ACIT 8(1), MUMBAI V. EURO TRADITION INDIA P. LTD, MUMBAI

ITA 4419/MUM/2010

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 88062 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 7 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-01-2015
• Appeal Filed By: Department
• Bench Allotted: G
• Next Hearing Date: 01-10-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 31-05-2010
• Court: TRIBUNAL
• Department Lawyers: R N DSOUZA
• Assessee Lawyers: AJAY C GOSALIA
• Keywords: Depreciation; Opportunity of being heard
• Section: 234B; 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER ./I.T.A. NO.4419/M/2010 ( / ASSESSMENT YEAR: 2007 - 2008 ) ACIT - 8(1), R.NO.210, 2 ND FLOOR, AAYAKAR BHAVAN, MUMBAI 400 020. / VS. M/S. EURO TRADITION INDIA PVT LTD, 609 - 611, B WING, CRISTAL PLAZA,LINK ROAD, ANDHERI (E), MUMBAI 400 058. ./ PAN : AAACE 7941H ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI R.N. DSOUZA, DR / RESPONDENT BY : SHRI AJAY C. GOSALIA / DATE OF HEARING : 17.12.2014 / DATE OF PRONOUNCEMENT : 14 .01.2015 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE REVENUE ON 31.5.2010 IS AGAINST THE ORDER OF THE CIT (A) - 16, MUMBAI DATED 23.3.2010 FOR THE ASSESSMENT YEAR 2007 - 2008. IN THIS APPEAL, REVENUE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) ERRED IN DELETING THE ACTION OF THE ASSESSING OFFICER WITH REGARD TO LEVY OF TAX U/S 115JB WITHOUT APPRECIATING THE FACT THAT THE UNABSORBED CARRIED FORWARD DEPRECIATION FOR THE EARLIER YEAR WAS NIL AND HENCE THE ASSESSEE WAS NOT ELIGIBLE FOR REDUCTION OF BROUGHT FORWARD LOSS OF PREVIOUS YEAR. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) ERRED IN DELETING THE ACTION OF THE ASSESSING OFFICER WITH REGARD TO THE LEVY OF TAX U/S 115JB WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE WAS NOT ELIGIBLE FOR BENEFITS CLAIMED BY IT AS PER THE PROVISIONS OF SECTION 115JB BROUGHT IN THE STATUTE W.E.F 2001 - 02. 3. ON THE FACT S IN THE CIRCUMSTANCES OF THE CASE IN LAW, THE LD CIT (A) ERRED IN DELETING THE INTEREST CHARGED BY ASSESSING OFFICER U/S 234B ON THE INCOME ASSESSED U/S 115JB WITHOUT APPRECIATING THE FACTS OF THE CASE. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD CIT (A) ERRED IN NOT CONSIDERING THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. KOTAK MAHINDRA FINANCE LTD 265 ITR 119, IN WHICH IT IS HELD THAT INTEREST U/S 234B AND 234C IS AUTOMATIC ON IT BEING PROVED THAT THE ASSESSEE HAD COMMITTED A DEFAULT AS GOVERNED BY SECTION 234B AND 234C. 2 2. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING OF PERFUMES AND OTHER COSMETIC PRODUCTS FILED THE RETURN OF INCOME DECLARING T HE TOTAL LOSS OF RS. 74.4 LAKHS. IN THE SCRUTINY ASSESSMENT, ASSESSING OFFICER COMPUTED THE TOTAL INCOME UNDER NORMAL PROVISIONS AS WELL AS UNDER THE MAT PROVISIONS U/S 115JB OF THE ACT AND HELD THAT ASSESSEE IS SUBJECT TO TAX UNDER THE MAT PROVISIONS. W HILE COMPUTING THE INCOME, ASSESSING OFFICER DID NOT GIVE ANY DEDUCTION ON ACCOUNT OF UNABSORBED BROUGHT FORWARD DEPRECIATION OF THE AY 2006 - 2007. FURTHER, ASSESSING OFFICER CHARGED THE INTEREST U/S 234B OF THE ACT. 3. DURING THE PROCEEDINGS BEFORE THE FI RST APPELLATE AUTHORITY IN CONNECTION WITH THE APPLICABILITY OF THE PROVISIONS OF SECTION 115JB OF THE ACT, ASSESSEE SUBMITTED THAT THE ASSESSEE IS A DIVIDEND PAYING COMPANY THEREFORE RELIED ON THE CBDT CIRCULAR NO.762 AS WELL AS THE DECISION OF THE ITAT B ANGALORE BENCH DECISION IN THE CASE OF M/S. PROCESS PUMPS (P) LTD VS.CIT 94 TTJ (BANG.) 190 (2005). AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, CIT (A) HELD IN PARA 3.3 THAT THE PROVISIONS OF SECTION 115JB ARE NOT TO BE INVOKED IN THIS CASE. ACCOR DINGLY HE GRANTED RELIEF TO THE ASSESSEE. FURTHER, ON THE ISSUE OF GRANTING OF DEDUCTION ON ACCOUNT OF UNABSORBED BROUGHT FORWARD DEPRECIATION, CIT (A) GRANTED RELIEF ON FINDING THAT THE ASSESSEE HAD A BROUGHT FORWARD DEPRECIATION AMOUNTING TO RS.19,35,934 / - WHICH IS A LESSER AMOUNT WHEN COMPARED WITH THAT OF THE BROUGHT FORWARD BUSINESS LOSS. FURTHER, CIT (A) ALSO GRANTED RELIEF SO FAR AS THE CHARGING OF INTEREST U/S 234B OF THE ACT. AGGRIEVED WITH THE SAME REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 4. DU RING THE PROCEEDINGS BEFORE US, IN CONNECTION WITH GROUND NO.1 AND 2, LD DR RELIED ON THE DECISION OF THE ITAT COCHIN BENCH IN THE CASE OF HOTEL & ALLIED TRADES (P) LTD VS. DCIT [2012] 26 TAXMANN.COM 328 (COCHIN - TRIB.) AND MENTIONED THAT NO DEDUCTION SHOUL D BE ALLOWED TO THE ASSESSEE WHEN BROUGHT FORWARD UNABSORBED BUSINESS LOSS IS NIL AS PER THE BOOKS. ASSESSEE IS NOT ALLOWED TO CLAIM DEDUCTION OF BROUGHT FORWARD DEPRECIATION WHILE COMPUTING THE BOOK PROFITS U/S 115JB OF THE ACT. HOWEVER, THERE IS NO INF ORMATION ABOUT THE C O N D I T I O N R E L A T I N G T O DIVIDEND PAYABILITY OF THE ASSESSEE , W H I C H W A S T H E C A S E D E C I D E D BY THE COCHIN 3 BENCH. LD DR DOES NOT HAVE ANYTHING TO SAY ON THE APPLICABILITY OF THE SAID CBDT CIRCULAR NO.762, WHICH WAS ACTUALLY ISSUED IN CONNECTION WITH THE PROVISIONS OF SE CTION 115JA OF THE ACT. ON THE ISSUE OF CHARGEABILITY OF INTEREST U/S 234B OF THE ACT, LD DR RELIED ON THE JUDGMENT OF THE BOMBAY HIGH COURT IN THE CASE OF CIT VS. KOTAK MAHINDRA FINANCE LTD [2004] 265 ITR 119 (BOM). IN REPLY, LD COUNSEL FOR THE ASSESSEE RELIED ON THE ORDER OF THE CIT (A). 5. ON THE ISSUE RAISED IN GROUND NOS.1 AND 2, IT IS THE SUBMISSION OF THE LD COUNSEL THAT IN VIEW OF THE FACT THAT ASSESSEE IS NOT A DIVIDEND PAYING COMPANY AND THE CASE IS COVED BY THE DECISION OF THE ITAT BANGALORE BE NCH IN THE CASE OF PROCESS PUMPS (P) LTD (SUPRA). HOWEVER, IT IS FAIRLY ADMITTED THAT THE APPLICABILITY OF THE SAID CIRCULAR TO THE FACTS OF THE PRESENT CASE WERE NOT EXAMINED BY THE ASSESSING OFFICER AND THE CIT (A) AND ALSO NOT CALLED FOR ANY REMAND REP ORT ON THIS ISSUE. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE RELEVANT MATERIAL PLACED BEFORE US. ON PERUSAL OF THE CIT (A)S ORDER, WE FIND, THE SAME DOES NOT INDICATE AS TO HOW THE SAID CIRCULAR HAS ISSUED FOR THE PURPOSE OF SECTION 115JA SHALL BE APPLIED TO THE PRESENT CASE WHETHER THE BOOKS PROFITS WERE COMPUTED U/S 115JB OF THE ACT. THIS ISSUE REQUIRES EXAMINATION OF FACT RELATING TO DIVIDEND PAYING HISTORY OF THE ASSESSEE, THE APPLICABILITY O F THE DECISION OF ITAT, COCHIN BENCH IN THE CASE OF HOTEL & ALLIED TRADES (P) LTD (SUPRA). ACCORDINGLY, WE REMAND THIS ISSUE RAISED IN GROUND NO.1 AND 2 OF THE APPEAL TO THE FILE OF THE ASSESSING OFFICER FOR APPLYING THE SAID DECISIONS (SUPRA) AND DECIDIN G THE ISSUE AFRESH AFTER PROVIDING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AS PER LAW. ACCORDINGLY, GROUND NOS. 1 AND 2 ARE ALLOWED FOR STATISTICAL PURPOSES. 7. THE ISSUE OF CHARGEABILITY U/S 234B IS CONSEQUENTIAL TO THE FINDING OF THE ASSE SSING OFFICER ON GROUND NOS. 1 AND 2 OF THE APPEAL. IN ANY CASE, IT IS BINDING ON THE ASSESSING OFFICER TO FOLLOW THE JUDGMENT OF THE BOMBAY HIGH COURT IN THE CASE OF KOTAK MAHINDRA FINANCE LTD (SUPRA) AND THE ASSESSING OFFICER SHOULD FOLLOW THE SAME AS P ER THE LAW. THUS, WE REMAND ALL THE GROUNDS RAISED BY THE ASSESSEE TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION AND DECISION IN THE MATTER. ACCORDINGLY, GROUNDS RAISED BY THE REVENUE ARE ALLOWED FOR STATISTICAL PURPOSES. 8. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. 4 ORDER PRONOUNC ED IN THE OPEN COURT ON 1 4 T H JANUARY, 2015. S D / - S D / - (VIJAY PAL RAO) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 1 4 .1.2015 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI