MAFATLAL FINANCE CO. LTD, NAVI MUMBAI V. ACIT 9(2), MUMBAI

ITA 3993/MUM/2009

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 8383 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-11-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 05-11-2014
• Assessment Year: 1996-1997
• Appeal Filed On: 25-06-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS ABHA KALA CHANDA
• Keywords: Reopening of assessment; Depreciation; Non compliance; Reassessment proceedings; Capital expenditure
• Section: 143(3); 32; 147; 148; 154

Judgement Text

D IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D, MUMBAI BEFORE SHRI B R BASKARAN, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER ITA NO. : 3991/MUM/2009 (ASSESSMENT YEAR: 1994-95) ITA NO. : 3992/MUM/2009 (ASSESSMENT YEAR: 1995-96) ITA NO. : 3993/MUM/2009 (ASSESSMENT YEAR: 1996-97) ITA NO. : 3994/MUM/2009 (ASSESSMENT YEAR: 1997-98) ITA NO. : 3995/MUM/2009 (ASSESSMENT YEAR: 1998-99) HYBRID FINANCIAL CO LTD (ERSTWHILE MAFATLAL FINANCE CO LTD), UNIT NO. 17/35, A WING, RAJ INDUSTRIAL CO-OPERATIVE PREMISES CO-OP SOCIETY LTD., MILITARY ROAD, MORAL, ANDHERI(E), MUMBAI -400 059 .: PAN: AAACM 2824 M VS ACIT 8(2), ROOM NO. 218, AAYAKAR BHAVAN, M K ROAD, MUMBAI -400 020 (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI NITESH JOSHI RESPONDENT BY : MRS ABHA KALA CHANDA /DATE OF HEARING : 05-11-2014 / DATE OF PRONOUNCEMENT : 21-11-2014 O R D E R , PER VIVEK VARMA, J.M. : FIVE APPEALS HAVE BEEN FILED BY THE ASSESSEE AGAINS T THE CONSOLIDATED ORDER PASSED BY CIT(A) X, MUMBAI, DAT ED 15.06.2009, COVERING ASSESSMENT YEARS 1993-94 TO 1998-99. THE A SSESSEE HAS FILED THE APPEALS FOR ASSESSMENT YEARS 1994-95 TO 1998-99 . SINCE THERE IS A CONSOLIDATED ORDER BY THE CIT(A), WE ARE ALSO DISPO SING OFF THE APPEALS IMPUGNED BEFORE US THROUGH THIS COMMON AND CONSOLID ATED ORDER COVERING ASSESSMENT YEARS 1994-95 TO 1998-99. HYBRID FINANCIAL CO LTD (ERSTWHILE MAFATLAL FINANCE CO LTD) ITAS 3991 TO 3995/MUM/2009 2 2. WE FIND THAT ON FACTS AND MERITS, THE ISSUE IS C OMMON IN ALL THE YEARS BEFORE US. 3. IN ASSESSMENT YEAR 1994-95, BESIDES THE COMMON I SSUE, RUNNING THROUGH ALL THE FIVE APPEALS, THERE IS AN I SSUE ON LEGALITY PERTAINING TO REOPENING OF THE ASSESSMENT UNDER SEC TION 148. 4. SINCE THE FACTS ARE IDENTICAL, WE ARE PROCEEDING WITH ASSESSMENT YEAR 1994-95, BEING THE LEAD YEAR ITA NO. 3991/MUM/2009 : ASSESSMENT YEAR : 1994-95 : ASSESSEES APPEAL : 5. THE FOLLOWING GROUNDS ARE TAKEN BY THE ASSESSEE: THE APPELLANT OBJECTS TO THE IMPUGNED ORDER DT. 15 .06.2009 OF THE COMMISSIONER OF INCOME TAX (APPEALS) (HEREINAFT ER REFERRED TO CIT(A) U/S 253 OF THE INCOME TAX ACT, 1961 ON THE FOLLOWING AMONGST OTHER GROUNDS, EACH OF WHICH IS IN THE ALTE RNATIVE AND WITHOUT PREJUDICE ON OTHERS: 1. THE CIT(A) ERRED IN DISALLOWANCE OF DEPRECIATION OF RS. 61,51,89,421/- IN RESPECT OF LEASED ASSETS. 2. THE CIT(A) FAILED TO APPRECIATE THAT ASSESSING OFFIC ER IN ITS REMAND REPORT DATED 27 TH APRIL 2007 HAD AFTER THOROUGH EXAMINATION OF THE FACTS OF THE PRESENT CASE, GAVE A FINDING THAT IT HAD JUSTIFIED THE TESTS LAID DOWN IN THE CA SE OF SPECIAL BENCH MID EAST PORTFOLIO MANAGEMENT LTD AND ICICI L TD AND DEPRECIATION ON THE LEASED ASSETS WAS ALLOWED ONLY AFTER VERIFYING THE DEPRECIATION CLAIM AFRESH. 3. THE CIT(A) ERRED IN RELYING ON THE OTHER OF ASSESSM ENT YEAR 1995-96 DATED 25 TH APRIL 2000 WHICH HAD ALREADY BEEN SET ASIDE BY THE HONBLE TRIBUNAL BY ITS ORDER DATED 28 TH NOVEMBER, 2003 OF ITAT MUMBAI BENCH H MUMBAI. 4. THE CIT(A) ERRED IN HOLDING THAT THE APPELLANT DID NOT BECOME THE OWNER OF THE LEASED ASSETS AS THE LEAS E TRANSACTIONS WERE IN THE NATURE OF FINANCE. THIS OPINION FORMED BY THE CIT(A) IS CONTRADICTORY TO THE REMAND REPORT DT. 27.04.2007 AND HAS WRONGLY BEEN RELIED UPON FRO M THE JUDGMENT OF ASEA BROWN BOVERI LTD VS INDUSTRIAL FINA NCE CORPORATION OF INDIA (154 TAXMAN 512). 5. THE CIT(A) ERRED IN ITS FINDING THAT THE LEASED TRA NSACTIONS ARE SHAM AND IN REALITY SIMPLY FINANCIAL LOANS 6. THE CIT(A) ERRED IN CONCLUDING THAT CERTAIN TRANSAC TIONS SELECTED OUT OF THE SUBMISSIONS MADE ARE BOGUS NAT URE OF LEASE TRANSACTION AND DO NOT PROVE THAT THE APPELL ANT IS NOT HYBRID FINANCIAL CO LTD (ERSTWHILE MAFATLAL FINANCE CO LTD) ITAS 3991 TO 3995/MUM/2009 3 THE OWNER OF THE ASSETS AND IS NOT ENTITLED TO DE PRECIATION AS PER INCOME TAX RULES. 7. ASSUMING WITHOUT ADMITTING THAT THE LEASE TRANSACTIO NS ARE IN THE NATURE OF FINANCIAL LEASE, THE CIT(A) ERRED IN DENYING THE APPELLANTS CLAIM OF DEPRECIATION IN RESPECT TO THE LEASED ASSETS. 8. THE CIT(A) ERRED IN CONFIRMING THE PENALTY PROCEEDI NGS U/S 271(1)(C). 9. EACH ONE OF THE ABOVE GROUNDS IS WITHOUT PREJUDICE TO THE OTHER. 10. THE APPELLANT RESERVES THE RIGHT TO AMEND, ALTER OR ADD TO THE GROUNDS OF THE APPEAL. 6. THE ASSESSEE HAS FILED ADDITIONAL GOA ON TWO OCC ASION, I.E. ON 17.06.2010 AND 03.04.2014. 7. AT THE TIME OF HEARING, THE AR SUBMITTED THAT AD DITIONAL GOA FILED VIDE LETTER DATED 17.06.2010 BE IGNORED. 8. WE, THEREFORE ARE LEFT WITH ADDITIONAL GOA, FILE D VIDE LETTER DATED 03.04.2014,WHICH IS AS FOLLOWS: THAT THE ASSESSING OFFICER ERRED IN ASSUMING JURISD ICTION U/S 148 OF THE INCOME TAX ACT, 1961 WITHOUT APPRECIATIN G THAT THE APPELLANT HAD FILED A RECTIFICATION APPLICATION DAT ED 20/12/1996 WITHDRAWING ITS CLAIM OF DEPRECIATION IN RESPECT OF ITS TRANSACTIONS WITH M/S KEDIA DISTILLERIES LTD. 9. THE FACTS AS PER SOF FILED BEFORE THE CIT(A) ARE THAT THE ASSESSEE IS A NBFC AND IS GOVERNED UNDER THE RULES OF RBI. IT IS IN THE BUSINESS OF LEASE FINANCE, HIRE PURCHASE AND FACTORING, I.E. BILL DISCOUNTING AND ADVANCING OF LOANS. 10. THE LEGALITY AND MERITS REACHED UPTO THE ITAT O N AN EARLIER OCCASION IN ASSESSMENT YEAR 1994. BOTH THE ISSUES WERE RESTORED BACK TO THE FILE OF THE AO FOR DE NOVO ASSESSMENTS. 11. IN THE SECOND ROUND, THE ASSESSMENT WAS FRAMED EX PARTE BECAUSE OF CERTAIN REASONS, WHICH WERE SORTED OUT I N APPEAL BEFORE THE CIT(A), WHEREIN, THE CIT(A) CALLED FOR R EMAND REPORT FROM THE AO, WHICH INCLUDED THE REASONS FOR NON ATT ENDANCE AND HYBRID FINANCIAL CO LTD (ERSTWHILE MAFATLAL FINANCE CO LTD) ITAS 3991 TO 3995/MUM/2009 4 NON COMPLIANCES BEFORE THE AO. THE CIT(A) ALSO SOUG HT ANALYSIS OF MERITS IN THE REMAND PROCEEDINGS. 12. THE AO, SENT THE REMAND REPORT, GIVING DETAILS OF FACTS INVOLVED IN THE YEARS, WHICH ARE IMPUGNED BEFORE US AS WELL AS ON LEGALITY FOR REOPENING IN ASSESSMENT YEAR 1994-9 5. 13. THE PRIMARY AND SOLITARY ISSUE AS RAISED BEFORE US IS WHETHER THE ASSESSEE IS ELIGIBLE FOR THE CLAIM OF D EPRECIATION IN CASE OF ASSETS PUT ON LEASE, AND, HAVE ENTERED SALE AND LEASE BACK AGREEMENT WITH ITS CLIENTS. 14. THE MAIN ARGUMENT OF THE REVENUE AUTHORITIES IN BOTH TYPES OF AGREEMENTS HAD BEEN THAT THE ASSESSEE HAD MERELY FINANCED ITS CLIENTS, AND GAVE IT A COLOUR OF LEASE . THE ASSESSEE DID NOT HAVE ANY LEGAL OR BENEFICIAL RIGHT OVER THO SE ASSETS. 15. SINCE THE ISSUE COULD NOT BE EXAMINED AT THE AO STAGE, BECAUSE OF NON ATTENDANCE OF THE ASSESSEES REPRESE NTATION, THE CIT(A) CALLED FOR THE REMAND REPORT FROM THE AO, WH ICH WAS SUBMITTED BEFORE THE CIT(A) ON 27.04.2007. 16. ON RECEIPT OF THE REMAND REPORT, THE CIT(A) CON SIDERED THE SAME IN THE LIGHT OF MUMBAI SPECIAL BENCH DECISIONS RENDERED IN THE CASE OF ICICI LTD, ITA NO. 3300/MUM/1997, REPOR TED IN 271 ITR 1987 AT 87 AND MID EAST PORTFOLIO MANAGEMENT LT D VS DCIT, ITA NO. 5616/MUM/1999, HAVING COMMON ISSUE AN D THE ITAT DECIDED THE ISSUE, KEEPING THE FOLLOWING IN PE RSPECTIVE, (A) WAS THERE AN INTENTION TO PASS THE PROPERTY IN THE EQUIPMENT TO THE ASSESSEE ? (B) WAS THE EQUIPMENT IDENTIFIED/ASCERTAINED WITH R EASONABLE CLARITY ? (C) WAS THE EQUI9PMENT VALUED, AND IF SO, WHETHER I T WAS A BONA FIDE VALUATION ? WAS THE VALUE INFLATED ? HOW CREDI BLE IS THE REPORT OF THE VALUER, IF THERE IS ON ? HYBRID FINANCIAL CO LTD (ERSTWHILE MAFATLAL FINANCE CO LTD) ITAS 3991 TO 3995/MUM/2009 5 (D) WHAT ARE THE TE3RMS OF THE LEASE ? IS THE DOCUM ENT MORE OF AN ARRANGEMENT FOR SECURITY FOR ONE LOAN AND LESS O F A LEASE ? (E) IS THERE ANY PARALLEL OR COLLATERAL DOCUMENTATI ON OR CORRESPONDENCE OR AN UNDERSTANDING BETWEEN THE PART IES WHICH THROWS DOUBT ON THEIR INTENTION PROFESSED BY THE PR INCIPAL DOCUMENTATION ? (F) WHAT IS THE CONDUCT OF THE PARTIES ? HOW TRANSP ARENT HAS IT BEEN ? (G) IF THE LESSEE IS A PUBLIC UTILITY UNDERTAKING, WOULD THE SALE OF THE EQUIPMENT BE IN CONFORMITY WITH THE RATIONALE F OR ITS EXISTENCE AND WOULD IF HAVE AN ADVERSE IMPACT ON IT S WORKING ? THESE ARE ONLY SOME OF THE FACTORS THAT ONE IS EXPE CTED TO KEEP IN VIEW IN DEALING WITH SUCH CASES. THEY ARE BY NO MEANS EXHAUSTIVE. ULTIMATELY, IT IS THE INFERENCE TO BE D RAWN ON A CUMULATIVE CONSIDERATION OF ALL THE FACTS AND CIRCU MSTANCES OF THE CASE WHICH IS MATERIAL. 17. THE CIT(A) NOTED THAT THE ASSESSEE ENTERED INTO TWO KINDS OF TRANSACTIONS. IN THE FIRST KIND, THE ASSESSEE AC QUIRED THE ASSET FROM MANUFACTURER AND SUPPLIER ON BEHALF OF THE ASS ESSEE, AND LEASED THE SAME TO THE ASSESSEE, AND IN THE SECOND KIND THE ASSET IS ACQUIRED BY THE CLIENT ITSELF, WHICH ARE T AKEN BY THE ASSESSEE AND LEASED BACK TO THE CLIENT. IN BOTH THE CATEGORIES, THE ASSESSEE WAS NEVER IN THE ACTUAL POSSESSION OF THE ASSET. ON THIS BASIC FACT, THE REVENUE AUTHORITIES DISALLOWED THE CLAIM OF DEPRECIATION BY THE ASSESSEE. 18. IN THE PROCEEDINGS BEFORE THE ITAT, BEFORE US, THE AR SUBMITTED THAT THE BASIC FACT ITSELF IS INFIRM AND INCOMPLETE. THE AR SUBMITTED THAT IN THE REMAND REPORT, THE AO MENT IONED THAT CONFIRMATIONS HAD BEEN RECEIVED BY THE DEPARTMENT F ROM THE LESSEES THAT THEY HAVE NOT CLAIMED DEPRECIATION AND ALSO IN SOME CASES, ASSETS HAD BEEN REPOSSESSED AND SOLD THE SAM E TO THIRD PARTIES IN THE CASES OF LEASE. 19. THE AR SUBMITTED THAT IF THESE FACTS ARE TAKEN INTO CONSIDERATION, ALONG WITH THE FACTUM OF ISSUE OF CL AIM OF DEPRECIATION, WOULD NOT HAVE ANY HINDRANCE. HYBRID FINANCIAL CO LTD (ERSTWHILE MAFATLAL FINANCE CO LTD) ITAS 3991 TO 3995/MUM/2009 6 20. THE AR ON THE ISSUE OF SALE OF LEASE BACK TRANS ACTIONS HAS RELIED ON THE DECISION OF CIT VS COSMOS FILMS LTD., REPORTED IN 338 ITR 266, MUMBAI ITAT ORDERS IN THE CASE OF DCB VS DCIT, IN ITA NO. 3000/MUM/2001, SICOM IN ITA NO. 7901/MUM/2003, L&T IN ITA NO. 2200/MUM/2001 AND BY THE HONBLE SUPREME COURT IN THE CASE ICDS LTD. VS CIT, CA NO. 3282 OF 2008, WHEREIN IT HAS BEEN OBSERVED AT PAGE 16 PARA 19, 19. WE MAY NOW ADVERT TO THE FIRST REQUIREMENT I.E . THE ISSUE OF OWNERSHIP. NO DEPRECIATION ALLOWANCE IS GRANTED IN RESPECT OF ANY CAPITAL EXPENDITURE WHICH THE ASSESSEE MAY BE O BLIGED TO INCUR ON THE PROPERTY OF OTHERS. THEREFORE, THE ENT IRE CASE HINGES ON THE QUESTION OF OWNERSHIP; IF THE ASSESSEE IS TH E OWNER OF THE VEHICLES, THEN HE WILL BE ENTITLED TO THE CLAIM ON DEPRECIATION, OTHERWISE, NOT. AND AT PAGE 21 PARA 23, IT HAS BEEN HELD, 23. THE REVENUES OBJECTION TO THE CLAIM OF THE AS SESSEE IS FOUNDED ON THE LEASE AGREEMENT. IT ARGUED THAT AT T HE END OF THE LEASE PERIOD, THE OWNERSHIP OF THE VEHICLE IS TRANS FERRED TO THE LESSEE AT A NOMINAL VALUE NOT EXCEEDING 1% OF THE O RIGINAL COST OF THE VEHICLE, MAKING THE ASSESSEE IN EFFECT A FIN ANCER. HOWEVER WE ARE NOT PERSUADED TO AGREE WITH THE REVENUE. AS L ONG AS THE ASSESSEE HAS A RIGHT TO RETAIN THE LEGAL TITLE OF T HE VEHICLE AGAINST THE REST OF THE WORLD, IT WOULD BE THE OWNE R OF THE VEHICLE IN THE EYES OF LAW. A SCRUTINY OF THE SALE A GREEMENT CANNOT BE THE BASIS OF RAISING QUESTION AGAINST THE OWNERSHIP OF THE VEHICLE. THE CLUES QUA OWNERSHIP LIE IN THE LEA SE AGREEMENT ITSELF, WHICH CLEARLY POINT IN FAVOUR OF THE ASSESS EE. AND IN PARAS 27 TO 29, FINALLY, LEARNED SENIOR COUNSEL APPEARING ON BEHAL F OF THE ASSESSEE ALSO POINTED OUT A LARGE NUMBER OF CASES, ACCEPTED AND UNCHALLENGED BY THE REVENUE, WHEREIN THE LESSOR HAS BEEN HELD AS THE OWNER OF AN ASSET IN A LEASE AGREEMENT [COMMISSIONER OF INCOME-TAX VS. BANSAL CREDITS LTD. , COMMISSIONER OF INCOME-TAX VS M.G.F.(INDIA) LTD., COMMISSIONER OF INCOME-TAX VS. ANNAMALAI FINANCE LTD .]. IN EACH OF THESE CASES, THE LEASING COMPANY WAS HELD T O BE THE OWNER OF THE ASSET, AND ACCORDINGLY HELD ENTITLED T O CLAIM DEPRECIATION AND ALSO AT THE HIGHER RATE APPLICABLE ON THE ASSET HIRED OUT. WE ARE IN COMPLETE AGREEMENT WITH THESE DECISIONS ON THE SAID POINT. 28. THERE WAS SOME CONTROVERSY REGARDING THE INVOIC ES ISSUED BY THE MANUFACTURER WHETHER THEY WERE ISSUED IN T HE NAME OF THE LESSEE OR THE LESSOR. FOR THE VIEW WE HAVE TAKE N ABOVE, WE HYBRID FINANCIAL CO LTD (ERSTWHILE MAFATLAL FINANCE CO LTD) ITAS 3991 TO 3995/MUM/2009 7 DEEM IT UNNECESSARY TO GO INTO THE SAID QUESTION AS IT IS OF NO CONSEQUENCE TO OUR FINAL OPINION ON THE MAIN ISSUE. FROM A PERUSAL OF THE LEASE AGREEMENT AND OTHER RELATED FA CTORS, AS DISCUSSED ABOVE, WE ARE SATISFIED OF THE ASSESSEES OWNERSHIP OF THE TRUCKS IN QUESTION. 29. THEREFORE, IN THE FACTS OF THE PRESENT CASE, WE HOLD THAT THE LESSOR I.E. THE ASSESSEE IS THE OWNER OF THE VEHICL ES. AS THE OWNER, IT USED THE ASSETS IN THE COURSE OF ITS BUSI NESS, SATISFYING BOTH REQUIREMENTS OF SECTION 32 OF THE A CT AND HENCE, IS ENTITLED TO CLAIM DEPRECIATION IN RESPECT OF ADD ITIONS MADE TO THE TRUCKS, WHICH WERE LEASED OUT. 21. IN THE LIGHT OF THE ABOVE CITED CASE LAWS, THE AR SUBMITTED THAT THE ISSUE IS FULLY COVERED AND THEREFORE THE A PPEAL MUST BE ALLOWED. 22. THE DR RELIED ON THE ORDERS OF THE REVENUE AUTH ORITIES. 23. WE HAVE HEARD THE ARGUMENTS AT LENGTH AND HAVE ALSO CONSIDERED THE CASE LAWS CITED BEFORE US. THE FACTU M OF REPOSSESSION OF EQUIPMENT HAS NOT BEEN DISPUTED BY THE REVENUE AUTHORITIES. THIS CLEARLY MEANS THAT LESSEE IS NOT THE OWNER AND THAT THE LESSEE HAS NOT CLAIMED DEPRECIATION. THIS CLEARLY SHOWS THAT LESSOR IS THE OWNER AND IT IS HE WHO CAN MAKE THE LEGAL CLAIM FOR OWNERSHIP AND DEPRECIATION. 24. WE, THEREFORE ARE OF THE CONSIDERED VIEW THAT D ESPITE THE FACT THAT THE COMPLETE FACTS WERE BEFORE THE CIT(A) , THE CIT(A) EITHER DID NOT CONSIDER THEM OR THAT HE DID NOT GO INTO THE FACTS, WHICH WERE BROUGHT OUT BY THE AO IN THE REMAND REPO RT. WE FURTHER HOLD THAT THERE WAS NO QUESTION OF SHAM TRA NSACTION, BECAUSE, THE ASSESSEE WAS DEALING WITH CORPORATES A S WELL AS STATE GOVERNMENT AGENCIES. IN THESE CIRCUMSTANCES, THE CLAIM OF THE ASSESSEE CANNOT BE HELD TO BE SHAM AND HAVE TO BE TAKEN TO BE GENUINE, AND THEREFORE ALLOWABLE. HYBRID FINANCIAL CO LTD (ERSTWHILE MAFATLAL FINANCE CO LTD) ITAS 3991 TO 3995/MUM/2009 8 25. SINCE ALL THE GROUNDS OF APPEAL ARE CONNECTED T O THESE TWO ISSUES, WE ALLOW ALL THE GROUNDS. 26. IN THE RESULT, ALL THE FIVE APPEALS OF THE ASSE SSEE ARE ALLOWED ON MERITS. 27. IN THE IMPUGNED ASSESSMENT YEAR, THE CASE HAD B EEN REOPENED UNDER SECTION 148. 28. THE BASIC ISSUE WAS THAT DEPRECIATION WAS CLAIM ED ON THE EQUIPMENT GIVEN ON FINANCE LEASE TO M/S KEDIA DISTI LLERIES LTD. THIS DEPRECIATION SUBSEQUENT TO THE FRAMING OF ASSE SSMENT U/S 143(3) WAS WITHDRAWN BY FILING OF AN APPLICATION U/ S 154, DATED 20.12.1996. 29. THE ISSUE IS WHETHER THE AO COULD REOPEN THE PR OCEEDING U/S 148 WITHOUT DISPOSING OFF THE APPLICATION U/S 1 54, DATED 20.12.1996. 30. THIS APPLICATION REMAINED UNDISPOSED OFF, BUT O N 09.10.1997, THE AO INITIATED REASSESSMENT PROCEEDIN GS U/S 148 WITHOUT DISPOSING OFF THE APPLICATION U/S 154. FOR THIS PROPOSITION, THE AR CITED THE CASE OF HINDUSTAN UNI LEVER LTD. VS DCIT, REPORTED IN 325 ITR 102 WHEREIN THE HONBLE B OMBAY HIGH COURT HELD, (II) THAT THE REVENUE HAD AN EFFICACIOUS REMEDY OPE N TO IT IN THE FORM OF A RECTIFICATION UNDER SECTION 154 FOR CORRE CTING THE COMPUTATIONAL ERROR AND CONSEQUENTLY RECOURSE TO TH E PROVISIONS OF SECTION 147 WAS NOT WARRANTED. THE AR ALSO REFERRED TO CERTAIN OTHER DECISIONS, WH ICH WE HAVE TAKEN INTO CONSIDERATION. 31. ONCE THE RECTIFICATION APPLICATION HAS BEEN FIL ED, THE AO/REVENUE AUTHORITIES ARE DUTY BOUND TO DISPOSE OF F THE HYBRID FINANCIAL CO LTD (ERSTWHILE MAFATLAL FINANCE CO LTD) ITAS 3991 TO 3995/MUM/2009 9 RECTIFICATION. AS HELD BY THE HONBLE BOMBAY HIGH C OURT IN HINDUSTAN UNILEVER LTD. (SUPRA), WHEN AN EFFICACIOUS REMEDY IS THERE TO RECTIFY A POINT ON ISSUE, THERE IS NO NEED TO REOPEN THE ENTIRE ASSESSMENT ORDER. 32. RESPECTFULLY FOLLOWING THE DECISION OF THE HON BLE BOMBAY HIGH COURT IN HINDUSTAN UNILEVER LTD., WE HOLD THAT THE REASSESSMENT PROCEEDINGS, INITIATED BY THE AO IN AS SESSMENT YEAR 1994-95 WAS BAD IN LAW. WE THEREFORE, HOLD THE REASSESSMENT PROCEEDING TO BE ILLEGAL AND THEREFORE , ALL THE SUBSEQUENT PROCEEDINGS CONSEQUENT TO 148 ARE ANNULL ED. 33. AS A RESULT, THE APPEAL AS FILED BY THE ASSESSE E IS ALLOWED. 34. NOW, WE SHALL DEAL WITH REMAINING FOUR APPEALS, IN ASSESSEES OWN CASE, WHICH ARE SQUARELY COVERED BY OUR OWN ORDER DECIDED HEREINABOVE AS A LEAD APPEAL IN ITA N O. 3991/MUM/2009 FOR AY 1994-95 ON MERITS. ITA NO. 3992/MUM/2009 : ASSESSMENT YEAR : 1995-96 : ASSESSEES APPEAL : ITA NO. 3993/MUM/2009 : ASSESSMENT YEAR : 1996-97 : ASSESSEES APPEAL : ITA NO. 3994/MUM/2009 : ASSESSMENT YEAR : 1997-98 : ASSESSEES APPEAL : ITA NO. 3995/MUM/2009 : ASSESSMENT YEAR : 1998-99 : ASSESSEES APPEAL : 35. IN THE APPEALS PERTAINING TO ASSESSMENT YEARS 1 995-96 TO 1998-98, ON MERITS, THE ISSUE IS IDENTICAL TO THE I SSUES IN ASSESSMENT YEAR 1994-95, WHEREIN WE HAVE ALLOWED TH E CLAIM OF DEPRECATION BY THE ASSESSEE, WITHOUT PREJUDICE TO O UR DECISION ON LEGAL GROUND ON REOPENING OF ASSESSMENT U/S 148. HYBRID FINANCIAL CO LTD (ERSTWHILE MAFATLAL FINANCE CO LTD) ITAS 3991 TO 3995/MUM/2009 10 36. THEREFORE, ON MERITS, ASSESSMENT YEARS 1995-96, 1996-97, 1997-98 & 1998-99, THE APPEALS STAND ALLOWED. TO SUM UP: ASSESSEES APPEAL ITA 3991/M/09 FOR AY 94-95 STANDS ALLOWED ASSESSEES APPEAL ITA 3992/M/09 FOR AY 95-96 STANDS ALLOWED ASSESSEES APPEAL ITA 3993/M/09 FOR AY 96-97 STANDS ALLOWED ASSESSEES APPEAL ITA 3994/M/09 FOR AY 97-98 STANDS ALLOWED ASSESSEES APPEAL ITA 3992/M/09 FOR AY 98-99 STANDS ALLOWED ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST NOVEMBER, 2014. SD/- SD/- (B R BASKARAN) (VIVEK VARMA) ACCOUNTANT MEMBER JUD ICIAL MEMBER MUMBAI, DATE: 21 ST NOVEMBER, 2014 !/ COPY TO:- 1) / THE APPLICANT. 2) / THE RESPONDENT. 3) THE CIT (A)-X, MUMBAI. 4) '' # M.C. X - , MUMBAI / THE CIT-MC-X - , MUMBAI. 5) $%&!!'( D ''( , ) * THE D.R. D BENCH, MUMBAI. 6) &+,- COPY TO GUARD FILE. './ / BY ORDER / / TRUE COPY / / [ 0/1 2 ''( , ) * DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI ` *561 .!. * CHAVAN, SR. PS