The ACIT, Circle-2, JAMNAGAR V. Shree Extrusion Ltd., JAMNAGAR

ITA 478/RJT/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1325 (ITAT-RAJKOT)
• Duration Of Justice: 1 year(s) 8 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-04-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 15-03-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 01-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C S ANJARIA
• Assessee Lawyers: MJ RANPURA
• Keywords: Depreciation; Carry forward of business losses; Period of limitation; Time period of passing order; Unabsorbed depreciation
• Section: 43B; 32; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BEN CH, RAJKOT [CONDUCTED THROUGH E-COURT AT AHMEDABAD] (BEFORE SHRI ANIL CHATURVEDI, A.M. & SHRI S. S. GOD ARA, J.M.) ( , , ) ITA NO. 478/RJT/2014 (ASSESSMENT YEAR: 2007- 08) ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-2, JAMNAGAR VS. SHREE EXTRUSION LTD., SHED NO.217/218, GIDC PHASE-II, DARED, JAMNAGAR PAN: AADCSM0253P (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI C. S. ANJARIA, D.R. RESPONDENT BY : SHRI M. J. RANPURA, C.A. DATE OF HEARING : 15-03-20 16 DATE OF PRONOUNCEMENT : 06-04-2016 ( )/ ORDER PER ANIL CHATURVEDI, ACCOUNTANT MEMBER THIS APPEAL FILED BY THE REVENUE IS AGAINST THE ORD ER OF CIT(A), JAMNAGAR, DATED 20.05.2014 FOR A.Y. 2007-08. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI ALS ON RECORD ARE AS UNDER: 3. ASSESSEE IS A COMPANY STATED TO BE ENGAGED IN TH E BUSINESS OF MANUFACTURING OF COPPER AND COPPER BASED ALLOYS, EXTRUDED PRODUCT S AND IS TRADERS IMPORTERS OF NON-FERROUS METALS. ASSESSEE FILED ITS RETURN OF INCOME FOR A.Y. 2007-08 ON 06.10.2007 DECLARING TOTAL INCOME AT RS.NIL AFTER S ETTING OFF OF CARRY FORWARD LOSSES OF RS.1,68,39,463/-. THE CASE WAS SELECTED FOR SCR UTINY AND THEREAFTER, ASSESSMENT ITA NO 478/RJT/2014 A.Y. 2007-08 . ( ACIT V S. SHREE EXTRUSION LTD.) 2 WAS FRAMED U/S.143(3) OF THE ACT VIDE ORDER DATED 2 4.12.2009 AND THE TOTAL INCOME WAS DETERMINED AT RS. 1,76,95,942/- BEFORE SETTING OFF OF BROUGHT FORWARD LOSSES. THEREAFTER, THE CASE WAS REOPENED AND NOTICE U/S.14 8 OF THE ACT WAS ISSUED ON 08.08.2011 FOR REOPENING OF THE ASSESSMENT FOR THE REASON THAT ACCORDING TO THE A.O., ASSESSEE HAD CLAIMED EXCESSIVE CARRY FORWARD DEPRECIATION LOSSES. THEREAFTER, ASSESSMENT WAS FRAMED U/S.143(3) R.W.S. 147 OF THE ACT VIDE ORDER DATED 07.03.2014 WHEREBY THE ASSESSEE WAS DENIED THE CARR Y FORWARD OF UNABSORBED LOSSES OF RS.82,63,240/- FOR A.Y. 1998-99. AGGRIEV ED BY THE ORDER OF A.O., ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) W HO VIDE ORDER DATED 20.05.2014 (IN APPEAL NO. CIT(A)/JAM/31/13-14/296) DECIDED THE ISSUE IN FAVOUR OF ASSESSEE BY HOLDING AS UNDER: 6. I HAVE DULY CONSIDERED THE SUBMISSION OF THE AP PELLANT AND ALSO GONE THROUGH THE ASSESSMENT ORDER. 6.1 I AM INCLINED TO AGREE WITH THE APPELLANT THAT THE APPELLANT IS VERY MUCH ENTITLED FOR CARRY FORWARD OF UNABSORBED DEPRECIATION AS WEL L AS BUSINESS LOSS ON THE BASIS OF BIFR ORDER. THE AO IS DIRECTED TO ALLOW BOTH AFTER DUE VERIFICATION FROM RECORDS. THE GROUND OF APPEAL IS ALLOWED. 4. AGGRIEVED BY THE ORDER OF LD. CIT(A), REVENUE IS NOW IN APPEAL BEFORE US AND HAS RAISED FOLLOWING GROUNDS: 1. THE LD. CIT(A) ERRED IN LAW AS WELL AS ON FACTS BY ALLOWING CARRY FORWARD OF UNABSORBED DEPRECIATION AS WELL AS BUSINESS LOSS CL AIMED WRONGLY BY THE ASSESSEE BEYOND THE TIME TO ALLOW TO BE CARRIED FORWARD AS P ER THE IT ACT. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 4.1 BEFORE US, LD. D.R. SUBMITTED THAT LD. CIT(A) P ASSED A NON-SPEAKING ORDER AND HE SUPPORTED THE ORDER OF A.O. AND SUBMITTED TH AT THE ORDER OF A.O. BE UPHELD. LD. A.R. ON THE OTHER HAND REITERATED THE SUBMISSIO NS MADE BEFORE THE A.O. AND LD. CIT(A) AND FURTHER SUBMITTED THAT BASED ON THE AUDI TED BALANCE SHEET AS ON 31.03.2001, ASSESSEE HAD FILED REFERERENCE U/S.15(1 ) OF THE SICK INDUSTRIAL COMPANIES (SPECIAL PROVISIONS) ACT, 1985(SICA) AND THEREAFTER BOARD FOR ITA NO 478/RJT/2014 A.Y. 2007-08 . ( ACIT V S. SHREE EXTRUSION LTD.) 3 INDUSTRIAL & FINANCIAL RECONSTRUCTION (BIFR) DECLAR ED ASSESSEE AS A SICK COMPANY AND APPOINTED IDBI AS OPERATING AGENCY FOR PREPARIN G REVIVAL SCHEME FOR THE ASSESSEE. SUBSEQUENTLY, THE SCHEME FOR REVIVAL WAS APPROVED BY BIFR. HE SUBMITTED THAT SECTION 32 OF SICA PROVIDES THAT THE SANCTIONED SCHEME (I.E. SCHEME WHICH IS APPROVED BY BIFR) SHALL OVER RIDE A LL THE LAWS EXCEPT THE FOREIGN EXCHANGE REGULATION ACT, 1973 AND THE URBAN LAND (C EILING & REGULATIONS) ACT, 1976. HE THEREFORE SUBMITTED THAT IN THE CASE OF A SSESSEE SINCE THE SCHEME HAS BEEN APPROVED BY BIFR AND AS PER PARA 15.3 OF BIFR ORDER IN ASSESSEES CASE BEARING NO. 180/2002 & 310/2003, THE UNABSORBED LOS SES CAN BE CARRIED FORWARD WITHOUT ANY PERIOD OF LIMITATION. HE ALSO PLACED O N RECORD THE COPY OF THE AFORESAID BIFR ORDER. HE THEREFORE SUBMITTED THAT ASSESSEE WAS ELIGIBLE FOR CARRY FORWARD OF BUSINESS LOSSES AND HE THUS SUPPORTED TH E ORDER OF LD. CIT(A). 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS ON RECORD. THE A.O. IN THE RE-ASSESSMENT PROCEEDINGS, DENIED T HE CARRY FORWARD OF UNABSORBED LOSSES FOR A.Y. 1998-99. WE FIND THAT ASSESSEE HAS BEEN DECLARED A SICK COMPANY DURING F.Y. 2006-07 AND HAD FILED A REFERENCE U/S.1 5(1) OF THE SICK INDUSTRIAL COMPANIES (SPECIAL PROVISIONS) ACT, 1985. WE FIND THAT BIFR HAS DIRECTED THAT THE ASSESSEE BE ALLOWED TAX BENEFIT U/S.72 OF THE ACT T O CARRY FORWARD BUSINESS LOSS WITHOUT ANY LIMITATION PERIOD INCLUDING BUSINESS LO SSES WHICH MAY HAVE LAPSED AND THE ASSESSEE BE EXEMPT FROM APPLICABILITY OF PAYMEN T OF MAT. THE RELEVANT DIRECTIONS ARE REPRODUCED HEREINABOVE FOR READY REF ERENCE: 15.3 DIRECTORATE OF INCOME TAX (RECOVERY) I. TO CONSIDER TO EXEMPT THE COMPANY FROM THE APPLI CABILITY OF THE PAYMENT OF MINIMUM ALTERNATE TAX (MAT) UNDER SECTION115JB, 115JAA OF THE INCOME TAX ACT, 1961. II. TO CONSIDER ALLOWING TAX BENEFITS U/S.72 OF THE INCOME TAX ACT, 1961 TO CARRY FORWARD THE UNABSORBED BUSINESS LOSSES WITHOU T ANY LIMITATION PERIOD INCLUDING BUSINESS LOSSES, WHICH HAVE LAPSED . ITA NO 478/RJT/2014 A.Y. 2007-08 . ( ACIT V S. SHREE EXTRUSION LTD.) 4 III. TO CONSIDER EXEMPTING THE COMPANY FROM THE PRO VISIONS OF SECTION OF 41(1) AND 43B OF THE INCOME TAX ACT, 1961 IN RESPECT OF T HE RELIEF AND CONCESSIONS AVAILED FROM BANKS AND FINANCIAL INSTIT UTIONS. IN VIEW OF THE AFORESAID FACTS AND IN THE ABSENCE O F ANY CONTRARY BINDING DECISION PLACED BY REVENUE, WE FIND NO REASON TO INTERFERE W ITH THE ORDER OF LD. CIT(A) AND THUS THE GROUND OF REVENUE IS DISMISSED. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DI SMISSED. ORDER PRONOUNCED IN OPEN COURT ON 06/04/2016 SD/- SD/- (S. S. GODARA) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED. 06/04/2016 TRUE COPY S K SINHA COPY OF THE ORDER FORWARDED TO:- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT, RAJKOT