Winner Nippon Electronics Ltd., New Delhi V. ACIT, New Delhi

ITA 4659/DEL/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 53005 (ITAT-DELHI)
• Duration Of Justice: 11 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Next Hearing Date: 13-10-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 25-10-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K MONGA
• Assessee Lawyers: ARUN AHUJA
• Keywords: Depreciation; Set aside
• Section: 115JB; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH I NEW DELHI) BEFORE SHRI U.B.S. BEDI, JUDICIAL MEMBER AND SHRI B.K. HALDAR, ACCOUNTANT MEMBER I.T.A. NO.4659 /DEL/2010 ASSESSMENT YEAR : 2006-07 M/S WINNER NIPPON ELECTRONICS ACIT, LTD., C-105/4, NARAINA INDL. AREA, CIRCLE-18 (1), PHASE-I, NEW DELHI. V. NEW DELHI (APPELLANT) (RESPONDENT) PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO.AAACW AAACW AAACW AAACW- -- -1094 1094 1094 1094- -- -R RR R APPELLANT BY : SHRI K. SAMPATH, ADVOCATE & SHRI ARUN AHUJA, C.A. RESPONDENT BY : SHRI A.K. MONGA, SR. DR. ORDER PER B.K. HALDAR, AM: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD CIT(A) XXI, NEW DELHI DATED 23.8.2010 FOR ASSESSMENT YEAR 200 6-07. THE ASSESSEE HAS TAKEN FOLLOWING GROUNDS OF APPEALS:- 1. THE ORDER PASSED BY THE LD ASSESSING AUTHORITY IS ARBITRA RY, BAD IN LAW AND AGAINST THE FACTS OF THE CASE, 2. THE LD ASSESSING AUTHORITY COULD NOT COMPREHEND THE PRO VISIONS OF SECTION 115JB (MAT) AND THE FACT THAT SECTION 115J B (MAT) IS A SELF CONTAINED ACT IN ITSELF WHILE DENYING THE BENEFI T OF BROUGHT FORWARD LOSSES TO THE ASSESSEE. ITA NO4659/DEL/10 2 3. THE LD ASSESSING AUTHORITY HAS ERRED IN JUDGMENT BY INVO KING SECTION 79 APPLICABILITY, WHILE APPLYING THE PROVISIO NS OF SECTION 115JB OF THE ACT. 4. THE ASSESSEE RETAINS THE RIGHT TO ADD, AMEND OR ALTER AN Y OR ALL GROUNDS OF APPEAL. 2. THE ASSESSEE IS A LIMITED COMPANY WHERE PUBLIC ARE NO T SUBSTANTIALLY INTERESTED. DURING THE PREVIOUS YEAR UNDE R CONSIDERATION, THE SHAREHOLDING PATTERN OF THE COMPANY WAS CHANGED. IT SOLD 19,82,700 SHARES OUT OF TOTAL NUMBER OF SHARES OF 20,17 ,300 TO ONE M/S REGALA LETHEXTILE LTD. AS PER THE COMPUTATION OF INCOME TAXABLE INCOME WAS DISCLOSED AT NIL. WHILE MAKING THE COMPUTAT ION U/S 115JB OF THE ACT, THE ASSESSEE SET OFF THE BROUGHT FORWARD LOSS WITH THE NET PROFIT AND THE BOOK PROFIT WAS ARRIVED AT NIL. THE A SSESSING OFFICER HELD THAT IN VIEW OF SECTION 79 OF THE ACT, SET OFF OF BUSI NESS LOSSES OF EARLIER YEAR IN CASES OF COMPANIES WHERE THE CHANGE IS EFFECTED IN THEIR SHAREHOLDING AS IN THE INSTANT CASE WAS NOT PERMISSIBLE. AS THE BROUGHT FORWARD BUSINESS LOSS IN THE PRESENT CASE HAD TO BE CONSIDE RED AS NIL, NO SET OFF WAS ALLOWED BY THE ASSESSING OFFICER. THUS, THE TOTAL INCOME AS PER SECTION 15 JB OF THE ACT WAS COMPUTED AT `.43,6 4,594/-. WHILE DOING SO, THE ASSESSING OFFICER DID NOT ACCEPT THE CONTE NTION OF THE ASSESSEE THAT SECTION 79 OF THE INCOME TAX ACT, 1961 HAD NO APPLICATION IN COMPUTING THE TOTAL INCOME AS PER SECT ION 115JB OF THE ACT. AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE THE LD CIT(A). 3. BEFORE THE LD CIT(A), IT WAS CONTENDED BY THE ASSE SSEE THAT SECTION 79 OF THE ACT DID NOT HAVE ANY APPLICATION F OR COMPUTING TOTAL INCOME U/S 115JB OF THE ACT. IN SUPPORT OF THE ABOVE CONTENTION RELIANCE WAS PLACED IN THE CASE OF FASCEL LTD. V. ITO REPORTED IN 117 TTJ (AHD.) 891., THE LD CIT(A), HOWEVER, DID NOT ACCEP T THE CONTENTION OF ITA NO4659/DEL/10 3 THE ASSESSEE. RELYING ON THE JUDGMENT OF AAR IN THE CASE OF RASHTRIYA ISPAT NIGAM LTD., REPORTED IN 285 ITR 1, HE UPHELD T HE ORDER OF THE ASSESSING OFFICER. AGGRIEVED, THE ASSESSEE HAS FILED APPEAL BEFORE THE TRIBUNAL. 4. BEFORE US, LD AR FOR THE ASSESSEE HAS RELIED ON THE SUB MISSIONS MADE BEFORE THE AUTHORITIES BELOW WHEREAS THE LD DR H AS RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. HE SPECIFICALLY READ OUT PARA 4.1.1 OF THE LD CIT(A)S ORDER. 5. WE HAVE HEARD THE PARTIES AND PERUSED THE RECORD. WE HAVE ALSO GONE THROUGH THE CASE LAWS RELIED ON BY BOTH THE SIDES. WE DO ACCEPT THE PROPOSITION THAT SECTION 79 OF THE ACT HAS NO APPL ICATION TO SECTION 115JB OF THE ACT IN VIEW OF THE DECISION OF THE TRIB UNAL IN THE CASE OF FASCEL LTD. (SUPRA). HOWEVER, IT IS TO BE SEEN AS TO WH AT WAS THE AMOUNT OF BROUGHT FORWARD LOSS EXCLUDING BROUGHT FORW ARD UN- ABSORBED DEPRECIATION AS PER THE COMPANIES ACT AT THE BEGINNING OF THE RELEVANT PREVIOUS YEAR. ALSO THE AMOUNT OF UN-ABSO RBED BROUGHT FORWARD DEPRECIATION AS ON THE BEGINNING OF THE PREV IOUS YEAR WAS ALSO TO BE ASCERTAINED. LEAST OF THE TWO COULD BE REDUCED FROM THE NET PROFIT AS PER PROFIT & LOSS ACCOUNT FOR ARRIVING AT TH E BOOK PROFIT U/S 115JB OF THE ACT. THUS, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW ON THIS ISSUE AND REMIT THE MATTER BACK TO THE F ILE OF THE ASSESSING OFFICER TO RE-ADJUDICATE THE ISSUE AND PASS A FR ESH ORDER AS PER LAW KEEPING IN VIEW OUR DIRECTION STATED HEREIN ABOVE. WE ALSO OBSERVE THAT THE ASSESSING OFFICER WILL BE FREE TO COMPU TE THE TOTAL INCOME OF THE ASSESSEE AS PER THE OTHER PROVISIONS OF THE ACT IF THE TOTAL INCOME DETERMINED AS PER SECTION 115JB OF THE A CT FALLS BELOW THE TOTAL INCOME COMPUTED AS PER THE OTHER PROVISIONS OF T HE ACT. ITA NO4659/DEL/10 4 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALL OWED. 7. ORDER PRONOUNCED IN THE OPEN COURT ON THE 21ST DA Y OF OCTOBER, 2011. SD/- SD/- (U.B.S. BEDI) (B.K. HAL DAR) JUDICIAL MEMBER ACCOUNTANT MEMBER DT. 21.10.2011. HMS COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI). DATE OF HEARING 13.10.2011 DATE OF DICTATION 14.10.2011 DATE OF ORDER SIGNED BY THE HON'BLE MEMBER. 21.10.2011 DATE OF ORDER SENT TO THE CONCERNED BENCH 21.10.2011 ITA NO4659/DEL/10 5