTED THE SAID ORDER AND DID NOT CONTEST IN APPEAL. THE AO REOPENED THE AFORESAID ORDER AND PASSED ANOTHER ORDER U/S 147 R.W.S. 143(3) DATED 21 -03-2014. IN THE SAID ORDER THE AO DISALLOWED THE EXCESS DEPRECIATION ALL OWED IN THE ORDER U/S 143(3) AND THE INCOME U/S 115JB WAS ARRIVED AT ` 45,20,228/-. THE APPELLANTS APPEAL BEFORE THE SAID ORDER WAS DISMIS SED BY THE CIT(A). THE ITA NO.3298/16 :- 3 -: APPELLANT FILED AN APPEAL AGAINST THE CIT(A)S ORDE R BEFORE THE ITAT. THE ITAT ALLOWED THE APPEAL ON THE GROUND THAT THE REOP ENED ASSESSMENT WAS DONE AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF RELEVANT ASSESSMENT YEAR. IN THE MEANTIME, THE AO PASSED A RECTIFICATIO N ORDER U/S 154 DATED 07- 12-20 15 ON THE REOPENED ASSESSMENT ORDER U/S 147 D ATED 21-03-2014 BY MAKING FURTHER DISALLOWANCE IN THE APPELLANTS CLAI M OF EXCESS DEPRECIATION. THE APPELLANT IS IN APPEAL BEFORE THE CIT(A) AGAINS T THE AFORESAID RECTIFICATION ORDER U/S 154. DURING THE APPEAL PROC EEDING, THE APPELLANTS AR HAS SUBMITTED THAT SINCE THE AOS REOPENED ASSESSME NT ORDER U/S 147 DATED 21-03-2014 WAS STRUCK DOWN BY THE ITAT ON THE GROUN D THAT REOPENING WAS NOT SUSTAINABLE, THE AOS RECTIFICATION ORDER U/S 1 54 ON THE SAID REOPENED ORDER U/S 147 IS NOT LEGALLY VALID. LD.CIT(A) OBSE RVED THAT SINCE THE AOS REOPENED ASSESSMENT ORDER U/S 147 DATED 21-03-2014 WAS STRUCK DOWN BY THE ITAT, THE AOS FURTHER RECTIFICATION ORDER U/S 154 DATED 07-12-2015 IS NOT LEGALLY SUSTAINABLE AS THE SAID ORDER WAS VOID AB INITIO. THEREFORE, THE AOS FURTHER DISALLOWANCE OF THE APPELLANTS CLAIM O F EXCESS DEPRECIATION IS NOT ACCEPTABLE. IN VIEW OF THE ABOVE REMARKS, THE R ECTIFICATION ORDER U/ S 154 DATED 07-12-20 15 IS ANNULLED. AGAINST THIS, THE RE VENUE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. ADMITTEDLY, THE ASSESSEE CARRIED THE APPEAL AGAINST THE ASSESSMENT ORDER PASSED BY THE AO U/S.143(3) R.W.S.147 OF THE ACT VI DE ORDER DATED 21.03.2014. THE LD.CIT(A) DISPOSED OFF THE APPEAL V IDE ORDER DATED 22.01.2016. AGAINST THE ORDER OF LD.CIT(A), THE ASS ESSEE CAME IN APPEAL ITA NO.3298/16 :- 4 -: BEFORE THIS TRIBUNAL CHALLENGING THE REOPENING OF A SSESSMENT . THE TRIBUNAL VIDE ORDER DATED 12.05.2016 ANNULLED THE ASSESSMENT . SINCE THERE WAS NO SURVIVAL OF ASSESSMENT ORDER PASSED U/S.143(3) R.W. S.147 OF THE ACT VIDE ORDER DATED 21.03.2014, THERE IS NO QUESTION OF PAS SING IN RECTIFICATION ORDER DATED 07.12.2015, WHICH IS THE PRESENT IMPUGNED ORD ER. ACCORDINGLY, WE ARE DISMISSING THE REVENUES APPEAL. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DI SMISSED. ORDER PRONOUNCED ON 1 ST MAY, 2017, AT CHENNAI. SD/ - SD/ - ! ' # . $ %& ' ( DUVVURU RL REDDY ) ) % / JUDICIAL MEMBER ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER () / CHENNAI *+ / DATED: 1 ST MAY, 2017. K S SUNDARAM +,-- ./-0/ / COPY TO: - 1 . / APPELLANT 3. - 1-!' / CIT(A) 5. /23- 4 / DR 2. / RESPONDENT 4. - 1 / CIT 6. 3&-5 / GF