CHAMPAGNE VINEYARDS LTD, MUMBAI V. DCIT CIR 6(2), MUMBAI

ITA 4255/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9188 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 04-12-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 25-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MITUL GORADIA
• Keywords: Reasonable cause; Scheme of amalgamation; Revised return
• Section: 143(3); 139(5)

Judgement Text

. , IN THE INCOME TAX APPELLATE TRIBUNAL SMC , BENCH MUMBAI , BEFORE SHRI R. K. GUPTA , JM ITA NO. 4255 / MUM/ 20 1 1 ( ASSESSMENT YEAR : 200 6 - 20 0 7 ) M/S CHAMPAGNE VINEYARDS LTD, NAV BHAVNA CO - OPERATIVE SOCIETY, ROOM NO. 5, 3 RD FLOOR, PRABHADEVI, MUMBAI - 400 025 VS. DCIT CIR 6(2) MUMBAI PAN/GIR NO. : AABCC 6296 N ( APPELLANT ) .. ( RESPO NDENT ) AND ITA NO. 425 6 /MUM/20 11 ( ASSESSMENT YEAR :2006 - 2007 ) M/S CHAMPAGNE VINEYARDS LTD, NAV BHAVNA CO - OPERATIVE SOCIETY, ROOM NO.5, 3 RD FLOOR, PRABHADEVI, MUMBAI - 400 025 VS. DCIT CIR 6(2) MUMBAI PAN/GIR NO. : AABCC 6296 N ( APPELLANT ) .. ( RESPONDENT ) /ASSESSEE BY : MR. SUNIL NAHTA & MR. MITUL GORADIA /REVENUE BY : MR. MOHIT JAIN DATE OF HEARING : 4 TH DEC . , 2012 DATE OF PRONOUNCEMENT : 7 TH DEC. ,2012 O R D E R TH ESE TWO APPEALS HAVE BEEN PREFERRED BY THE ASSESSEE AGAINST THE ORDER DATED 4 - 1 - 2011 OF LEANED CIT(A) - 1 2 , MUMBAI RELATING TO THE ASSESSMENT COMPLETED UNDER SECTION 143(3) AS WELL AS UNDER SECTION 115WE(3) OF THE ACT FOR THE ASSESSMENT YEAR 2006 - 07 . ITA NO S . 425 5 & 4256 /20 1 1 2 2. THE ASSESSEE IS OBJECTING THE INACTION ON THE PART OF THE LEARNED CIT(A) IN CONFIRMING THE NON - CONSIDERATION OF REVISED RETURN FILED DURING THE ASSESSMEN T PROCEEDINGS, WHICH WAS IN CONSONANCE WITH THE SCHEME OF DEMERGER APPROVED BY THE HON BLE BOMBAY HIGH COURT. 3 . THE ASSESSEE FILED RETURN ON 30 - 11 - 2006 DECLARING LOSS OF RS. 35,26,381/ - . THE ASSESSEE FILED A REVISED RETURN DURING THE ASSESSMENT PROCEEDIN GS, WHICH IS BEYOND THE TIME LIMIT AS PROVIDED UNDER SECTION 139(5) OF THE ACT . THE ASSESSING OFFICER DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE ON THE GROUND THAT SCHEME OF DEMERGER HAS BEEN APPROVED BY THE HON BLE BOMBAY HIGH COURT ONLY ON 27 - 3 - 2008 A ND THE REVISED RETURN UNDER SECTION 139(5) WAS TO BE FILED BEFORE 31 - 3 - 2008 . THERE ARE SO MANY FORMALITIES WERE TO BE COMPLETED IN RESPECT OF SCHEME OF DEMERGER APPROVED BY THE HONBLE BOMBAY HIGH COURT. THEREFORE, THE ASSESSEE COULD NOT FILE THE RETURN IN TIME. 4 . THE ASSESSING OFFICER OBSERVED THAT THE PROVISIONS ARE VERY SPECIFIC BY WHICH THE REVISED RETURN UNDER SECTION 139(5) COULD HAVE BEEN FILED ON OR BEFORE 31 - 3 - 2008 . ACCORDINGLY, HE DID NOT ACCEPT THE REVISED RETURN AND COMPLETED THE ASSESSMENT O N THE BASIS OF THE ORIGINAL RETURN. 5 . THE LEARNED CIT(A) HAS ALSO CONFIRMED THE ACTION OF THE ASSESSING OFFICER. NOW, THE ASSESSEE IS IN APPEAL HERE BEFORE THE TRIBUNAL. ITA NO S . 425 5 & 4256 /20 1 1 3 6 . THE CONTENTION RAISED BEFORE THE LOWER AUTHORITIES ARE REITERATED HERE BEFORE T HE TRIBUNAL BY LEARNED AR OF THE ASSESSEE. RELIANCE HAS BEEN PLACED ON THE DECISION OF THE HON BLE MADRAS HIGH COURT IN THE CASE OF PENTAMEDIA GRAPHICS LTD. VS. ITO , REPORTED IN [2010] 236 C TR 204 ( MAD ) AND ALSO ON THE DECISION OF THE TRIBUNAL IN THE CASE OF BHARTI AIRTEL LTD. VS. ACIT, PASSED IN ITA NO. 3907/DEL/2010, VIDE ORDER DATED 11 - 2 - 2011 FOR THE ASSESSMENT YEAR 2006 - 2007. IT WAS ALSO SUBMITTED THAT ON IDENTICAL FACTS THE HON BLE MADRAS HIGH COURT HAS HELD THAT THE RETURN FILED ON A LATER STAGE I.E. B EYOND THE STIPULATED TIME , HAS TO BE CONSIDERED FOR THE REASON THAT THE SCHEME OF AMALGAMATION TAKES EFFECT FROM ONLY ON AND FROM THE DATE OF THE ORDER SANCTIONING THE SCHEME. IN THE PRESENT CASE, THE SCHEME WAS SANCTIONED BY AN ORDER WHICH WAS RECEIVED BY THE ASSESSEE ONLY ON 27 - 3 - 2008 . THEY PREPARED THE COMPUTATION OF INCOME ON THE BASIS OF DEMERGER SCHEME APPROVED BY THE HON BLE BOMBAY HIGH COURT AND FILED RETURN IN THE MONTH OF OCTOBER, 2008. THE ASSESSMENT WAS PENDING, THEREFORE, IN VIEW OF THE DECISIO N OF THE HON BLE MADRAS HIGH COURT FOLLOWED BY THE DELHI BENCH OF THIS TRIBUNAL IN THE CASE OF BHARTI AIRTEL LTD. (SUPRA) , THE ASSESSING OFFICER SHOULD HAVE BEEN ACCEPTED THE CLAIM OF THE ASSESSEE. 7 . ON THE OTHER HAND, LEARNED DR PLACED RELIANCE ON THE OR DER S OF THE ASSESSING OFFICER AS WELL AS THE LEARNED CIT(A) . ITA NO S . 425 5 & 4256 /20 1 1 4 8 . AFTER CONSIDERING THE SUBMISSION AND PERUSING THE MATERIAL ON RECORD, I FOUND THAT THE ASSESSEE DESERVES TO SUCCEED ON TH E ISSUE. THE ORDER OF THE HON BLE BOMBAY HIGH COURT APPROVING THE SCHE ME OF DEMERGER WAS RECEIVED ONLY ON 27 - 3 - 2008 . TIME FOR FILING REVISED RETURN UNDER SECTION 139(5) WAS AVAILABLE ONLY UPTO 31 - 3 - 2008 . I NOTED THAT THE HON BLE SUPREME COURT IN THE CASE OF MARSHALL SONS & CO. (INDIA) LIMITED VS. ITO, REPORTED IN (1997) 138 CTR (SC) 1 , DEALS WITH THE CASE OF AMALGAMATION PARTICULARLY WITH REFERENCE TO EFFECTIVE DATE FROM WHICH THE AMALGAMATION IS TO TAKE PL ACE. IN THAT CASE, THE ASSESSEE THEREIN HAD ITS HOLDING COMPANY IN CALCUTTA AND THE SUBSIDIARY COMPANY IN MADRAS. IN DECE MBER, 1982, THE SUBSIDIARY COMPANY PASSED A RESOLUTION PROPOSING TO AMALGAMATE WITH THE HOLDING COMPANY. AN APPLICATION BY THE HOLDING COMPANY BEFORE THE CALCUTTA HIGH COURT AND AN APPLICATION BY SUBSIDIARY COMPANY BEFORE THE MADRAS HIGH COURT WERE MADE TO GRANT THE SCHEME OF AMALGAMATION THAT THE ENTIRE UNDERTAKING OF THE SUBSIDIARY COMPANY WAS TO BE TRANSFERRED TO THE HOLDING COMPANY WITH EFFECT FROM THE TRANSFER DATE VIZ. 1 ST JANUARY, 198 2 . THE SCHEME WAS SANCTIONED ON 21 - 11 - 1983 BY THE H O N BLE MADRAS HI GH COURT AND ON 11 - 1 - 1984 BY THE HON BLE CALCUTTA HIGH COURT. THEREAFTER THE ITO ISSUED NOTICE UNDER SECTION 139(2) TO THE SUBSIDIARY COMPANY AND CALLED UPON TO FILE THE RETURN OF INCOME FOR THE ASSESSMENT YEARS 1984 - 85 & 1985 - 86 . THE SUBSIDIARY COMPANY RE PLIED THAT THERE WAS NO QUESTION OF THE SUBSIDIARY COMPANY FILING RETURNS FOR THE AFORESAID PERIOD AFTER THE ITA NO S . 425 5 & 4256 /20 1 1 5 AMALGAMATION SANCTIONED W.E.F. 1 ST JANUARY, 1982 . THE WRIT FILED BEFORE THE HON BLE MADRAS HIGH COURT WAS DISMISSED. HOWEVER, THE HON BLE APEX COUR T ALLOWED THE ISSUE IN FAVOUR OF THE ASSESSEE. THE HON BLE SUPREME COURT POINTED OUT THAT WHEN THE COURT HAD NOT SPECIFIED ANY DATE AS THE DATE OF TRANSFER OR AMALGAMATION, IT WOULD NOT BE A REASONABLE TO SAY THAT THE SCHEME OF AMALGAMATION TAKES EFFECT FR OM ONLY ON AND FROM THE DATE OF THE ORDER SANCTIONING THE SCHEME. THE HON BLE APEX COURT POINTED OUT THAT TILL THE SCHEME IS SANCTIONED AND ON THE SCHEME BEING GRANTED, THE BUSINESS CARRIED ON BY THE TRANSFEROR COMPANY, NAMELY, SUBSIDIARY COMPANY IN THE RE PORTED DECISION, SHOULD BE DEEMED TO HAVE BEEN CARRIED ON FOR AND ON BEHALF OF THE TRANSFEREE COMPANY AND THIS IS THE NECESSARY AND LOGICAL CONSEQUENCE OF THE COURT SANCTIONING THE SCHEME OF AMALGAMATION AS PRESENTED TO IT. THESE OBSERVATIONS WERE FOLLOWED BY THE HON BLE MADRAS HIGH COURT IN THE CASE OF PENTAMEDIA GRAPHICS LTD. (SUPRA) . ACCORDINGLY, THE HO NBLE MADRAS HIGH COURT HAD HELD THAT THE EFFECTIVE DATE, THUS, GIVEN AS 1 ST JANUARY, 1984 AND GOING BY CLAUSE 7.2, THE ORDER OF THE COURT SANCTIONING THE SCHEME ORIGINALLY UNDER ORDER DATED 12 TH OCTOBER, 2004 AND 8 TH NOVEMBER, 2004 , FOLLOWED BY THE ORDER DATED 29 TH NOVEMBER , 2007 MODIFYING THE SCHEME TO BE EFFECTIVE FROM 1 ST JANUARY, 2004 , IS BINDING ON THE RESPONDENTS ALSO . HENCE, APPLYING THE DECISION OF THE HON BLE APEX COURT IN THE ABOVE REFERRED TO DECISION, THE EFFECTIVENESS OF THE SCHEME AS APPROVED, HENCE, CANNOT BE IGNORED BY A REFERENCE TO SECTION 139(5) OF THE COMPANIES ACT, 1956. ITA NO S . 425 5 & 4256 /20 1 1 6 9 . IN THE PRESENT CASE, THE ASSESSMENT WAS PENDING AND DURING THE ASSESSMENT PROCEEDING, THE ASSESSEE HAD FILED ITS REVISED RETURN ON THE BASIS OF THE SCHEME OF DEMERGER APPROVED BY THE HON BLE BOMBAY HIGH COURT AND, THEREFORE, IN MY CONSIDERED VIEW, THERE WAS A REASONABLE CAUSE FOR NO T FILING THE REVISED RETURN WITHIN THE STIPULATED PERIOD ALLOWED UPTO 31 - 3 - 2008 . ACCORDINGLY, I HOLD THAT THE ASSESSING OFFICER SHOULD HAVE PASSED THE ASSESSMENT S ON THE BASIS OF REVISED RETURN AND NOT ON THE BASIS OF ORIGINAL RETURN. THEREFORE, THE ORDERS OF THE AUTHORITIES BELOW ARE SET AS IDE AND THE ASSESSING OFFICER IS DIRECTED TO PASS THE ASSESSMENT S ON THE BASIS OF THE REVISED RETURN WHICH WAS REVISED ON THE BASIS OF THE DECISION OF THE HON BLE BOMBAY HIGH COURT, WHO APPROVED THE SCHEME OF DEMERGER. 10 . IN THE RESULT, APPEAL S OF THE ASSE SSEE S ARE ALLOWED AS INDICATED ABO V E . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 7 TH DAY OF DEC . 2012. 2012 SD/ - ( ) ( R.K.GUPTA ) / JUDICIAL MEMBER MUMBAI ; DATED : 07 / 1 2 / 2012 . /PKM , PS ITA NO S . 425 5 & 4256 /20 1 1 7 COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / TH E RESPONDENT. 3. / THE CIT(A) - X, MUMBAI. 4. / CIT 5. / DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY// / BY ORDER, ( DY./ASSTT. REGISTRAR) / ITAT, MUMBAI