DCIT CIR 3(1), MUMBAI V. APPLICOMP (I) LTD, MUMBAI

ITA 4131/MUM/2014

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 4757 (ITAT-MUMBAI)
• Duration Of Justice: 7 year(s) 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-04-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 04-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Earning of tax free income; Question of law; Rule 8D; Set aside
• Section: 15; 143(3); 14A; 115JB; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH “A”, MUMBAI BEFORE SHRI KULDIP SINGH, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA No.4131/M/2014 Assessment Year: 2010-11 DCIT, Circle 3(1), Room No.607, 6 th Floor, Aayakar Bhavan, Mumbai - 400020 Vs. M/s. Applicomp (India) Ltd., 171 ‘C’ Wing, Mittal Court, Nariman Point, Mumbai – 400 021 PAN: AACCA9547R (Appellant) (Respondent) CO No.09/M/2016 (Arising out of ITA No.4131/M/2014) Assessment Year: 2010-11 M/s. Applicomp I(India) Ltd., 171 ‘C’ Wing, Mittal Court, Nariman Point, Mumbai – 400 021 PAN: AACCA9547R Vs. DCIT, Circle 3(1), Room No.607, 6 th Floor, Aayakar Bhavan, Mumbai - 400020 (Appellant) (Respondent) Present for: Assessee by : None Revenue by : Shri Mehul Jain, D.R. Date of Hearing : 11 . 04 . 2022 Date of Pronouncement : 11 . 04 . 2022 ITA No.4131/M/2014 & CO No.09/M/2016 M/s. Applicomp (India) Ltd. 2 O R D E R Per : Kuldip Singh, Judicial Member: For the sake of brevity aforesaid appeal and cross objections bearing common question of law and facts are being disposed of by way of composite order. 2. Appellant DCIT, Circle 3(1), Mumbai (hereinafter referred to as the Revenue) and the cross objector M/s. Applicomp (India) Ltd. (hereinafter referred to as the assessee) by filing the present appeal and cross objections respectively sought to set aside the impugned order dated 20.03.2014 passed by the Ld. Commissioner of Income Tax (Appeals) [hereinafter referred to as the Ld. CIT(A)] on the grounds inter alia that: ITA No.4131/M/2014 "1. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the additions of Rs.12,79,969/- made by the AO on account of "provision for warranty" for the purpose of calculating book profit u/s.ll5JB, without appreciating the fact that the provisions of the clause (c) of the Explanation 1 to the section 115JB(2) of the I.T. Act are applicable to the assessee’s case. 2. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in directing AO to exclude from the total income of the assessee an amount of Rs.25,69,91,736/- credited to P&L A/c being gain from Exchange Rate Fluctuation pertaining to foreign loan taken for fixed assets without appreciating the fact that the assessee had made no such claim in its original return of income. 3. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in directing AO to exclude from the total income of the assessee an amount of Rs.25,69,91,736/- credited to P&L A/c being gain from Exchange Rate Fluctuation pertaining to foreign loan taken for fixed assets without appreciating the fact that the claim of the assessee is not allowable in view of Hon'ble Supreme Court's decision in the case of Goetze (India) Ltd. as the assessee had not filed any revised return for A.Y.2010-11 within the prescribed time limit for such claim. ITA No.4131/M/2014 & CO No.09/M/2016 M/s. Applicomp (India) Ltd. 3 4. The appellant prays that the order of CIT (A) on the above ground be set aside and that of Assessing Officer be restored. 5. The appellant craves leave to amend or alter any ground or add a new ground which may necessary" CO No.09/M/2016 “1. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income-Tax (Appeals) erred in confirming the disallowance of Rs.38,45,869/- u/s 14A of the Income Tax Act, 1961 read with Rule 8D of the Income Tax Rules, 1962 and treating the same as expenses incurred for earning exempt income by rejecting the explanation given by the appellant, which is wrong and contrary to the provisions of Income Tax Act, 1961, and the Rules made thereunder. 2.(a) On the facts and in the circumstances of the case and in law, the learned Commissioner of Income-Tax (Appeals) erred in adding the sum of Rs.38,45,8697- being the amount disallowed by him by invoking the provisions of Section 14A read with rule 8D, to the book profit for the purpose of Section 115JB of the Income Tax Act, 1961 which is wrong and contrary to the provisions of the Income Tax Act, 1961, and the Rules made thereunder. (b) On the facts and in the circumstances of the case and in law the learned Commissioner of Income-Tax (Appeals) failed to appreciate that the provisions of section 14A(2), 14(A)(3) and Rule 8D are deeming provisions and the same cannot be extended to provisions of section 115JB of the Act. The respondent craves leave to add, alter, amend and/or modify the above grounds of cross objection on or before the date of hearing.” 3. Briefly stated facts necessary for adjudication of the controversy at hand are : the assessee is into the business of manufacturing and trading of consumer electronics and home appliances. During the scrutiny proceedings Assessing Officer (AO) made addition of Rs.12,79,969/- under section 115JB of the Income Tax Act, 1961 (for short ‘the Act’). The AO also made addition of Rs.25,69,61,736/- credit to the P&L account being gain from exchange rate fluctuation pertaining to the foreign loan taken for fixed assets by declining the contentions raised by the assessee ITA No.4131/M/2014 & CO No.09/M/2016 M/s. Applicomp (India) Ltd. 4 that amount of exchange rate fluctuation was inadvertently credited as other income and sought to exclude the same from total returned income. The AO accordingly framed the assessment at Nil under section 143(3) of the Act under normal provisions and at Rs.34,64,270/- on the book profit computed under section 115JB of the Act. 4. Assessee carried the matter before the Ld. CIT(A) by way of filing the appeal who has partly allowed the same. Feeling aggrieved both the Revenue as well as assessee have come up before the Tribunal by filing the appeal and cross objections. 5. Despite issuance of the notice to the assessee company none appeared on behalf of it, so the Bench decided to decide the appeal and the cross objections on the basis of material available on record with the assistance of the Ld. D.R. for the Revenue. 6. We have heard the Ld. Departmental Representative for the Revenue, perused the orders passed by the Ld. Lower Revenue Authorities and documents available on record in the light of the facts and circumstances of the case and case law relied upon. 7. At the very outset it is brought to the notice of the Bench that National Company Law Tribunal (NCLT), Mumbai Bench in CP(IB) 507/MB/2018 in the matter of State Bank of India vs. M/s. Applicomp (India) Limited, Corporate Debtor/Co-obligator entertained and decided the petition against the assessee of corporate debtor vide order dated 25.09.2018 by returning the following findings: “7.14 In light of above discussion and also respectfully following the above-cited decision of the NCLAT the answer of the above framed ITA No.4131/M/2014 & CO No.09/M/2016 M/s. Applicomp (India) Ltd. 5 Legal question is in Affirmative and therefore it is my conscientious view that this Petition / Application deserves Admission. 7.15. The Financial Creditor has proposed the name of Insolvency Professional. Consequently, as there is no disciplinary proceeding pending against the proposed IP, the Insolvency Professional proposed by the Financial Creditor; Mr. Avil Menezes, O/at. 403, Crescent Business Park. SakinaKa. Andheri (E), Mumbai, Maharashtra – 400072, having registration No.IBBI/IPA-001/IP- P00017/2016-17/10041, having E-mail address as, [e-mail] is appointed as Interim Resolution Professional to conduct the Insolvency Resolution Process. 7.16. Having admitted the Application, the provisions of Moratorium as prescribed under Section 14 of the Code shall be operative henceforth with effect from the date of order shall be applicable by prohibiting institution of any Suit before a Court of Law, transferring/'encumbering any of the assets of the Debtor Co-obligor etc, However, the supply of essential goods or services to the "Corporate Debtor / Co-obligor" shall not be terminated during Moratorium period. It shall he effective till completion of the Insolvency Resolution Process or until the approval of the Resolution Plan prescribed under Section 31 of the Code. 7.17. That as prescribed under Section 13 of the Code on declaration of Moratorium the next step of Public Announcement of the Initiation of Corporate Insolvency Resolution Process shall be carried out by the IRP immediately on appointment, as per the provisions of the Code.? 18. That the Interim Resolution Professional shall perform the duties as assigned under Section 15 and Section 18 of the Code and inform the progress of the Resolution Plan and the compliance of the directions of this Order within 30 days to this Bench. A liberty is granted to intimate even at an early date, if need be. 8. The Petition/Application, is hereby "Admitted". The commencement of the Corporate Insolvency Resolution Process shall be effective from the date of receipt of the certified copy of this Order.” 8. In view of the order passed by the NCLT, we are of the considered view that since proceedings under Insolvency & Bankruptcy Code (IBC) have already been initiated and moratorium has been declared for prohibiting all the proceedings against the corporate debtor including execution of judgment decree or order in any court of law, Tribunal, arbitration panel or ITA No.4131/M/2014 & CO No.09/M/2016 M/s. Applicomp (India) Ltd. 6 other authority, present appeals in the present format are not maintainable, being not filed by Mr. Avil Menezes, Interim Resolution Professional (IRP), who is empowered to file appeal only on approval of the committee of creditors. Hence the present appeal as well as cross objection are liable to be dismissed being not maintainable at this stage. 9. Resultantly, the aforesaid appeal filed by the Revenue and the cross objection filed by the assessee/respondent are dismissed with liberty to file fresh one in proper format duly verified by persons authorized to file the return of income or IRP may get the present appeals/cross objections restored by moving an application. Order pronounced in the open court on 11.04.2022. Sd/- Sd/- (S. RIFAUR RAHMAN) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Dated: 11.04.2022. * Kishore, Sr. P.S. Copy to: The Appellant The Respondent The CIT, Concerned, Mumbai The CIT (A) Concerned, Mumbai The DR Concerned Bench //True Copy// By Order Dy/Asstt. Registrar, ITAT, Mumbai.