MEDIA NET SOFTWARE SERVICS (INDIA) PRIVATE LIMITED, MUMBAI V. DCIT-10(2)(2), MUMBAI

ITA 362/MUM/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 2784 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2013-2014
• Appeal Filed On: 15-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJAY SINGH
• Keywords: Depreciation; Opportunity of being heard; Period of limitation; Right to appeal; Condonation of delay; Unabsorbed depreciation; Capital expenditure
• Section: 143(3); 10AA; 115JB

Judgement Text

P A G E | 1 ITA NO. 362/MUM/2018 MEDIA NET SOFTWARE SERVICES (I) P. LTD. VS. DCIT 10(2)(2), MUMBAI IN THE INCOME TAX APPELLATE TRIBUNAL ' D ' BENCH, MUMBAI BEFORE SHRI G.MANJUNATHA , ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER ITA NO. 362 /MUM/201 8 (ASSESSMENT YEAR: 2013 - 14 ) MEDIA. NET SOFTWARE SERVICES (INDIA) PVT. LTD; DIRECTIPLEX, OLD NAGARDAS ROAD, ANDHERI EAST, MUMBAI 400 069 VS. ASST. COMMISSIONER OF INCOME TAX CIRCLE - 25(1), ROOM NO. 402, 4 TH FLOOR, C - 10, PRATYAKSHKAR BHAVAN, BKC, BANDRA (EAST), MUMBAI - 400 051 PAN AAHCM5070 A ( A PPELLANT) (RESPONDENT) ASSESSEE BY: SHRI. FIROZ ANDHYARUJINA , A.R REVENUE BY: SHRI . SANJAY SINGH , D.R DATE OF HEARING: 26.02.2019 DATE OF PRONOUNCEMENT: 2 7 .0 2 .201 9 O R D E R PER RAVISH SOOD, JM THE PRESENT APPEAL FILED BY THE ASSESSEE FOR A . Y 2013 - 14 IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) - 17 , MUMBAI, DATED 31.10 .2017 , WHICH IN TURN ARISES FROM THE ASSESSMENT ORDER PASSED UNDER SEC. 143(3) OF THE INCOME TAX ACT, 1961 (FOR SHORT IT ACT), DATED 29.02.2016 . THE ASSESSEE ASSAILING THE ORDER OF THE CIT(A) HAS RAISED BEFORE US THE FOLLOWING GROUNDS OF APPEAL : 1. ON THE F ACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT (A) ERRED IN NOT ADMITTING AND ENTERTAINING THE MANUAL APPEAL FILED INSTEAD OF E FILING, EVEN THOUGH THE MANUAL APPEAL FILED WAS WITHIN TIME, FEES PAID, REGULAR AND MAINTAINABLE. 2. O N THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT (A) OUGHT TO HAVE APPRECIATED THE FACT THAT THE APPEAL WHEN E - FIL ED COULD NOT BE LOADED SINCE THERE WERE ISSUES WITH THE INCOME TAX PORTAL AND THE SAME COULD NOT BE PROCESSED , HENCE MANUAL APPEAL WAS FILLED TO AVOID AN Y DELAY IN FILING THE APPEAL . P A G E | 2 ITA NO. 362/MUM/2018 MEDIA NET SOFTWARE SERVICES (I) P. LTD. VS. DCIT 10(2)(2), MUMBAI 3. THE CIT (A) GROSSLY ERRED IN NOT ADMITTING THE APPEAL AND HEARING THE MATTER ON MERITS MERELY ON THE GROUND THAT THE APPEAL WAS FILED MANUALLY THOUGH REGULAR HEARING WAS ENTERTAINED AT WHICH ADDITIONAL SUBMISSIONS WERE MADE , MATTER WAS DISCUSSED AND THE ISSUES ON MERITS WERE FULLY CONSIDERED . 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, AT THE FAG - END OF THE HEARING, SCN FOR E FILING WAS ISSUED AND THEREAFTER E FILLING APPEAL WAS ONCE AGAIN SUBMITTED BY PAYING APPEAL FEES AGAIN AND REGULARIZING THE MANUAL APPEAL WHICH WAS FILED IN TIME. 5. THE CIT (A) OUGHT TO HAVE ADMITTED THE APPEAL AND HEARD THE MATTER ON MERITS AS SUBMISSIONS AND HEARING ON MERITS WAS ALMOST CO MPLETED BEFORE THE CIT (A). HENCE THE FOLLOWING GROUNDS MAY BE ADJUDICATED THAT IS (1) DISALLOWANCE OF LEASEHOLD IMPROVEMENT EXPENSES OF RS.2,29,00,399/ - AS CAPITAL EXPENDITURE. (2) DISALLOWANCE OF SET - OFF BROUGHT FORWARD BUSINESS LOSS AND UNABSORBED DEPRECIATION FOR DEDUCTION U/S 1OAA OF THE IT ACT. 6. ASSESSEE CRAVES LEAVE TO ALTER, AMEND, CHANGE, DELETE, MODIFY OR VARY A NY AND /OR ALL OF THE AFORESAID GROUNDS AND /OR ADD ANY NEW GROUND OF APPEAL. 2. BRIEFLY STATED, THE ASSESSEE COMPANY WH ICH IS ENGAGED IN THE BUSINESS OF INFORMATION TECHNOLOGY (IT) AND IT ENABLED SERVICES (ITES) HAD E - FILED ITS RETURN OF INCOME FOR A . Y 2013 - 14, D ECLARING TOTAL INCOME AT RS. NIL AFTER SETTING OFF BROUGHT FORWARD BUSINESS LOSS OF RS. 3,49,20,910/ - , UNABSORBED DEPRECIATION OF RS. 1,14,72,186/ - AND CLAIM OF DEDUCTION UNDER SEC. 10AA OF THE IT ACT OF RS. 71,98,812/ - . FURTHER, THE ASSESSEE HAD DECLARED BOOK PROFIT UNDER SEC. 115JB OF THE IT ACT AT RS. 5,39,86,922/ - . SUBSEQUENTLY, THE CASE OF THE ASSESSEE WAS SELE CTED FOR SCRUTINY ASSESSMENT UNDER SEC. 143(2) OF THE IT ACT. THE A.O WHILE FRAMING THE ASSESSMENT INTER ALIA MADE THE FOLLOWING ADDITIONS /MODIFICATIONS: S.NO. PARTICULARS AMOUNT 1. DISALLOWANCE OF LEASEHOLD IMPROVEMENT EXPENSES RS. 2,29,00,399/ - 2. DISALLOWANCE OF SET - OFF OF DEDUCTION UNDER SEC. 10AA OF THE IT ACT PRIOR TO ADJUSTMENT OF BROUGHT FORWARD BUSINESS LOSSES AND UNABSORBED DEDUCTION. - P A G E | 3 ITA NO. 362/MUM/2018 MEDIA NET SOFTWARE SERVICES (I) P. LTD. VS. DCIT 10(2)(2), MUMBAI 3. AGGRIEVED, THE ASSESSEE DECIDED TO ASSA IL THE ASSESSMENT FRAMED BY THE A.O IN APPEAL BEFORE THE CIT(A). HOWEVER, THE ASSESSEE COULD NOT SUCCESSFULLY E - FILE THE APPEAL AS AT THE RELEVANT POINT OF TIME THERE WERE CERTAIN ISSUES AS REGARDS UPLOADING OF THE SAME ON THE INCOME - TAX PORTAL. IN ORDER T O AVOID ANY DELAY IN FILING OF THE APPEAL THE ASSESSEE UNDER THE AFORE SAID COMPELLING CIRCUMS TANCES MANUALLY FILED THE SAME ON 01.04.2016. 4. THE CIT(A) NOTICED THAT THE ASSESSEE HAD FILED THE APPEAL MANUALLY IN PA PER FORM ON 01 .04 .2016 , AGAINST THE ORDER PASSED BY THE A.O UNDER SEC. 143(3) OF THE IT ACT FOR A.Y 2013 - 14. IT WAS OBSERVED BY THE CIT(A) THAT AS PER NOTIFICATION NO. S.O 637(E) [NO. 11/2016 (F.NO. 149/150/2015 - TPL)], DATED 1 ST MARCH, 2016 ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES, NEW DELHI , RULE 45 OF THE INCOME TAX RULE S , 1962 WAS AMENDED , THEREIN MAKING IT MANDATORY FOR ALL THE PERSONS WHO WERE REQUIRE D TO FURNISH THEIR RETURN OF INCOME ELE CTRONI CALLY TO E - FILE THEIR APPEALS BEFORE THE APPELLATE C OMMISSIONER WITH EFFECT FR OM 01.03.2016. IN THE BACKDROP OF HIS A FORESAID OBSERVATIONS, THE CIT(A ) CONCLUDED THAT AS THE APPEAL THAT WAS MANUALLY FILED BY THE ASSESSEE IN PAPER FORM WAS NOT IN CONFORMITY WITH RULE 12(3) OF THE INCOME TAX RULE S, 1962 , THEREFORE, THE SAME WAS NOT MAINTAINABLE AND COULD NOT BE ADMITTED . ACCORDINGLY , THE CIT(A) DISMISS ED THE APPEAL FILED BY THE ASSESSEE IN LIMINE. 4. THE ASSESSEE BEING AGGRIEVED WITH THE ORDER PASSED BY THE CIT(A) HAS CARRIED THE MATTER IN APPEAL BEFORE US. THE LD. AUTHORIZED REPRES ENTATIVE (FOR SHORT A .R) FOR THE ASSESSEE SUBMITTED THAT THE APPEAL BEFORE THE CIT(A) COULD NOT SUCCESSFULLY E - FILED AS AT THE RELEVANT POINT OF TIME THERE WERE CERTAIN ISSUES AS REGARDS UPLOADING OF THE SAME ON THE INCOME - TAX PORTAL . IT WAS SUBMITTED BY THE LD. A.R THAT AS THE APPEAL COULD NOT BE E - FILED BY THE ASSESSEE, THEREFORE, IN ORDER TO AVOID ANY DELAY THE SAME WAS MANUALLY FILED ON 01.04.2016. THE LD. A.R AVERRED THAT THE CIT(A) HAD ERRED IN DISMISSING THE APPEAL OF THE ASSES SEE IN LIMINE . IT WAS SUBMITTED BY THE LD. A.R THAT THE SINCERITY OF THE ASSESSEE TO EXHAUST HIS SUBSTANTIVE RIGHT TO FILE AN APPEAL COULD BE GATHERED FROM THE FACT THAT IT HAD PREFERRED AN APPEAL WITH THE APPELLATE AUTHORITY. APART THEREFROM, IT WAS THE C ONTENTION OF THE LD. A.R P A G E | 4 ITA NO. 362/MUM/2018 MEDIA NET SOFTWARE SERVICES (I) P. LTD. VS. DCIT 10(2)(2), MUMBAI THAT THE FILING OF THE APPEAL IN PAPER FORM BY THE ASSESSEE COULD ONLY BE HELD AS A TECHNICAL DEFAULT AND MERELY FOR THE SAID REASON IT COULD NOT HAVE BEEN DIVESTED OF ITS SUBSTANTIVE RIGHT TO FILE AN APPEAL . IN THE BACKDROP OF HIS AFORESAID CONTENTIONS , IT WAS A VERRED BY THE LD. A.R THAT THE APPEAL BE RESTORED TO THE FILE OF THE CIT(A) WITH A DIRECTION TO DISPOSE OFF THE SAME ON MERITS. 5. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE (FOR SHORT D.R) SUBMITTED THAT THE APPEAL FILED BY THE ASSESSEE IN PAPER FORM COULD NOT BE ADMITTED. HOWEVER, THE LD. D.R IN ALL FAIRNESS SUBMITTED THAT HE HAD NO OBJECTION IF THE MATTER IS RESTORED TO THE FILE OF THE CIT(A) WITH A DIRECTION TO THE ASSESSEE TO FILE AN APPLICATION SEEKING CONDONATION OF DELAY IN VOLVED IN E - FILING OF THE APPEAL . 5. WE HAVE HEARD THE AUTHORIZED REPRESENTATIVES FOR BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. ON A PER USAL OF THE ORDER OF THE CIT(A), WE FIND THAT T HE APPEAL OF THE ASSESSEE WAS DISMISSED FOR THE REASON THAT THE SA ME NOT HAVING BEEN FILED ELECTRONI CALLY WAS THUS NOT IN CONFORMITY WITH RULE 12(3) OF THE INCOME TAX RULE S , 1962. WE HAVE DELIBERATED AT LENGTH ON THE ISSUE UNDER CONSIDERATION AND FIND THAT THE ISSUE HEREIN INVOLVED IS SQUARELY COVERED BY AN ORDER OF A COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF ALL INDIA FEDERATION OF T AX PRACTITIONER, MUMBAI, VS. ITO (E) - 1(2), MUMBAI [ITA NO. 7134/MUM/2017, DATED 04.05.2018] . I N THE AFOREMENTIONED CASE THE TRIBUNAL OBSERVING THAT THE DEFAULT ON THE PART OF TH E ASSESSEE IN FILING THE APPEAL IN PAPER FORM WAS MERELY A TECHNICAL DEFECT WHI CH COULD NOT BE ALLOWED TO OVERSHADOW THE CAUSE OF SUBSTANTIAL JUSTICE , HAS HELD AS UNDER: 6. WE HAVE HEARD THE COUNSELS FOR BOTH THE PARTIES AND WE HAVE ALSO PERUSED THE MATERIAL PLACED ON RECORD AS WELL AS ORDERS PASSED BY THE REVENUE AUTHORITIES. FROM THE RECORDS WE NOTICED THAT ELECTRONICALLY FILING OF THE APPEALS WAS INTRODUCED FOR THE FIRST TIME VIDE RULE 45 OF I.T. RULES 1962, MANDATING COMPULSORY E - FILING OF APPEALS BEFORE APPELLATE COMMISSIONER WITH EFFECT FROM 1 ST MARCH 2016. WE NOTICED THAT IN THIS RESPECT, THERE IS NO CORRESPONDING AMENDMENT IN ANY OF THE PROVISIONS OF THE SUBSTANTIVE LAW I.E I.T. ACT, 1961. P A G E | 5 ITA NO. 362/MUM/2018 MEDIA NET SOFTWARE SERVICES (I) P. LTD. VS. DCIT 10(2)(2), MUMBAI AS PER THE FACTS OF THE PRESENT CASE, THE ASSESSMENT IN THE ABOVE CASE WAS COMPLETED U/S 143(3) OF THE I. T. ACT 1961. HOWEVER THE ASSESSEE HAS FILED APPEAL BEFORE LD. CIT(A) IN PAPER FORM AS PRESCRIBED UNDER THE PROVISIONS OF I.T. ACT 1961 WITHIN THE PRESCRIBED PERIOD OF LIMITATION. BUT THE SAME WAS DISMISSED BY LD. CIT(A) BY HOLDING THAT ASSESSEE HAD NOT FIL ED APPEAL THROUGH ELECTRONIC FORM, WHICH IS MANDATORY AS PER I.T. RULES 1962. AFTER HAVING CONSIDERED THE ENTIRE FACTUAL POSITION, WE FIND THAT HONBLE SUPREME COURT IN THE CASE OF STATE OF PUNJAB VS. SHYAMALAL MURARI AND OTHERS REPORTED IN AIR 1976 (SC ) 1177 HAS CATEGORICALLY HELD THAT COURTS SHOULD NOT GO STRICTLY BY THE RULEBOOK TO DENY JUSTICE TO THE DESERVING LITIGANT AS IT WOULD LEAD TO MISCARRIAGE OF JUSTICE. IT HAS BEEN REITERATED BY THE HONBLE SUPREME COURT THAT ALL THE RULES OF PROCEDURE ARE HANDMAID OF JUSTICE. THE LANGUAGE EMPLOYED BY THE DRAFTSMAN OF PROCEDURAL LAW MAY BE LIBERAL OR STRINGENT, BUT THE FACT REMAINS THAT THE OBJECT OF PRESCRIBING PROCEDURE IS TO ADVANCE THE CAUSE OF JUSTICE. THE HONBLE APEX COURT HAS SAID IN AN ADVERSARIAL SYSTEM, NO PARTY SHOULD ORDINARILY BE DENIED THE OPPORTUNITY OF PARTICIPATING IN THE PROCESS OF JUSTICE DISPENSATION. THE HONBLE SUPREME COURT IN ITS JUDGEMENT REPORTED AS AIR 2005 (SC) 3304 IN THE CASE OF RANI KUSUM VRS. KANCHAN DEVI, REITERATED T HAT, A PROCEDURAL LAW SHOULD NOT ORDINARILY BE CONSTRUED AS MANDATORY, AS IT IS ALWAYS SUBSERVIENT TO AND IS IN AID OF JUSTICE. ANY INTERPRETATION, WHICH ELUDES OR FRUSTRATES THE RECIPIENT OF JUSTICE, IS NOT TO BE FOLLOWED. FROM THE FACTS OF THE PRESENT C ASE, WE GATHERED THAT THE ASSESSEE HAD ALREADY FILED THE APPEAL IN PAPER FORM, HOWEVER ONLY THE E - FILING OF APPEAL HAS NOT BEEN DONE BY THE ASSESSEE AND ACCORDING TO US, THE SAME IS ONLY A TECHNICAL CONSIDERATION. IN THIS RESPECT, WE RELY UPON THE JUDGEMEN T OF HONBLE SUPREME COURT, WHEREIN THE HONBLE SUPREME COURT HAS REITERATED THAT IF IN A GIVEN CIRCUMSTANCES, THE TECHNICAL CONSIDERATION AND SUBSTANTIAL JUSTICE ARE PITTED AGAINST EACH OTHER , THEN IN THAT EVENTUALITY THE CAUSE OF SUBSTANTIAL JUSTICE DESE RVES TO BE PREFERRED AND CANNOT BE OVERSHADOWED OR NEGATIVE BY SUCH TECHNICAL CONSIDERATIONS. APART FROM ABOVE WE HAVE ALSO NOTICED THAT THE COORDINATE BENCH OF HONBLE ITAT DELHI BENCH IN APPEAL ITA NO. 6595/DEL/16 IN CASE TITLED GURINDER SINGH DHILLON V RS. ITO HAD RESTORED THE MATTER TO THE FILE OF LD. CIT(A) UNDER IDENTICAL CIRCUMSTANCES WITH A DIRECTION DO DECIDE APPEAL AFRESH ON MERIT, AFTER CONDONING THE DELAY, IF ANY. SINCE IN THE PRESENT CASE, WE FIND THAT APPEAL IN THE PAPER FORM WAS ALREADY WIT H LD. CIT(A), THEREFORE IN THAT EVENTUALITY THE LD. CIT(A) OUGHT NOT TO HAVE DISMISSED THE APPEAL SOLELY ON THE GROUND THAT THE ASSESSEE HAS NOT FILED THE APPEAL ELECTRONICALLY BEFORE THE APPELLATE COMMISSIONER. KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES AS WELL AS THE CASE LAWS DISCUSSED AND RELIED UPON ABOVE, WE ARE OF THE CONSIDERED VIEW THAT THE CAUSE OF JUSTICE WOULD BE SERVED IN CASE, WE SET ASIDE THE ORDERS OF LD. CIT(A) & ALLOW THE PRESENT APPEAL. WHILE S EEKING THE COMPLIANCE, WE DIRECT THE ASSESSEE TO FILE THE APPEAL ELECTRONICALLY WITHIN 10 DAYS FROM THE DATE OF RECEIPT OF THIS ORDER. IN CASE, THE DIRECTIONS ARE FOLLOWED THEN IN THAT EVENTUALITY, THE DELAY IN E - FILING THE APPEAL SHALL STAND CONDONED. LD. CIT(A) IS P A G E | 6 ITA NO. 362/MUM/2018 MEDIA NET SOFTWARE SERVICES (I) P. LTD. VS. DCIT 10(2)(2), MUMBAI FURTHER DIRECTED TO CONSIDER THE APPEAL FILED BY THE ASSESSEE ON MERITS BY PASSING A SPEAKING ORDER. RESULTANTLY, WE ALLOW THE APPEAL FILED BY THE ASSESSEE. 7. IN THE NET RESULT THE APPEAL FI LED BY THE ASSESSEE IS ALLOWED. WE HAVE PERUSED THE AFORESAID ORDER OF THE TRIB UNAL AND FINDING OURSELVES AS BEING IN AGREEMENT WITH THE VIEW THEREIN TAKEN, RESPECTFULLY FOLLOW THE SAME. IN THE BACKDROP OF THE FACTS INVOLVED IN THE CASE BEFORE US , THE APPEAL IN ALL FAIRNESS AND IN THE VERY INTEREST OF J USTICE IS RESTORED TO THE FILE OF THE CIT(A). THE CIT(A) IS DIRECTED TO CONSIDER THE APPEAL WHICH WAS E - FILED BY THE ASSESSEE AS HAVING BEEN FILED ON THE DATE ON WHICH THE SAME WAS MA NUALLY FILED IN PAPER FORM ON 01 .04.2016 , AND DISPOSE OFF THE SAME ON MERITS BY WAY OF A SPEAKING ORDER . NEEDLESS TO SAY , THE CIT(A) WHILE DISPOSING O F F THE APPEAL SHALL AFFORD A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE ORDER OF THE CIT(A) IS SET ASIDE IN TERMS OF OUR AFORESAID OBSERVATIONS. 6. THE APPEA L OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRO NOUNCED IN THE OPEN COURT ON 2 7 . 02 .201 9 S D / - S D / - ( G.MANJUNATHA ) (RAVISH SOOD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; 27 .0 2 .201 9 PS. ROHIT P A G E | 7 ITA NO. 362/MUM/2018 MEDIA NET SOFTWARE SERVICES (I) P. LTD. VS. DCIT 10(2)(2), MUMBAI / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI