M/s Triveni Kshetriya Gramin Bank, Banda. V. Dy Commissioner of Income Tax, Kanpur

ITA 493/LKW/2012

• Counselvise Citation: 49323714 RSA 2012
• Duration Of Justice: 2 year(s) 11 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 20-07-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 10-09-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: VIVEK MISHRA
• Keywords: Business income; Depreciation; Business expenditure; Unabsorbed depreciation
• Section: 143(3); 142(1); 263; 2

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.493/LKW/2012 ASSESSMENT YEAR:2009 - 10 D.C.I.T., CIRCLE - 6, KANPUR VS M/S TRIVENI KSHETRIYA GRAMIN BANK, DM COLONY, BANDA. PAN:AAALT0714E (RESPONDENT) (APPELLANT) SHRI RAJESH KUSHWAHA, C. A. APPELLANT BY SHRI VIVEK MISHRA, C.I.T., D. R. RESPONDENT BY 21/07/2015 DATE OF HEARING 28 /08/2015 DATE OF PRONOUNCEMENT O R D E R PER A. K. GARODIA, A.M. THIS IS AN ASSESSEES APPEAL DIRECTED AGAINST THE ORDER PASSED BY LEARNED CIT - I I, KANPUR DATED 1 0 /0 7 /201 2 U/S 263 FOR ASSESSMENT YEAR 2009 - 2010. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. THAT THE ORDER PASSED BY L D CIT - II IS ERRONEOUS, AGAINST THE FACTS OF THE CASE, ILLEGAL AND UNJUSTIFIED. 2. THAT THE L D CIT APPEAL GROSSLY ERRED BY CANCELLING THE ORDER PASSED BY ID AO WITHOUT SATISFYING THE CONDITIONS AS LAID DOWN IN SECTION 263 OF THE IT ACT AND THERE WAS NO JUSTIFICATION OF INITIATION THE PROCEEDING U/S 263 IF THE I.T. ACT, 1961 AS THE CONDITION LAID DOWN FOR THE INVOCATION OF SUCH PROVISION WAS NOT REFLECTED IN THE ORDER PASSED BY THE LD. CIT. 2 3. THE L D CIT II EXCEEDED HIS JURISD ICTION AS THE CIT DOES NOT HAVE THE POWER TO REVISE THE CASE WHEN THE FACTS HAVE BEEN CONSIDERED AND ADJUDICATED BY THE A.O. IN THE LIGHT OF THE DECISIONS OF HIGHER JUDICIAL AUTHORITIES. 4. THAT THE L D CIT II GROSSLY ERRED IN ON FACTS AND LAW WHILE CONCLU DING LD AO HAS NOT EXAMINED THE ISSUE OF CARRY FORWARD OF LOSS AND UNABSORBED DEPRECIATION, WITHOUT APPRECIATING THE FACT THAT IN THE APPELLATE ORDER OF AY 2007 - 08 ID CIT (A) I KANPUR HAS DIRECTED THE AO TO CHECK THE CALCULATIONS AND ALLOW THE RELIEF ACCO RDINGLY IF ANY TO THE ASSESSEE. 5. THE L D CIT - II GROSSLY ERRED IN IGNORING THE FACT THAT WHEN THE APPEAL EFFECT WITH RESPECT TO CORRECT CALCULATION OF CARRIED FORWARD LOSS & DEPRECIATION WAS PENDING BEFORE AO UNDER HIM, THE SAME CANNOT BE THE BASIS OF REVISION U/S 263. 6. THE LD CIT - II GROSSLY ERRED ON FACTS AND LAW WHILE CONCLUDING THAT LOSS ARISING FROM SALE OF BONDS CAN BE SET OFF AGAINST THE INCOME FROM CAPITAL GAINS AND CANNOT BE CLAIMED AS NORMAL BUSINESS EXPENDITURE WITHOUT CONSIDERING THE LAW L AID DOWN IN (240 ITR 355) BY HON'BLE SUPREME COURT. THUS LD. CIT HAS GROSSLY ERRED IN CONCLUDING THAT THE LOSS ON SALE OF BONDS UNITS IS A CAPITAL LOSS, WHICH IS FACTUALLY/LEGALLY INCORRECT. THE CONCLUSION DRAWN BY THE LD. CIT IS WITHOUT ANY DISCUSSION AND REASONING. 7. THE LD. CIT GROSSLY ERRED IN CONCLUDING THAT DEDUCTION CLAIMED U/S 36 ( 1)(VIIA) DEBITING RS. 25,04,746.09 TO AVOID THE ATTENTION OF THE DEPARTMENT TOWARDS THE NET INCREASE OF R S .164137293.10. THE DEDUCTION CLAIMED WAS LEGAL AND ALLOWABLE TO ASSESSEE. 8. THE LD. CIT GROSSLY ERRED IN TAKING THE GROUND 4, WHICH WAS UNDER CONSIDERATION IN APPEAL FILED BEFORE THE CIT (A) KANPUR IN THE A.Y.2008 - 2009. 9. THAT THE ORDER OF THE ID COMMISSIONER OF INCOME TAX II OF BEING ERRONEOUS IN LAW AND ON FACTS DESERVE TO BE VACATED 3 AND THE ORDER OF THE LEARNED ASSESSING OFFICER BE RESTORED. 3. IT WAS SUBMITTED BY LEARNED A.R. OF THE ASSESSEE THAT ON PAGES 14 TO 16 OF THE PAPER BOOK ARE THE NOTICES ISSUED BY ASSESSING OFFICER U/S 142(1) OF THE ACT ON 14/07/2011 AND THE REPLY OF THE ASSESSEE SUBMITTED BEFORE THE ASSESSING OFFICER IS AVAILABLE ON PAGES 18 TO 20 OF THE PAPER BOOK. HE SUBMITTED THAT ENQUIRY WAS MADE BY THE ASSESSING OFFICER AND REPLY WAS SUBMITTED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER ON ALL ISSUES AND THEREFORE, THE ASSESSMENT ORDER IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENUE AND HENCE , THE ORDER OF LEARNED CIT U/S 263 IS WITHOUT JURISDICTION AND SHOULD BE QUASHED. 4. LEARNED D. R. OF THE REVENUE SUPPORTED THE ORDER OF CIT . 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT AS PER THE ORDER PASSED BY LEARNED CIT U/S 263, THE FIRST OBJECTION IS THAT THE ASSESSEE HAS CLAIMED BROUGHT FORWARD BUSINESS LOSS OF RS.469.84 LAC S AND UNABSORBED DEPRECIATION OF RS.100.20 LAC S WHICH HAS BEEN ALLOWED BY THE ASSESSING OFFICER BUT THERE WAS NO UNABSORBED DEPRECIATION OR BUSINESS LOSS AS PER THE ORDER U/S 143(3) FOR ASSESSMENT YEAR 2008 - 09 AND THEREFORE, THE ASSESSMENT ORDER IS ERRONEO US AS WELL AS PREJUDICIAL TO THE INTEREST OF REVENUE. 5.1 THE SECOND OBJECTION OF LEARNED CIT IS THAT AS PER SCHEDULE - 14, A SUM OF RS.41,15,648.48 IS CLAIMED BY THE ASSESSEE AS LOSS ON SALE OF INVESTMENT. HE HAS ALSO NOTED THAT THE ASSESSING OFFICER AS PER PARA 5 OF THE WRITTEN QUESTIONNAIRE REQUIRED THE ASSESSEE TO FILE DETAILS OF LOSS ON SALE OF INVESTMENT AND AS PER THE DETAILS SUBMITTED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER IN ITS REPLY DATED 11/10/2011, IT IS APPARENT FROM SUCH DETAILS THAT THIS IS CAPITAL LOSS AGAINST SALES OF BONDS AND IT CAN BE SET OFF 4 ONLY AGAINST THE INCOME FROM CAPITAL GAIN AND THEREFORE, THIS LOSS HAS BEEN WRONGLY ALLOWED. 5.2 THE THIRD OBJECTION OF LEARNED CIT IS THAT AS PER SCHEDULE - 5 TO THE BALANCE SHEET, SUBSIDY RESERVE FUND HAS BEEN INCREASED FROM RS.2,740.45 LAC TO RS.3176.45 LAC AND OTHER PROVISION HAS INCREASED FROM 1188.04 LAC TO RS.3393.41 LAC AND IN THIS MANNER, THERE IS TOTAL INCREASE IN LIABILITY OF RS.1641.37 LAC BUT AS PER PROFIT & LOSS ACCOUNT AND APP ROPRIATION ACCOUNT, ONLY A SUM OF RS.25.05 LAC IS DEBITED IN PROFIT & LOSS ACCOUNT AS PROVISION AND CONTINGENCIES AND SUM OF RS.131.30 LAC IS DEBITED IN THE APPROPRIATION ACCOUNT AS STATUTORY RESERVE. HE HAS ALSO NOTED THAT THERE IS NO DETAIL AVAILABLE IN RESPECT OF ADDITION OF RS.25.05 LAC AND THEREFORE, IT IMPLIES THAT THE ASSESSEE HAS DEBITED ONLY AMOUNT OF RS.25.05 LAC TO AVOID ATTENTION OF DEPARTMENT TOWARDS THE AMOUNT OF RS.1641.37 LAC DEBITED IN PROFIT & LOSS ACCOUNT. 5.3 THE FOURTH OBJECTION OF LE ARNED CIT IS THAT THE ASSESSEE HAS CLAIMED AMORTIZATION OF GOVERNMENT SECURITIES AT RS.99,32,984/ - FOR WHICH THE ASSESSEE WAS REQUIRED TO FURNISH DETAILS VIDE PARA 6 OF WRITTEN QUESTIONNAIRE DATED 14/07/2011 BUT IN COMPLIANCE, NO REPLY HAS BEEN FILED BY TH E ASSESSEE ON THIS ISSUE. 6. THIS IS SETTLED POSITION OF LAW BY NOW THAT IF THE ASSESSMENT ORDER IS SUFFERING FROM LACK OF ENQUIRY BY THE ASSESSING OFFICER OR LACK OF APPLICATION OF MIND BY THE ASSESSING OFFICER, THEN THE ASSESSMENT ORDER IS ERRONEOUS A S WELL AS PREJUDICIAL TO THE INTEREST OF REVENUE. IN THE PRESENT CASE, ON THE FIRST ISSUE, WE FIND THAT AS PER THE ASSESSMENT ORDER FOR ASSESSMENT YEAR 2008 - 09 DATED 14/07/2011 AVAILABLE ON RECORD, THE ASSESSED INCOME IS POSITIVE INCOME OF RS.1777.24 LAC. THE PRESENT YEAR IS THE VERY NEXT YEAR AFTER ASSESSMENT YEAR 2008 - 09 AND WHEN THERE IS POSITIVE TAXABLE INCOME IN 5 ASSESSMENT YEAR 2008 - 09, THERE CANNOT BE ANY BROUGHT FORWARD BUSINESS LOSS OR UNABSORBED DEPRECIATION FOR SET OFF IN ASSESSMENT YEAR 2009 - 10 UNTIL AND UNLESS THE ADDITION MADE IN ASSESSMENT YEAR 2008 - 09 IS DELETED BY APPELLATE AUTHORITIES RESULTING INTO L OSS IN THAT EAR AND SUCH DELETION OF THE ADDITION IN THAT YEAR IS ACCEPTED BY THE DEPARTMENT. THE ASSESSMENT ORDER IN THE PRESENT YEAR IS DATED 21/11/2011, WHICH IS AFTER LESS THAN 11 MONTHS OF THE ORDER PASSED BY THE ASSESSING OFFICER IN ASSESSMENT YEAR 2008 - 09 AND NOTHING HAS BEEN BROUGHT ON RECORD TO SHOW THAT THE POSITIVE INCOME ASSESSED BY THE ASSESSING OFFICER IN ASSESSMENT YEAR 2008 - 09 WAS CONVERTED INTO LOSS IN TURN RESULTING INTO AVAILABILITY OF ANY BROUGHT FORWARD BUSINESS LOSS OR UNABSORBED DEP RECIATION IN THE PRESENT YEAR. HENCE, THE ASSESSMENT ORDER IS CLEARLY ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF REVENUE ON THIS ISSUE BECAUSE THE ASSESSING OFFICER HAS ALLOWED BROUGHT FORWARD BUSINESS LOSS AND UNABSORBED DEPRECIATION. 6.1 ON THE SECOND ISSUE ALSO, WE FIND THAT ALTHOUGH ENQUIRY WAS RAISED BY THE ASSESSING OFFICER IN RESPECT OF LOSS ON INVESTMENT BUT AS PER REPLY FURNISHED BY THE ASSESSEE, IT COMES OUT THAT SUCH LOSS IS IN RESPECT OF SALE OF INVESTMENT AND THEREFORE THE ASSESSIN G OFFICER WAS REQUIRED TO MAKE ENQUIRY AS TO WHETHER SUCH LOSS IS ELIGIBLE FOR SET OFF AGAINST BUSINESS INCOME. HENCE, ON THIS ISSUE, THERE IS LACK OF ENQUIRY AS WELL AS LACK OF APPLICATION OF MIND BY THE ASSESSING OFFICER RESULTING INTO ASSESSMENT ORDER BEING ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF REVENUE. 6.2 ON THE THIRD ISSUE, THERE IS NO ENQUIRY BY THE ASSESSING OFFICER AND THEREFORE, THERE IS LACK OF ENQUIRY BY THE ASSESSING OFFICER RESULTING INTO ASSESSMENT ORDER BEING ERRONEOUS AS WEL L AS PREJUDICIAL TO THE INTEREST OF REVENUE. 6 6.3 ON THE FOURTH ISSUE, ALTHOUGH TH ERE WAS ENQUIRY BY THE ASSESSING OFFICER BUT NO DETAIL WAS FURNISHED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER AND HENCE, THE ASSESSING OFFICER SHOULD HAVE APPLIED HIS MIN D TO DECIDE AS TO WHETHER THIS CLAIM OF THE ASSESSEE REGARDING AMORTIZATION OF GOVERNMENT SECURITIES AT RS.99,32,984/ - IS ALLOWABLE OR NOT BUT THERE IS NO SUCH MENTION IN THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER AND THEREFORE, ON THIS ISSUE, TH ERE IS NO APPLICATION OF MIND BY THE ASSESSING OFFICER AND HENCE, THE ASSESSMENT ORDER IS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF REVENUE ON THIS ISSUE. 7. AS PER ABOVE DISCUSSION, WE HAVE SEEN THAT FOR ALL THE FOUR ISSUES , THE ASSESSMENT ORDE R IS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF REVENUE AND THEREFORE, NO INTERFERENCE IS CALLED FOR IN THE ORDER OF LEARNED CIT. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS DISMISSED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DAT E MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 28 /08/2015 *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1.THE APPELLANT 2.THE RESPONDENT. 3.CONCERNED CIT 4.THE CIT(A) 5.D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR