TIMES GUARANTY LTD, MUMBAI V. ASST CIT 1(3), MUMBAI

ITA 4260/MUM/2013

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 3695 (ITAT-MUMBAI)
• Duration Of Justice: 6 year(s) 5 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-11-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2006-2007
• Appeal Filed On: 28-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AMIT PRATAP SINGH
• Assessee Lawyers: S VENKATARAMAN
• Keywords: Business income; Depreciation; Question of law; Unabsorbed depreciation
• Section: 143(3); 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E, MUMBAI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANAT M EMBER & SHRI PAWAN SINGH, JUDICIAL MEMEBR ITA NO. 4260/MUM/2013 ASSESSMENT YEAR : 2006-07 TIMES GUARANTY LTD TIMES OF INDIA BUILDING DR D.N. ROAD, FORT MUMBAI 400 001 PAN : AABCT2481Q VS ACIT-1(3), MUMBAI APPELLANT RESPONDEDNT APPELLANT BY SHRI S VENKATARAMAN -AR RESPONDENT BY SHRI AMIT PRATAP SINGH SR DR DATE OF HEARING 03-10-2019 DATE OF PRONOUNCEMENT 06-11-2019 O R D E R PER PAWAN SINGH, JUDICIAL MEMBER : 1. THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE ORD ER OF CIT(A)-7, MUMBAI DATED 16-01-2013 FOR ASSESSMENT YEAR 2006-07 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LEARNED CIT(A) ERRED IN CONSIDERING THE INCOME FROM BANK DEPOSITS, INTER EST ON BONDS AND INTEREST ON IT REFUND AS 'INCOME FROM OTHER SOURCES'. 2) THE LEARNED CIT(A) ERRED TREATING THE INCOME FR OM BANK DEPOSITS. INTEREST ON BONDS AND GOVERNMENT SECURITIES AND INTEREST ON INCOME TAX REFUND AS 'INCOME FROM OTHER SOURCES' INSTEAD OF INCOME FROM BUSINESS AND CONSEQUENTLY ERRED IN NOT ALLOWING SET OFF OF BROUG HT FORWARD BUSINESS LOSS U/S 72 OF THE INCOME TAX ACT, 1961 AGAINST SUCH INCOME. HE FURTHER ERRED IN NOT ALLOWING SET OFF OF UNABSORBED DEPRECIATION U/S 32( 2) OF THE INCOME TAX ACT, 1961 AGAINST SUCH INCOME. 3) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LEARNED CIT(A) FAILED TO ALLOW THE SET OFF OF 'UNABSORBED DEPRECIATION' A GAINST INCOME FROM OTHER SOURCES U/S 32(2) OF THE INCOME TAX ACT, 1961. 2 ITA 4260/MUM/2013 TIMES GUARANTY LTD 4) THE LEARNED CIT(A) ERRED IN CHARGING INTEREST U /S 234C OF THE INCOME TAX ACT, 1961 WITHOUT APPRECIATING THE FACT THAT THE AS SESSEE'S LIABILITY ARISES ON ACCOUNT OF MAT AND THERE IS NO LIABILITY ARISING ON ACCOUNT OF ADVANCE TAX. 2. THE ASSESSEE, VIDE APPLICATION DATED 08-07-2019, RA ISED THE FOLLOWING ADDITIONAL GROUND OF APPEAL:- 1.) 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE ASSESSEE SUBMITS THAT SINCE THERE IS NO INCOME TAX PAYABLE ON THE TOTAL INCOME COMPUTED UNDER THE NORMAL PROVISIONS OF THE INCOME TAX ACT, 1961, THE PROVISIONS OF SECTION 115JB ARE NOT ATTRACTED A ND THE ASSESSING OFFICER ERRED IN TAXING A SUM OF RS. 3,76,24,820/-, UNDER S ECTION 115JB OF THE ACT AS BOOK PROFITS.' 3. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF ADVISORY SERVICES AND INVESTMENT ACTIVI TIES. THE ASSESSMENT FOR THE YEAR UNDER CONSIDERATION WAS COMPLETED U/S 143(3) ON 24-12- 2008. THE AO BESIDES, OTHER ADDITIONS AND DISALLOW ANCES, TREATED THE INTEREST INCOME ON BANK DEPOSITS, INTEREST ON GOVER NMENT BONDS AND GOVERNMENT SECURITIES AS INCOME FROM OTHER SOURCES AS AGAINST THE CLAIM OF BUSINESS INCOME AND NOT ALLOWED THE SET OFF OF BROUGHT FORWARD BUSINESS LOSS. THE AO ALSO NOT ALLOWED THE UNABSOR BED DEPRECIATION U/S 32(2) AGAINST THE INCOME FROM OTHER SOURCES. ON AP PEAL BEFORE THE COMMISSIONER (APPEALS), THE ACTION OF AO WAS SUSTAI NED. THUS, FURTHER AGGRIEVED, THE ASSESSEE HAS FILED PRESENT APPEAL BE FORE THE TRIBUNAL. 3 ITA 4260/MUM/2013 TIMES GUARANTY LTD 4. WE HAVE HEARD THE SUBMISSION OF LD.AR OF THE ASSESS EE AND LD. DR FOR THE REVENUE AND PERUSED THE ORDER OF LOWER AUTHORIT IES, CAREFULLY. AT THE OUTSET OF HEARING, THE LD.AR OF THE ASSESSEE SUBMIT S THAT HE IS NOT PRESSING GROUNDS 1 & 2. CONSIDERING THE SUBMISSION OF LD.AR OF THE ASSESSEE, GROUNDS 1 & 2 ARE DISMISSED, AS NOT PRESS ED. 5. THE LD.AR FURTHER SUBMITS THAT HE HAS FILED ADDITIO NAL GROUND OF APPEAL WHICH RELATES TO APPLICABILITY OF PROVISIONS OF SEC TION 115JB. THE LD.AR SUBMITS THAT NO NEW FACTS ARE NECESSARY TO BE BROUG HT ON RECORD. THE GROUND OF APPEAL RAISED BY ASSESSEE IS PURELY LEGAL IN NATURE. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE SUBMITS THAT IN TH E GROUNDS OF APPEAL THE ASSESSEE HAS STATED THAT SECTION 115JB IS NOT A TTRACTED. THUS, THERE IS NO NEED TO RAISE ADDITIONAL GROUNDS OF APPEAL. 6. WE HAVE CONSIDERED THE SUBMISSION OF BOTH THE PARTI ES AND CONSIDERING THE FACT THAT NO NEW FACT IS NECESSARY TO BE BROUGH T ON RECORD AND THAT THE ADDITIONAL GROUND OF APPEAL RAISED BY ASSESSEE IS P URELY LEGAL IN NATURE AND ULTIMATELY WOULD AFFECT THE TAX LIABILITY OF TH E ASSESSEE, THE ADDITIONAL GROUND OF APPEAL RAISED BY THE ASSESSEE IS ADMITTED . 7. IN SUPPORT OF GROUND 3, THE LD.AR OF THE ASSESSEE S UBMITS THAT ON IDENTICAL ISSUE FOR A.YS 2003-04 & 2004-05, THE TRI BUNAL PASSED THE ORDER AGAINST THE ASSESSEE AND ON FURTHER APPEAL, T HE HON BLE JURISDICTION HIGH COURT HAS DECIDED THE ISSUE IN FA VOUR OF THE ASSESSEE IN 4 ITA 4260/MUM/2013 TIMES GUARANTY LTD ITA NO.841 OF 2011 WITH ITA NO.842 OF 2011 VIDE JUD GEMENT DATED 03- 08-2018. THEREFORE, THIS ISSUE STANDS COVERED IN F AVOUR OF THE ASSESSEE. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE SUPPO RTED THE ORDER OF THE LOWER AUTHORITIES. 8. WE HAVE CONSIDERED THE SUBMISSION OF BOTH THE PARTI ES AND GONE THROUGH THE ORDERS OF LOWER AUTHORITIES. WE HAVE NOTED THA T IN ASSESSEE S OWN CASE FOR A.YS 2003-04 & 2004-05, THE HON BLE BOMBAY HIGH COURT ON THE FOLLOWING QUESTION OF LAW PASSED THE ORDER IN F AVOUR OF THE ASSESSEE:- ' WHETHER THE SET OFF OF CARRIED FORWARD UNABSORBED DEPRECIATION RELATING TO A. Y. 1997-98 TO 1999-2000 IS TO BE DEA LT WITH IN ACCORDANCE WITH THE PROVISIONS OF SECTION 32(2) AS APPLICABLE FOR A. Y. 1997-98 TO 1999-2000 OR THE SAME HAS TO BE DEALT WITH IN AC CORDANCE WITH THE SAID PROVISIONS AS APPLICABLE TO A. Y. 2003-04 AND 2004-05?' 9. THE HON BLE BOMBAY HIGH COURT, WHILE FOLLOWING THE DECISION OF HINDUSTAN UNILEVER LTD 394 ITR 73 (BOM) PASSED THE FOLLOWING ORDER. FOR APPRECIATION OF FACTS AND CLARITY, THE ENTIRE O RDER OF THE HON BLE HIGH COURT IS EXTRACTED BELOW:- 3 BOTH THESE APPEALS BY THE ASSESSEE WERE KEPT TOD AY FOR FINAL DISPOSAL ALONG WITH OTHER APPEALS FILED BY THE REVE NUE ON THE SAME ISSUE. THIS BY OUR ORDER DATED 2 ND AUGUST, 2018. 4 MR. DALAI, LEARNED COUNSEL FOR THE APPELLANT IN S UPPORT OF THE APPEALS SUBMITS THAT THE ISSUE RAISED HEREIN ABOVE STANDS CONCLUDED IN FAVOUR OF THE APPELLANT-ASSESSEE BY THE DECISION OF THIS COURT IN C1T V/S. HINDUSTAN UNILEVER PVT. LTD., 394 ITR 73. THE AFORESAID 5 ITA 4260/MUM/2013 TIMES GUARANTY LTD DECISION HAS BEEN FOLLOWED BY THIS COURT IN REVENUE 'S APPEAL ON AN IDENTICAL QUESTION IN CIT V/S. M/S, ARCH FINE CHEMI CALS (P) LTD., (INCOME TAX APPEAL NO. 1037 OF 2014) DISMISSED ON 6 TH DECEMBER, 2016, CIT V/S. BAJAJ HINDUSTAN LTD., (INCOME TAX AP PEAL NOS. 134, 135, 136, 140, 141 AND 143 OF 2016) A COMMON ORDER DATED 28 TH FEBRUARY, 2018 DISMISSED SIX APPEALS AND IN PRINCIP AL CIT V/S. HINDUSTAN ANTIBIOTICS (INCOME TAX APPEAL NO. 1042 O F 2015) DISMISSED ON 20 TH FEBRUARY, 2018. THUS, MR. DALAI SUBMITS THAT THE APPEALS SHOULD BE ALLOWED. 5 MR. PINTO, LEARNED COUNSEL FOR THE REVENUE SUBMIT S THAT THE ISSUE SHOULD BE REFERRED TO THE LARGER BENCH, AS AN APPEA L ON AN IDENTICAL QUESTION HAS BEEN ADMITTED BY THIS COURT IN CIT V/S . M/S. MILTON'S PVT. LTD., (INCOME TAX APPEAL NO. 2301 OF 2013) ON 20 RH FEBRUARY, 2017 AND CIT V/S. M/S. CONFIDENCE PETROLEUM INDIA L TD., (INCOME TAX APPEAL NO. 582 OF 2014) ON 3 RD APRIL, 2017. THUS, THE AFORESAID ADMISSION, ACCORDING TO MR. PINTO, WOULD JUSTIFY THE REFERRING THE QUESTION OF LAW TO A LARGER BENCH. 6 THE DECISION RENDERED IN HINDUSTAN UNILEVER LTD., (SUPRA) FINALLY DISPOSES OF THE APPEAL, BY RELYING UPON THE DECISIO N OF THE GUJARAT HIGH COURT IN DCIT V/S. GENERAL MOTORS INDIA PVT. LTD., 354 ITR 244 AND THE CIRCULAR DATED 22 ND NOVEMBER, 2001 ISSUED BY THE CENTRAL BOARD FOR DIRECT TAXES. THUS, THE ORDER ADM ITTING AN APPEAL, CANNOT BE CONSIDERED SIMILAR TO A SPEAKING ORDER WHICH HAS FINALLY DISPOSED OF THE APPEAL, AT THE TIME OF ADMI SSION, NO CONCLUDING VIEW IS TAKEN. 7 IT WAS NEXT SUBMITTED THAT IN ANY CASE, THE DECISIO N OF THIS COURT IN M/S. HINDUSTAN UNILEVER LTD., (SUPRA) IS NOT COR RECT. HOWEVER, NO SUBMISSION IN SUPPORT OF THE SAME IS MADE. THUS, NO CASE TO REFER THIS QUESTION TO A LARGER BENCH, CAN ARISE. WE NOTE THAT IN THE DECISION RENDERED IN M/S. HINDUSTAN UNILEVER LTD., (SUPRA), THE 6 ITA 4260/MUM/2013 TIMES GUARANTY LTD REVENUE WAS NOT ABLE TO POINT OUT ANY REASON AS TO WHY THE DECISION OF THE GUJARAT HIGH COURT IS GENERAL MOTORS (I) LTD .,(SUPRA) SHOULD NOT BE FOLLOWED. EVEN BEFORE US TODAY, NO SUBMISSIO NS ARE MADE IN SUPPORT OF THE REVENUE'S CONTENTION THAT THE DECISI ON IN HINDUSTAN UNILEVER LTD., (SUPRA) IS NOT CORRECT OR IN VIEW OF SOME DISTINCTIVE FACTS HERE WHICH WOULD LEAD TO NOT FOLLOWING THE DE CISION OF THIS COURT IN M/S. HINDUSTAN UNILEVER LTD., (SUPRA). 8 WE ARE INFORMED THAT THE REVENUE HAS FILED AN SLP TO THE APEX COURT, CHALLENGING THE ORDER OF THIS COURT IN M/S. HINDUSTAN UNILEVER LTD., (SUPRA). HOWEVER, MERE FILING OF AN SLP WOULD NOT BY ITSELF MAKE THE DECISION IN HINDUSTAN UNILEVER L TD., (SUPRA) NOT BINDING. NEEDLESS TO STATE THAT IN CASE THE REVENUE IS AGGRIEVED BY THIS ORDER, IT IS ALWAYS OPEN TO CHALLENGE THE SAME BEFORE THE APEX COURT AND TAG IT ALONG WITH THE PENDING SLP IN CASE OF HINDUSTAN UNILEVER LTD., (SUPRA). 9 IN THE ABOVE VIEW, THE SUBSTANTIAL QUESTION OF LA W IN BOTH THESE APPEALS ARE ANSWERED IN FAVOUR OF THE APPELLANT-ASS ESSEE AND AGAINST THE RESPONDENT-REVENUE. 10. IN VIEW OF THE AFORESAID DECISION OF HON BLE JURISDICTIONAL HIGH COURT, THE GROUND OF APPEAL RAISED BY THE ASSESSEE IS ALLO WED. GROUND 3 IS ALLOWED. 11. GROUND 4 RELATES TO CHARGING OF INTEREST U/S 234C. THE LD.AR OF THE ASSESSEE FAIRLY SUBMITS THAT THIS GROUND OF APPEAL IS COVERED AGAINST THE ASSESSEE BY THE DECISION OF HON BLE SUPREME COURT IN THE CASE OF ROLTA INDIA 330 ITR 470 (SC). CONSIDERING THE SUBMISSION OF ASSESSEE, GROUND 4 OF THE ASSESSEE IS DISMISSED. 7 ITA 4260/MUM/2013 TIMES GUARANTY LTD 12. THE ADDITIONAL GROUND OF APPEAL RELATES TO COMPUTAT ION OF INCOME AS PER SECTION 115JB. THE LD.AR OF THE ASSESSEE SUBMITS T HAT NO TAX IS PAYABLE AS PER COMPUTATION OF INCOME. THEREFORE, THE PROVI SIONS OF SECTION 115JB ARE NOT APPLICABLE. THE LD. DR, ON THE OTHER HAND, SUBMITS THAT IF NO TAX IS PAYABLE, THERE WAS NO NEED TO RAISE ADDITIONAL G ROUND OF APPEAL AND SUPPORTED THE ORDER OF AO. 13. WE HAVE CONSIDERED THE SUBMISSION OF BOTH THE PART IES AND PERUSED THE RECORDS. WE FIND THAT PROVISIONS OF SECTION 115JB( 1) READS AS FOLLOWS:- SPECIAL PROVISION FOR PAYMENT OF TAX BY CERTAIN COM PANIES 115JB . (1) NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTH ER PROVISION OF THIS ACT, WHERE IN THE CASE OF AN ASSESSEE, BEING A COMPANY, THE INCOME- TAX, PAYABLE ON THE TOTAL INCOME AS COMPUTED UNDER THIS ACT IN RESPECT OF ANY DAY OF APRIL, 87 [2012], IS LESS THAN [EIGHTEEN AND ONE-HALF PER CEN T] OF ITS BOOK PROFIT,[SUCH BOOK PROFIT SHALL BE DEEMED T O BE THE TOTAL INCOME OF THE ASSESSEE AND THE TAX PAYABLE BY THE ASSESSEE ON SUCH TOTAL INCOME SHALL BE THE AMOUNT OF INCOME-TAX AT THE RATE OF [EIGHTEE N AND ONE-HALF PER CENT]]. 87SUBSTITUTED FOR 2011 BY THE FINANCE ACT, 2011, W.E.F. 1.4.2012. EA RLIER, 2011 WAS SUBSTITUTED FOR EIGHTEEN PER CENT WAS SUBSTITUTED FOR FIFTEEN PER CENT BY THE FINANCE ACT, 2010, W.E.F. 1-4-2011, FIFTEEN PER CENT WAS SUBSTITUTED FOR TEN PER CENT BY THE FINANCE (NO.2) ACT, 2009, W.E.F. 1-4-2010 AND TEN PER CENT FOR SEVEN AND ONE-HALF PER CENT BY THE FINANCE ACT, 2006, W.E.F. 1-4-2007 . 14. BEFORE US, THE LD. AR FOR THE ASSESSEE STATES THAT NO TAX IS PAYABLE; SO PROVISIONS OF SECTION 115JB ARE NOT APPLICABLE. TH E LD. DR ALSO DID NOT STATE ANYTHING TO CONTRADICT THE CONTENTION OF THE ASSESSEE. IN SUCH 8 ITA 4260/MUM/2013 TIMES GUARANTY LTD SITUATION, WE DEEM IT NECESSARY TO RESTORE THE ISSU E BACK TO THE FILE OF THE ASSESSING OFFICER AND DIRECT HIM TO DECIDE THE ISSU E OF APPLICABILITY OF PROVISIONS OF SECTION 115JB OF THE ACT. WE ACCORDI NGLY DO SO. THE ASSESSEE IS DIRECTED TO PROVIDE THE DETAILS AS MAY BE REQUIRED BY THE AO IN SUPPORT OF ITS CLAIM. THE ISSUE IS ACCORDINGLY RES TORED TO THE FILE OF THE ASSESSING OFFICER WITH THE ABOVE DIRECTIONS. THE A DDITIONAL GROUND OF APPEAL IS TREATED AS ALLOWED FOR STATISTICAL PURPOS E. 15. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS PART LY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 06 -11-2019. SD/- SD/- (SHAMIM YAHYA) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIALMEMBER MUMBAI, DT : 06 TH NOVEMBER, 2019 PK/- COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI