DCIT RG 10(1), MUMBAI V. INDIAN OIL CORPORATION LTD, MUMBAI

ITA 417/MUM/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8679 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Next Hearing Date: 08-10-2012
• Assessment Year: misc
• Appeal Filed On: 18-01-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R MURLIDHAR
• Keywords: Depreciation; Revised return
• Section: 143(3)

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI . .. . . .. . , ,, , ! ! ! ! , ' ' ' ' # $% # $% # $% # $% , ,, , & ! & ! & ! & ! ' ' ' ' BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER . / ITA NO. 417/MUM./2010 ( &( ) '*) / ASSESSMENT YEAR : 198889 ) ASST. COMMISSIONER OF INCOME TAX RANGE10(1), AAYAKAR BHAVAN 101, M.K. ROAD, MUMBAI 400 020 .. +, / APPELLANT ( V/S INDIAN OIL CORPORATION LTD. INDIAN OIL BHAVAN G9, ALI YAVAR JUNG MARG BANDRA (E), MUMBAI 400 051 .... -.+, / RESPONDENT !+ . / PERMANENT ACCOUNT NUMBER AAACI1681G !' 0 1 / REVENUE BY : MR. P.K. SHUKLA &( )2 0 1 / ASSESSEE BY : MR. R. MURLIDHAR (' 0 / DATE OF HEARING 08.10.2012 $ 34* 0 / DATE OF ORDER 12.10.2012 $ $ $ $ / ORDER # $% # $% # $% # $% , ,, , & ! & ! & ! & ! 5 5 5 5 / PER AMIT SHUKLA, J.M. THE PRESENT APPEAL PREFERRED BY THE REVENUE, IS DIR ECTED AGAINST THE IMPUGNED ORDER DATED 5 TH NOVEMBER 2009, PASSED BY THE LEARNED COMMISSIONER (APPEALS)XXI, MUMBAI, FOR ASSESSMENT YEAR 198889, ON THE FOLLOWING GROUNDS: INDIAN OIL CORP. LTD. 2 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED CIT(A) ERRED IN DIRECTING TO ALLOW DEDUCTION UNDER SECTION 32AB IN EXCESS OF THE DEDUCTION CLAIM ED IN THE RETURN OF INCOME FILED WITHOUT APPRECIATING THAT NO REVISED RETURN WAS FILED BY THE ASSESSEE TO CLAIM HIGHER DE DUCTION AND HENCE, THE CLAIM WAS NOT ALLOWABLE IN VIEW OF THE A PEX COURT JUDGMENT IN THE CASE OF GOETZE INDIA LTD., 284 ITR 323. 2. THE APPELLANT PRAYS THAT THE ORDER OF LEARNED CI T(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT THE A.O. BE RESTORED. 2. THE FACTS RELEVANT FOR THE ADJUDICATION OF THE ISSU E INVOLVED, AS CULLED OUT FROM THE ORDER PASSED BY THE LEARNED COM MISSIONER (APPEALS), ARE THAT THE ASSESSEE, IN THE ORIGINAL RETURN OF IN COME, CLAIMED DEDUCTION OF ` 100,06,95,380, UNDER SECTION 32AB OF THE ACT. IN T HIS WORKING OF THE DEDUCTION, THE ASSESSEE DID NOT CONSIDER INTEREST O N TAX FREE BONDS OF ` 28,47,91,767, INTEREST ON PORTFOLIO MANAGEMENT INVE STMENT OF ` 60,68,95,489, INTEREST ON GOVT. SECURITIES OF ` 42,649 AND DIVIDEND INCOME OF ` 4,00,000, AS ELIGIBLE FOR DEDUCTION UNDER SECTION 32AB OF THE ACT. HOWEVER, DURING THE ASSESSMENT PROCEEDINGS, TH E REVISED STATEMENT WAS SUBMITTED SHOWING THE ADMISSIBLE DEDUCTION OF ` 106,33,37,685, IN WHICH THE ABOVE SAID AMOUNT WERE CONSIDERED BY ASSE SSEE AS ELIGIBLE FOR DEDUCTION UNDER SECTION 32AB. IN THE ASSESSMENT ORD ER PASSED UNDER SECTION 143(3) DATED 30 TH NOVEMBER 1998, THE ASSESSING OFFICER ALLOWED DEDUCTION UNDER SECTION 32AB OF ` 66,98,32,970. THE A.O. HELD THAT INTEREST ON TAX FREE BONDS OF ` 28,47,91,767, INTEREST ON PORTFOLIO MANAGEMENT INVESTMENTS ` 60,68,95,489, INTEREST ON GOVT. SECURITIES ` 42,649 AND DIVIDEND INCOME OF ` 4,00,000 TOTALING TO ` 89,21,29,905, WAS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 32AB. THE ASSESSING OFFICER FURTHER HELD THAT THE AMOUNT UTILISED FOR THE PURCHASE OF P LANT AND MACHINERY IN THE MARKETING DIVISION AT ` 37,44,03,566, ITEMS OF PLANT AND MACHINERY WHERE 100% DEPRECIATION WAS WRITTEN OFF AND / OR UT ILISED FOR REVENUE PURPOSES AT ` 7,44,25,885, AND OTHER THAN MARKETING DIVISION CON STRUCTION PERIOD EXPENSES AT ` 9,34,57,014, WERE NOT ELIGIBLE FOR THE PURPOSE OF DEDUCTION UNDER SECTION 32AB OF THE ACT. AS PER THE ASSESSING OFFICER, INDIAN OIL CORP. LTD. 3 20% OF THE BOOK PROFIT WAS AT ` 87,89,27,753, WHEREAS UTILISED AMOUNT WAS AT ` 66,98,32,970. THEREFORE, THE ASSESSING OFFICER ALL OWED DEDUCTION OF ` 66,98,32,970 BEING THE LOWER OF THE TWO AMOUNTS. 3. IN FIRST APPEAL, THE LEARNED COMMISSIONER (APPEALS) , VIDE ORDER DATED 14 TH NOVEMBER 1991, HELD THAT THE AMOUNT OF ` 37,44,03,566, WAS ELIGIBLE FOR DEDUCTION UNDER SECTION 32AB OF THE AC T. THE AMOUNT OF ` 7,44,25,885 AND ` 9,34,57,014, WERE HELD TO BE NOT ELIGIBLE FOR SUCH DEDUCTION. THE LEARNED COMMISSIONER (APPEALS) ALSO HELD THAT THE SUM OF ` 89,21,905, WAS NOT ELIGIBLE FOR INCLUSION IN BOOK PROFIT FOR DEDUCTION UNDER SECTION 32AB OF THE ACT. 4. AGGRIEVED, THE ASSESSEE PREFERRED SECOND APPEAL, WH EREIN THE TRIBUNAL, VIDE ORDER DATED 27 TH APRIL 2006, HELD THAT THE SUM OF ` 89,21,29,905, WAS ELIGIBLE FOR INCLUSION IN BOOK PR OFIT FOR THE PURPOSE OF DEDUCTION UNDER SECTION 32AB OF THE ACT. THE TRIBUN AL REVERSED THE DECISION OF THE LEARNED COMMISSIONER (APPEALS) ON T HIS ISSUE AND ALLOWED RELIEF TO THE ASSESSEE. HOWEVER, IN RESPECT OF THE SUM OF ` 9,34,57,014, THE TRIBUNAL DID NOT ALLOW RELIEF TO THE ASSESSEE. HOWEVER, WHILE GIVING EFFECT TO THE ORDER PASSED BY THE TRIBUNAL, THE ASS ESSING OFFICER ALLOWED DEDUCTION UNDER SECTION 32AB AT ` 100.03, CRORES BEING 20% OF TOTAL BOOK PROFIT AT ` 500.15 CRORES. 5. BEFORE THE LEARNED COMMISSIONER (APPEALS), THE ASSE SSEE SUBMITTED THAT ITS BOOK PROFIT AS PER REPORT WAS ` 528.67 CRORES WHICH INCLUDED AMOUNT OF ` 89,21,29,905, REPRESENTING INTEREST ON TAX FREE BO NDS AND INCOME FROM OTHER SOURCES. SINCE THE TRIBUNAL HAS A LLOWED RELIEF ON THIS ISSUE HOLDING THAT THE SUM OF ` 89,21,29,905 IS ELIGIBLE FOR INCLUSION IN BOOK PROFIT FOR THE PURPOSE OF DEDUCTION UNDER SECT ION 32AB, THEREFORE, THE ASSESSING OFFICER SHOULD HAVE CONSIDERED THE ELIGIB LE BOOK PROFIT AT ` 528.67 CRORES AND SHOULD HAVE ALLOWED 20% OF THE SA ME AT ` 105.73 CRORES AS DEDUCTION UNDER SECTION 32AB OF THE ACT. THE ASSESSEE ARGUED THAT THE ASSESSING OFFICER COMMITTED MISTAKE BY NOT GIVING CORRECT EFFECT TO THE ORDER PASSED BY THE TRIBUNAL. INDIAN OIL CORP. LTD. 4 6. THE LEARNED COMMISSIONER (APPEALS) DULY APPRECIATED THE ASSESSEES CONTENTIONS AND DIRECTED THE ASSESSING OFFICER TO A LLOW DEDUCTION UNDER SECTION 32AB AT ` 104,42,36,536, I.E., FURTHER DEDUCTION OF ` 43,84,156. THE RELEVANT OBSERVATIONS OF THE LEARNED COMMISSION ER (APPEALS) ARE AS UNDER: 2.3 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CA SE WHICH HAVE BEEN ELABORATELY DISCUSSED IN THE ABOVE PARAGRAPHS. THE APPELLANT IS ENTITLED FOR DEDUCTION UNDER SECTION 32AB OF THE ACT OF A SUM EQUAL TO 20% OF PROFIT OR THE AMOUNT UTILISED FOR P URCHASE OF MACHINERY OR PLANT WHICHEVER IS LESS. AFTER CONSIDE RING THE ORDER OF ITAT, THE ELIGIBLE BOOK PROFIT WORKS OUT OF ` 528.67 CRORES AND 20% OF WHICH WORKS OUT TO ` 105.73 CRORES. THE AMOUNT UTILISED FOR PURCHASE OF PLANT AND MACHINERY IS AT ` 104,42,36,536 [ ` 66,98,32,970 ALREADY CONSIDERED BY A.O. IN ASSESSME NT ORDER PLUS ` 37,44,03,566 ALLOWED BY THE CIT(A)]. THE LOWER OF THE AMOUNT IS ` 104,42,36,536 ELIGIBLE FOR DEDUCTION UNDER SECTION 32AB OF THE ACT. THE A.O. HAS ALREADY GIVEN DEDUCTION OF ` 100,03,95,380 UPTO THE DATE OF ORDER GIVING EFFECT TO THE ITATS ORDER . THE A.O. IS DIRECTED TO ALLOW FURTHER DEDUCTION OF ` 4,38,41,156. NOW, AT THIS STAGE THAT IS IN THE SECOND ROUND WHIC H IS IN PURSUANCE OF GIVING AFFECT TO THE TRIBUNAL ORDER, THE DEPARTM ENT IS RAISING A GROUND THAT SUCH A CLAIM CANNOT BE ALLOWED AS THE ASSESSEE HAS NOT FILED REVISED RETURN OF INCOME AND THE SAME IS NOT ALLOWABLE IN V IEW OF THE JUDGMENT OF HON'BLE SUPREME COURT IN GOETZE (INDIA) LTD. V/S CIT [2006] 284 ITR 323 (SC) . 7. BEFORE US, THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT EVEN THOUGH THIS IS THE SECOND ROUND OF APPEAL, STI LL IT HAS TO BE SEEN THAT EXCESS DEDUCTION CLAIMED DURING THE COURSE OF ASSES SMENT PROCEEDINGS WITHOUT THE REVISED RETURN OF INCOME CANNOT BE CLAI MED. HE STRONGLY RELIED UPON THE RATIO LAID DOWN BY THE HON'BLE SUPREME COU RT IN GOETZE (I) LTD. (SUPRA) . 8. THE LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, SUBMITTED THAT, FIRSTLY , IT IS NOT A CASE OF A NEW CLAIM AS THE CLAIM OF 3 2AB, WAS ALREADY THERE IN THE RETURN OF INCOME AND IT WAS ON LY CERTAIN COMPUTATIONAL INDIAN OIL CORP. LTD. 5 ERROR IN THE DEDUCTION UNDER SECTION 32AB, WHICH WA S CORRECTED BY WAY OF REVISED COMPUTATION AND FILED BEFORE THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND, THEREFORE, TH E RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN GOETZE (I) LTD. (SUPRA) WILL NOT BE APPLICABLE AND SECONDLY , IN ANY CASE, THE JUDGMENT IN GOETZE (I) LTD. (SUPRA) IS NOT APPLICABLE AS THE MATTER HAS BEEN SETTLED BY THE AP PELLATE AUTHORITIES. IN SUPPORT OF THIS CONTENTION, HE RELIED ON THE JUDGME NT OF HON'BLE JURISDICTIONAL HIGH COURT IN CIT V/S PRUTHVI BROKER S AND SHAREHOLDERS, [2012] 23 TAXMAN.COM 23 (BOM.). 9. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS OF THE PARTIES, PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND THE MATERIAL PLACED ON RECORD. THIS APPEAL IS ARISING OUT OF THE ORDER GIV ING EFFECT TO THE ORDER PASSED BY THE TRIBUNAL DATED 27 TH APRIL 2006. AS STATED ABOVE, IN THE ORIGINAL RETURN OF INCOME ITSELF, THE ASSESSEE HAS MADE A CLAIM FOR DEDUCTION UNDER SECTION 32AB AT ` 100.30 CRORES AND THE SAME WAS REVISED BY WAY OF FILING REVISED COMPUTATION BEFORE THE ASSESSING OFFICER AT ` 106.33 CRORES. THE ASSESSING OFFICER HAS RESTRICTE D THE DEDUCTION AT ` 66.98 CRORES. IN THE FIRST APPEAL, THE LEARNED COMM ISSIONER (APPEALS) HAS FURTHER ENHANCED THE DEDUCTION. FINALLY, AFTER THE ORDER PASSED BY THE TRIBUNAL, THIS DEDUCTION UNDER SECTION 32AB, HAS BE EN ENHANCED TO ` 104.42 CRORES. THUS, THERE WAS NO OCCASION BY THE A SSESSING OFFICER TO RESTRICT THE SAME AT ` 100.03 CRORES ON THE GROUND THAT THIS WAS THE CLAI M MADE IN THE ORIGINAL RETURN OF INCOME. THE RATIO LA ID DOWN BY THE HON'BLE SUPREME COURT IN GOETZE (I) LTD. (SUPRA) WILL NOT BE APPLICABLE; F IRSTLY , THE ASSESSEE HAS NOT MADE ANY FRESH CLAIM FOR DEDUC TION FOR THE FIRST TIME BEFORE THE ASSESSING OFFICER BUT HAS MERELY BROUGHT TO THE NOTICE OF THE ASSESSING OFFICER THAT CERTAIN AMOUNT OF INTEREST I NCOME COULD NOT BE TAKEN INTO THE COMPUTATION OF DEDUCTION UNDER SECTI ON 32AB AND SECONDLY , THIS MATTER HAS ALREADY TRAVELED UP TO THE STAGE OF TWO APPELLATE AUTHORITIES WHEREIN THE CLAIM OF THE ASSESSEE HAS B EEN DULY ENTERTAINED AND EXAMINED. THE HON'BLE SUPREME COURT IN THE SAID JUDGMENT ITSELF HAS CLARIFIED THAT IT DOES NOT IMPINGE ON THE POWER OF THE APPELLATE AUTHORITIES INDIAN OIL CORP. LTD. 6 TO ENTERTAIN ANY SUCH CLAIM. ACCORDINGLY, WE DO NOT FIND ANY MERIT IN THE GROUNDS TAKEN BY THE DEPARTMENT AND THE QUANTUM OF DEDUCTION UNDER SECTION 32AB AS WORKED OUT AFTER GIVING EFFECT TO T HE ORDER PASSED BY THE TRIBUNAL AMOUNTING TO ` 104,42,36,536, IS TO BE ALLOWED AS HELD BY THE LEARNED COMMISSIONER (APPEALS). CONSEQUENTLY, THE C ONCLUSION AND FINDINGS DRAWN BY THE LEARNED COMMISSIONER (APPEALS ) IS HEREBY UPHELD AND GROUNDS TAKEN BY THE DEPARTMENT STAND DISMISSED . 10. 2 6 !' 0 2 0 78 9 10. IN THE RESULT, REVENUES APPEAL IS DISMISSED. $ 0 4* : ; (6 12 TH OCTOBER 2012 4 0 9 ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH OCTOBER 2012 SD/- . .. . . .. . ! ! ! ! P.M. JAGTAP ACCOUNTANT MEMBER SD/- # # # # $% $% $% $% & ! & ! & ! & ! AMIT SHUKLA JUDICIAL MEMBER MUMBAI, ; ( ; ( ; ( ; ( DATED: 12 TH OCTOBER 2012 $ 0 -&#< =<* / COPY OF THE ORDER FORWARDED TO : (1) &( )2 / THE ASSESSEE; (2) !' / THE REVENUE; (3) > () / THE CIT(A); (4) > / THE CIT, MUMBAI CITY CONCERNED; (5) <'A -&&( , , / THE DR, ITAT, MUMBAI; (6) B) C / GUARD FILE. .< -& / TRUE COPY $( / BY ORDER - . DE / PRADEEP J. CHOWDHURY '2F &( D' / SR. PRIVATE SECRETARY G / 7 / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI