OXFORD MOULDINGS P.LTD ( NOW MERGED WITH TIME TECHNOPLAST LTD), MUMBAI V. DCIT RG 8(2), MUMBAI

ITA 4122/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8722 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 10-10-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 19-05-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Depreciation; Unabsorbed depreciation; Reassessment proceedings
• Section: 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C, MUMBAI BEFORE SHRI D. K. AGARWAL, JUDICIAL MEMBER AND SHRI D. KARUNAKARA RAO, ACCOUNTAT MEMBER I.T.A. NO.4122/M/2011 ASSESSMENT YEAR:2005-2006 M/S. OXFORD MOULDINGS PVT. LTD., (NOW MERGED WITH TIME TECHNOPLAST LTD), 102, TODI COMPLEX, 35, SAKI VIHAR ROAD, ANDHERI (EAST), MUMBAI 400 072. PAN: AAACT2783J VS. DY. COMMISSIONER OF INCOME TAX, RANGE-8(2), MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RAKESH JOSHI RESPONDENT BY : SHRI OM PRAKASH, DR DATE OF HEARING:10.10.2012 DATE OF ORD ER: 12.10.2012 O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 19.5.2011 IS D IRECTED AGAINST THE ORDER OF CIT (A)- 17, MUMBAI DATED 27.1.2011 IN RELATION TO ASSESSMEN T YEAR 2005-2006. 2. IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING GR OUNDS READ AS UNDER: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WE LL AS IN LAW, THE LD CIT (A) HAS ERRED IN ACCEPTING THE REOPENING OF THE ASSESSMENT U/S 147 OF THE INCOME TAX ACT, 1961 BY THE ASSESSING OFFICER. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AS WELL AS IN LAW, THE LD CIT (A) HAS ERRED IN RELYING UPON THE ASSESSING OFFICER S DECISION ON SET-OFF OF UNABSORBED DEPRECIATION OF RS 27,37,487/- WHILE COMPUTING DEDUCTION U/S 80 -IB. 3. BRIEFLY STATED THE RELEVANT FACTS OF THE CASE AR E THAT THE ASSESSEE IS ENGAGED IN THE MANUFACTURING AND TRADING AND FILED ITS RETURN DECLARING THE TOTAL INCOME OF RS. 21,14,734/-. THE SAME WAS SCRUTINIZED U/S 143(3) AN D THE TOTAL INCOME WAS DETERMINED AT RS 30,68,880/-. THE ASSESSMENT WAS REOPENED BY ISSUING A NOTICE U/S 148 OF THE ACT. IN VIEW OF THE HONBLE SUPREME COURT JUDGMENT IN THE CASE OF CIT VS. KOTAGIRI 2 M/S. OXFORD MOULDINGS PVT. LTD., INDUSTRIES CO. OF TEA FACTORY LTD., (324 ITR 60) WH ICH IS RELEVANT FOR THE PROPOSITION THAT THE DEDUCTION UNDER CHAPTER VIA IS TO BE ALLOW ED FROM THE GROSS TOTAL INCOME AFTER ALLOWING SET OFF OF UNABSORBED LOSSES / DEPRECIATION . IN THE REASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER EXCLUDED THE UNA BSORBED DEPRECIATION OF RS. 27,37,487/- CONSIDERING THE SAID SUPREME COURT JUDG MENT WHILE COMPUTING THE ALLOWABLE DEDUCTION. ASSESSEE RELIED ON THE JURISDI CTIONAL HIGH COURT JUDGMENT IN THE CASE OF CIT VS. SHIRKE CONSTRUCTION EQUIPMENT LTD (2 000) 246 ITR 421 (BOM) WHICH IS RELEVANT FOR THE PROPOSITION THAT UNABSORBED DEPREC IATION CANNOT BE REDUCED BEFORE THE ALLOWABLE DEDUCTION U/S 80-IB IS COMPUTED. AGGRIEV ED WITH THE SAME, ASSESSEE FILED AN APPEAL BEFORE THE CIT (A) AND RAISED THE LEGAL ISSU E OF VALIDITY OF NOTICE ISSUED U/S 148 AS WELL AS ON THE MERITS. CIT (A) DISMISSED THE LE GAL GROUND RELATING TO REOPENING AND CONFIRMED THE AOS VIEW WITH REGARD TO SET OFF OF U NABSORBED DEPRECIATION OF RS.27,37,487/-. CIT (A) HELD THAT THE JURISDICTIO NAL HIGH COURT JUDGMENT IN THE CASE OF SHRIKE CONSTRUCTION EQUIPMENT LTD (SUPRA) WAS SET AS IDE BY THE HONBLE SUPREME COURT VIDE 161 TAXMAN 212 IN VIEW OF THE DECISION IN THE CASE OF IPCA LABORATORY LTD VS. DCIT [135 TAXMAN 594] AND THEREFORE HE FOLLOWED THE HONBLE SUPREME COURT JUDGMENT IN THE CASE OF CIT VS. KOTAGIRI INDUSTRIES CO. OF TEA FACTORY LTD., (324 ITR 60). AGGRIEVED WITH THE ABOVE, ASSESSEE IS IN APPE AL BEFORE US. 4. BEFORE US, LD COUNSEL FOR THE ASSESSEE MENTIONED THAT THE ASSESSING OFFICER ISSUED NOTICE U/S 148 WITHOUT JURISDICTION AND WITH OUT PREJUDICE, LD COUNSEL DID NOT PRESS THIS GROUND. THEREFORE, WITHOUT GOING INTO T HE MERITS OF THE ARGUMENTS RAISED BY LD COUNSEL IN SUPPORT OF THE GROUND, GROUND NO.1 IS DISMISSED AS NOT PRESSED. 5. REGARDING GROUND NO.2 RELATING TO THE PROCEDURE OF COMPUTATION OF THE ALLOWABLE DEDUCTION U/S 80-IB OF THE ACT VIS A VIS THE UNABSORBED DEPRECIATION OF RS 27,37,487/-, LD COUNSEL FOR THE ASSESSEE BROUGHT OU R ATTENTION TO PROVISIONS OF SUB- SECTION 5 TO SECTION 80-IB OF THE ACT AND ARGUED TH AT THE PROFITS OF THE ELIGIBLE UNIT HAVE TO BE COMPUTED ON A STANDALONE BASIS AND IN THAT CA SE, THE UNABSORBED DEPRECIATION RS 3 M/S. OXFORD MOULDINGS PVT. LTD., 27,37,487/- OUGHT NOT BE REDUCED FROM THE PROFITS O F THE ELIGIBLE UNIT. IN THIS REGARD, LD COUNSEL FILED A COPY OF THE ORDER OF THIS TRIBUN AL IN THE CASE OF MEERA COTTON & SYNTHETIC MILLS (P) LTD. VS. CIT [2009] SOT 177 (MU M) FOR THE PROPOSITION THAT LOSSES IN OTHER UNITS OF THE COMPANY CANNOT BE SET OFF AGAINS T THE PROFITS OF ELIGIBLE UNIT IN QUESTION WHILE CALCULATION THE AMOUNT OF DEDUCTION TO BE ALLOWED U/S 80-IB OF THE ACT IN VIEW OF THE PROVISIONS OF SUB-SECTION 5 TO SECTION 80-IB. FURTHER, LD COUNSEL RELIED ON THE JURISDICTIONAL HIGH COURT JUDGMENT IN THE CASE OF SYNCO INDUSTRIES LTD. VS. AO AND ORS. (254 ITR 608) WHICH ELABORATED THE DIFFERENCE OF GROSS TOTAL INCOME V/S ALLOWABILITY OF DEDUCTION UNDER CHAPTER VI-A OF THE ACT. FURTHER, LD COUNSEL MENTIONED THAT THE DECISIONS CITED BY THE CIT (A) WERE NOT RE LEVANT TO THE PROVISIONS OF SECTION 80- IB OF THE ACT. 6. ON THE OTHER HAND, LD DR RELIED ON THE ORDER OF THE REVENUE AUTHORITIES. 7. WE HAVE HEARD BOTH THE PARTIES ON THIS ISSUE OF INTERPRETING THE SECTION 80-IB OF THE ACT AND FIND THAT THE HELD PORTION IN THE CASE OF MEERA COTTON & SYNTHETIC MILLS (P) LTD. (SUPRA) WHICH IS RELEVANT FOR THE PROPOSITION THAT LOSS SUFFERED BY THE OTHER ELIGIBLE UNITS OF THE ASSESSEE CANNOT BE SET OFF AGAINST THE PROFITS OF ELIGIBLE UNIT WHILE CALCULATING AMOUNT OF DEDUCTION TO BE ALLOWED UNDER SECTION 80-IB OF THE ACT. 8. THUS, THE PROVISIONS OF SECTION 80-IB(5) MANDATE S THAT THE PROFITS AND GAINS OF THE ELIGIBLE BUSINESS SHOULD BE COMPUTED AS IF SUCH ELIGIBLE BUSINESS WERE THE ONLY SOURCE OF INCOME OF THE ASSESSEE DURING THE PREVIOU S YEAR. THEREFORE, THE CIT (A) ERRED IN IGNORING THE UNDERLYING PRINCIPLE THAT THE ELIGIBLE BUSINESS/UNIT OF THE ASSESSEE SHOULD NOT BE DENIED OF RIGHTFUL CLAIM OF DEDUCTION BY REDUCING THE SAID PROFITS BY UNDULY SETTING OFF EITHER AGAINST THE LOSSES OF THE OTHER UNITS OF THE ASSESSEE OR AGAINST THE UNABSORBED DEPRECIATION AS IN THE INSTANT CASE . IN FACT, THE SAID DECISION OF THE TRIBUNAL WAS AVAILABLE AT THE RELEVANT POINT OF TIM E IE ON 27 TH JAN 2011 THE DATE OF THE ORDER OF THE CIT(A) AND HOWEVER, THE ASSESSEE DID N OT CITE THE SAME. THEREFORE, IN OUR 4 M/S. OXFORD MOULDINGS PVT. LTD., OPINION, THE ISSUE RAISED BEFORE US IS REQUIRED TO BE ADJUDICATED BY THE CIT (A) CONSIDERING THE ABOVE DECISION IN THE CASE OF MEERA COTTON & SYNTHETIC MILLS (P) LTD. VS. ACIT. GROUND NO.2 IS DECIDED ACCORDINGLY. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 12 TH DAY OF OCTOBER, 2012. SD/- SD/- (D.K. AGARWAL) (D. KARUN AKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE : 12.10.2012 AT :MUMBAI OKK COPY TO : 1. M/S. OXFORD MOULDINGS P. LTD., MUMBAI. (NOW MERGED WITH TIME TECHNOPLAST LTD.) 2. DCIT, RANGE 8(2), MUMBAI. 3. THE CIT (A), CONCERNED. 4. THE CIT CONCERNED. 5. THE DR C, BENCH, ITAT, MUMBAI. 6. GUARD FILE. // TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI