DCIT CIR 3(1), MUMBAI V. CONCAST (I) LTD, MUMBAI

ITA 4577/MUM/2013

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0672 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-05-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 18-05-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 10-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEIL PHILIP
• Keywords: Reopening of assessment; Period of limitation; Difference of opinion; Change of opinion
• Section: 143(3); 147; 148

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI N.K . BILLAIYA, A CCOUNTANT M EMBER / I .T.A. NO . 4577/MUM/2013 ( / ASSESSMENT YEAR : 2004 - 05 THE D Y. CIT, CIRCLE 3(1), AAYAKAR BHAVAN, MUMBAI - 400 020 / VS. M/S. CONCAST (INDIA) LTD., 47 - 48, JOLLY MAKER CHAMBER - II, NARIMAN POINT, MUMBAI - 400 021 ./ ./ PAN/GIR NO. : AAACC 1759M ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY: SHRI NEIL PHILIP / RESPONDENT BY : SHRI NIRAJ SETH / DATE OF HEARING : 18 . 0 5 .2015 / DATE OF PRONOUNCEMENT : 20 .0 5 .2015 / O R D E R PER N.K. BILLAIYA, AM: WITH THIS APPEAL, REVENUE HAS CHALLENGED THE CORRECTNESS OF THE ORDER OF THE LD. CIT(A) - 6 MUMBAI DT. 12.3.2013 PERTAINING TO ASSESSMENT YEAR 2004 - 05. 2. THE SUM AND SUBSTANCE OF THE GRIEVANCE OF THE REVENUE IS THAT THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE REOPENING OF ASSESSMENT WAS DUE TO MERE CHANGE OF OPINION AND THEREFORE BAD IN LAW. ITA. NO. 4577/M/2013 2 3. IN THIS CASE, THE ORIGINAL RETURN OF INCOME WAS FILED ON 29. 10.2004 DECLARING LOSS OF RS. 15,92,109/ - . THE ASSESSMENT WAS MADE U/S. 143(3) OF THE ACT ON 29.12.2006 BY WHICH THE TOTAL ASSESSED INCOME WAS COMPUTED AT RS. 2,93,09,580/ - . SUBSEQUENTLY, THE ASSESSMENT WAS REOPENED BY ISSUE OF NOTICE U/S. 148 OF THE ACT AFTER OBTAINING NECESSARY ADMINISTRATIVE APPROVAL. 4. THE REASONS RECORDED FOR REOPENING THE ASSESSMENT READ AS UNDER: IN THIS CASE, ASSESSMENT U/S. 143(3) OF THE I.T. ACT, 1961 WAS COMPLETED ON 29.12.2006, ASSESSING THE TOTAL INCOME AT RS. 2,93,09, 580/ - AS AGAINST INCOME RETURNED AT ( - ) RS. 15,92,109/ - . ON PERUSAL OF THE RECORDS, IT IS OBSERVED THAT WHILE DETERMINING THE TAXABLE INCOME, THE ASSESSEE WAS ALLOWED SET - OFF OF LONG TERM CAPITAL LOSS OF RS. 38,66,320/ - PERTAINING TO THE A.Y. 1997 - 98 AGAI NST THE SHORT TERM CAPITAL GAIN AMOUNTING TO RS. 38,66,320/ - OF THE CURRENT ASSESSMENT YEAR. CONSEQUENT TO AMENDMENT MADE TO SUB - SEC.1 OF SEC. 74 VIDE FINANCE ACT, 2002 W.E.F. 1.4.2003, THE BROUGHT FORWARD UNABSORBED LONG TERM CAPITAL LOSS CAN BE SET OFF ONLY AGAINST THE LONG TERM CAPITAL GAINS AND NOT AGAINST THE SHORT TERM CAPITAL GAINS. IN THIS CASE, EVIDENTLY, THE LONG TERM CAPITAL LOSS PERTAINING TO A.Y. 1997 - 98 HAS BEEN INCORRECTLY SET - OFF AGAINST THE SHORT TERM CAPITAL GAINS PERTAINING TO A.Y. 200 4 - 05. IN VIEW OF THE ABOVE, I HAVE REASON TO BELIEF THAT THE INCOME TO THE TUNE OF RS. 38,66,320/ - HAS ESCAPED ASSESSMENT RESULTING INTO SHORT LEVY OF TAX. 4.1. IN RESPONSE TO THIS ACTION OF THE AO, THE ASSESSEE FILED A DETAILED SUBMISSION VIDE LETTER DT. 11.11.2011. THE MAIN CONTENTION OF THE ASSESSEE WAS THAT IT HAS DISCLOSED ALL RELEVANT DETAILS RELATING TO SET OFF OF CARRIED FORWARD LONG TERM CAPITAL LOSS AGA INST SHORT TERM CAPITAL GAIN ITA. NO. 4577/M/2013 3 IN ITS ORIGINAL RETURN. THEREFORE, THERE IS NO FAILURE ON THE PART OF THE ASSESSEE. IT WAS FURTHER CONTENDED THAT AFTER THE AMENDMENT W.E.F. 1.4.2003, THE ACT IS SILENT ON THE SET OFF OF CARRIED FORWARD LOSSES THEREFORE IT CA N BE SAID THAT BROUGHT FORWARD LONG TERM CAPITAL LOSS CAN BE ALLOWED TO SET OFF AGAINST ANY CAPITAL GAINS. THE ASSESSEE RELIED UPON THE DECISION OF THE TRIBUNAL MUMBAI BENCH IN THE CASE OF GITA NJALI TRADING LTD. THE SUBMISSIONS MADE BY THE ASSESSEE DID NOT FIND ANY FAVOUR WITH THE AO. THE AO OBSERVED THAT THE DECISION RELIED UPON BY THE ASSESSEE HAS BEEN OVER RULED BY THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL MUMBAI IN THE CASE OF JCIT VS MOTOGOMERY EMERGING M A RKET FUNDS 100 ITD 217. DRAWIN G SUPPORT FROM THE DECISION OF THE SPECIAL BENCH, THE AO DISALLOWED THE SET OFF OF LONG TERM CAPITAL LOSS BROUGHT FORWARD FROM EARLIER YEARS AGAINST SHORT TERM CAPITAL GAIN. 5. THE ASSESSEE VEHEMENTLY CHALLENGED THE REOPENING OF THE ASSESSMENT BEFORE THE LD. CIT(A). IT WAS BROUGHT TO THE NOTICE OF THE LD. CIT(A) THAT THERE IS NO ALLEGATION IN REASONS RECORDED THAT THERE WAS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ITS ASSESSMENT. IT WAS CLAIMED TH AT IN THE ABSENCE OF ANY SUCH REASONS RECORDED, THE REOPENING OF ASSESSMENT IS NOT JUSTIFIED IN VIEW OF THE DECISION OF THE HONBLE DELHI HIGH COUT IN THE CASE OF HARYANA ACRYLIC MANUFACTURING CO. VS CIT 308 ITR 038. AFTER CONSIDERING THE FACTS AND THE SU BMISSIONS IN THE LIGHT OF THE PROVISO TO SEC. 147, THE LD. CIT(A) HELD AS UNDER: 3.3. IN THE PRESENT CASE, ASSESSMENT U / S 143(3) WAS MADE ON 29.12.2006. THE APPELLANT IN THE COMPUTATION OF INCOME FILED ALONG WITH THE RETURN OF INCOME, FILED ON 29.10.2004, HAS CLEARLY MENTIONED THAT LONG TERM CAPITAL LOSS OF AY 1997 - 98 IS SET OFF AGAINST SHORT TERM CAPITAL GAIN AND THE APPELLANT HAS GIVEN A NOTE STATING THAT THE RIGHT TO CARRY FORWARD LONG TERM CAPITAL LOSS AND SET OFF AGAINST SHORT TERM CAPITAL LOSS IS NOT ITA. NO. 4577/M/2013 4 EXTINGUISHED AS ACCRUED RIGHTS ARE SAVED, UNLESS THEY ARE TAKEN AWAY EXPRESSLY AS HELD IN 166 ITR 102 (SC). THE APPELLANT AT PAGE 8 OF THE RETURN OF INCOME IN SCHEDULE - E.3 HAS ALSO MENTIONED THAT CAPITAL GAIN LOSS OF RS. 1,03,08,3911 - IS BROUGHT FORWARD FROM THE PRECEDING ASSESSMENT YEAR AND RS. 38,66,3201 - IS SET OFF AGAINST CURRENT YEAR'S CAPITAL GAINS AND RS. 64,42,0711 - IS BEING CARRIED FORWARD. THE ASSESSING OFFICER IN THE ASSESSMENT ORDER U/S 143(3) AT PAGE 3 HAS GIVEN COMPUTATION OF INCOME IN WHICH HE HAS MENTIONED THE AMOUNT OF SHORT TERM CAPITAL GAIN ON SALE OF FIXED ASSETS AT RS. 43,57,945/ - LESS LOSS ON SALE OF INVESTMENT AT RS. 4,91,6251 - AND THE BALANCE AMOUNT OF SHORT TERM CAPITAL GAIN WAS SET OFF BY THE ASSESSING OFFICER AGAINST LONG TERM CAP ITAL LOSS OF AY 1997 - 98 CARRIED FORWARD. 3.4 AS THE MATERIAL FACT WAS DISCLOSED BY THE APPELLANT AND THE SAME WAS ALSO CONSIDERED BY THE AO WHILE MAKING ASSESSMENT U / S 143(3), THE REOPENING OF ASSESSMENT IS FOUND TO BE NOT VALID AND THE ORDER U/ S 147 DATE D 26.12.2011 IS, THEREFORE, QUASHED 6. AGGRIEVED BY THIS, THE REVENUE IS BEFORE US. 7. THE LD. DEPARTMENTAL REPRESENTATIVE STRONGLY SUPPORTED THE ASSESSMENT ORDER AND IN SUPPORT OF HIS CONTENTION, THE LD. DR RELIED UPON THE DECISION IN 348 ITR 439. 8. PER CONTRA, THE LD. COUNSEL FOR THE ASSESSEE REITERATED WHAT HAS BEEN SUBMITTED BEFORE THE LOWER AUTHORITIES. IT IS THE SAY OF THE LD. COUNSEL THAT WHILE CLAIMING THE SET OF IN THE ORIGINAL RETURN OF INCOME IN THE COMPUTATION OF INCOME ITSELF BY WAY OF A NOTE, THE ASSESSEE HAS BROUGHT TO THE NOTICE OF THE AO THAT IT IS RELYING UPON THE DECISION OF THE HONBLE SUPREME COURT 166 ITR 102. THE LD. COUNSEL CONCLUDED BY SAYING THAT THERE IS NO FAILURE ON THE PART OF THE ASSESSEE THEREFORE THERE IS NO ERROR IN THE FINDINGS OF THE LD. CIT(A). 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE DECISIONS RELIED UPON BY THE RIVAL PARTIES. IN THE CASE RELIED UPON BY TH E LD. DR IN 348 ITR 439, THE FACT SHOW THAT IN THAT CASE, THE ASSESSEE ITA. NO. 4577/M/2013 5 HAD CLAIMED CERTAIN DEDUCTION AND THAT CLAIM OF THE ASSESSEE WAS NOT FOUND CORRECT AS THE INVESTMENTS WERE MADE BEYOND THE PRESCRIBED PERIOD OF LIMITATION. IN THE CASE IN HAND, THE CLAI M OF THE ASSESSEE CANNOT BE SAID TO BE FALSE OR INCONTRAVENTION TO THE PROVISIONS OF LAW AS IT WAS SUPPORTED BY THE DECISION OF THE HONBLE SUPREME COURT IN 166 ITR 102. WE FIND THAT THIS FACT WAS BROUGHT TO THE NOTICE OF THE AO BY WAY OF A NOTE TO THE CO MPUTATION OF INCOME FILED WITH THE RETURN OF INCOME WHICH MEANS THAT WHEN THE ASSESSMENT WAS MADE ORIGINALLY U/S. 143(3) OF THE ACT, THE AO HAS EXAMINED THIS ISSUE AS IS EVIDENT FROM THE ASSESSMENT ORDER PLACED ON RECORD BEFORE US AND AFTER EXAMINING THE D ETAILS THE AO HAS ALLOWED THE SET OFF OF BROUGHT FORWARD LONG TERM CAPITAL LOSS FROM SHORT TERM CAPITAL GAINS. CONSIDERING ALL THESE FACTS IN TOTALITY, IN OUR HUMBLE OPINION, THERE IS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT. WE THEREFORE DO NOT FIND ANY REASON TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A). 10. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. OR DER PRONOUNCED IN THE OPEN COURT ON MAY , 2015 ( JOGINDER SING ) (N.K. BILLAIYA) /JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : MAY , 2015 . . ./ RJ , SR. PS