ACIT 2(1), MUMBAI V. TATA MOTORS LTD, MUMBAI

ITA 4824/MUM/2011

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 6305 (ITAT-MUMBAI)
• Duration Of Justice: 7 year(s) 10 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-05-2019
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 06-05-2014
• Assessment Year: 2003-2004
• Appeal Filed On: 16-06-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R MANJUNATHA SWAMY
• Assessee Lawyers: J D MISTRI
• Keywords: Reopening of assessment; Retrospective amendment; Bad and doubtful debts; Assessment record; Reassessment proceedings; Set aside
• Section: 234B; 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E , BENCH MUMBAI BEFORE SHRI M.BALAGANESH, AM & SHRI AMARJIT SINGH , JM ITA NO. 3334 / MUM/20 1 1 ( ASSESSMENT YEAR : 20 03 - 200 4 ) M/S TATA MOTORS LIMITED(FORMERLY KNOWN AS TATA ENGINEERING & LOCOMOTIVE COMPANY LTD), BOMBAY HOUSE, 24, HOMI MODY STREET, HUTATMA CHOWK, MUMBAI - 4000 01 VS. ACIT, CIR - 2(1), MUMBAI - 20 PAN/GIR NO. AA ACT 2727 Q ( APPELLANT ) .. ( RESPONDENT ) AND ITA NO. 4824 /MUM/201 1 ( ASSESSMENT YEAR :20 03 - 200 4 ) ACIT, 2(1), MUMBAI - 20 VS. M/S TATA MOTORS LIMITED( FORMERLY KNOWN AS TATA ENGINEERING & LOCOMOTIVE COMPANY LTD), BOMBAY HOUSE, 24, HOMI MODY STREET, HUTATMA CHOWK, MUMBAI - 400001 PAN/GIR NO.AA ACT 2727 Q (APPELLANT ) .. (RESPONDENT ) ASSESSEE BY SHRI J.D.MISTRI & NIKHIL TIWARI, AR REVENUE BY SHRI R .MANJUNATHA SWAMY, CITDR DATE OF HEARING 01 /0 5 /2019 DATE OF PRONOUNCEMENT 03/05 /2019 / O R D E R PER M. BALAGANESH (A.M) : TH ESE APPEAL S IN ITA NO. 3334&4824 /MUM/201 1 FOR A.Y. 2003 - 2004 ARISE OUT OF THE ORDER BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 6 , ITA NO. 3334&4824 /M UM/201 8 TATA MOTORS L IMITED . 2 MUMBAI IN APPEAL NO. CIT(A) - 6 / IT - 136/2009 - 10 [OLD NO.CIT(A)XXX/IT - 55/RG.2(3)/0 8 - 09] DATED 10.03.2011 (LD. CIT(A) IN SHORT) AGAINST THE ORDER OF ASSESSMENT PASSED U/S.143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS ACT) DATED 31.12.2007 BY THE LD. INCOME TAX OFFICER 2(1) , MUMBAI (HEREINAFTER REFERRED TO AS LD. AO). 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - 1. RE - ASSESSMENT PROCEEDINGS U/S.147 - INVALID AND BAD IN LAW : THE LEARNED CIT (A) HAS ERRED BOTH IN LAW AND ON FACTS IN NOT DECIDING THE FUNDAMENTAL GROUND RAISED BY THE APPELLANT CHALLENGING THE VALIDITY OF REASSESSMENT PROCEEDINGS UNDER SECTION 147. 2. GROUNDS NOT LEGALLY DECIDED BY THE CIT (A) THE LEARNED CIT (A) HAS ERRED BOTH IN LAW AND ON FACTS IN NOT LEGALLY DECIDING THE FOLLOWING GROUNDS CHALLENGED BY THE APPELLANT: I) ADJUSTMENT TO BOOK PROFIT COMPUTATION U/S. 115JB IN RESPECT OF PROVISION FOR DEFERRED TAX II) ADJUSTMENT TO BOOK PROFIT COMPUTATION U/S. 115JB IN RESPECT OF PROVISION FOR DIMINUTION IN VALUE OF INVESTMENTS . III) ADJUSTMENT TO BOOK PROFIT COMPUTATION U/S. 115JB IN RESPECT OF PROVISION FOR BAD AND DOUBTFUL DEBTS . THE LEARNED CIT (A) OUGHT TO HAVE LEGALLY DECIDED THE ABOVE GROUNDS IN THIS APPEAL AGAINST THE ORDER U/S.143 (3) R.W.S.147 INSTEAD OF NOT DECIDING THIS GROUNDS LEGALLY IN THIS APPEAL BY RESORTING TO ENHANCEMENT IN RESPECT OF THESE ITEMS IN AN ANOTHER APPEAL AGAINST THE ORDER U/S.143 (3) FOR THE SAME ASSESSMENT YEAR WHICH WAS PENDING BEFORE THE LEARNED CIT (A) FOR DISPOSAL. THE ASSESSEE VIDE LETTER DATED 21.08.2018 HAS FILED THE ADDITIONAL LEGAL G ROUNDS OF APPEAL, WHICH READS AS UNDER : - ADDITIONAL LEGAL GROUNDS OF APPEAL THE APPELLANT CRAVES LEAVE TO RAISE THE FOLLOWING ADDITIONAL GROUNDS OF APPEAL WITHOUT PREJUDICE TO THE GROUNDS RAISED IN THE ORIGINAL APPEAL: ITA NO. 3334&4824 /M UM/201 8 TATA MOTORS L IMITED . 3 3. ERRED IN LEVY OF INTEREST UNDE R SECTION 2348 OF THE ACT, WITHOUT APPRECIATING THAT IN THE FACTS OF THE CASE, NO INTEREST IS LEVIABLE SINCE INCOME OF THE APPELLANT FOR THE YEAR UNDER CONSIDERATION IS TAXABLE AS PER PROVISIONS OF SECTION 115J8 OF THE ACT (I.E. MAT PROVISIONS); 4. WITHO UT PREJUDICE TO THE ABOVE, NO INTEREST UNDER SECTION 2348 OF THE ACT CAN BE CHARGED AS THE ADDITIONS ARE MADE WHILE COMPUTING BOOK PROFIT AS PER MAT PROVISIONS UNDER SECTION 115J8 OF THE ACT ON THE BASIS OF RETROSPECTIVE AMENDMENTS IN THE ACT; THE APPE LLANT CRAVES LEAVE TO ADD, AMEND, ALTER, VARY, OMIT OR SUBSTITUTE THE AFORESAID GROUND OF APPEAL AT ANY TIME BEFORE OR AT THE TIME OF HEARING OF THE APPEAL AS THEY MAY BE ADVISED. FURTHER, THE ASSESSEE VIDE LETTER DATED 28.08.2018, HAS FILED ADDITIONAL L EGAL GROUNDS OF APPEAL, WHICH READS AS UNDER : - ADDITIONAL LEGAL GROUND OF APPEAL: I. NON - APPLICABILITY OF INTEREST UNDER SECTION 234B IF INCOME IS ASSESSED UNDER MAT PROVISIONS IN VIEW OF THE ABOVE, AS THE INCOME OF ASSESSEE IS ASSESSED UNDER THE MA T PROVISIONS, THERE SHOULD BE NO LEVY OF INTEREST UNDER SECTION 234B OF THE ACT. IN THIS REGARD, RELIANCE IS PLACED ON THE FOLLOWING DECISIONS, PREVAILING AT THAT POINT OF TIME, WHEREIN IT HAS BEEN HELD THAT NO INTEREST UNDER SECTION 234B OR 234C IS LEVIAB LE IF TAX IS DETERMINED UNDER SECTION 115JB OF THE ACT: - KWALITY BISCUITS LTD (284 ITR 434) (SC) SNOWCEM INDIA LTD (313 ITR 170) (BOM) NATURAL GEMS LTD (327 ITR 269) (BOM) SUBSEQUENTLY THE HON'BLE SUPREME COURT IN CASE OF ROLTA INDIA LTD (330 I TR 470) (SC) DATED 7 JANUARY 2011, CONTRARY TO THE ABOVE DECISIONS, HAS HELD THAT INTEREST IS LEVIABLE EVEN IF INCOME TAX IS PAYABLE UNDER MAT PROVISIONS. THE HON'BLE TRIBUNAL IN FOLLOWING CASES HELD THAT IN THE ASSESSMENT MADE BY AO (PRIOR TO DECISION OF SUPREME COURT IN CASE OF ROLTA INDIA), INTEREST UNDER SECTION 234B CANNOT BE LEVIED IF INCOME IS CHARGEABLE TO TAX AS PER MAT PROVISIONS UNDER SECTION 115JB OF THE ACT: ITA NO. 3334&4824 /M UM/201 8 TATA MOTORS L IMITED . 4 SICOM LTD. (ITA NO. 1522/M/2009) DATED 6TH DECEMBER 2016 (MUM) ALOK INDUSTRIES L TD (ITA NO. 8340/M/2010) DATED 20 FEBRUARY 2015 (MUM) ROCKLINE DEVELOPERS PVT. LTD. (ITA NO. 6382/M/2013) DATED 21ST FEBRUARY 2014 (MUM) CHARBHUJA INDUSTRIES PVT LTD (ITA NO. 6901/M/2012) DATED 24 JANUARY 2014 (MUM) II. NON APPLICABILITY OF INTERES T UNDER SECTION 234B IF ADDITION IS MADE ON ACCOUNT OF RETROSPECTIVE AMENDMENT IN THE ACT FURTHER, WITHOUT PREJUDICE TO THE APPLICABILITY OF INTEREST PROVISIONS UNDER SECTION 234B OF THE ACT, IF INCOME IS ASSESSED UNDER MAT AND WITHOUT PREJUDICE TO THE C HALLENGE OF ENHANCEMENT MADE BY CIT(A), THE ASSESSEE WISHES TO SUBMIT THAT IF AT ALL THE AFORESAID ADJUSTMENT IS SUSTAINED, THERE SHOULD BE NO LEVY OF INTEREST UNDER SECTION 234B OF THE ACT ON THESE ADDITIONS AS THEY ARE MADE DUE TO RETROSPECTIVE AMENDMENT S BY FINANCE ACT 2008 OR BY FINANCE ACT 2009 W.R.E.F. 1 APRIL 2001. RELIANCE IN THIS REGARD IS PLACED ON THE FOLLOWING DECISIONS WHEREIN IT HAS BEEN HELD THAT NO INTEREST UNDER SECTION 234B CAN BE CHARGED ON ACCOUNT OF TAX LIABILITY ARISING DUE TO RETROSPE CTIVE AMENDMENT IN THE ACT: - JSW ENERGY LTD (379 ITR 36) (BOM) ESSAR STEEL LNDIA LTD. (ITA NO. 7013/M/11) DATED 27 SEPTEMBER 2013 (MUM ITAT) EMAMI LTD (337 ITR 470) (CAL) NATIONAL DAIRY DEVELOPMENT BOARD (397 ITR 543) (GUJ) ASAH I INDIA GLAS S LTD (ITA NO. 1637 IM/2014) DATED 26 FEBRUARY 2018 IN THIS REGARD, ASSESSEE NOW WISHES TO FILE ADDITIONAL LEGAL GROUNDS OF APPEAL FOR NON-APPLICABILITY OF INTEREST PROVISIONS UNDER SECTION 234B OF THE ACT ON ACCOUNT OF THE ABOVE ARGUMENTS. AS ALL THE F ACTS PERTAINING TO THESE ADDITIONAL GROUNDS ARE ON RECORD AND DO NOT NEED ANY FRESH VERIFICATION OF FACTS, WE REQUEST YOUR HONOUR'S TO KINDLY ADMIT THE ADDITIONAL GROUNDS OF APPEAL AND DECIDE ON MERITS. WE FURTHER SUBMIT THAT THE ADDITIONAL GROUNDS OF AP PEAL CAN BE RAISED IF THE FACTS ARE ON RECORD, AS IN THE INSTANT CASE. IN RESPECT OF THE ABOVE PROPOSITION, WE RELY ON THE FOLLOWING DECISIONS: ITA NO. 3334&4824 /M UM/201 8 TATA MOTORS L IMITED . 5 NATIONAL THERMAL POWER CO. LTD. (229 ITR 383) (SC) JUTE CORPORATION OF I NDIA LTD. (187 ITR 688) (SC) AHMEDABAD ELECTRICITY CO. LTD. (1991TR 351) (BOM FB) PRUTHVI BROKERS & SHAREHOLDERS PVT LTD (349 ITR 336) (BOM) RAMCO CEMENTS LTD (373 ITR 146) (MAD) MAHINDRA & MAHINDRA LTD (30 SOT 374) (MUM SB) IN VIEW OF THE ABOVE, WE REQUEST YOUR HONOUR'S TO KINDLY CONSIDER OUR ADDITIONAL ALTERNATE LEGAL GROUND OF APPEAL AND DECIDE ON MERITS AFTER PROVIDING ASSESSEE A PERSONAL HEARING IN THE MATTER. FURTHER, THE ASSESSEE VIDE LETTER DATED 25.04.2019, HAS FILED SUPPLEMENTARY LEGAL GROUNDS OF APPEAL, AS A MA TTER OF ABUNDANT CAUTION WHICH READS AS UNDER : - ON THE FACTS AND IN LAW, THE LEARNED ASSESSING OFFICER: REASSESSMENT PROCEEDINGS UNDER SECTION 147 - INVALID AND BAD IN LAW 1A. ERRED IN MAKING REASSESSMENT UNDER SECTION 147 OF THE ACT WITHOUT APPRECIAT ING THAT THE REOPENING PROCEEDINGS ARE INVALID AND BAD IN LAW; ADJUSTMENT TO BOOK PROFIT UNDER SECTION 115JB OF THE ACT IN RESPECT OF PROVISION FOR DEFERRED TAX, PROVISION FOR DIMINUTION IN VALUE OF INVESTMENTS AND PROVISION FOR BAD AND DOUBTFUL DEBTS 2A. ERRED IN MAKING ADDITION TO BOOK PROFITS UNDER SECTION 115J B OF THE ACT UNDER REOPENING PROCEEDINGS UNDER SECTION 147 OF THE ACT IN RESPECT OF THE FOLLOWING ITEMS: - I. PROVISION FOR DEFERRED TAX OF RS. 190.55 CRORES II. PROVISION FOR DIMINUTION IN VALUE OF INVESTMENTS OF RS. 26 CRORES; III. PROVISION FOR BAD AND DOUBTFUL DEBTS OF RS. 94.94 CRORES; THE APPELLANT CRAVES LEAVE TO ADD, ALTER, DELETE OR MODIFY ALL OR ANY OF THE ABOVE GROUNDS OF APPEAL. 3. THE REVENUE HAS FILED THE FOLLOWING GROUNDS O F APPEAL : - ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN ALLOWING RELIEF TO THE ASSESSEE TO THE EXTENT IMPUGNED IN THE GROUNDS ENUMERATED BELOW: ITA NO. 3334&4824 /M UM/201 8 TATA MOTORS L IMITED . 6 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) ERRED IN ALLOWING ASSESSEE'S CLAIM OF DELETION OF PROVISION OF STAFF WELFARE EXPENSES IN ARRIVING BOOK PROFIT U/S 115JB IN SPITE OF THE SAME BEING AN ASCERTAINED LIABILITY. 2. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING, THE DECISION OF THE CIT(A) MAY BE SET ASIDE AND THAT OF THE AO RESTORED. 4. AT THE OUTSET, WE FIND THAT THE ADDITIONAL GROUNDS OF APPEAL RAISED BY THE ASSESSEE GO TO THE ROOT OF THE MATTER AND DO NOT INVOLVE FRESH INVESTIGATION OF THE FACTS AND, HENCE, DESERVE TO BE ADMITTED. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ASSESSEE HAS CHALLENGED THE PRELIMINARY GROUNDS ON THE VALIDITY OF REOPENING OF THE ASSESSME NT BEFORE US. LD. AR BEFORE US ARGUED THAT COPY OF ACTUAL REASONS RECORDED BY THE AO FOR REOPENING OF THE ASSESSMENT WAS NEVER FURNISHED TO THE ASSESSEE IN ORDER TO ENABLE THE ASSESSEE TO FILE ITS OBJECTIONS THEREON DURING THE COURSE OF REASSESSMENT PROCEE DINGS. ADMITTEDLY THE ASSESSMENT WAS SOUGHT TO BE REOPENED FOR MAKING CERTAIN ADDITIONS TO BOOK PROFITS COMPUTED U/S.115JB OF THE ACT. LD. AO IN THE REASSESSMENT ORDER MADE VARIOUS ADDITIONS TO BOOK PROFITS U/S.115JB OF THE ACT, AGAINST WHICH THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A). BEFORE THE LD. CIT(A), THE ASSESSEE ALSO CHALLENGED THE VALIDITY OF REOPENING OF ASSESSMENT WHILE MAKING SEVERAL LEGAL ARGUMENTS THEREON. WE FIND FROM THE PERUSAL OF THE ORDER OF LD.CIT(A) THAT THE LD.CIT(A) IN PA RA 10.1 AT PAGE 10 OF HIS ORDER HAD GIVEN HIS FINDING WITH REGARD TO THE CHALLENGE OF THE ASSESSEE ON THE QUESTION OF VALIDITY OF REASSESSMENT PROCEEDINGS AS UNDER : - ITA NO. 3334&4824 /M UM/201 8 TATA MOTORS L IMITED . 7 10.1 IT MAY BE NOTED FROM A PERUSAL OF THE FOREGOING PARAGRAPHS OF THIS ORDER THAT THE A DDITIONS / DISALLOWANCES MADE BY THE AO AS A CONSEQUENCE OF THE RE-OPENING OR THE CASE FOR THIS YEAR HAVE EITHER ALREADY BEEN CONSIDERED BY THIS OFFICE FOR ENHANCEMENT IN THE APPELLA TE ORDER PASSED IN .THE ORDER U/ S.143(3) OR RELIEF HAS BEEN ALLOWED BY THIS OFFICE IN RESPECT OF SUCH' ADDITIONS / DISALLOWANCES. HENCE, THE ISSUE REGARDING THE VALIDITY OF REASSESSMENT PROCEEDINGS U/S.147 HAS BECOME ACADEMIC IN NATURE WHICH REQUIRES NO ADJUDICATION. 6 . FROM THE ABOVE, IT COULD BE SEEN THAT THE LD. CIT(A) HAD N OT ADJUDICATED THE LEGAL ISSUE WHICH IS PRELIMINARY IN NATURE ON THE QUESTION OF VALIDITY OF REOPENING OF ASSESSMENT. AT THE TIME OF HEARING, LD. DR PRODUCED THE ASSESSMENT RECORDS BEFORE US. WE HAVE GONE THROUGH THE ASSESSMENT FOLDER AND FOUND THAT THE RE ASONS RECORDED BY THE LD. AO VIS - - VIS THE LETTER OF THE LD. AO DATED 15.11.2007 PURPORTED TO BE THE REASONS RECORDED DO NOT MATCH IN ENTIRETY. WHEN THE FACT WAS SHOWN TO BOTH THE PARTIES BEFORE US AND BOTH THE PARTIES AGREED FOR THE MISMATCH THEREON. IN T HIS BACKGROUND, IT COULD BE SAFELY CONCLUDED THAT THE ACTUAL REASONS RECORDED WERE NOT COMMUNICATED TO THE ASSESSEE FOR FILING ITS OBJECTIONS TO THE SAME IN THE LIGHT OF THE DECISION RENDERED BY THE HONBLE SUPREME COURT IN THE CASE OF G.K.N DRIVESHAFTS (I NDIA) LTD. VS. ITO (2003) 259 ITR 19 (SC). HENCE, THE LD. AO ALSO COULD NOT PASS A SEPARATE SPEAKING ORDER DISPOSING OFF THOSE OBJECTIONS TO THE REASONS RECORDED. IN THESE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE, WE DEEM IT FIT AND APPROPRIATE, IN THE INTEREST OF JUSTICE AND FAIR - PLAY, TO REMAND BOTH THE APPEALS OF THE ASSESSEE AS WELL AS THE REVENUE TO THE FILE OF LD. AO FOR DE NOVO ADJUDICATION IN RESPECT OF ISSUES CONTESTED BEFORE US ALONE BY BOTH THE PARTIES, AFTER GIVING A CLEAR FINDING ON THE VAL IDITY OF REOPENING OF ITA NO. 3334&4824 /M UM/201 8 TATA MOTORS L IMITED . 8 ASSESSMENT. IN THIS REGARD, LD. AO IS DIRECTED TO SUPPLY THE ACTUAL REASONS RECORDED FOR REOPENING OF THE ASSESSMENT TO THE ASSESSEE. THE ASSESSEE, IF IT SO DESIRES, MAY FILE OBJECTIONS TO THE SAME. IN CASE, IF ANY OBJECTIONS ARE FILE D BY THE ASSESSEE TO THE REASONS RECORDED, LD. AO IS DIRECTED TO PASS A SEPARATE SPEAKING ORDER DISPOSING OFF THOSE OBJECTIONS. 7 . WE WOULD LIKE TO MAKE IT CLEAR THAT IN VIEW OF THE AFORESAID DIRECTIONS, ALL THE ISSUES CONTESTED BEFORE US ON MERITS BY BOTH THE PARTIES INCLUDING THE ADDITIONAL GROUNDS RAISED BY THE ASSESSEE ARE LEFT OPEN AND NO DECISION IS RENDERED THEREON BY US. 8 . IN THE RESULT, BOTH APPEALS OF THE ASSESSEE AS WELL AS REVENUE ARE ALLOWED FOR THE STATISTICAL PURPOSES IN THE LIGHT OF DIREC TIONS CONTAINED HEREINABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 0 3 / 05 /201 9 SD/ - ( AMARJIT SINGH ) SD/ - ( M.BALAGANESH ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED 0 3 / 05 /201 9 PRAKASH KUMAR MISHRA, SR. PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//