D.C.I.T. CIRCLE 3(3), MUMBAI V. RICOH INDIA LTD., MUMBAI

ITA 4463/MUM/2012

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3190 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 11 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 21-01-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 02-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SUR ESH MALIK
• Keywords: Depreciation; Opportunity of being heard; Unabsorbed depreciation
• Section: 143(3); 115JB; 154

Judgement Text

1 ITA NO.4463/MUM/2012 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D, MUMBAI BEFORE SHRI JOGINDER SINGH (JUDICIAL MEMBER) AND SHRI ASHWANI TANEJA (ACOUNTANT MEMBER) I.T.A. NO.ITA NO.4463/MUM/2012 (ASSESSMENT YEAR : 2005-06) DY.ACIT, CIRCLE 3(3), MUMBAI VS M/S RICOH INDIA LTF D 1201, 1 ST FLOOR, BLDG NO.12, SOLITAIRE CORPORATE PARK, ANDHERI GHATKOPAR LINK ROAD ANDHERI (E), MUMBAI 93 PAN : PAN :AACR4151J (APPELLANT) (RESPONDENT) APPELLANT BY SURBHI SHARMA RESPONDENT BY SURESH MALIK DATE OF HEARING : 07-06-2016 DATE OF PRONOUNCEMENT : -06-2016 O R D E R PER ASHWANI TANEJA, AM THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF THE LD.COMMISSIONER OF INCOME-TAX IT(APPEALS) [HEREINAF TER CALLED CIT(A)] ORDER DATED 15-02-2012 PASSED AGAINST THE ORDER OF THE AS SESSING OFFICER(HEREINAFTER CALLED ASSESSING OFFICER) U/S 154 OF THE INCOME-TAX ACT, 1961 DATED 11-03-2010 FOR A.Y. 2005-06 ON THE FOLLOWING GROUNDS: 2 ITA NO.4463/MUM/2012 1(A).ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE ID. CIT (A) ERRED IN DELETING THE ADDITION OF' 2,82 ,31,142/-, MADE U/S 115JB BY WAY OF DISALLOWANCE OF BROUGHT FORWARD UN ABSORBED DEPRECIATION, WITHOUT APPRECIATING THAT AS PER THE PROVISIONS OF SEC. 79, LOSS PRIOR TO A.Y 1999-00 IS NOT ALLOWED TO BE CARR IED FORWARD AND SET OFF.' L(B). 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE ID. CIT (A) ERRED IN DELETING THE ENHANCEMENT MADE TO T HE BOOK PROFIT U/S 154 BY WAY OF DISALLOWANCE OF BROUGHT FORWARD UN AB SORBED DEPRECIATION, WITHOUT APPRECIATING THAT THE DISALLO WANCE WAS MADE AFTER ISSUE OF PROPER NOTICE U/S 154 AND AFTER GIVING PRO PER OPPORTUNITY OF BEING HEARD TO THE ASSESSEE.' 2. 'THE APPELLANT PRAYS THAT THE ORDER OF CIT CA) O N THE ABOVE GROUND BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE REST ORED'. 2. DURING THE COURSE OF HEARING, LD.DR SUBMITTED TH AT THE ASSESSING OFFICER HAD RIGHTLY DENIED THE BENEFIT OF BROUGHT FORWARD U NABSORBED DEPRECIATION APPLYING THE PROVISIONS OF SECTION 79 UNDER WHICH D ISALLOWANCE WAS MADE IN A.Y. 1999-2000 WHEREIN CARRY FORWARD OF LOSS WAS DE NIED. 3. ON THE OTHER HAND, THE LD.COUNSEL OF THE ASSESSE E BROUGHT TO THE NOTICE OF THE BENCH THAT THE ASSESSING OFFICER MISUNDERSTO OD THE FACTS OF THE CASE IN A.Y. 1999-2000. THE ASSESSING OFFICER HAD REJECTED THE CLAIM OF CARRY FORWARD OF UNABSORBED LOSSES BY APPLYING THE PROVISIONS OF SECTION 79. AGAINST THE SAID ORDER APPEAL WAS FILED BEFORE THE LD. CIT(A) WHEREI N ORDER OF THE ASSESSING OFFICER WAS REVERSED AND ASSESSING OFFICER WAS DIRE CTED TO ALLOW CARRY FORWARD OF EARLIER YEAR LOSSES. THE LD.COUNSEL ALSO DREW O UR ATTENTION ON A CHART SHOWING YEAR-WISE BREAK UP OF UNABSORBED LOSSES AND UNABSORBED DEPRECIATION SHOWING THAT THE TOTAL AMOUNT OF UNABS ORBED DEPRECIATION AGGREGATING TO RS.308.89 LAKHS WAS LOWER THAN THE U NABSORBED BUSINESS LOSS 3 ITA NO.4463/MUM/2012 AGGREGATING TO RS.2,476.40 LAKHS AND THEREFORE, UNA BSORBED DEPRECIATION WAS RIGHTLY REDUCED FROM THE AMOUNT OF BOOK PROFIT TAXA BLE U/S 115JB. THERE WAS NO MISTAKE IN THE ASSESSMENT ORDER PASSED U/S 143(3 ) MUCH LESS, A MISTAKE APPARENT FROM RECORD, AND THEREFORE, ORDER PASSED U /S 154 WAS LEGALLY AND FACTUALLY INCORRECT AND, THEREFORE, RIGHTLY REVERSE D BY THE LD.CIT(A;HENCE, THE ORDER OF THE LD.CIT(A) SHOULD BE UPHELD AND APPEAL OF THE REVENUE SHOULD BE DISMISSED. 4. WE HAVE GONE THROUGH THE ORDERS PASSED BY LOWER AUTHORITIES AND STATEMENTS MADE BY BOTH THE SIDES BEFORE US. IN TH IS CASE, ORIGINAL ASSESSMENT ORDER WAS PASSED U/S 143(3) DT. 31-12-2008. SUBSEQ UENTLY, THE ASSESSING OFFICER ISSUED NOTICE U/S 154 ON 11-03-2010 PROPOSI NG TO RECTIFY THE EARLIER ASSESSMENT ORDER ON THE GROUND THAT CREDIT FOR UNAB SORBED DEPRECATION / LOSS WAS WRONGLY GRANTED AND THAT MISTAKE WAS REQUIRED T O BE CORRECTED. ON THE SAME DATE, I.E. ON 11-03-2010 WITHOUT GIVING ANY OP PORTUNITY TO THE ASSESSEE AND WITHOUT WAITING FOR ANY REPLY OF THE ASSESSEE, THE ASSESSING OFFICER PASSED ORDER U/S 154 BY GIVING CREDIT OF LESSER AMOUNT OF UNABSORBED DEPRECIATION, I.E. FOR RS.2,65,57,858 TO COMPUTE THE BOOK PROFIT LIABL E TO BE TAXED U/S 115JB. 5. BEING AGGRIEVED, THE ASSESSEE FILED APPEAL BEFOR E THE LD.CIT(A) WHEREIN COMPLETE FACTS WERE ANALYSED BY LD.CIT(A) AND IT WA S NOTED BY HIM THAT THE LD.AO MISUNDERSTOOD THE FACTS OF THE CASE AND WRONG LY PASSED ORDER U/S 154 WHEREAS SET OFF OF UNABSORBED DEPRECIATION AGGREGAT ING TO RS.308.89 LAKHS WAS RIGHTLY GRANTED BY THE ASSESSING OFFICER HIMSELF IN THE ORIGINAL ORDER PASSED U/S 143(3). THE BRIEF SUBMISSIONS OF THE ASSESSEE BEFO RE THE LD.CIT(A) AND FINDING OF LD.CITA)ARE REPRODUCED AS UNDER:- 4 ITA NO.4463/MUM/2012 4.1 (C) THE APPELLANT'S AR FURTHER ARGUED THAT EVEN ON MERITS THERE IS NO MISTAKE IN THE FIGURE OF RS.3,08,89,000/-- REPRE SENTING THE AMOUNT OF LOSS BROUGHT FORWARD OR UNABSORBED DEPRECIATION, WHICHEVER IS LESS AS PER BOOKS OF ACCOUNT, CONSIDERED FOR WORKING OUT THE FIGURE OF BOOK PROFIT U/S.115JB IN ASSESSMENT ORDER DATED 31.12.20 0B AND HENCE 'HERE WAS ABSOLUTELY NO CASE FOR RECTIFICATION OF T HIS FIGURE. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE APPELLANT'S AR SUBMITTED AN AUTHENTICATED STATEMENT FROM THE STATUTORY AUDITORS OF THE APPELLANT COMPANY MENTIONING FIGURES OF BUSINESS LOSS AS WELL AS UNABSORBED DEPRECIATION RIGHT FROM AYR.1 994-95 (FIRST YEAR OF APPELLANT COMPANY ) TO DATE. THE A.R. FURTHER SUBMITTED PHOTOCOPIES OF PROFIT AND LOSS ACCOUNT OF THE APPELLANT COMPANY FOR ALL THESE YEAR S TO SUPPORT THIS STATEMENT. THE A.R. SUBMITTED THAT THE STATEMENT CL EARLY SHOWS THAT EVEN AFTER ADJUSTMENT OF PROFITS FOR A.YRS.2000-01, 2001-(12, 2002-02, 2003-04 AND 2004-05 THE UNABSORBED BUSINESS LOSS WA S RS.24,76,40,OOO/- WHEREAS THE UNABSORBED DEPRECIATI ON WAS RC;.3,OB,89,OOO/-. SINCE THE FIGURE OF UNABSORBED D EPRECIATION' WAS LESSER OF THE TWO, THE SAME WAS RIGHTLY CLAIMED AS DEDUCTION IN ITR JAR AYR.2005-06 11ED BY THE APPELLANT COMPANY AND THE S AME WAS RIGHTLY ACCEPTED BY THE ADD!. CIT., AFTER DUE VERIF ICATION IN ASSESSMENT ORDER DATED 31.12.200B. 4.2 I HAVE CONSIDERED THE AO.'S ORDER AS WELL AS AP PELLANTS ARS SUBMISSION. HAVING CONSIDERED BOTH AND AFTER TAKING NOTE OF THE APPELLANT AR'S ARGUMENTS, I AM OF THE CONSIDERED VI EW THAT THE A O.'S ACTION OF PASSING THE ORDER U/S.154 OF THE ACT WAS COMPLETELY LACKING IN RESPECT OF PROVIDING A REASONABLE OPPORTUNITY TO HE APPELLANT AS IT WAS A PRIMARY REQUIREMENT ON HER PAT OF HE ASSESSIN G OFFICER IN VIEW OF THE EXPLICIT PROVISIONS OF SECTION 154(1) AND 15 4(3) OF THE ACT. THUS, TAKING NOTE OF THE APEX COURT JUDGEMENT IN TH E CASE OF T.S. BALARAM, ITO VS. VOLKAT BROTHERS (19761) REPORTED I N 82 ITR PAGE 50 AND HERO CYCLES LTD & OTHERS REPORTED IN 228 ITR PA GE 463, I AM OF THE CONSIDERED VIEW THAT THE A.O. HAS NOT EXERCISED HIS POWER AVAILABLE U/S.154 CORRECTLY AS THE PROVISIONS OF SE CTION 154 RESTRICTS THE POWER OF THE AO. TO MISTAKES APPARENT FROM THE RECORD. HENCE, EVEN ON THIS PRETEXT ALSO, THE AO.'S ORDER CANNOT B E HELD TO BE JUSTIFIED AND SUSTAINABLE. FURTHER, EVEN IN THE APP ELLATE PROCEEDINGS, THE APPELLANT'S AR FILED A DETAILED CHART OF CALCUL ATION OF AMOUNT ELIGIBLE FOR DEDUCTION U/S. '115JB OF THE ACT SINCE THE APPELLANT COMPANY'S INCEPTION FROM F.YR.1993-94 TO F.YR.2003- 04 WHICH IS 5 ITA NO.4463/MUM/2012 BASED ON THE AUDITED ACCOUNTS OF THE APPELLANT COMP ANY WHICH WERE FILED BY THE APPELLANT COMPANY WHILE FILING RETURN OF INCOME. HAVING TAKEN NOTE OF THIS CHART SUBMITTED BY THE AR, I ALS O FIND THAT THE CLAIM OF THE APPELLANT COMPANY IN AFORESAID PARA 4.1 OF T HIS ORDER IS COMPLETELY JUSTIFIED AND CORRECT. ALL THESE FACTS F OR CALCULATION OF AMOUNT ELIGIBLE FOR DEDUCTION U/S.115JB WERE AVAI!A BLE WITH THE A.O ALONGWITH THE RETURN OF INCOME FILED. THE APPELLANT 'S SUBMISSION OF THE CHART IS ANNEXED WITH THIS ORDER AS ANNEXURE 'A '. HAVING TAKEN NOTE OF THE SAME, I FIND THAT EVEN ON T.IE BASIS OF APPELLANT'S RECORD, THE AO. WAS COMPLETELY UNJUSTIFIED WHILE RECTIFYING THE AFORESAID ORDER. THUS, AFTER TAKING NOTE OF THE APPELLANT'S SUBMISSION, AO.'S ORDER AND ALL THE FACTS AVAILABLE ON RECORD, I CONS IDER IT PROPER AND APPROPRIATE TO HOLD THAT THE A.O. WAS COMPLETELY UN JUSTIFIED IN HIS ACTION IN RECTIFYING THE ASSESSMENT ORDER. ACCORDIN GLY, THE SAME IS DELETED. THUS, APPELLANT'S THIS GROUND OF APPEAL I S DECIDED IN FAVOUR OF THE APPELLANT. 6. IT IS THUS NOTED FROM THE PERUSAL OF THE ABOVE T HAT THE CIT(A) HAD ANALYSED THE FACTS IN DETAIL AND FOUND THAT THERE W AS NO MISTAKE IN THE ORIGINAL ASSESSMENT ORDER AND CREDIT OF THE UNABSORBED DEPRE CIATION WAS RIGHTLY GRANTED TO THE ASSESSEE AT RS.308.89 LAKHS. IT IS FURTHER NOTED BY US ON PERUSAL OF ORDER PASSED BY LD.CIT(A) DATED 30-09-2004 FOR A .Y. 1999-2000 IN THE CASE OF ASSESSEE COMPANY REVEALS THAT THE CLAIM OF CARRY FO RWARD OF LOSSES WHICH WAS REJECTED BY THE ASSESSING OFFICER U/S 79 WAS ALLOWE D BY LD.CIT(A), WITH FOLLOWING OBSERVATIONS : THE NEXT GROUND OF APPEAL IS DIRECTED AGAINST THE DISALLOWANCE OF BROUGHT FORWARD LOSSES. THE AO HAD INVOKED SECTION 79 OF THE IT ACT AND HAS DISQUALIFIED THE EARLIER LOSSES FOR CARRY F ORWARD AND SET OFF BECAUSE SHARE HOLDING PATTERN OF THE APPELLANT COMP ANY WAS SUBSTANTIALLY CHANGED. IT WAS SUBMITTED BY THE APP ELLANT THAT THE SAID PROVISIONS ARE NOT APPLICABLE TO PUBLIC LTD C OMPANY AND THEREFORE IT IS ENTITLED TO CARRY FORWARD THE LOSSE S EVEN ON CHANGE OF SHARE HOLDING PATTERN. SINCE THE APPELLANT IS A PU BLIC LTD COMPANY 6 ITA NO.4463/MUM/2012 LISTED ON STOCK EXCHANGE THE CARRY FORWARD OF EARLI ER LOSSES CANNOT BE DENIED TO THE APPELLANT IN TERMS OF SECTION 79. . THE AO IS DIRECTED TO ALLOW THE CARRY FORWARD OF EARLIER YEARS LOSSES. 7. IT WAS FURTHER STATED AT THE BAR BY THE LD.COUNS EL THAT ABOVESAID ORDER OF LD.CIT(A) ATTAINED FINALITY AS NO APPEAL W AS FILED BY THE REVENUE AGAINST THE SAID ORDER. THE FACTS STATED BY THE LD .COUNSEL WERE NOT DISPUTED BY THE LD.DR. THUS, THE POSITION THAT EME RGES BEFORE US IS THAT ASSESSEE WAS ENTITLED TO GET THE CREDIT OF UNABSORB ED DEPRECIATION OR UNABSORBED LOSSES, WHICHEVER IS LESS. IT IS SEEN O N THE BASIS OF CHART WHICH WAS ATTACHED AS ANNEXURE A BY LD.CIT(A) TO HIS OR DER THAT AMOUNT OF UNABSORBED BUSINESS LOSS WAS FOR RS.24,76,40,000 AS AGAINST AMOUNT OF UNABSORBED DEPRECATION OF RS.308.89 LAKHS. THUS, T HE AMOUNT OF UNABSORBED DEPRECIATION WAS LESS AND, THEREFORE, AS SESSEE WAS ELIGIBLE TO GET THE BENEFIT OF THE SAME A DEDUCTION FROM THE BO OK PROFITS TO COMPUTE THE TAXABLE AMOUNT OF BOOK PROFITS U/S 115JB. THUS , THERE WAS NO MISTAKE, MUCH LESS A MISTAKE APPARENT ON RECORD, AN D THEREFORE, THE LD.CIT(A) HAD RIGHTLY QUASHED THE ORDER PASSED U/S 154. NO INTERFERENCE IS CALLED FOR IN THE ORDER OF THE LD.CIT(A), AND THERE FORE, THE SAME IS HEREBY UPHELD. 8. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DI SMISSED. ORDER PRONOUNCED ON THIS 15 TH DAY OF JUNE, 2016. SD/- SD/- (JOGINDER SINGH) (ASHWANI TANEJA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT : 15 TH JUNE, 2016 PK/- 7 ITA NO.4463/MUM/2012 COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE LD. DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE , D-BENCH (TRUE COPY) BY ORDER ASSTT.REGISTRAR, ITAT, MUMBAI BENCHES