M/s. Sudhir Transformers Ltd., Bangalore V. ACIT, New Delhi

ITA 3959/DEL/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3099 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 10 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-05-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 3
• Next Hearing Date: 04-05-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 10-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S RANA
• Keywords: Opportunity of being heard
• Section: 115JB; 154; 11; 15

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G : NEW DELHI BEFORE SHRI H.S.SIDHU , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 3959/DEL/2014 (ASSESSMENT YEAR: 2005 - 06 ) SUDHIR TRANSFORMERS LTD, (FORMERLY SUDHIR INTRA VIDYUT LTD) 31, BOMMASANDRA INDUSTRIAL AREA, BANGALORE PAN:AAACI4556J VS. ACIT, CENTRAL CIRCLE - 25, NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. SALIL AGARWAL, ADV SH. SHAILESH GUPTA, ADV REVENUE BY: SH. SS RANA, CIT DR DATE OF HEARING 11/05 / 2017 DATE OF PRONOUNCEMENT 19 / 05 / 2017 O R D E R PER PRASHANT MAHARISHI, A. M. 1. THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER DATED 15/4/2014 OF THE LD CIT ( A) - 1, NEW DELHI FOR THE ASSESSMENT YEAR 2005 - 06. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED BOTH IN LAW AND ON FACTS IN NOT ALLOWING THE CLAIM OF THE APPELLANT COMPANY REGARDING CALCULATION OF TAX AS PER THE PROVISIONS OF MAT UNDER SECTION 115JB OF THE ACT, ON AN AMOUNT OF BOOK PROFI T OF RS. 29,71, 846/ - AND NOT AS PER NORMAL PROVISIONS OF THE ACT. 1.1 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS FURTHER ERRED IN NOT ALLOWING THE BENEFIT OF SET OFF OF BROUGHT FORWARD LOSSES OF A SUM OF RS. 35,68,524/ - . 1.2 THAT IN DOING SO, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FURTHER FAILED TO APPRECIATE THE BASIC FACT THAT THE APPEAL FILED BY THE APPELLANT COMPANY WAS MAINTAINABLE UNDER SECTION 250 OF THE ACT AND SHOULD HAVE BEEN DECIDED ON MERITS. 1.3 THAT THE LEARNED COMM ISSIONER OF INCOME TAX (APPEALS) HAS FURTHER ERRED IN LAW AND ON FACTS IN MAKING ADDITIONS IN THE HANDS OF ASSESSEE COMPANY, WITHOUT GIVING ANY FAIR AND PROPER OPPORTUNITY OF BEING HEARD TO THE APPELLANT COMPANY. THEREBY, VIOLATING THE PRINCIPLES OF NATURA L JUSTICE. PAGE 2 OF 4 3. BRIEF FACTS OF THE CASE ARE THAT SEARCH WAS CONDUCTED ON 10/2/2010 IN SUDHIR GROUP OF CASES. THEREFORE, IN THE CASE OF THE ASSESSEE NOTICE UNDER SECTION 153C DATED 31/5/2011 WAS ISSUED. CONSEQUENTLY, ASSESSEE FILED RETURN OF INCOME ON 08/08/ 2011 DECLARING INCOME OF RS. 3569985/ . THE COMPUTATION OF TOTAL INCOME OF THE ASSESSEE WAS AS UNDER : - A) INCOME COMPUTED UNDER THE NORMAL COMPUTATION MECHANISM RS 3568524/ - LESS: CARRIED FORWARD LOSS SET OFF RS. 3568524/ - TOTAL INCOME RS. NIL B) INCOME COMPUTED U/S 115 JB OF THE ACT I.E. BOOK PROFIT RS. 3569985/ - AS THE TAX PAYABLE U/S 115 JB OF THE ACT IS MORE THAN NORMAL COMPUTATION OF TOTAL INCOME OF THE ASSESSEEE, THE RETURNED INCOME WAS BOOK PROFIT COMPUTED U/S 115 J B OF THE ACT. 4. THE ASSESSMENT WAS FRAMED UNDER SECTION 153C READ WITH SECTION 143 (3) OF THE ACT ON 26/12/2011 DETERMINING TOTAL INCOME OF RS. 4516260. WHILE FRAMING THIS ASSESSMENT LD AO DID NOT GRANT THE DEDUCTION OF SET OFF CARRIED FORWARD LOSSES AND THEREFORE HE DID NOT COMPUTE INCOME AS PER SECTION 115 JB OF THE ACT. THERE WAS ALSO NO REASON GIVEN FOR NOT GRANTING CREDIT FOR SETTING OFF LOSSES TO THE ASSESSEE. ASSESSEE CHALLENGED THE ABOVE ORDER BEFORE THE LD. CIT (APPEALS) 1, NEW DELHI WHO BY O RDER DATED 15/04/2014 GRANTED PARTIAL RELIEF TO THE ASSESSEE. CONSEQUENTLY, THAT THE LD. ASSESSING OFFICER PASSED AN APPEAL EFFECT ORDER WHEREIN THE ASSESSED INCOME OF THE ASSESSEE WAS REDUCED TO RS . 382 7553/ - FROM THE ASSESSED INCOME OF RS 4516260/ - . THE LD AO THEN ALSO DID NOT GRANT THE CARRY FORWARD OF THE LOSSES AS SET OFF IN COMPUTATION OF TOTAL INCOME. H ENCE , WHILE CALCULATING THE TAX PAYABLE BY THE ASSESSEE THE LD. AO COMPUTED THE TAX ON INCOME COMPUTED UNDER NORMAL PROVISIONS OF THE ACT AND NOT UNDER SECTION 11 5JB OF THE INCOME TAX ACT. THEREFORE, ASSESSEE AGGRIEVED BY THE ORDER OF THE LD. ASSESSING OFFICER MADE AN APPLICATION UNDER SECTION 154 OF THE ACT, REQUESTING FOR COMPUTATION O F TAX UNDER 115 JB OF THE INCOME TAX ACT. SUCH APPLICATION WAS REJECTED BY THE LD. ASSESSING OFFICER V IDE ORDER DATED 21/8/2013 . AGAINST THIS ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT (A) WHO THOUGH NOTED THAT INCOME IS REQUIRED TO BE TAXED BY GIVING EF FECT TO THE PROVISIONS OF SECTION 1 15 JB OF THE INCOME TAX ACT IF THE TAX PAYABLE UN DER THE NORMAL COMPUTATION IS LESS THAN THAT, HOWEVER DISMISSED THE APPEAL OF THE ASSESSEE. THEREFORE, ASSESSEE BEING AGGRIEVED WITH THE ORDER OF THE LD. CIT (A) HAS PREFE RRED APPEAL BEFORE US. 5. THE LD. AUTHORIZED REPRESENTATIVE VEHEMENTLY SUBMITTED THAT ASSESSEE IS REQUIRED TO BE CHARGED FOR TAX EITHER UNDER THE NORMAL PROVISIONS OF THE ACT IF THE TAX PAYABLE PAGE 3 OF 4 UNDER SECTION 115 JB OF THE INCOME TAX ACT IS LESS THAN THAT OTH ERWISE THE INCOME IS REQUIRED TO BE CHARGED TO TAX AS PER SECTION 115 JB OF THE ACT. HE REFERRED TO THE COMPUTATION OF TOTAL INCOME FILED BY THE ASSESSEE FOR ASSESSMENT YEAR 2005 - 2006, WHICH IS PLACED AT PAGE NO. 7 - 9 OF THE PAPER BOOK WHEREIN ASSESSEE H AS SHOWN THAT PROFIT AS PER PROFIT AND LOSS ACCOUNT AT RS. 3452119 AND ADDED THERETO INCOME TAX OF RS. 117866/ MAKING THE BOOK PROFI T UNDER SECTION 115 JB OF RS. 3 569985/ . HE FURTHER SUBMITTED THAT NORMAL COMPUTATION OF TOTAL INCOME IS RS 3568524/ - AN D THEREFORE CARRIED FORWARD LOSSES ARE SET OFF OF THE SAME MAKING IT NIL. HE SUBMITTED THAT TAXABLE INCOME AS PER THE NORMAL COMPUTATION OF TOTAL INCOME IS NIL AND WHER EAS THE BOOK PROFIT IS AT RS. 3 569985/ . HE THEREFORE SUBMITTED THAT IT IS AGAINST TH E PROVISIONS OF THE INCOME TAX ACT TO IGNORE THE PROVISIONS OF SECTION 115 JB OF THE INCOME TAX ACT AND TO CHARGE TAX ON THE INCOME APPLYING NORMAL PROVISIONS. 6. THE LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND ALSO PERUSED THE COMPUTATION OF TOTAL INCOME PLACED AT PAGE NO. 7 9 OF THE PAPER BOOK BASED ON WHICH THE LD. ASSESSING OFFICER HAS MADE COMPUTATION OF TOTAL INCOME . ACCORDING TO THE COMPUTATION OF TO TAL INCOME, THE GROSS TOTAL INCOME OF THE AS SESSEE IS STATED TO BE AT RS. 3 568524/ AND THERE FROM THE BROUGHT FORWARD LOSSES HAS BEEN SET OFF TO THE EXTENT OF 35685 2 4 / - AND THEREFORE THE NORMAL COMPUTATION MECHANISMS RESULTED INTO TAXABLE INCOME OF RS. NIL. FURTHER, THE CALCULATION OF BOOK PROFIT UNDER SECTION 115 JB WAS ALSO MADE WHICH SHOWS THAT THE BOOK PROFIT INCOME OF TH E ASSESSEE IS RS. 3 569985/ . APPARENTLY, THERE IS A PRIMA FACIE ERROR IN THE ORDER OF THE DL AO IN COMPUTATION OF INCOME OF THE AS SESSEEE UNDER NORMAL PROVISIONS BY NOT GRANTING SET OFF THE LOSSES AGAINST INCOME OF RS 3568524/ - UNDER NORMAL COMPUTATION OF TOTAL INCOME. THE CARRIED FORWARD LOSS AVAILABLE FOR SET OFF WITH THE ASSESSEE AS PER COMPUTATION FILED IS RS. 3891523/ - ( RS 3568524/ - + 322999/ - ) WHICH IS REQUIRED TO BE REDUCED FROM THE INCOME COMPUTED AS PER NORMAL PROVISION OF THE ACT WHICH LD AO HAS FAILED TO GIVE EFFECT TO. THERE WAS ALSO SPECIFIC DIRECTION OF THE LD CIT (A) IN PARA NO 3.5 OF THE ORDER DATED 14.11.2012 . DESPITE THIS LD AO IN ORDER, GIVING EFFECT TO THE ORDER OF CIT (A) HAS NOT GIVEN SET OFF CARRIED FORWARD LOSSES. REASON GIVEN BY THE DL CIT (A) IS THAT ASSESSEE SHOULD HAVE FILED APPEAL AGAINST THE ORDER OF AO GIVING APPEAL EFFECT ORDER AND THEREFORE THE APPEAL OF THE ASSESSEE IS REJECTED. WE REJECT THIS REASON GIVEN BY CIT (A). WHEN IN THE ORIGINAL ORDER UNDER SECTION 153C READ WITH SECTION 143 (3 ) WAS PASSED ON 26/12/2011. THE LD. ASSESSING OFFICER IS WITHOUT ANY REASON NOT GRANTED S ETOFF OF CARRY FORWARD OF THE LOSSES. THEREFORE, THERE IS AN APPARENT ERROR IN THE ORDER OF THE LD. ASSESSING OFFICER, PAGE 4 OF 4 WHICH WAS NOT TOUCHED UPON DURING THE APPELLATE PROCEEDINGS, AND THEREFORE IT IS A MISTAKE APPARENT FROM THE RECORD , WHICH IS RECTIFI ABLE U/S 154 OF THE INCOME TAX ACT. THE CORRECT COMPUTATION OF THE TOTAL INCOME OF THE ASSESSEE WOULD BE AS UNDER: - NORMAL COMPUTATION INCOME ASSESSED AS PER ORDER GIVING APPEAL EFFECT RS. 3827553/ - LESS : CARRIED FORWARD LOSSES SET OFF RS 382 7553/ - INCOME RS NIL U/S 115JB BOOK PROFIT AS COMPUTED RS. 3569885/ - THE LD AO IS DIRECTED TO NOW COMPUTE THE TAX ON BOOK PROFIT U/S 115JB OF THE ACT . IN VIEW OF THE ABOVE FACTS, APPEAL OF THE ASSESSEE IS ALLOWED AND THE MATTER OF COMPUTATION OF TAX APPLYING THE PROVISION OF SECTION 115JB OF THE ACT IS RESTORED TO THE FILE OF LD AO. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PR ONOUNCED IN THE OPE N COURT ON 1 9 / 05 / 2017 . - S D / - - S D / - ( H.S.SIDHU ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 1 9 / 05 / 2017 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI