M/s.Punjab Tourism Development Corp. Ltd., Chandigarh V. DCIT, Chandigarh

ITA 388/CHANDI/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51502 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 5 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 20-09-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 16-04-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: JAI SHREE SHARMA
• Assessee Lawyers: A K JINDAL
• Keywords: Depreciation; Condonation of delay; Unabsorbed depreciation
• Section: 154; 43B; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES B CHANDIGARH BEFORE MS. SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER ITA NO. 388/CHD/2010 ASSESSMENT YEAR: 2006-07 M/S PUNJAB TOURISM DEVELOPMENT VS. THE DCIT, CORPORATION LTD, CIRCLE 1(1), CHANDIGARH CHANDIGARH PAN NO. AAACP 8513 E (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI A.K.JINDAL RESPONDENT BY : SMT.JAISHREE SHARMA DATE OF HEARING : 20.09.2011 DATE OF PRONOUNCEMENT : ORDER PER SUSHMA CHOWLA, JM THE APPEAL BY THE ASSESSEE IS AGAINST THE ORDER OF CIT(A), CHANDIGARH DATED 27.11.2009 RELATING TO ASSESSMENT YEAR 2006-07 AGAINST THE ORDER PASSED UNDER SECTION 143(3) OF THE I.T. A CT, 1961. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. THAT THE LD. CIT(A) IS NOT JUSTIFIED IN DISMISSING THE APPEAL REGARDING CARRY FORWARD OF UNABSORBED LOSSES AND DEPRECIATION BY HOLDING THAT THE LOSS DETERMINE D IN ASSESSMENT YEAR 2004-05 AND ASSESSMENT YEAR 2005-06 IS THE TOTAL LOSS TO BE CARRIED FORWARD WHEREAS IN THE ORDER ONLY THE LOSS FOR THE PARTICULAR ASSESSMENT YEAR I. E. 2004-05 AND ASSESSMENT YEAR 2005-06 WAS DETERMINED BY ASSESSING OFFICER AND COMPLETELY IGNORING THE FACT THAT 2 NO ORDER HAS BEEN PASSED WITH RESPECT TO LOSSES BRO UGHT FORWARD FROM EARLIER YEARS. 2. THAT THE LD. CIT(A) IS NOT JUSTIFIED IN UPLOADING T HE DISALLOWANCE OF RS. 2,89,522/- ON ACCOUNT OF PROVID ENT FUND MADE THE DUE DATE UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. (A) THAT THE LD. CIT(A) IS NOT JUSTIFIED IN DISMIS SING THE GROUND OF APPEAL WITHOUT GIVING ANY FINDING WITH RE GARD TO THE DISALLOWANCE OF RS. 24,022/- ON ACCOUNT TO L ATE PAYMENT OF ESI UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. (B) THAT THE APPELLANT DISPUTES THE UPLOADING OF DISALLOWANCE OF RS. 24,022/- ON ACCOUNT OF LATE PAY MENT OF ESI UNDER THE FACTS AND CIRCUMSTANCES OF THE CAS E . 3. THE PRESENT APPEAL IS FILED AFTER A DELAY OF 44 DAYS. THE ORDER OF CIT(A) WAS RECEIVED BY THE ASSESSEE ON 31.1.2009 AN D THE DATE OF FILING THE PRESENT APPEAL WAS 1.3.2010. HOWEVER, THE APPE AL WAS FILED BEFORE THE TRIBUNAL ON 15.4.2010 I.E AFTER A DELAY OF 44 D AYS. THE ASSESSEE HAS MOVED AN APPLICATION FOR CONDONATION OF DELAY IN FI LING THE PRESENT APPEAL, WHICH IS AVAILABLE ON RECORD. AS PER THE S AID APPLICATION, THE ASSESSEE WAS RUNNING TOURIST COMPLEX IN THE STATE O F PUNJAB, BUT DUE TO CONTINUOUS LOSSES, DECISION FOR DISINVESTMENT WAS T AKEN IN 2008 AND PROPERTIES OF THE ASSESSEE WERE TRANSFERRED TO THE DEPARTMENT OF TOURISM, PUNJAB. CONSEQUENTLY, THE SERVICES OF EMPLOYEES O F THE CORPORATION WERE TERMINATED W.E.F. 15.12.2009. THE PENDING WORK WAS BEING LOOKED AFTER BY THE OUT SOURCED STAFF OF ANOTHER CORPORATION OF PUNJAB TOURISM BOARD ON ADHOC ARRANGEMENT. THE PLEA OF THE ASSESSEE WAS THAT DUE TO STAFF CRUNCH, THE APPELLATE ORDER RECEIVED BY THE ASSESSE E WAS MISPLACED AND 3 WAS TRACED IN THE FIRST WEEK OF APRIL 2010 AND HENC E THE DELAY IN FURNISHING THE APPEAL. IN THE FACTS AND CIRCUMSTAN CES ENUMERATED ABOVE, WE FIND MERIT IN THE PLEA OF THE ASSESSEE AND CONDO NE THE DELAY IN FURNISHING THE PRESENT APPEAL AND TAKE THE SAME ON RECORD. 4. THE BRIEF FACTS RELATING TO THE ISSUE RAISED VID E GROUND NO.1 ARE THAT THE ASSESSEE HAD DECLARED INCOME UNDER DIFFERENT HE ADS I.E. BUSINESS OR PROFESSION AND INCOME FROM OTHER SOURCES. THE A SSESSEE IN THE RETURN OF INCOME HAD ALSO ADJUSTED LOSSES CARRIED FORWARD FROM THE EARLIER YEARS. THE ASSESSEE CLAIMED THAT THE TOTAL BROUGHT FORWARD LOSSES OF RS. 3.98 CRORES WERE TO BE CARRIED FORWARD AND ADJUSTED AGAI NST INCOME DETERMINED FOR THE YEAR UNDER CONSIDERATION. THE BREAK UP OF T HE SAID ADJUSTMENTS OF RS. 3.98 CRORES IS INCORPORATED BY THE ASSESSING OF FICER AT PAGES 2 & 3 OF THE ASSESSMENT ORDER. THE ASSESSING OFFICER NOTED THAT AS PER THE ASSESSMENT ORDER PASSED IN ASSESSMENT YEAR 2004-05, NET LOSS OF RS. 14,49,367/- WAS ASSESSED AND WAS ALLOWED TO BE CARR IED FORWARD AND FURTHER FOR THE ASSESSMENT YEAR 2005-06, THERE WAS NET LOSS OF RS. 14,01,244/- WHICH WAS ASSESSED AND UNABSORBED LOSS OF PREVIOUS YEAR I.E. 2004-05 OF RS. 14,49,367/- WAS ALLOWED TO BE CARRIE D FORWARD. HENCE, TOTAL LOSS OF RS. 28,50,611/- WAS AVAILABLE TO BE S ET OFF. THE ASSESSING OFFICER FURTHER NOTED THAT THE ASSESSEE HAD NOT CON TESTED IN APPEAL THE ASSESSMENT ORDERS PASSED U/S 143(3) OF THE INCOME T AX ACT RELATING TO ASSESSMENT YEARS 2004-05 AND 2005-06. ACCORDINGLY, CREDIT OF UNABSORBED LOSS TO THE EXTENT OF RS. 28,50,611/- WA S ALLOWED TO THE ASSESSEE. THE CIT(A) UPHELD THE ORDER OF ASSESSING OFFICER. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A) A ND HENCE THE GROUND NO. 1 RAISED BY THE ASSESSEE. 4 5. THE CLAIM OF THE ASSESSEE IS THAT IN ADDITION TO THE LOSSES OF ASSESSMENT YEARS 2004-05 AND 2005-06, IT WAS ALSO E LIGIBLE FOR THE CARRY FORWARD OF SET OFF OF PROPORTIONATE LOSSES AND DEPR ECIATION LOSSES DECLARED BY THE ASSESSEE UP TO ASSESSMENT YEAR 2003-04. THE LD. AR FOR THE ASSESSEE HAD FURNISHED ON RECORD THE DETAILS OF BRO UGHT FORWARD LOSSES FROM ASSESSMENT YEAR 1993-94 ONWARDS. AS PER THE T ABULATED DETAILS, UP TO ASSESSMENT YEAR 2003-04, THE BALANCE LOSS TO BE CARRIED FORWARD IS RS. 1.50 CRORES COMPRISING OF BUSINESS LOSSES OF RS. 1, 12,71,483/- AND UNABSORBED DEPRECIATION LOSS OF RS. 37,37,753/-. A S PER THE ASSESSEE, AFTER DEMERGES OF THE COMPANIES, THE ALLOCATED LOSS TO THE ASSESSEE UP TO ASSESSMENT YEAR 2003-04 WAS RS. 1,09,95,490/-. TH E LD. AR HOWEVER, FAIRLY ADMITTED THAT WHILE COMPLETING ASSESSMENT RE LATING TO ASSESSMENT YEARS 2004-05 & 2005-06, SUCH BENEFIT HAS NOT BEEN ALLOWED TO THE ASSESSEE. HOWEVER, IT WAS POINTED OUT BY THE LD. A R FOR THE ASSESSEE THAT THE PERUSAL OF THE ASSESSMENT ORDER PLACED AT PAGES 9 & 10 AND 4 TO 6 RELATING TO ASSESSMENT YEARS 2004-05 AND 2005-06 RE SPECTIVELY, REFLECTS THAT THE ASSESSING OFFICER HAS NOT CONSIDERED THE C ARRY FORWARD ADJUSTMENT OF BROUGHT FORWARD LOSSES. IT WAS ALSO POINTED OUT BY THE LD. AR THAT IN BOTH THE ASSESSMENT YEARS THERE WAS NET LOSSES AND THE ASSESSEE HAD ALREADY FILED APPLICATION U/S 154 OF THE INCOME TAX ACT FOR THE ADJUSTMENT OF CARRY FORWARD LOSSES, WHICH WAS STILL PENDING. THE DR FOR THE REVENUE PLACED RELIANCE ON THE ORDER OF CIT(A). 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORDS. UNDER THE PROVISIONS OF SECTION 72 OF THE ACT, WHER E THE NET RESULT OF COMPUTATION UNDER THE HEAD PROFIT AND GAINS OF BUSI NESS IS A LOSS FOR THE RELEVANT YEAR, AND SUCH LOSS IF COULD NOT BE SET OF F AGAINST INCOME IN ANY HEAD OF INCOME, SO MUCH OF LOSS WHICH HAS NOT BEEN SET OFF OR PARTLY NOT 5 SET OFF IS TO BE CARRIED FORWARD TO THE FOLLOWING A SSESSMENT YEARS AND SHALL BE SET OF AGAINST PROFIT AND GAINS OF BUSINESS, IF ANY, CARRIED ON BY THE ASSESSEE AND ASSESSED IN SUCH RELEVANT ASSESSMENT Y EARS. IN CASE THE LOSS CANNOT BE SO WHOLLY SET OFF IN THE FOLLOWING ASSESS MENT YEAR, THE SAME SHALL BE CARRIED FORWARD TO THE NEXT ASSESSMENT YEA R/S FOR PERIOD OF EIGHT YEARS. SECTION 72A OF THE ACT LAYS DOWN THE PROVISI ONS RELATING TO CARRY FORWARD OF SET OFF OF ACCUMULATED LOSSES AND UNABSO RBED DEPRECIATION IN AMALGAMATION OR DEMERGER OF THE COMPANY. SUB SECTI ON (1) TALKS OF RIGHTS OF THE AMALGAMATING COMPANY VIS-A-VIS THE ACCUMULAT ED LOSS AND UNABSORBED DEPRECIATION. SUB SECTION (4) TO SECTIO N 72A LAYS DOWN THE CONDITION FOR THE ALLOWANCE OF UNABSORBED DEPRECIAT ION OF THE DEMERGED COMPANY. IN VIEW OF THE PROVISIONS OF THE ACT, THE ASSESSEE IS ENTITLED TO THE BENEFIT OF CARRY FORWARD AND SET OFF OF UNABSOR BED BUSINESS LOSSES AND UNABSORBED DEPRECIATION INCOME FROM BUSINESS ASSESS ED IN THE RESPECTIVE ASSESSMENT YEARS, SUBJECT TO FULFILLMENT OF CONDITI ONS LAID DOWN IN SECTION 72 / 72A OF THE INCOME TAX ACT. THE ASSESSEE BEFOR E US WAS RUNNING TOURIST COMPLEX IN THE STATE OF PUNJAB. HOWEVER, A DECISION WAS TA KEN TO DISINVEST THE PROPERTIES OF THE ASSESSEE CORPORATIO N IN 2008 AND THE SAID PROPERTIES WERE THEREAFTER TRANSFERRED TO THE DEPAR TMENT OF TOURISM, PUNJAB. IN THE YEAR UNDER CONSIDERATION I.E. ASSES SMENT YEAR 2006-07, THE ASSESSEE HAD SHOWN INCOME FROM BUSINESS AND ALSO IN COME FROM OTHER SOURCES. THE ASSESSEE HAD CLAIMED SET OFF OF UNABS ORBED LOSSES OF THE EARLIER YEARS AGAINST THE AFORESAID INCOME. THE AS SESSING OFFICER HAD ALLOWED THE BENEFIT OF SET OFF OF CARRIED LOSSES / DEPRECIATION LOSSES RELATING TO ASSESSMENT YEARS 2004-05 AND 2005-06. THE SAID LOSSES WERE DETERMINED IN THE CAPTIONED ASSESSMENT YEARS VIDE O RDER/S PASSED U/S 143(3) OF THE ACT. . THE PERUSAL OF THE ASSESSMENT ORDER/S RELATING TO ASSESSMENT YEARS 2004-05 AND 2005-06 REFLECTS THE A SSESSING OFFICER TO 6 HAVE COMPLETED THE ASSESSMENT IN VIEW OF THE RETURN OF LOSSES BEING FILED BY THE ASSESSEE. HOWEVER, IN ASSESSMENT YEAR 2005 -06, THE BROUGHT FORWARD LOSSES FROM ASSESSMENT YEAR 2004-05, WERE A LSO RECOGNIZED AND TOTAL LOSSES OF RS. 28,50,611/- I.E. ON ACCOUNT OF UNABSORBED LOSS RELATING TO ASSESSMENT YEAR 2004-05 OF RS. 14,49,367/- AND U NABSORBED LOSS OF RS. 14,01,244/- OF ASSESSMENT YEAR 2005-06, WERE HELD T O BE CARRIED FORWARD TO THE FOLLOWING YEARS. THE ASSESSING OFFICER COMP LETED THE ASSESSMENT IN THE YEAR UNDER APPEAL AND ALLOWED THE BENEFIT OF THE SAID LOSSES OF RS. 28,50,611/-. THE ASSESSEE IS AGGRIEVED BY THE NON SETTING OFF OF THE BROUGHT FORWARD LOSSES OF THE YEARS UP TO ASSESSMEN T YEAR 2003-04. THE CASE OF THE ASSESSEE IS THAT ALTHOUGH THE ACCUMULAT ED BUSINESS LOSSES AND UNABSORBED DEPRECIATION LOSSES, UP TO ASSESSMENT YE AR 2003-04, WERE RS. 1.50 CRORES, HOWEVER, ON ACCOUNT OF DEMERGER OF COM PANIES, THE BALANCE LOSS AND UNABSORBED DEPRECIATION TO BE SET OFF AGAI NST INCOME OF THE ASSESSEE WAS RS. 1.09 CRORES. THE ASSESSEE HAS FUR NISHED ON RECORD THE TABULATED DETAILS OF THE LOSSES ASSESSED IN THE HAN DS OF THE ASSESSEE STARTING FROM ASSESSMENT YEAR 1993-94. FURTHER, P LEA OF THE ASSESSEE IS THAT IT HAD MOVED APPLICATION FOR RECTIFICATION U/S 154 OF THE INCOME TAX ACT FOR SET OFF OF THE AFORESAID BUSINESS LOSSES AN D UNABSORBED LOSSES IN ASSESSMENT YEAR ASSESSMENT YEARS 2004-05 AND 2005-0 6. THE APPLICATION U/S 154 FOR ASSESSMENT YEAR 2004-05 WAS FILED ON 7. 1.2009 AND FOR ASSESSMENT YEAR 2005-06 ON 14.1.2009, WHICH IS STIL L PENDING FOR DISPOSAL. IN THE INTEREST OF JUSTICE, WE DEEM IT FIT TO RESTO RE THIS ISSUE BACK TO THE FILE OF ASSESSING OFFICER TO DETERMINE AND ADJUDICA TE THE CLAIM OF THE ASSESSEE OF BROUGHT FORWARD LOSSES / DEPRECIATION L OSS AND ADJUSTMENTS OF SAID BUSINESS LOSS / DEPRECIATION LOSS AFTER VERIFY ING THE CLAIM OF THE ASSESSEE AND IN ACCORDANCE WITH LAW. FROM THE PER USAL OF THE DETAILS INCORPORATED AT PAGE 2 OF THE ASSESSMENT ORDER, WE FIND THAT THE ASSESSEE 7 HAD CLAIMED CARRIED FORWARD LOSSES AND UNABSORBED D EPRECIATION BROUGHT FORWARD FROM PERVIOUS YEAR PRIOR TO ASSESSMENT YEAR 2004-05 AND THE ASSESSING OFFICER HAS FAILED TO ADDRESS THE SAME. T HE ASSESSING OFFICER HAD ALLOWED THE CLAIM ONLY IN RESPECT OF THE ASSESSED LOSS RELATING TO ASSESSMENT YEARS 2004-05 AND 2005-06. WE FIND THAT THE ORDER OF THE ASSESSING OFFICER SUFFERS FRO M AN INFIRMITY. THE ASSESSING OFFICER SHALL AFFORD REASONABLE OPPORTUNI TY OF HEARING TO THE ASSESSEE. THE GROUND NO.1 RAISED BY THE ASSESSEE IS THUS ALLOWED FOR STATISTICAL PURPOSES. 7. THE ISSUE IN GROUND NO.2 IS IN CONNECTION WITH THE DISALLOWANCE MADE U/S 43B OF THE INCOME TAX ACT ON ACCOUNT OF PF AND ESI. THE LD. AR FOR THE ASSESSEE FAIRLY ADMITTED THAT OUT OF THE DUES OF ESI TOTALING RS. 24,022/-, A SUM OF RS. 929/- HAS NOT BEEN PAID BY T HE ASSESSEE EVEN TILL THE DUE DATE OF FILING OF RETURN OF INCOME. IN RES PECT OF THE DISALLOWANCE ON ACCOUNT OF PF, IT WAS POINTED OUT THAT THE LD. A R THAT THOUGH THE CIT(A) HAS ADOPTED THE FIGURE OF RS. 2,89,522/-, TH E ACTUAL AMOUNT DUE WAS RS. 2,86,933/-. 8. WE FIND THAT THE PRESENT ISSUE IS COVERED BY THE ORDER OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CIT V LAKHANI INDIA LTD INDUSTRIES [39 DTR (P&H) 210] WHEREIN IN HAS BEEN HELD THAT PAYMEN T OF EMPLOYEES AND EMPLOYERS CONTRIBUTION TO PF MADE BEYOND THE DUE D ATES COULD NOT BE DISALLOWED U/S 43B.OF THE ACT. IN THE FACTS BEFORE THE HON'BLE COURT, THE SAID PAYMENTS WERE MADE BY THE ASSESSEE BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME. FOLLOWING THE ABOVE SAID RATIO LA ID DOWN BY THE HON'BLE HIGH COURT, WE ARE OF THE VIEW THAT WHERE THE ASSES SEE HAS DEPOSITED THE AMOUNT OF PF & ESI DUES ON ACCOUNT OF BOTH EMPLOYER S SHARE AND 8 EMPLOYEES SHARE BEFORE THE DUE DATE OF FILING THE R ETURN OF INCOME, NO DISALLOWANCE IS WARRANTED U/S 43B OF THE ACT. IN T HE INTEREST OF JUSTICE, WE DIRECT THE ASSESSING OFFICER TO VERIFY THE CLAIM OF THE ASSESSEE AND WHERE THE PAYMENTS ON ACCOUNT OF CONTRIBUTION TO PF AND ESI HAVE BEEN MADE BY THE ASSESSEE BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME, THE ASSESSEE IS ENTITLED TO THE SAID CLAIM AND NO DISAL LOWANCE IS WARRANTED U/S 43B OF THE ACT. HOWEVER, AS ADMITTED BY THE LD. AR FOR THE ASSESSEE, A SUM OF RS. 929/- ON ACCOUNT OF ESI PAYABLE HAS NOT BEEN PAID BY THE ASSESSEE TILL THE DUE DATE OF FILING OF RETURN OF I NCOME, THE SAME IS TO BE DISALLOWED IN THE HANDS OF THE ASSESSEE. ACCORDING LY, GROUND NO.2 RAISED BY THE ASSESSEE IS PARTLY ALLOWED. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY OF SEPTEMBER, 2011. SD/- SD/- (MEHAR SINGH) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 30 TH SEPTEMBER, 2011 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR TRUE COPY BY ORDER ASSISTANT REGISTRAR, ITAT, CHANDIGARH 9