INDAGE HOTELS LTD, MUMBAI V. ACIT CIR 6(1), MUMBAI

ITA 4464/MUM/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3558 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-06-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Next Hearing Date: 07-01-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 31-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P K SHUKLA
• Assessee Lawyers: MITUL GORADIA
• Keywords: Revised return
• Section: 139(5)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUM BAI .. , !,#$ # % BEFORE SHRI B. R. MITTAL, JM AND SHRI SANJAY ARORA , AM ./ I.T.A. NO.4464/MUM/2010 ( ' ( )( ' ( )( ' ( )( ' ( )( / / / / ASSESSMENT YEAR: 2006-07) INDAGE HOTELS LTD., 5, NAV BHAVNA CO.OP. SOCIETY, 3 RD FLOOR, PRABHADEVI, MUMBAI-400 025 ' ' ' ' / VS. ASST. CIT, CIRCLE 6(1), AAYKAR BHAVAN, MUMBAI-400 021 * #$ ./ + ./ PAN/GIR NO. AAACB 5799 G ( *, / APPELLANT ) : ( -.*, / RESPONDENT ) *, / # / APPELLANT BY : SHRI SUNIL NAHTA & SHRI MITUL GORADIA -.*, 0 / # / RESPONDENT BY : SHRI P. K. SHUKLA ' 0 12$ / // / DATE OF HEARING : 29.04.2013 3 ) 0 12$ / DATE OF PRONOUNCEMENT : 21.06.2013 #4 / O R D E R PER SANJAY ARORA, A. M.: THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-14, MUMBAI (CIT(A) FOR SH ORT) DATED 22.02.2010, DISMISSING THE ASSESSEES APPEAL CONTESTING ITS ASSESSMENT U/S .143(3) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) FOR THE ASSESSMENT YEAR (A. Y.) 2005-06 VIDE ORDER DATED 29.12.2008. 2 ITA NO.4464/MUM/2010 (A.Y. 2006-07) INDAGE HOTELS LTD. VS. ASST. CIT 2.1 AT THE VERY OUTSET, PLACING A COPY OF THE DECIS ION BY THE SMC BENCH OF THE TRIBUNAL IN THE CASE OF CHAMPAGNE VINEYARDS LTD. VS. DY. CIT (IN ITA NOS.4255, 4256/MUM/2011 DATED 07.12.2012) ON RECORD, IT WAS S UBMITTED BY THE LD. AR, THE ASSESSEES COUNSEL, THAT THE ISSUE ARISING IN THE I NSTANT APPEAL IS SQUARELY COVERED BY THE SAID ORDER. THE ONLY ISSUE ARISING IN THE APPEAL IS WHETHER THE INCOME REVISED BY THE ASSESSEE, PER THE REVISED COMPUTATION FILED WITH THE ASSESSING OFFICER (AO) ON 08.12.2008, PURSUANT TO THE SCHEME OF DEMERGER BEIN G APPROVED BY THE HONBLE JURISDICTIONAL HIGH COURT VIDE ITS ORDER DATED 14.0 3.2008, WHEREBY THE HOTEL UNDERTAKING OF THE ASSESSEE-COMPANY STANDS TRANSFERRED W.E.F. 0 1.01.2006 TO M/S. CHAMPAGNE VINEYARDS LTD., THE ASSESSEE-APPELLANT IN THE DECIS ION BY THE TRIBUNAL REFERRED TO SUPRA, IS TO BE TAKEN INTO ACCOUNT IN ASSESSING ITS INCOME FO R THE CURRENT YEAR. BOTH THE AUTHORITIES BELOW HAVE DECLINED TO ENTERTAIN THE SAID REVISED C OMPUTATION, EXCLUDING THE INCOME OF THE SAID UNIT, ON THE BASIS THAT THE SAME COULD NOT BE CONSIDERED AS A REVISED RETURN U/S. 139(5) OF THE ACT, THE TIME LIMIT OF WHICH EXPIRED ON 31.03.2008. THE TRIBUNAL IN THE CASE OF CHAMPAGNE VINEYARDS LTD. (SUPRA), THE RESULTING COMPANY IN RESPECT OF THE DE MERGER AFORESAID, DECIDING THE SAME ISSUE, HAS HELD, WITH REFERENCE TO THE DECISIONS IN THE CASE OF PENTAMEDIA GRAPHICS LTD. VS. ITO [2010] 236 CTR 204 (MAD.) AND MARSHALL SONS & CO. (INDIA) LIMITED VS. ITO [1997] 223 ITR 809 (SC), THAT THE EFFECTIVENESS OF THE SCHEME AS APPROVED COULD NOT BE IGNORED BY REFERENCE TO SECTI ON 139(5) OF THE ACT. THE ORDER BY THE TRIBUNAL IN THE CASE OF BHARTI AIRTEL LTD. VS. ADDL. CIT (IN ITA NO.3907/DEL/2010 DATED 11.02.2011) STANDS ALSO NOTED BY IT. IN THIS VIEW O F THE MATTER, IT WAS PRAYED THAT THE IMPUGNED ASSESSMENT BE SET ASIDE, AND THE ASSESSING AUTHORITY DIRECTED FOR FRAMING THE ASSESSMENT IN TERMS OF THE ASSESSEES REVISED COMPU TATION. 2.2 THE LD. DR, ON THE OTHER HAND, WOULD PLACE RELI ANCE ON THE ORDERS OF THE AUTHORITIES BELOW, CLAIMING THAT NO REASONABLE JUSTIFICATION FO R THE DELAY IN FILING THE REVISED RETURN, WHICH IN FACT WAS NOT EVEN PER THE PRESCRIBED FORM BUT ONLY BY WAY OF A COMPUTATION, STANDS ADVANCED BY THE ASSESSEE; THE ORDER BY THE H ONBLE HIGH COURT APPROVING THE DEMERGER HAVING BEEN ADMITTEDLY RECEIVED BY IT ON 2 7.03.2008, AND THE AUDIT OF THE 3 ITA NO.4464/MUM/2010 (A.Y. 2006-07) INDAGE HOTELS LTD. VS. ASST. CIT REVISED ACCOUNTS HAVING ALSO BEEN COMPLETED BY THE MONTH OF MAY, 2008, EVEN AS NOTED BY THE LD. CIT(A). AS SUCH, THE ASSESSEES CASE IS NOT MAINTAINABLE IN LAW; THE TIME LIMIT FOR FURNISHING THE REVISED RETURN UNDER THE ACT HAV ING EXPIRED ON 31.03.2008 AND, FURTHER, BEING INFLEXIBLE, AS WELL AS ON FACTS. 3. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. WE ARE UNABLE TO APPRECIATE THE CONTROVERSY ARISING IN THE INSTANT CASE. THIS IS AS THE BASIC FACTS ARE CLEAR AND UNDISPUTED, AND THE L AW IN THE MATTER, ABUNDANTLY CLEAR. THE EFFECTIVE AND THE APPOINTED DATE OF THE DEMERGER SC HEME UNDER REFERENCE IS JANUARY 01, 2006. ACCORDINGLY, THE INCOME OF THE ASSESSEE UP TO 31.12.2005 IS TO BE TAKEN ON THE BASIS OF THE STATE OF AFFAIRS OBTAINING PRIOR TO TH E DEMERGER, WHILE THAT FOR THE SUBSEQUENT PERIOD, AFTER GIVING EFFECT TO THE DEMERGER. THE SA ME IS THE LEGAL CONSEQUENCE OF THE SCHEME OF THE DEMERGER, WHICH THOUGH OPERATIVE FROM THE APPOINTED DATE (01.01.2006), WOULD TAKE EFFECT ON THE CERTIFIED COPY OF THE ORDE R OF THE HONBLE HIGH COURT APPROVING THE SAME BEING FILED WITH THE CONCERNED REGISTRAR O F COMPANIES (SEC.391(3) OF THE COMPANIES ACT, 1956). THE LAW DOES NOT ADMIT OF ANY VARIANCE ON THIS SCORE. IT NEEDS TO BE REALIZED THAT THE INCOME ARISING TO THE TWO ENTI TIES, I.E., THE ASSESSEE-DEMERGED COMPANY AND THE TRANSFEREE-COMPANY, STANDS MODIFIED IN VIEW OF THE ORDER OF THE HONBLE HIGH COURT APPROVING THE SCHEME OF MERGER OR DEMERG ER, AS THE CASE MAY BE, SO THAT THE NORMAL PROCEDURE OF ASSESSMENT, INCLUDING AS TO THE TIME LIMIT AVAILABLE FOR FILING THE REVISED RETURN U/S. 139(5), WOULD BE TO NO EFFECT. AS REGARDS THE PROCEDURAL ASPECT, THE ASSESSMENT PR OCEDURE, I.E., IN RESPECT OF THE ASSESSMENT OF INCOME OF THE DEMERGED UNIT AFTER 31. 12.2005, IS TO BE ON THE TRANSFEROR- COMPANY PRIOR TO THE FILING OF THE ORDER BY THE HON BLE HIGH COURT WITH THE CONCERNED REGISTRAR, AND ON THE TRANSFEREE (RESULTING) COMPAN Y THEREAFTER. THIS IS AS THE FILING OF THE SAID ORDER WITH THE REGISTERING AUTHORITY OPERATES AS A PUBLIC NOTICE OF THE ORDER BY THE HONBLE HIGH COURT TO ALL CONCERNED, INCLUDING THE REVENUE, AND ALSO THAT ALL THE PROCEDURAL FORMALITIES IN ITS RESPECT, INCLUDING AS MAY HAVE BEEN STIPULATED BY THE HONBLE COURT OR AS PER LAW, STAND DULY COMPLIED WITH. 4 ITA NO.4464/MUM/2010 (A.Y. 2006-07) INDAGE HOTELS LTD. VS. ASST. CIT IN THE INSTANT CASE, THE ASSESSEE-COMPANY, BY FILIN G ITS REVISED COMPUTATION, IS ONLY INSISTING FOR THE ASSESSMENT OF ITS INCOME IN TERMS OF THE DEMERGER, SO THAT THE INCOME OF THE DEMERGED UNIT, I.E., THE HOTEL UNDERTAKING, WOU LD BE ASSESSABLE IN ITS HANDS ONLY FOR THE PERIOD PRIOR TO THE DEMERGER. AS SUCH, SUBJECT TO THE ORDER OF THE HONBLE HIGH COURT APPROVING THE SCHEME OF DEMERGER HAVING BEEN FILED WITH THE ROC, THE AO WAS BOUND TO GIVE LEGAL EFFECT TO THE SAID ORDER ON IT BEING COM MUNICATED THERETO DESPITE THE EXPIRY OF TIME FOR FURNISHING THE REVISED RETURN UNDER THE AC T, SO THAT, AS AFORESAID, THE INCOME OF THE DEMERGED UNIT WOULD BE ASSESSABLE IN ITS HANDS ONLY UP TO 31.12.2005, AND THE INCOME THEREAFTER HAS TO BE EXCLUDED, AS WE UNDERSTAND THE ASSESSEES CLAIM TO BE. THE ORDER BY THE TRIBUNAL IN THE CASE OF THE TRANSFEREE-COMPANY ALSO HOLDS LIKEWISE WITH REFERENCE TO THE DECISIONS SUPRA CLARIFYING THE LAW IN THE MATTE R. WE, THEREFORE, HAVE NO HESITATION IN CONFIRMING THE ASSESSEES STAND. WE DECIDE ACCORDIN GLY. 4. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED ON THE AFORESAID TERMS. 5 16 ' (51 0 7 8$1 91 0 1 :; ORDER PRONOUNCED IN THE OPEN COURT ON JUNE 21, 2013 #4 0 3 ) $# <'6 =' 21, 2013 0 B SD/- SD/- (B. R. MITTAL) (SANJAY ARORA) / JUDICIAL MEMBER #$ / ACCOUNTANT MEMBER MUMBAI; <' DATED : 21 .06.2013 .'../ ROSHANI , SR. PS 5 ITA NO.4464/MUM/2010 (A.Y. 2006-07) INDAGE HOTELS LTD. VS. ASST. CIT #4 0 -1C D#C)1 #4 0 -1C D#C)1 #4 0 -1C D#C)1 #4 0 -1C D#C)1/ COPY OF THE ORDER FORWARDED TO : 1. *, / THE APPELLANT 2. -.*, / THE RESPONDENT 3. E ( ) / THE CIT(A) 4. E / CIT CONCERNED 5. CHB -1' , , / DR, ITAT, MUMBAI 6. BI( J / GUARD FILE #4' #4' #4' #4' / BY ORDER, 7 77 7/ // /: : : : (DY./ASSTT. REGISTRAR) , , , , / ITAT, MUMBAI