KOSI BRIDGE INFRASTRUCTURE COMPANY PVT LTD., MUMBAI V. PR CIT -6, MUMBAI

ITA 3471/MUM/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 3512 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-03-2021
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2012-2013
• Appeal Filed On: 22-05-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Depreciation; Rectification of order; Revised return; Set aside
• Section: 143(3); 13; 22; 147; 263; 154

Judgement Text

1 I.T.A. NOS.3471 & 3578/MUM/2019 IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) I.T.A. NO. 3471 /MUM/201 9 - ASSESSMENT YEAR - 2012 - 13 I.T.A. NO.3578 /MUM/2019 - ASSESSMENT YEAR - 2014 - 15 KOSI BRIDGE INFRASTRUCTURE COMPANY PRIVATE LTD, UNIT NO.703, 7 TH FLOOR TOWER 3, EQUINOX BUSINESS PARK OFF BKC, LBS MARG, MUMBAI - 400 070 PAN : AA CCK8652M VS PRINCIPAL COMMISSIONER OF INCOME - TAX - 6, MUMBAI APPELLANT RESPONDENT APPELLANT BY SHRI RAKESH JOSHI RESPONDENT BY SHRI VINAY SINHA , CIT, DR DATE OF HEARING 16 - 02 - 2021 DATE OF PRONOUNCEMENT 0 5 - 0 3 - 2021 O R D E R PER SAKTIJIT DEY (JM) CAPTIONED APPEALS HAVE BEEN FILED BY THE ASSESSEE CHALLENGING THE VALIDITY OF THE ORDERS PASSED BY THE LEARNED PRINCIPAL COMMISSIONER OF I NCOM E T AX (PCIT) - 6, MUMBAI U NDER SECTION 263 OF THE INCOME - TAX ACT, 1961 FOR THE ASSESSMENT YEARS 2012 - 13 AND 2 0 14 - 15. ITA NO.3471/MUM/2019 (A SSESSMENT Y EAR - 2012 - 13) 2 I.T.A. NOS.3471 & 3578/MUM/2019 2. THE FACTS RELEVANT FOR DISPOSAL OF THIS APPEAL ARE, THE ASS ESSEE IS A RESIDENT COMPANY AND IS ENGAGED IN THE ACTIVITY OF DEVELOPING VARIOUS INFRASTRUCTURE PROJECTS. WHILE CARRYING ON SUCH ACTIVITY, THE ASSESSEE HAD CONSTRUCTED A PART OF NATIONAL HIGHWAY NO.57 , BEING A BRIDGE OVER RIVER KOSI IN THE STATE OF BIHAR ON BUILD, OPERATE AND TRANSFER (BOT) B ASIS UNDER THE ANNUITY SCHEME. FOR THE ASSESSMENT YEAR 2012 - 13, THE ASSESSEE FILED ITS RETURN OF INCOME, ORIGINALLY ON 26 - 09 - 2012 DECLAR ING LOSS OF RS.61,99,84,578/ - . SUBSEQUENTLY, ASSESSEE FILED A REVISED RETURN ON 29 - 03 - 2014 REVISING LOSS TO RS.62,53,59,860/ - AFTER CLAIMING DEPRECIATION ON THE BOT PROJECT CONSTRUCTED BY IT . O RIGINAL LY, ASSESSMENT WAS COMPLETED U NDER SECTION 143(3) OF THE ACT VIDE ORDER DATED 11 - 03 - 2016 ACCEPTING THE INCOME/LOSS RETURNED BY THE ASSESSEE, AFTER ALLOWING THE CLAIM OF DEPRECIATION. SUBSEQUENTLY, THE ASSESSMENT WAS REOPENED U NDER SECTION 147 OF THE ACT ON THE REASONING THAT THE ASSESSEE NOT BEING THE OWNER OF THE BRIDGE CONSTRUCTED, IS INELIGIBLE TO CLAIM DEPRECIATION. ULTIMATELY, TH E ASSESSING OFFICER CONCLUDED THE ASSESSMENT U NDER SECTION 143(3) R.W.S. 147 OF THE ACT VIDE ORDER DATED 18 - 1 - 2017 DISALLOWING ASSESSEES CLAIM OF DEPRECIATION ON THE BOT PROJECT. 3. AGAINST THE RE - ASSESSMENT ORDER PASSED DISALLOWING CLAIM OF DEPRECIATIO N, ASSESSEE FILED APPEAL BEFORE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS). IN THE MEANW H ILE, ON A N APPLICATION FILED BY THE ASSESSEE MAKING AN ALTERNATIVE CLAIM OF AMORTIZATION OF EXPENDITURE INCURRED IN THE BOT PROJECT, THE ASSESSING OFFICER PASSED AN ORDER U NDER SECTION 154 OF THE ACT ON 14 - 03 - 2019 ALLOWING ASSESSEES CLAIM OF AMORTIZATION IN TERMS OF CBDT CIRCULAR NO.9 OF 2014. 4. WHEN THE MATTER STOOD THUS, LEARNED PCIT , IN EXERCISE OF HIS POWER U NDER SECTION 263 OF THE ACT CALLED FOR THE ASSESSMEN T RECORDS OF THE ASSESSEE. AFTER PERUSING THE RECORDS, HE WAS OF THE VIEW THAT WHILE COMPLETING THE RE - 3 I.T.A. NOS.3471 & 3578/MUM/2019 ASSESSMENT, THE ASSESSING OFFICER HAS NOT EXAMINED THE CAPITALIZATION OF EXPENDITURE IN EARLIER YEARS , AS WELL AS , HAS NOT VERIFIED THE GENUINENESS OF EX PENDITURE CLAIMED BEFORE ALLOWING AMORTIZATION OF SUCH EXPENDITURE. THEREFORE, HE ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE TO EXPLAIN , WHY THE RE - ASSESSMENT ORDER AS WELL AS THE ORDER PASSED U NDER SECTION 154 OF THE ACT SHOULD NOT BE SET ASIDE. THOUGH , TH E ASSESSEE MADE SUBMISSIONS CHALLENGING THE VALIDITY OF POWER EXERCISED U NDER SECTION 263 OF THE ACT AS WELL AS THE MERITS OF THE CLAIM OF AMORTIZATION; HOWEVER, THE REVISIONAL AUTHORITY WAS NOT CONVINCED. LEARNED PCIT, ULTIMATELY , PASSED THE IMPUGNED ORDE R SETTING ASIDE THE ORDER PASSED U NDER SECTION 143(3) R.W.S.147 OF THE ACT AS WELL AS THE RECTIFICATION ORDER PASSED U NDER SECTION 154 OF THE ACT WHILE DIRECTING THE ASSESSING OFFICER TO VERIFY THE VERACITY AND GENUINENESS OF ASSESSEES CLAIM OF CAPITALIZE D EXPENDITURE AND THEREAFTER ALLOW THE AMORTIZATION BENEFIT. AFTER PASSING OF THE ORDER U NDER SECTION 263 OF THE AC T , LEARNED C OMMISSIONER (A PPEALS ), WHILE DECIDING ASSESSEES APPEAL FILED AGAINST THE ASSESSMENT ORDER PASSED U NDER SECTION 143(3) R.W.S.147 OF THE ACT , PASSED AN ORDER ON 22 - 10 - 2019 DIRECTING THE ASSESSING OFFICER TO ALLOW ASSESSEES CLAIM OF DEPRECIATION ON THE BOT PROJECT. WHILE GIVING EFFECT TO THE DIRECTIONS OF LEARNED PCIT AND LEARNED COMMISSIONER (APPEALS) IN THE RESPEC TIVE ORDER S PASSED BY THEM, THE ASSESSING OFFICER PASSED A FRESH ASSESSMENT ORDER U NDER SECTION 143(3) R.W.S. 263 OF THE ACT ON 18 - 12 - 2019 ALLOWING ASSESSEES CLAIM OF DEPRECIATION ON THE BOT PROJECT. 5 . WE HAVE HEARD SHRI RAKESH JOSHI, LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE AND SHRI VINAY SINHA, LEARNED D EPARTMENTAL R EPRESENTATIVE. 6 . AS COULD BE SEEN FROM THE FACTS EMERGING FROM RECORD AND BRIEFLY DISCUSSED EARLIER, THE MAJOR DISPUTE IS WITH REGARD TO ASSESSEES CLAIM OF DEPRECIATION ON THE 4 I.T.A. NOS.3471 & 3578/MUM/2019 BOT PROJECT. IN THE RE - ASSESSMENT ORDER, THE ASSESSING OFFICER HAD DISALLOWED THE DEPRECIATION CLAIM ED . HOWEVER, IN AN ORDER PASSED U NDER SECTION 154 OF THE ACT , THE ASSESSING OFFICER ALLOWED AMORTIZATION OF THE EXPENDITURE IN TERMS OF CBDT CIRCULAR REFERRED TO ABOVE. LEARNED PCIT, WHILE EXERCISING HIS POWER U NDER SECTION 263 OF THE ACT HAS SET ASIDE THE RE - ASSESSMENT ORDER AS WELL AS THE ORDER PASSED U NDER SECTION 154 OF THE ACT , AS REFERRED TO ABOVE , BY DIRECTING THE ASSESSING OFFICER TO VERIFY THE GENUINENE SS OF EXPENDITURE CLAIMED BY THE ASSESSEE AND THEREAFTER ALLOW AMORTIZATION . W HEREAS , WHILE DECIDING ASSESSEES APPEAL AGAINST DISALLOWANCE OF DEPRECIATION ON BOT PROJECT , LEARNED C OMMISSIONER (A PPEALS ) HAS DIRECTED THE ASSESSING OFFICER TO ALLOW THE CLAIM OF DEPRECIATION. IT IS OBSERVED, IN THE FRESH ASSESSMENT ORDER PASSED UNDER SECTION 143(3) R.W.S. 263 OF THE ACT THE ASSESSING OFFICER, AFTER VERIFYING THE DETAILS , H AS RECORDED A CATEGORICAL FINDING THAT THE EXPENDITURE S CLAIMED BY THE ASSESSEE ON THE BO T PROJECT ARE GENUINE. FURTHER, THE ASSESSING OFFICER HAS ALSO GIVEN EFFECT TO THE DIRECTIONS OF LEARNED COMMISSIONER (APPEALS) BY ALLOWING D EPRECIATION ON THE BOT PROJECT. THUS, IT IS APPARENT, THE ASSESSING OFFICER HAS CARRIED OUT THE DIRECTIONS OF , BOT H , LEARNED PCIT AND LEARNED COMMISSIONER (APPEALS) IN LETTER AND SPIRIT. AS FAR AS VALIDITY OF ASSUMPTION OF JURISDICTION UNDER SECTION 263 OF THE ACT IS CONCERNED, IN PRINCIPLE, WE AGREE WITH THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE REASSESSMENT ORDE R CANNOT BE HELD AS EITHER ERRONEOUS O R PREJUDICIAL TO THE INTEREST OF REVENUE, AS, THE ASSESSMENT WAS REOPENED ONLY FOR THE PURPOSE OF DISALLOWING AS SESSEES CLAIM OF DEPRECIATION. IN THE REASSESSMENT PROCEEDING THE ASSESSING OFFICER WAS NOT REQUIRED TO E XAMINE THE GENUINENESS OF EXPENDITURE CAPITALIZED AS IT WAS A SUBJECT MATTER OF ORIGINAL ASSESSMENT PROCEEDING. BE THAT AS IT MAY, IN THE FRESH ASSESSMENT ORDER THE ASSESSING OFFICER HAS VERIFIED THE DETAILS OF EXPENDITURE 5 I.T.A. NOS.3471 & 3578/MUM/2019 CAPITALIZED AND FOUND THEM TO BE GENUINE. FURTHER, THE ASSESSING OFFICER HAS ALSO ALLOWED ASSESSEES CLAIM OF DEPRECIATION. THUS, IN VIEW OF THE FRESH ASSESSMENT ORDER PASSED UNDER SECTION 143(3) R.W.S 263 OF THE ACT, THE ISSUES RAISED IN THE PRESENT APPEAL ARE NOW OF MERE ACADEMIC INTERE ST . IN EFFECT, THE PRESENT APPEAL OF THE ASSESSEE HAVING BECOME INFRUCTUOUS, DOES NOT REQUIRE ADJUDICATION. 7 . IN THE RESULT, APPEAL IS DISMISSED. ITA NO.3578/MUM/2019 ( A SSESSMENT Y EAR - 2014 - 15 ) 8 . THE FACTS IN THIS APPEAL ARE MORE OR LESS IDENTICAL TO ITA NO.3471/MUM/2019 DECIDED IN THE EARLIER PART OF THIS ORDER , EXCEPT , FOR THE FACT THAT IN THE ASSESSMENT ORDER PASSED U NDER SECTION 14 3 (3) OF THE ACT, THE ASSESSING OFFICER, THOUGH , DISALLOWED ASSESSEES CLAIM OF DEPRECIATION ON THE BOT PROJECT; HOWEVER , HE ALLOWED AMORTIZATION OF EXPENDITURE INCURRED ON THE BOT PROJECT. WHEREAS, LEARNED PCIT, IN THE ORDER PASSED U NDER SECTION 263 OF THE ACT HAS SET ASIDE THE ASSESSMENT ORDER WITH A DIRECTION TO VERIFY THE GENUINENESS OF EXPENDITURE CLAIMED AND THEREAFTE R ALLOW AMORTIZATION . LIKE IN THE ASSESSMENT YEAR 2012 - 13, LEARNED COMMISSIONER (APPEALS) ALLOWED ASSESSEES CLAIM OF DEPRECIATION ON THE BOT PROJECT. IN THE FRESH ASSESSMENT ORDER PASSED UNDER SECTION 143(3) R.W.S 263 OF THE ACT THE ASSESSING OFFICER HAS VERIFIED THE EXPENDITURE CAPITALIZED AND FOUND THEM TO BE GENUINE AND THEREAFTER HAS ALLOWED DEPRECIATION ON THE BOT PROJECT. IN VIEW OF THE AFORESAID, OUR DECISION IN ITA NO.3471/MUM/2019 , SUPRA, WOULD APPLY MUTATIS MUTANDIS TO THIS APPEAL ALSO. ACCORDINGL Y, THE A PPEAL HAVING BECOME INFRUCTUOUS IS DISMISSED. 9. IN THE RESULT, BOTH THE APPEALS ARE DISMISSED. 6 I.T.A. NOS.3471 & 3578/MUM/2019 ORDER PRONOUNCED ON 0 5 / 0 3 /2021. S D / - S D / - (N.K. PRADHN) ( SAKTIJIT DEY ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DT : 0 5 /0 3 /2021 PAVANAN COPY TO : 1. APPELLANT 2. RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) 5. THE DR, ITAT, MUMBAI 6. GUARD FILE /TRUE COPY/ BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI 7 I.T.A. NOS.3471 & 3578/MUM/2019