The ITO, Ward-5(3), Ahmedabad V. Royal Manor Hotels & Ind, Limited, Ahmedabad

ITA 426/AHD/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1793 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-04-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 16-03-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 15-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRADEEP KR MAJUMD
• Keywords: Depreciation; Difference of opinion; Tax effect; Revised return; Unabsorbed depreciation; Change of opinion
• Section: 143(3); 115JB; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH BEFORE: S H RI ANIL CHATURVEDI , ACCOUNTANT MEMBER AND SHR I S. S. GODARA , JUDICIAL MEMBER THE ITO, WARD - 5(3), AHMEDABAD (APPELLANT /RESPONDENT ) VS ROYAL MANOR HOTELS & IND. LTD, AIRPORT CROSS ROAD, HANSOL, AHMEDBAD - 380004 PAN: AABCR5304G (RESPONDENT /APPELLANT ) REVENUE BY : MR. PRADEEP KR. MAJUMD AR , SR. D . R. ASSESSEE BY: S H RI PM MEHTA WITH SHRI GULAB THAKOR , A.R. DATE OF HEARING : 16 - 03 - 2 016 DATE OF PRONOUNCEMENT : 08 - 04 - 2 016 / ORDER P ER : S. S. GODARA , JUDICIAL MEMBER : - THE ASSESSEE AND REVENUE HAVE FILED INSTANT CROSS APPEALS FOR ASSESSMENT YEAR 2006 - 07, AGAINST ORDER DATED 14.12.2011 PASSED BY THE CIT(A) - XI, AHMEDABAD, IN PROCEEDINGS U/S. 143(3) R.W.S. 147 OF THE INCO ME TAX ACT, 1961 IN SHORT THE ACT. I T A NO S . 426 & 176 / A HD/20 12 A SSESSMENT YEAR 200 6 - 07 I.T.A NO. 426 & 176 /AHD/20 12 A.Y. 2006 - 07 PAGE NO ITO VS. RO Y A L MANOR HOTELS & IND. LTD 2 2. WE COME TO RIVAL PLEADINGS. THE ASSESSEE S APPEAL RAISES TWO SUBSTANTIVE GROUNDS. FIRST ONE CHALLENGES VALIDITY OF THE IMPUGNED REOPENING AS TAKEN RECOURSE TO BY THE ASSESSING OFFICER AND UPHELD IN THE LOWER APPELLAT E PROCEEDINGS. LAT T ER SUBSTANTIVE GROUND READS THAT THE CIT(A) OUGHT TO HAVE ALLOWED ASSESSEE S BROUGHT FORWARD LOSSES CLAIMED OF RS. 1,49,66,475/ - THEREBY REVERSING ASSESSING OFFICER ' S ACTION IN PARTLY ACCEPTING THE SAME. THE REVENUE S CROSS APPEAL ASSAIL S LOWER APPELLATE AUTHORITIES ACTION IN DIRECTING THE ASSESSING OFFICER TO VERIFY ASSESSEE S LOSSES FIGURES FROM RECORDS AND ALLOW THE SAME FOR COMPUTING SECTION 115JB BOOK AS PROFITS. 3. WE COME TO RELEVANT FACTS NOW. THIS ASSESSEE COMPANY IS IN HOTEL BUSINESS. IT RETURNED NIL INCOME ON 31.12.2006. THIS WAS FOLLOWED BY A REVISED RETURN REITERATING EARLIER INCOME WITH FRINGE BENEFITS OF RS. 13,85,732/ - . THE ASSESSING OFFICER FRAMED A REGULAR ASSESSMENT ON 26.12.2008 ACCEPTING THE SAME. HE FORMED REASONS TO BELIEVE THEREAFTER THAT ASSESSEE S INCOME LIABLE TO BE ASSESSED HAD ESCAPED ASSESSMENT. HIS REASONS INTER ALIA APPEAR TO BE THAT : - A) W HILE COMPUTING INCOME, FBT OF RS. 3,03,979/ - AND I.T. OF RS. 14,50,640/ - WERE DEBITED IN THE P & L ACCOUNT AND SAME W ERE ADDED TO THE NET PROFIT. HOWEVER, AT THE TIME OF COMPUTATION OF BOOK PROFIT (MAT). ONLY INCOME - TAX WAS ADDED TO THE BOOK PROFIT BUT FBT OF RS. 3,03,979/ - WAS NOT ADDED FOR WORKING OUT THE MAT. (B) W HILE MAKING NET PROFIT OF RS. 24,18,461/ - DUE TO EXCE SS DEPRECIATION PROVIDED DURING EARLIER I.T.A NO. 426 & 176 /AHD/20 12 A.Y. 2006 - 07 PAGE NO ITO VS. RO Y A L MANOR HOTELS & IND. LTD 3 YEARS WAS WRITTEN BACK. HOWEVER, BUSINESS LOSS OF RS. 1,81,04,636/ - AND DEPRECIATION OF RS. 1,17,91,111/ - SHOWN IN THE F.Y. 98 - 99 ACCORDINGLY LOWER OF LOSS/DEPRECIATION OF RS. 63,13,525/ - WAS ALLOWED FOR DEDUCTION IN BOOK PROFIT. ON VERIFICATION, IT WAS FOUND T HAT THE IRREGULAR DEDUCTION OF RS. 63,13,525/ - IS TO BE ADDED BACK TO THE BOOK PROFIT BESIDES NET PROFIT OF RS. 24,18,461/ - (F.Y. 98 - 99) ALSO DEDUCTED FROM THE B/F LOSS/DEPRECIATION. 4. THE ASSESSING OFFICER ISSUED SECTION 148 NOTICE ON 2 5.03.2010. THE ASSESSEE FILED RESPONSE THERETO ON 29.04.2010 REITERATING THE VERY INCOME ALONG WITH BOOK PROFITS U/S. 115JB OF RS. 1,72,38,737/ - . THE ASSESSING OFFICER FRAMED RE - ASSESSMENT ON 29.11.2010 REDUCING ALLEGED IRREGU LAR DEDUCTIONS OF BROUGHT FORWARD BUSINESS AND UNABSORBED LOSSES OF RS. 87,31,986/ - . 5. THE ASSESSEE FILED APPEAL INTER ALIA RAISING TWO SUBSTANTIVE ARGUMENTS IN CHALLENGING VALIDITY OF REOPENING AND FRINGE BENEFITS ADDITION. IT FURTHER PLEADED THAT I T OUGHT TO HAVE BEEN ALLOWED SET OFF OF BROUGHT FORWARD BUSINESS LOSS/UNABSORBED DEPRECIATION FOR COMPUTING SECTION 115JB BOOK PROFITS. THE CIT(A) HAS REJECTED FIRST SUBSTANTIVE PLEA, DELETED FRINGE BENEFIT ADDITION OF RS. 3,03,679/ - AND TAKES ON RECORD AS SESSEE S ADDITIONAL DETAILS O F UNABSORBED LOSSES AND DIRECTS THE ASSESSING OFFICER TO VERIFY THE SAME FROM RECORDS AND TO ALLOW THESE LOSSES AS PER PROVISIONS OF THE ACT. WE FIND FROM OPERATIVE PART PARA 5.1 OF THE LOWER I.T.A NO. 426 & 176 /AHD/20 12 A.Y. 2006 - 07 PAGE NO ITO VS. RO Y A L MANOR HOTELS & IND. LTD 4 APPELLATE ORDER THAT THE ASSESSEE H AD FILED THESE LOSSES FIGURES TO HAVE BEEN CARRIED FORWARD FROM ASSESSMENT YEARS 2003 - 04 & 2004 - 05. THIS LEAVES BOTH THE PARTIES AGREED TO THE EXTENT INDICATED HEREINABOVE. 6. WE HAVE HEARD BOTH THE PARTIES. LEARNED REPRESENTATIVES REITERATE THEIR RES PECTIVE PLEADINGS. THE ASSESSEE SEEKS TO QUASH THE IMPUGNED REOPENING BY TERMING IT AS MERE CHANGE OF OPINION. THE REVENUE S CASE IS THAT THE CIT(A) HAS ERRED IN DIRECTING THE ASSESSING OFFICER TO ALLOW ASSESSEE S UNABSORBED LOSSES/DEPRECIATION AS CARRIE D FORWARD FROM THE EARLIER ASSESSMENT YEARS (SUPRA). WE PUT UP A SPECIFIC QUERY TO THE PARTIES AS TO WHAT HAS TRANSPIRED IN CONSEQUENTIAL PROCEEDINGS IN FURTHERANCE TO THE CIT(A) S DIRECTIONS. THE ASSESSEE FILES BEFORE US ASSESSING OFFICER S CONSEQUENTIA L ORDER DATED 19 - 01 - 2012 REVISING ITS BOOK PROFITS TO RS. 2,23,42,668 / - AS AGAINST THOSE REFLECTED WITH THE RETURN AMOUNTING TO RS. 1,72,38,73 7/ - . N ET TAX EFFECT FLOWING FROM THE ABOVE STATED RE - COMPUTATION COME S TO RS. 3,82,795/ - . LD. AUTHORIZED REPRE SENTATIVE SUBMITS THAT THE ASSESSEE HAS NOT CHALLENGED THIS RE - COMPUTATION BEFORE ANY H IGHER FORUM. T HE ASSESSEE HAS EXPRESSED SATISFACTION TO THE ABOVE STATED RE - COMPUTATION OF ITS BOOK PROFIT S IN OTHER WORDS . WE OBSERVE IN THESE FACTS THAT THE SOLE SUB STANTIVE ISSUE ON MERITS IS THAT OF APPROPRIATE COMPUTATION OF BOOK PROFIT FIGURES ONLY. THE SAME STANDS ADJUDICATED. NEITHER PARTY EXPRESSES ANY GRIEVANCE THEREFROM. WE FIND NO MERIT IN ASSESSEE S CONTENTION CHALLENGING I.T.A NO. 426 & 176 /AHD/20 12 A.Y. 2006 - 07 PAGE NO ITO VS. RO Y A L MANOR HOTELS & IND. LTD 5 VALIDITY OF REOPE NING SINCE TH IS ISSUE HAS BEEN RENDERED INFRUCTUOUS . COMING TO ITS LATTER GROUND THAT THE CIT(A) OUGHT TO HAVE ALLOWED ITS CARRIED FORWARD DEPRECIATION AND LOSSES, THE CIT(A) HAS ALREADY DIRECTED THE ASSESSING OFFICER TO ACCEPT THE RELEVANT FIGURES SUBJECT TO VERIFICA TION. THE SAME STAND VERIFIED IN CONSEQUENTIAL ORDER. WE SEE NO REASON TO INTERFERE WITH LOWER APPELLATE FINDINGS UNDER CHALLENGE RAISING MERE ACADEMIC ISSUES IN THESE FACTS AND CIRCUMSTANCES. BOTH PARTIES CROSS APPEALS FAIL ACCORDINGLY. 7 . BOTH T HESE CROSS APPEALS ARE DISMISSED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 08 - 0 4 - 201 6 SD/ - SD/ - (ANIL CHATURVEDI ) ( S. S. GODARA ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD : DATED 0 8 /0 4 /2016 AK / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,