CROMPTON GREAVES LTD, MUMBAI V. DCIT CIR 6(2), MUMBAI

ITA 4831/MUM/2012

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1859 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2015
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 31-12-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 23-07-2012
• Court: TRIBUNAL
• Department Lawyers: DURGA DATT
• Keywords: Rectification of order; Question of law
• Section: 143(3); 154

Judgement Text

IN THE INCO ME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI AMARJIT SINGH, JUDICIAL MEMBER I.T.A. NO. 4831/M/2012 (ASSESSMENT YEAR : 2007 - 2008 ) M/S. CROMPT ON GREAVES LTD, 6 TH FLOOR, C.G. HOUSE, DR. A.B. ROAD, PRABHADEVI, MUMBAI - 400025. / VS. DCIT - 6(2), AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020. ./ PAN : AAACC3840K ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI PRADIP KAPASI / RESPONDENT BY : SHRI DURGA DATT, DR / DATE OF HEARING : 02 .12.2015 / DATE OF PRONOUNCEMENT : 16 .12.2015 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT (A) - 12, MUMBAI DATED 29.5.2012 FOR THE ASSESSMENT YEAR 2007 - 2008. IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1. THE LD CIT (A) VIDE HIS ORDER DATED 29.5.2012 ERRED I N LAW AND ON FACTS IN CONFIRMING THE FALSE STATEMENT MADE BY THE AO THAT YOUR APPELLANT HAD AGREED TO THE RECTIFICATION PROPOSED BY THE AO FOR RE - COMPUTATION OF THE SURCHARGE AND EDUCATION CESS AND FURTHER ERRED IN LAW AND ON FACTS IN CONFIRMING THE LEVY O F SC AND EC SOLELY ON THE GROUND OF AN ALLEGED CONSENT WHICH WAS NEVER GIVEN AS IS ESTABLISHED BY AN AFFIDAVIT OF CA JAGDISH AMBARDEKAR, THE MANAGER TAXATION OF THE COMPANY WHO APPEARED DURING THE PROCEEDINGS. 2. THE LD CIT (A) VIDE HER ORDER DATED 29.5.20 12 ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF THE AO IN CARRYING OUR RECTIFICATION U/S 154 IGNORING THE FACTS THAT THE ORDER OF THE AO PASSED U/S 143(1) DID NOT SUFFER FROM ANY MISTAKE APPARENT FROM RECORDS AND FURTHER ERRED IN LAW AND ON FACTS IN HOLDING THAT THE ISSUE OF LEVY OF SC AND EC WAS NOT DEBATABLE INSPITE OF THE FACT THAT THE SAID ISSUE WAS HIGHLY DEBATABLE. 3. THE LD CIT (A) ERRED IN LAW AND ON FACTS IN CONFIRMING THE ORDER U/S 154 DATED 5.2.2009 OF THE AO WHICH WAS PASSED AFTER ISSUE OF NOTICE U/S 143(2) DATED 18.9.2008 ISSUED FOR ASSESSMENT OF TOTAL INCOME WHEREBY NO RECTIFICATION PROCEEDINGS COULD HAVE TAKEN PLACE U/S 154 PENDING THE PROCEEDINGS FOR ASSESSMENT U/S 143(3) OF THE ACT. 4. THE LD CIT (A) VIDE HIS ORDER DATED 29.5.2012 E RRED IN LAW AND ON FACTS BY CONFIRMING THE ORDER OF THE AO IN INCREASING THE QUANTUM OF SURCHARGE AND 2 EDUCATION CESS BY LEVYING THE SAME ON AN AMOUNT OF TAX WITHOUT REDUCING SUCH TAX BY THE AMOUNT OF CREDIT U/S 115JAA OF RS. 16,14,06,703/ - BEING MAT PAID F OR AY 2006 - 07 AND ERRED IN LAW AND ON FACTS IN NOT APPROVING THE ACTION OF THE APPELLANT OF FIRST REDUCING THE BASIC TAX BY THE SAID MAT CREDIT AND THEREAFTER LEVYING SC AND EC AS MANDATED BY THE ROI AND THE ACT. VIDE LETTER DATED 29 TH DECEMBER, 2014, ASSESSEE ALSO RAISED THE FOLLOWING MODIFIED GROUND AND THE SAME READS AS UNDER: - THE LD CIT (A) VIDE HIS ORDER DATED 29.5.2012 ERRED IN LAW AND ON FACTS IN CONFIRMING THE FALSE STATEMENT MADE BY THE AO THAT YOUR APPELLANT HAD AGREED TO TH E RECTIFICATION PROPOSED BY THE AO FOR RE - COMPUTATION OF THE SURCHARGE AND EDUCATION CESS AND FURTHER ERRED IN LAW AND ON FACTS IN CONFIRMING THE LEVY OF SC AND EC SOLELY ON THE GROUND OF AN ALLEGED CONSENT WHICH WAS NEVER GIVEN AS IS ESTABLISHED BY AN AFF IDAVIT OF CA JAGADISH AMBARDEKAR, THE MANAGER TAXATION OF THE COMPANY WHO APPEARED DURING THE PROCEEDINGS AND FURTHER ERRED IN LAW AND ON FACTS IN PASSING AN ORDER U/S 154 DATED 5.2.2009 WITHOUT GIVING AN OPPORTUNITY OF HEARING AS REQUIRED U/S 154(3) OF TH E ACT AND ONCE AGAIN ERRED IN LAW AND ON FACTS IN RECTIFYING AN ORDER DATED 12.11.2008 WHICH ORDER WAS PASSED BEHIND THE BACK OF THE APPELLANT NOR WAS IT SERVED ON YOUR APPELLANT AND THE APPELLANT CLAIMS THAT NO SUCH ORDER WAS IN EXISTENCE AND PLEAD THAT T HE LD AO BE PUT TO THE STRICTEST PROOF OF THE OPPORTUNITY OF HEARING, PASSING OF ORDER AND THE SERVICE THEREOF. 2. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING, DISTRIBUTION AND SALE OF ELECT RICAL / ELECTRONIC ITEMS. ASSESSEE FILED THE RETURN OF INCOME DECLARING THE TOTAL INCOME OF RS. 208,75,20,974/ - AND THE SAME WAS RECTIFIED U/S 154 OF THE ACT ON 12.11.2008 DETERMINING THE REFUNDABLE AMOUNT OF RS. 6,54,66,220/ - . SUBSEQUENTLY, AO AGAIN REC TIFIED THE SAID RECTIFICATION ORDER ON FINDING THE EXISTENCE OF MISTAKE APPARENT FROM THE SAID RECTIFICATION ORDER DATED 12.11.2008. THE MISTAKE RELATES TO THE MANNER OF DETERMINING THE REFUND QUA THE MAT CREDIT. AS PER THE AO, MAT CREDIT SHOULD BE GIVEN AFTER THE TAXES ARE DETERMINED, INCLUDING THE QUANTIFICATION OF THE SURCHARGE AND EDUCATION CESS. HE ACCORDINGLY, RECTIFIED AND REDUCED THE REFUND, EARLIER QUANTIFIED BY THE AO. MATTER TRAVELLED TO THE FIRST APPELLATE AUTHORITY. 3. DURING THE PROCEEDING S BEFORE THE FIRST APPELLATE AUTHORITY, CIT (A) UPHELD THE SAID RECTIFICATION ORDER AND REJECTED THE CLAIM OF THE ASSESSEE. FOR THIS PROPOSITION, CIT (A) RELIED ON THE ORDER OF THE TRI BUNAL IN SUPPORT OF THE REVENUE IN THE CASE OF M/S. CLASSIC SHARES & STO C K BROKING SERVICES LTD VS. ACIT IN ITA NO.5869/M/2007, DATED 23.7.2010. FURTHER, THERE IS A DISCUSSION ABOUT THE CONCESSION GRANTED BY THE ASSESSEE ACCEPTING THE SAID RECTIFICATION. AGAIN AGGRIEVED WITH THE SAID DECISION OF 3 THE CIT (A), ASSESSEE IS IN FU RTHER APPEAL BEFORE THE TRIBUNAL BY RAISING THE ABOVE MENTIONED GROUNDS. 4. DURING THE PROCEEDINGS BEFORE US, LD COUNSEL FOR THE ASSESSEE RAISED THE ISSUES RELATING TO THE FINALITY OF THE SAID DECISION OF THE TRIBUNAL IN THE CASE OF M/S. CLASSIC SHARES & S TOCK BROKING SERVICES LTD (SUPRA) AND APPLICABILITY OF THE SUBSEQUENT JUDGMENT OF THE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. VACMENT INDIA [2015] 369 ITR 304 (ALL.), DATED 29.10.2014 AND SUSTAINING OF THE CONCESSION GRANTED BY THE EMPLOYEE OF THE ASSE SSEE WHEN THE ISSUE IS ALREADY SETTLED BY THE HONBLE HIGH COURT IN FAVOUR OF THE ASSESSEE. 5. ON HEARING BOTH THE PARTIES, WE FIND THE JUDGMENT OF THE ALLAHABAD HIGH COURT IN THE CASE OF VACMENT INDIA (SUPRA), DATED 29.10.2014 IS SUBSEQUENT IN TIME QUA THE SAID ORDER OF THE TRIBUNAL IN THE CASE OF CLASSIC SHARES & STOCK BROKING SERVICES LTD (SUPRA) DATED 23.7.2010. THE SAID JUDGMENT OF THE HONBLE HIGH COURT WAS ALSO NOT AVAILABLE TO THE AO AND THE CIT (A), WHO PASSED THE IMPUGNED ORDER DATED 29.5.2012. WE HAVE ALSO PERUSED THE SAID JUDGMENT OF THE HONBLE HIGH COURT AND FIND THE HIGH COURT DIS CUSSED THE RELEVANT INCOME TAX R ETURN (ITR) FORM NO.6 AND THE DIFFERENT COLUMNS THEREIN AND HELD AS UNDER: - TAX PAYABLE IS TO BE ARRIVED AT DEDUCTING CREDIT UNDER SECTION 115JAA FROM GROSS TAX PAYABLE AND ON THIS AMOUNT OF TAX PAYABLE SURCHARGE AND CESS ARE TO BE COMPUTED. 6. ON PERUSAL OF THE SAID JUDGMENT, WE FIND PARAS 5 TO 7 ARE RELEVANT IN THIS REGARD. CONSIDERING THE SIGNIFICANT OF THESE PARAS, THE SAME ARE REPRODUCED AS UNDER: - 5. THE ONLY QUESTION WHICH IS RAISED PERTAINS TO THE COMPUTATION OF TAX IN ACCORDANCE WITH THE MODALITIES WHICH ARE PRESCRIBED IN THE RELEVANT FORM, ITR - 6. INSOFAR AS IS MATERIAL, THE RELEVANT ENTRIES IN THE FORM (PART B - T TI) ARE AS FOLLOWS: - 3. GROSS TAX PAYABLE (ENTER HIGHER OF 2C AND 1) 4. CREDIT UNDER SECTION 115JAA OF TAX PAID IN EARLIER YEARS (IF 2C IS MORE THAN 1) (7 OF SCHEDULE MATC). 5. TAX PAYABLE AFTER CREDIT UNDER SECTION 115JAA [(3 - 4)] 6. SURCHARGE ON 5 7. EDUCATION CESS, INCLUDING SECONDARY AND HIGHER EDUCATION CESS ON (5+6) 8. GROSS TAX LIABILITY (5+6+7) 6. T HE AFORESAID ENTRIES LEAVE NO MANNER OF AMBIGUITY IN REGARD TO THE METHOD OF COMPUTATION OF TAX LIABILITY. ENTRY 3 REQUIRES COMPUTATION OF THE GROSS TAX PAYABLE. UNDE R ENTRY 4, CREDIT IS REQUIRED TO BE GIVEN UNDER SECTION 115JAA OF THE ACT OF THE TAX PAID IN EARLIER YEARS. ENTRY 5 REQUIRES A COMPUTATION OF THE 4 TAX PAYABLE AFTER CREDIT UNDER SECTION 115JAA OF THE ACT. THE MATER IS PLACED BEYOND DOUB T BY THE PARENTHESIS, WHICH INCLUDES THAT TAX PAYABLE UNDER ENTRY 5 IS TO BE ARRIVED AT BY DEDUCTING THE CREDIT UNDER SECTION 115JAA OF THE ACT (UNDER ENTRY 3) FROM THE GROSS TAX PAYABLE (UNDER ENTRY 4). THE SURCHARGE IS COMPUTED ON THE AMOUNT REFLECTED IN ENTRY 5. 7. THE TRIBUNAL HAS NOTED THAT FROM THE NEXT ASSESSMENT YEAR, AY 2012 - 13, THE POSITION WAS MATERIALLY ALTERED, BUT IN THE PRESENT CASE, SINCE THE DISPUTE RELATED TO AY 2011 - 12, THE METHOD OF COMPUTATION, AS DIRECTED BY THE COMMISSIONER (APPEALS), WAS PLAINLY IN ACCORDAN CE WITH THE METHODOLOGY AS PROVIDE IN ITR - 6. THE TRIBUNAL IN CONFIRMING THE ORDER OF THE COMMISSIONER (APPEALS) HAS, HENCE, NOT COMMITTED ANY ERROR. THE APPEAL WILL NOT GIVEN RISE TO ANY SUBSTANTIAL QUESTION OF LAW AND IS, ACCORDIN GLY, DISMISSED. 7. CONSIDERING THE ABOVE STATED RATIO LAID DOWN BY THE HONBLE HIGH COURT ON THE INTERPRETATION OF THE RELEVANT PROVISIONS, WE ARE OF THE OPINION THAT THE AOS FAILURE TO FOLLOW THE ABOVE STATED CORRECT INTERPRETATION OF LAW CONSTITUTES MISTAKE APPARENT FROM THE RECORD. THEREFORE, THE ISSUE RAISED BY THE ASSESSEE IN THE ORIGINAL GROUNDS AS WELL AS MODIFIED GROUNDS IS ALLOWED IN FAVOUR OF THE ASSESSEE. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COU RT ON 16 TH DECEMBER, 2015. SD/ - SD/ - ( AMARJIT SINGH ) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 16 /12/2015 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI