J.D. Electronics Industries Pvt.Ltd., Ahmedabad V. The Income tax Officer,Ward-2, Gandhinagar

ITA 3553/AHD/2008

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51033 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 15-12-2011
• Assessment Year: 1998-1999
• Appeal Filed On: 24-10-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: U S BHATI
• Keywords: Business income
• Section: 154; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, B BENCH, AHMEDABAD BEFORE SHRI MUKUL KUMAR SHRAWAT, JUDICIAL MEMBER AND SHRI A. K. GARODIA, ACCOUNTANT MEMBER I.T.A. NO.3553 / AHD/2008 (ASSESSMENT YEAR 1998-99) M/S. J D ELECTRONICS INDUSTRIES P. LTD., SAKAR 7, NEHRU BRIDGE CORNER, ASHRAM ROAD, AHMEDABAD VS. ITO, WARD 2, GANDHINAGAR PAN/GIR NO. : AAACJ5317J (APPELLANT) .. (RESPONDENT) APPELLANT BY: SHRI U S BHATI, AR RESPONDENT BY: SHRI SAMIR TEKRIWAL, SR. DR DATE OF HEARING: 15.12.2011 DATE OF PRONOUNCEMENT: 21.12.2011 O R D E R PER SHRI A. K. GARODIA, AM:- THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF LD. CIT(A) GANDHINAGAR DATED 15.08.2008 FOR THE ASSESSM ENT YEAR 1998-99. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: 1) THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN DIS MISSING THE APPEAL FILED BY THE APPELLANT COMPANY AGAINST THE O RDER PASSED BY THE A.O. REJECTING THE REQUEST FOR RECTIFICATION OF THE ORDER PASSED BY HER GIVING EFFECT TO THE ORDER OF THE INCOME TAX APPELLATE TRIBUNAL FOR THIS ASSESSMENT YEAR. 2 SINE THE EARLIER ORDERS WERE SET ASIDE BY THE HON BLE ITAT, THE A.O. WAS REQUESTED TO PASS THE ORDER AFTER HEAR INGS THE APPELLANT IN RESPECT OF THE NATURE OF THE INCOME OF RS.12,58,629/- EARNED FROM PURCHASE AND SALE OF SHARE I.E. TRADING IN SHARES BECAUSE THIS ASPECT WAS NOT LOOKED INTO AT THE TIME OF ORIGINAL ASSESSMENT AS OBSERVED BY THE HONBLE ITAT IN THEIR ORDERS. I.T.A.NO. 3553 /AHD/2008 2 3) IT IS, THEREFORE, PRAYED THAT THE A.O. MAY BE DI RECTED TO CONSIDER & ALLOW THE APPLICATION FOR RECTIFICATION FILED BY YOUR APPELLANT COMPANY. 2. IT WAS SUBMITTED BY THE LD. A.R. OF THE ASSESSEE THAT AS PER THE TRIBUNAL ORDER IN THE 1 ST ROUND IN I.T.A.NO. 2114/AHD/2003 DATED 16.03.2007, THIS ISSUE HAD BEEN DECIDED BY THE TRIB UNAL AS PER PARA 12 & 13 OF THIS TRIBUNAL ORDER. IT IS ALSO SUBMITTED BY HIM THAT THE COPY OF THIS TRIBUNAL DECISION IS AVAILABLE ON PAGES 16-19 OF TH E PAPER BOOK. IT IS SUBMITTED THAT THE DISPUTE WAS REGARDING THE CLAIM OF THE ASSESSEE OF SET OFF OF BROUGHT FORWARD BUSINESS LOSS OF EARLIER YEA R AGAINST THE CURRENT YEAR INCOME AND THIS CLAIM OF THE ASSESSEE WAS REJE CTED BY THE AUTHORITIES BELOW ON THIS BASIS THAT THE ASSESSEE DOES NOT HAVE BUSINESS INCOME IN THE PRESENT YEAR AND, THEREFORE, SET OFF IN THE PRESENT YEAR IS NOT ALLOWABLE. IT IS FURTHER SUBMITTED THAT THERE ARE TWO COMPONENTS OF INCOME IN THE PRESENT YEAR. THE FIRST IS INCOME FROM JOB WORK OF RS.13,631/- AND THE SECOND IS INCOME OF RS.12,58,629/- BEING PROFITS FR OM PURCHASE AND SALE OF SHARES. IT IS SUBMITTED THAT REGARDING THE 1 ST ISSUE, IT IS HELD BY THE TRIBUNAL THAT IT IS A BUSINESS INCOME AND HENCE SET OFF OF BROUGHT FORWARD BUSINESS LOSS HAS TO BE ALLOWED AT LEAST TO THAT EX TENT. AS PER THE SUBMISSION OF THE LD. A.R., SINCE THE TRIBUNAL HAS USED THE WORD ATLEAST, IT HAS TO BE INFERRED THAT FOR THE REMAINING AMOUNT , ISSUE HAS TO BE EXAMINED AND DECIDED AS PER LAW. BUT WHILE PASSING THE APPEAL EFFECT ORDER, THE A.O. HAD ALLOWED SET OFF TO THE EXTENT O F JOB WORK INCOME OF RS.13,631/- BUT HE DID NOT DISCUSS THE ISSUE AT ALL REGARDING THE SET OFF AGAINST THE INCOME OF RS.12,58,629/- BEING PROFITS FROM PURCHASE AND SALE OF SHARES. IT IS SUBMITTED THAT THE COPY OF APPEAL EFFECT ORDER PASSED BY THE A.O. IS AVAILABLE ON PAGE 20 OF THE PAPER BOOK. IT IS SUBMITTED THAT THE ASSESSEE FILED RECTIFICATION APPLICATION U/S 15 4 AGAINST THIS APPEAL EFFECT ORDER PASSED BY THE A.O. WHICH HAS BEEN REJE CTED BY THE A.O. AND I.T.A.NO. 3553 /AHD/2008 3 WHEN THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A ), AGAINST THIS REJECTION OF 154 APPLICATION, LD. CIT(A) HAS REJECT ED THE APPEAL OF THE ASSESSEE AND HENCE, THE ASSESSEE IS IN APPEAL BEFOR E THE TRIBUNAL AND IN VIEW OF THE TRIBUNAL DECISION IN THE 1 ST ROUND, THE A.O. SHOULD BE DIRECTED TO EXAMINE AND DECIDE THIS ASPECT REGARDING SET OFF OF BROUGHT FORWARD BUSINESS LOSS AGAINST PROFITS FROM PURCHASE AND SAL E OF THE SHARES. 3. AS AGAINST THIS, LD. D.R. OF THE REVENUE SUPPORT ED THE ORDERS OF AUTHORITIES BELOW. HE DRAWN OUR ATTENTION TO PARA 3.2.1 OF THE ORDER OF LD. CIT(A) WHEREIN IT IS HELD BY HIM THAT THE STAND TAKEN BY THE A.O. IS NOT AN UNIMAGINABLE STAND AND THERE IS NO QUESTION OF APPLICABILITY OF SECTION 154 IN THIS CONTEXT. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSE D THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW. WE FIRST REPRODUCE THE RELEVANT PARA 12 & 13 OF THE TRIBUNAL ORDER IN THE 1 ST ROUND WHICH IS AS UNDER: 12. IN THE THIRD YEAR, I.E. ASST. YEAR 1998-99, TH E ONLY DISPUTE IS WITH REGARD TO CARRY FORWARD AND SET OFF OF THE UNA BSORBED BROUGHT FORWARD LOSS OF EARLIER YEARS AGAINST THE CURRENT Y EAR'S INCOME. THE CONTENTION OF THE ASSESSEE WAS REJECTED ON THAT THE RE IS NO BUSINESS INCOME. THE CARRY FORWARD LOSSES HAVE BEEN IN THE E ARLIER YEARS AND ARE TO BE ALLOWED AGAINST THE INCOME FROM CIT(A) DI SMISSED THE APPEAL. 13. WE HAVE HEARD THE PARTIES AND CONSIDERED THE RI VAL SUBMISSIONS. THE ASSESSEE WAS A DEALER IN ELECTR ONIC ITEMS FOR THE LAST SO MANY YEARS. IT DISCONTINUED ITS MANU FACTURING ACTIVITY AND STARTED CARRYING ON THE JOB WORK. DURING THE YEAR UNDER CONSIDERATION, IT HAD RECEIVED JOB WORK OF RS.13,63 1 BESIDES THE INCOME OF RS.12,58,629/- BEING PROFIT FROM PURCHASE AND SALE OF SHARES. THE ASSESSING OFFICER HAS NOT EXAMINED THIS ASPECT BUT THE CIT(A) HELD THAT THE INCOME FROM JOB CHARGES WAS AL SO INCOME FROM OTHER SOURCES. THE INCOME FROM JOB WORK, IN OU R OPINION, IS THE INCOME FROM BUSINESS AND THE ASSESSEE SHOULD HA VE BEEN ALLOWED SET OFF OF CARRY FORWARD LOSSES ATLEAST TO THIS EXTENT AND THE BALANCE LOSS TO BE ADJUSTED AS SET OFF AND CARRY FO RWARD TO THE SUBSEQUENT YEAR, IN ACCORDANCE WITH LAW. W ORDER A CCORDINGLY. I.T.A.NO. 3553 /AHD/2008 4 5. FROM THE ABOVE FINDINGS OF THE TRIBUNAL IN THE 1 ST ROUND, WE FIND THAT IT IS HELD BY THE TRIBUNAL THAT ASSESSEE IS EL IGIBLE FOR SET OFF OF BROUGHT FORWARD LOSSES TO THE EXTENT OF INCOME FROM JOB WORK OF RS.13,631/- AND REGARDING THE BALANCE AMOUNT, IT WA S HELD BY THE TRIBUNAL THAT BUSINESS LOSS SHOULD BE CARRY FORWARD TO THE S UBSEQUENT YEAR IN ACCORDANCE WITH LAW. HENCE, WE DO NOT FIND SUCH DI RECTION IN THE TRIBUNAL ORDER THAT FOR THE PURPOSE OF ALLOWING SET OFF AGAI NST INCOME OF RS.12,58,629/- BEING THE PROFITS FROM PURCHASE AND SALE OF SHARES, THE MATTER WAS RESTORED BY THE TRIBUNAL TO THE FILE OF THE A.O. FOR A FRESH DECISION. ONLY BECAUSE, THE TRIBUNAL HAS USED THE WORD ATLEAST, IT CANNOT BE INFERRED THAT THE TRIBUNAL HAS HELD THAT FOR THE BALANCE AMOUNT, THE MATTER IS RESTORED BACK. HENCE, WE DO NOT FIND ANY MERIT IN THE CONTENTION OF THE ASSESSEE THAT FOR THE PURPOSE OF DECIDING THE ISSUE REGARDING SET OFF OF BROUGHT FORWARD LOSS AGAINST P ROFITS FORM PURCHASE AND SALE OF SHARES, THE MATTER WAS RESTORED BACK BY THE TRIBUNAL TO THE FILE OF THE A.O. FOR A FRESH DECISION. MOREOVER, EVEN I F THIS IS THE CASE, THEN ALSO THE REMEDY DOES NOT LIE U/S 154 BECAUSE SECTIO N 154 IS APPLICABLE WHEN THERE IS AN APPARENT MISTAKE IN THE ASSESSMENT ORDER. EVEN IF THERE IS MISTAKE IN THE APPEAL EFFECT ORDER PASSED BY THE A.O. IN INTERPRETING THE TRIBUNAL ORDER IN THE 1 ST ROUND, IT IS NOT AN APPARENT MISTAKE RECTIFIABLE U /S 154 AND HENCE, WE DO NOT FIND ANY REASON TO INTERFE RE IN THE ORDER OF LD. CIT(A). 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS DISMISSED. 7. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE M ENTIONED HEREINABOVE. SD./- SD./- (MUKUL KUAMR SHRAWAT) (A. K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER SP I.T.A.NO. 3553 /AHD/2008 5 COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR, AHMEDABAD BY ORDER 6. THE GUARD FILE AR,ITAT,AHMEDABAD 1. DATE OF DICTATION 15/12 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 16/12.OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P .S./P.S.19/12 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 21/12 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.21/12 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 21/12 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 9. DATE OF DESPATCH OF THE ORDER. ..