Appeal details
Counselvise Citation
[2019] 118 COUNSELVISE.COM (IT) 5347 (ITAT-DELHI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
3 year(s) 5 month(s) 23 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
28-01-2019
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
A
Assessment Year
2009-2010
Appeal Filed On
05-08-2015
Judgement Text
ITA NO. 5006/DEL/2015 ASSESSMENT YEAR 2009-10 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A NEW DELHI BEFORE SHRI N.K. SAINI, VIC E PRESIDENT AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO. 5006/DEL/2015 ASSESSMENT YEAR: 2009-10 ASSTT. COMMISSIONER OF INCOME TAX, VS M/S ADM AGRO INDUSTRIES CIRCLE 1(2), NEW DELHI. DHARWAD PVT. LTD., (PREVIOUSLY KNOWN AS TINNA AGRO INDUSTRIES LTD.), B-1, KHAITAN HOUSE, DEFENCE COLONY, NEW DELHI-110065 (APPELLANT) (RESPONDENT) DEPARTMENT BY: SHRI SRIDHAR DORA, SR. DR ASSESSEE BY: SHRI SALIL KAPOOR, ADVOCATE MS ANANYA KAPOOR, ADVOCATE DATE OF HEARING: 15.11.2018 DATE OF PRONOUNCEMENT: 28.01.2019 ORDER PER SUDHANSHU SRIVASTAVA, J.M. THIS APPEAL HAS BEEN PREFERRED BY THE REVENUE AGA INST THE ORDER PASSED BY THE LD. CIT (APPEALS)-I, NEW DE LHI VIDE DATED 22.5.2015 FOR ASSESSMENT YEAR 2009-10 AND THE SOLE ISSUE BEFORE US IS WHETHER THE LD. CIT (APPEALS) WAS CORRECT IN ALLOWING ASSESSEES CLAIM OF SET OFF OF BROUGHT FORWARD LOSS ES. 2.0 BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE MANUFACTURING AND TRADING OF EDIBLE OILS. ANOTHER ITA NO. 5006/DEL/2015 ASSESSMENT YEAR 2009-10 2 COMPANY M/S K.N. GURUSWAMY OIL MILLS LIMITED (KNG) WAS AMALGAMATED WITH THE ASSESSEE COMPANY ON 1.4.2007 P URSUANT TO THE AMALGAMATION BEING APPROVED BY THE HONBLE H IGH COURT OF DELHI VIDE ORDERS DATED 8 TH SEPTEMBER, 2008 AND 25 TH SEPTEMBER, 2008. THE RETURN OF INCOME FOR THE CAPTIONED YEAR WAS FILED DECLARING TOTAL INCOME AT NIL. AT THE TIME OF AMAL GAMATION, M/S KNG HAD ACCUMULATED LOSSES TO THE TUNE OF RS. 7,07, 28,268/- WHICH INCLUDED ACCUMULATED LOSS OF RS. 1,29,88,099/ - AND UNABSORBED DEPRECIATION TO THE TUNE OF RS. 5,77,40, 169/-. POST AMALGAMATION, THE ACCUMULATED LOSSES AND UNABSORBED DEPRECIATION OF KNG WAS BROUGHT FORWARD/CARRIED FOR WARD AND SET OFF BY THE ASSESSEE COMPANY IN VIEW OF THE PROV ISIONS OF SECTION 72A OF THE INCOME TAX ACT, 1961 (HEREINAFTE R REFERRED TO AS 'THE ACT'). DURING THE YEAR UNDER CONSIDERATIO N, THE ASSESSEE HAD SET OFF ACCUMULATED LOSSES AMOUNTING TO RS.1,04 ,77,404/- AGAINST ITS INCOME. HOWEVER, THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ASSESSEE HAD NOT SATISFIED THE REQUIR ED CONDITIONS FOR THE SET OFF OF ACCUMULATED LOSSES AND, THEREFOR E, THE SET OFF WAS DISALLOWED BY THE ASSESSING OFFICER. 2.1 AGGRIEVED, THE ASSESSEE APPROACHED THE LD. CIT (APPEALS) WHO HELD THAT THE ASSESSEE HAD FULLY COMP LIED WITH THE ITA NO. 5006/DEL/2015 ASSESSMENT YEAR 2009-10 3 CONDITIONS PRESCRIBED U/S 72A OF THE ACT AND THE GR OUND RAISED WAS ALLOWED IN FAVOUR OF THE ASSESSEE. NOW, THE DE PARTMENT IS IN APPEAL BEFORE THE ITAT AND HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS I N ALLOWING THE BROUGHT FORWARD LOSS OF RS. 1,04,77,40 4/- OF M/S K.N. GURUSWAMY OIL MILLS LTD., A SUBSIDIARY MERGED WITH THE APPELLANT COMPANY, BY ADMITTING ADDITIONAL EVIDENCE WITHOUT CONFRONTING WITH THE A. O. CONTRAVENING RULE 46A. 2. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN ALLOWING THE CLAIM OF BROUGHT FORWARD LOSSES WITHOU T VERIFYING THE CLAIM IN VIEW OF THE PROVISIONS OF SE CTION 72A(2) OF INCOME TAX ACT,1961, 3.0 THE LD. SR. DR SUBMITTED THAT THE LD. CIT (APP EALS) HAD ERRED IN ALLOWING THE BENEFIT OF SET OFF OF ACC UMULATED LOSSES WITHOUT CONSIDERING THE OBJECTION OF THE ASSESSING OFFICER THAT THE CONDITIONS PRESCRIBED IN SECTION 72A HAD NOT BEEN C OMPLIED WITH. IT WAS ALSO ARGUED BY THE LD. SR. DR THAT THE LD. C IT (APPEALS) HAD ADMITTED ADDITIONAL EVIDENCE WITHOUT CONFRONTIN G THE ASSESSING OFFICER WITH SUCH EVIDENCE AND THEREBY CO NTRAVENING THE PROVISIONS OF RULE 46A OF THE INCOME TAX RULES, 1962. 4.0 IN RESPONSE, THE LD. AR SUBMITTED THAT THE ISS UE STOOD COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF T HE ITAT IN ITA NO. 5006/DEL/2015 ASSESSMENT YEAR 2009-10 4 ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2011-12. A COPY OF THE SAID ORDER WAS ALSO PLACED BEFORE THE BENCH. THE L D. AR FURTHER SUBMITTED THAT THE LD. CIT (APPEALS) HAD NOT ADMITT ED ANY ADDITIONAL EVIDENCE IN CONTRAVENTION OF RULE 46A OF THE INCOME TAX RULES AND, THEREFORE, THIS ALLEGATION BY THE DE PARTMENT WAS INCORRECT. 5.0 WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE A LSO PERUSED THE MATERIAL AVAILABLE ON RECORD. A PERUSAL OF THE ORDER OF ASSESSMENT SHOWS THAT THE ASSESSING OFFICER HAS SIM PLY MENTIONED THAT THE ASSESSEE HAS NOT COMPLIED WITH T HE CONDITIONS LAID DOWN IN SECTION 72A OF THE ACT BUT HAS NOT SPE CIFIED AS TO HOW THE CONDITIONS WERE NOT MET BY THE ASSESSEE. T HE LD. CIT (APPEALS) HAS ALSO NOTED IN THE IMPUGNED ORDER THAT THE FINDINGS OF THE ASSESSING OFFICER IN THIS REGARD WERE AMBIGU OUS. 5.1 SECTION 72A OF THE INCOME TAX ACT, 1961 ('THE ACT') PROVIDES THAT SUBJECT TO THE FULFILMENT OF CERTAIN CONDITIONS AS PRESCRIBED IN SUBSECTION (2), THE AMALGAMATED COMPA NY SHALL BE ALLOWED TO CARRY FORWARD AND SET OFF OF ACCUMULATED LOSSES AND UNABSORBED DEPRECIATION OF THE AMALGAMATING COMPANY . IN ADDITION TO THE SPECIFIED CONDITIONS AS LAID DOWN I N SUBSECTION (2), CLAUSE (III) OF SUBSECTION (2), RULE 9C OF THE INCO ME TAX RULES, ITA NO. 5006/DEL/2015 ASSESSMENT YEAR 2009-10 5 1962 (FOR SHORT 'THE RULES') PRESCRIBES CERTAIN OTH ER CONDITIONS THAT MUST BE FULFILLED BY THE AMALGAMATED COMPANY A ND SUCH CONDITION SPECIFIED IN RULE 9C IS THAT THE AMALGAMA TED COMPANY SHOULD ACHIEVE AT LEAST 50% OF THE INSTALLED PRODUC TION CAPACITY OF THE AMALGAMATING UNDERTAKING BEFORE THE END OF F OUR YEARS FROM THE DATE OF AMALGAMATION AND CONTINUE TO MAINT AIN THE SAID MINIMUM LEVEL OF PRODUCTION TILL THE END OF FIVE YE ARS FROM THE DATE OF AMALGAMATION. THE PROVISO APPENDED TO RULE 9C (A) SAYS THAT THE CENTRAL GOVERNMENT, ON APPLICATION MADE BY THE AMALGAMATED COMPANY, MAY RELAX THE CONDITION OF ACH IEVING THE LEVEL OF PRODUCTION AND THE PERIOD DURING WHICH THE SAME IS TO BE ACHIEVED OR BOTH IN SUITABLE CASES HAVING REGARD TO THE GENUINE EFFORTS MADE BY THE AMALGAMATED COMPANY TO ATTAIN T HE PRESCRIBED LEVEL OF PRODUCTION AND CIRCUMSTANCES PR EVENTING SUCH EFFORTS FROM ACHIEVING THE SAME. 5.2 AN IDENTICAL ISSUE CAME UP BEFORE THE ITAT IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2011-12 ALS O AND VIDE ORDER DATED 5.11.2018 IN ITA NO. 5949/DEL/2016, THE ITAT DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. THE R ELEVANT OBSERVATIONS OF THE ITAT ARE CONTAINED IN PARA 6 AN D 7 OF THE SAID ITA NO. 5006/DEL/2015 ASSESSMENT YEAR 2009-10 6 ORDER AND THE SAME ARE BEING REPRODUCED HERE IN UND ER FOR A READY REFERENCE:- 6. WE HAVE GONE THROUGH THE RECORD. RULE 9C OF THE RULES PRESCRIBES THAT THE AMALGAMATED COMPANY, OWNI NG AN INDUSTRIAL UNDERTAKING OF THE AMALGAMATING COMPA NY BY WAY OF AMALGAMATION, SHALL ACHIEVE THE LEVEL OF PRODUCTION OF AT LEAST FIFTY PER CENT OF THE INSTAL LED CAPACITY OF THE SAID UNDERTAKING BEFORE THE END OF FOUR YEARS FROM THE DATE OF AMALGAMATION AND CONTINUE TO MAINTAIN THE SAID MINIMUM LEVEL OF PRODUCTION TILL THE END OF FIVE YEARS FROM THE DATE OF AMALGAMATION. THE PR OVISO THEREOF, HOWEVER, PROVIDES THAT THE CENTRAL GOVERNM ENT, ON AN APPLICATION MADE BY THE AMALGAMATED COMPANY, MAY RELAX THE CONDITION OF ACHIEVING THE LEVEL OF PRODUCTION OR THE PERIOD DURING WHICH THE SAME IS T O BE ACHIEVED OR BOTH IN SUITABLE CASES HAVING REGARD TO THE GENUINE EFFORTS MADE BY THE AMALGAMATED COMPANY TO ATTAIN THE PRESCRIBED LEVEL OF PRODUCTION AND THE CIRCUMSTANCES PREVENTING SUCH EFFORTS FROM ACHIEVIN G THE SAME. 7. IT IS, THEREFORE, CLEAR THAT IF THE ASSESSEE O BTAINS THE RELAXATION OF THE CONDITIONS FROM THE CBDT, IT WOUL D BE SUFFICIENT COMPLIANCE WITH THE REQUIREMENTS OF SECT ION 72 A OF THE ACT. IN THIS MATTER, THERE IS NO DENIAL OF THE FACTS RECORDED BY THE LD. CIT(A), AND IT IS NOT THE CASE OF THE REVENUE THAT THE ASSESSEE DID NOT OBTAIN THE ORDERS OF RELAXATION FROM THE CBDT AS PROVIDED IN RULE 9C. WE HAVE GONE THROUGH THE COPY OF THIS ORDER FILED BEFO RE US. IN THIS FACTUAL SITUATION WE DO NOT FIND ANYTHING I LLEGALITY OR IRREGULARITY IN THE IMPUGNED ORDERS. THERE IS NO NEED TO INTERFERE WITH THE SAME AND WE ACCORDINGLY UPHELD I T. THERE ARE NO MERITS IN THIS APPEAL AND THE APPEAL I S ACCORDINGLY DISMISSED. 5.3 ACCORDINGLY, IN VIEW OF THE DECISION OF THE CO ORDINATE BENCH IN ASSESSEES OWN CASE AS STATED ABOVE FOR AS SESSMENT YEAR 2011-12, RESPECTFULLY FOLLOWING THE SAME, WE HOLD T HAT THE LD. CIT ITA NO. 5006/DEL/2015 ASSESSMENT YEAR 2009-10 7 (APPEALS) WAS CORRECT IN ALLOWING THE BENEFIT OF SE T OFF OF BROUGHT FORWARD LOSSES. WE ALSO ADD THAT THE DEPARTMENTS CONTENTION THAT THE LD. CIT (APPEALS) HAS CONTRAVENED PROVISIO NS OF RULE 46A OF THE RULES BY ADMITTING ADDITIONAL EVIDENCE IS AL SO NOT SUBSTANTIATED BY FACTS ON RECORD AND, THEREFORE, TH IS PLEA IS ALSO DISMISSED. 6.0 IN THE RESULT, THE APPEAL OF THE REVENUE STAND S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH JANUARY, 2019. SD/- SD/- (N.K. SAINI) (SUDHANSHU SRIVASTAVA) VICE PRESIDENT JUDICIAL MEM BER DATED: 28 TH JANUARY , 2019 GS COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT BY ORDER ASSTT. REGISTRAR
