M/S. THE WEST COAST PAPER MILLS LTD, MUMBAI V. THE ACIT RG 1(3), MUMBAI

ITA 5264/MUM/2008

• Counselvise Citation: 526419914 RSA 2008
• Duration Of Justice: 3 year(s) 2 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 20-09-2011
• Assessment Year: 1998-1999
• Appeal Filed On: 18-08-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Depreciation; Period of limitation; Unabsorbed depreciation; Set aside
• Section: 148; 144; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G, MUMBAI BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER S.NO. ITA NO. ASSTT.YEAR. 1. 5264/MUM/2008 1998-99 2. 5265/MUM/2008 1999-2000 3. 5266/MUM/2008 2000-01 4. 5267/MUM/2008 2001-02 5. 5268/MUM/2008 2002-03 THE WEST COAST PAPER MILLS LTD., ASSTT. COMMISSIONER OF SHREENIWAS HOUSE, HAZARIMAL VS. INCOME-TAX, SOMANI MARG, FORT, RANGE-1(3), MUMBAI. MUMBAI 400 001. PAN AAACT 4179N. APPELLANT. RESPONDENT. S.NO. C.O. NO. ARISING OUT OF ITA NO. ASSTT.YEAR. 1. 16/MUM/2010 5264/MUM/2008 1998-99 2. 17/MUM/2010 5265/MUM/2008 1999 -2000 3. 18/MUM/2010 5266/MUM/2008 2000-01 4. 19/MUM/2010 5267/MUM /2008 2001-02 5. 20/MUM/2010 5268/MUM /2008 2002-03. DY. COMMISSIONER OF INCOME-TAX, THE WEST COAST PAPER MILLS LTD., 1(1), OSD, MUMBAI. VS. MUMBAI. CROSS OBJECTOR. RESPONDENT. ASSESSEE BY : S/SHRI D.B.DESAI, ASHISH JHAWAR, BASANT KASAT. DEPARTMENT BY: SHRI PAVA N VED. DATE OF HEARING : 20.09.2011. DATE OF PRONOUNC EMENT : 21-10-2011. 2 ITA NOS.5264 TO 5268/MUM/2008 C.O. NOS. 16 TO 20/MUM/2010 O R D E R. PER BENCH : THESE FIVE APPEALS FILED BY THE ASSESSEE AGAINST A COMPOSITE ORDER PASSED BY THE LEARNED CIT(APPEALS)-XXI, MUMBAI DATED 12-06-20 08 FOR ASSESSMENT YEARS 1998-99 TO 2002-03 INVOLVE A COMMON ISSUE AND THE S AME, THEREFORE, HAVE BEEN HEARD TOGETHER AND ARE BEING DISPOSED OF BY A SINGL E CONSOLIDATED ORDER ALONG WITH CORRESPONDING CROSS OBJECTIONS FILED BY THE REVENUE BEING C.O. NOS. 16 TO 20/MUM/2010. 2. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY WH ICH IS ENGAGED IN THE BUSINESS OF MANUFACTURE AND SALE OF PAPER AND PAPER BOARDS, MULTI LAYER BOARDS AND OPTICAL FIBER BESIDES POWER GENERATION AND LEASIN G. IN THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 1996-97, IT PURCHASED CERTAIN AS SETS WHICH WERE GIVEN ON LEASE. IN THE RETURNS OF INCOME FILED FOR ASSESSMENT YEARS 1996-97 AND 1997-98, THE ASSESSEE COMPANY CLAIMED 100% DEPRECIATION ON THE S AID LEASED ASSETS WHICH WAS DISALLOWED BY THE AO ON THE GROUND THAT THE RELEVAN T TRANSACTIONS CLAIMED TO BE THAT OF LEASE BY THE ASSESSEE WERE ACTUALLY PURE FI NANCIAL TRANSACTIONS. CONSEQUENTLY DEDUCTION WAS GRANTED BY THE AO IN RES PECT OF PRINCIPAL ELEMENT INCLUDED IN THE LEASE RENTALS IN ASSESSMENT YEARS 1 996-97 AND 1997-98 AS WELL AS IN SUBSEQUENT ASSESSMENT YEARS I.E. 1998-99 TO 2002-03 WHICH ARE UNDER CONSIDERATION. THE MATTER RELATING TO ASSESSEES CL AIM FOR DEPRECIATION ON LEASED ASSETS WAS REACHED TO THE TRIBUNAL BY WAY OF APPEAL S FILED BY THE ASSESSEE. THE TRIBUNAL ALLOWED THE SAID APPEALS ON THE ISSUE OF A SSESSEES CLAIM FOR DEPRECIATION ON LEASED ASSETS. THEREAFTER THE AO GAVE CONSEQUENT IAL EFFECTS TO THE ORDER OF THE TRIBUNAL BY WITHDRAWING THE DEDUCTION GRANTED IN RE SPECT OF PRINCIPAL ELEMENT 3 ITA NOS.5264 TO 5268/MUM/2008 C.O. NOS. 16 TO 20/MUM/2010 INCLUDED IN THE LEASE RENTAL FOR THE YEARS CONSIDER ATION I.E. ASSESSMENT YEARS 1998- 99 TO 2002-03. THESE ORDERS PASSED BY THE AO GIVING CONSEQUENTIAL EFFECT TO THE TRIBUNALS ORDER IN SUBSEQUENT ASSESSMENT YEARS WER E CHALLENGED BY THE ASSESSEE IN THE APPEALS FILED BEFORE THE LEARNED CIT(APPEALS). THE STAND TAKEN BY THE ASSESSEE BEFORE THE LEARNED CIT(APPEALS) WAS THAT THE TRIBUN AL WHILE PASSING THE ORDERS FOR ASSESSMENT YEARS 1996-97 AND 1997-98 HAD ONLY GIVEN DIRECTION TO ALLOW THE DEPRECIATION CLAIMED ON THE LEASED ASSETS AND THERE WAS NO FINDING THAT HAD BEEN GIVEN BY THE TRIBUNAL IN RESPECT OF TAXABILITY OF T HE PRINCIPAL ELEMENT INCLUDED IN THE LEASE RENTAL WHICH WAS EXCLUDED BY THE AO. IT W AS CONTENDED THAT IN THE ABSENCE OF ANY SUCH FINDING, THE AO WAS NOT AUTHORI ZED TO GIVE HIS OWN INTERPRETATION TO THE ORDER OF THE TRIBUNAL FOR AS SESSMENT YEARS 1996-97 AND 1997- 98 AND MODIFY/REVISE THE ASSESSMENT ORDERS FOR THE SUBSEQUENT YEARS. IT WAS ALSO CONTENDED THAT IF ANY AMENDMENT WAS TO BE MADE IN T HE SUBSEQUENT ASSESSMENT YEARS DUE TO ORDER OF THE APPELLATE AUTHORITY FOR T HE EARLIER ASSESSMENT YEARS, THE AO SHOULD HAVE FOLLOWED PROPER COURSE OF ACTION AS PER THE RELEVANT PROVISIONS OF THE INCOME-TAX ACT, 1961. IT WAS CONTENDED THAT THE RE WAS NO MENTION OR EVEN INDICATION OF ANY SECTION UNDER WHICH THE ORDERS F OR THE YEARS UNDER CONSIDERATION GIVING EFFECT TO THE ORDER OF THE TRIBUNAL WERE PAS SED BY THE AO. IT WAS CONTENDED THAT EVEN IF THE SAID ORDERS WERE TO BE CONSIDERED AS THE ORDERS PASSED U/S 154, THE SAME WERE NOT MAINTAINABLE SINCE THERE WAS NO MATER IAL ON RECORD FOR THE YEARS UNDER CONSIDERATION ON THE BASIS OF WHICH ORDERS U/ S 154 COULD BE PASSED. IT WAS CONTENDED THAT THE AO, IN ANY CASE, COULD NOT SUO M OTU MAKE ANY AMENDMENT U/S 154 HAVING THE EFFECT OF INCREASING THE LIABILITY B Y WAY OF DEMAND OR REDUCING THE REFUND WITHOUT ISSUING THE NOTICE TO THE ASSESSEE I N VIEW OF THE PROVISIONS OF SECTION 154(3). 4 ITA NOS.5264 TO 5268/MUM/2008 C.O. NOS. 16 TO 20/MUM/2010 3. THE LEARNED CIT(APPEALS) DID NOT FIND MERIT IN T HE SUBMISSIONS MADE ON BEHALF OF THE ASSESSEE BEFORE HIM. ACCORDING TO HIM , THE DIRECTIONS OF THE SUPERIOR JUDICIAL AUTHORITIES WERE REQUIRED TO BE GIVEN HARM ONIOUS CONSTRUCTION UNDER THE SCHEME OF THE ACT AND THE AO WAS DUTY BOUND TO GIVE CONSEQUENTIAL EFFECTS TO THE ORDER OF THE TRIBUNAL. WHILE GIVING CERTAIN EXAMPLE S IN SUPPORT OF THIS CONCLUSION, THE LEARNED CIT(APPEALS) OBSERVED THAT WHEN THE REV ENUE EXPENDITURE CLAIMED BY THE ASSESSEE IS TREATED AS CAPITAL BY THE AO/APPELL ATE AUTHORITIES, GRANT OF CONSEQUENT DEPRECIATION HAS TO BE AUTOMATIC. HE OBS ERVED THAT SIMILARLY WITHDRAWAL OF ADDITIONAL GRANT OF DEPRECIATION IS A UTOMATIC ON THE DECISION OF APPELLATE AUTHORITY HOLDING THAT A PARTICULAR EXPEN DITURE TREATED AS CAPITAL BY THE AO IS ACTUALLY REVENUE IN NATURE. HE HELD THAT THE AO IS COMPETENT TO MAKE SUCH AUTOMATIC ADJUSTMENT AND THE DECISION OF THE APPELL ATE AUTHORITY AUTOMATICALLY INCORPORATES CONSEQUENTIAL ALLOWANCE/DISALLOWANCE E VEN IN THE ABSENCE OF ANY SPECIFIC DIRECTION. HE HELD THAT THE AO HAS TO HARM ONIOUSLY INTERPRET DIRECTION OF THE APPELLATE AUTHORITY AND GIVE ALL CONSEQUENTIAL EFFECTS THERETO. HE HELD THAT THE AO, THEREFORE, WAS FULLY JUSTIFIED IN GIVING EFFECT TO THE APPELLATE ORDER OF THE TRIBUNAL TO THE EXTENT IT AFFECTED THE COMPUTATION OF INCOME FOR THE RELEVANT SUBSEQUENT YEAR. HE HELD THAT THE INCLUSION OF PRIN CIPAL ELEMENT OF LEASE RENT IN THE INCOME OF THE ASSESSEE WAS A CONSEQUENCE OF THE TRI BUNALS ORDER AND SUCH INCLUSION WAS TO TAKE PLACE AUTOMATICALLY AS A RESU LT OF THE ORDER OF THE TRIBUNAL. ACCORDINGLY THE ACTION OF THE AO IN INCLUDING THE P RINCIPAL AMOUNT OF LEASE RENT IN THE TOTAL INCOME OF THE ASSESSEE FOR THE YEARS UNDE R CONSIDERATION I.E. ASSESSMENT YEARS 1998-99 TO 2002-03 BY ORDERS GIVING EFFECT T O THE ORDER OF THE TRIBUNAL FOR ASSESSMENT YEARS 1996-97 AND 1997-98 WHEREBY THE RE LEVANT TRANSACTIONS HAD BEEN TREATED AS OPERATIONAL LEASE AND NOT FINANCIAL TR ANSACTION WAS UPHELD BY THE 5 ITA NOS.5264 TO 5268/MUM/2008 C.O. NOS. 16 TO 20/MUM/2010 LEARNED CIT(APPEALS). AGGRIEVED BY THE ORDER OF THE LEARNED CIT(APPEALS), THE ASSESSEE HAS PREFERRED THESE APPEALS BEFORE THE TRI BUNAL. 4. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE LEARNED CIT(APPEALS) IN HIS IMPUGNED ORDER HAS PROCEEDED ON THE FOOTING THAT THERE ARE NO PROVISIONS ENABLING THE AO TO GIVE CONSEQUENTIAL E FFECT TO THE ORDER OF THE TRIBUNAL IN THE SUBSEQUENT YEARS. HE INVITED OUR AT TENTION TO THE RELEVANT PROVISIONS OF SECTIONS 150 TO SHOW THAT THESE PROVISIONS SUFF ICIENTLY EMPOWER THE AO TO PASS CONSEQUENTIAL ORDERS EVEN FOR THE SUBSEQUENT YEARS AND THAT TOO WITHOUT ANY LIMITATION OF TIME. RELYING ON THE DECISION OF HON BLE SUPREME COURT IN THE CASE OF RAJINDER NATH VS. CIT REPORTED IN 120 ITR 14, H E CONTENDED THAT THERE HAS TO BE A FINDING OR DIRECTION GIVEN BY THE APPELLATE A UTHORITY WHICH ALONE CAN BE THE BASIS FOR INVOKING THE SAID PROVISIONS WHICH ENABLE THE AO TO GIVE CONSEQUENTIAL EFFECTS TO THE FINDINGS AND DIRECTIONS GIVEN BY THE APPELLATE AUTHORITY IN EARLIER YEAR THEREBY MODIFYING OR REVISING THE ASSESSMENTS FOR T HE SUBSEQUENT YEARS. HE CONTENDED THAT SUCH CONSEQUENTIAL EFFECTS ARE NOT A UTOMATIC AND THERE HAS TO BE A PROCESS OF LAW WHICH IS WELL DEFINED AND SPECIFICAL LY PROVIDED TO GIVE SUCH EFFECTS. HE CONTENDED THAT THE ORDERS PASSED BY THE AO GIVIN G EFFECT TO THE ORDER OF THE TRIBUNAL IN THE PRESENT CASE ARE DE-HORS THE PROCES S OF LAW AND IN THE ABSENCE OF ANY SPECIFIC PROVISION UNDER WHICH THE SAME CAN BE SAID TO HAVE BEEN PASSED, THEY ARE NOT VALID IN THE EYES OF LAW. HE CONTENDED THAT THE SAID ORDERS THUS ARE LIABLE TO BE QUASHED BEING WITHOUT ANY AUTHORITY OF LAW. 5. THE LEARNED DR, ON THE OTHER HAND, SUBMITTED THA T THE AO WAS QUITE JUST AND FAIR IN EXCLUDING EARLIER THE PRINCIPAL ELEMENT INV OLVED IN THE LEASE RENTAL TREATING THE SAME TO BE NOT TAXABLE AS A RESULT OF HIS DECIS ION HOLDING THAT THE RELEVANT TRANSACTIONS WERE NOT LEAS TRANSACTIONS AND THE SAM E WERE ACTUALLY FINANCIAL 6 ITA NOS.5264 TO 5268/MUM/2008 C.O. NOS. 16 TO 20/MUM/2010 TRANSACTIONS. HE SUBMITTED THAT THE SAID DECISION O F THE AO, HOWEVER, WAS SUBSEQUENTLY REVERSED BY THE TRIBUNAL HOLDING THAT THE RELEVANT TRANSACTIONS WERE ACTUALLY LEASED TRANSACTIONS AS CLAIMED BY THE ASSE SSEE AND CONSEQUENTIAL EFFECT, THEREFORE, WAS REQUIRED TO BE GIVEN AS A RESULT OF THE SAID DECISION OF THE TRIBUNAL BY INCLUDING THE PRINCIPAL ELEMENT OF LEASE RENT IN THE INCOME OF THE ASSESSEE WHICH WAS EARLIER EXCLUDED. HE CONTENDED THAT THIS WAS AN INTEGRAL PART OF THE SAME TRANSACTION WHICH WAS EARLIER TREATED BY THE AO AS FINANCE TRANSACTION AND LATER ON HELD TO BE PURELY LEASE TRANSACTIONS BY THE TRIBUNA L. HE SUBMITTED THAT THE CONSEQUENTIAL EFFECTS TO THE ORDER OF THE TRIBUNAL WERE REQUIRED TO BE GIVEN BY THE AO AND THERE IS NO NEED TO HAVE ANY SEPARATE AND SP ECIFIC PROVISION IN THE STATUTE ENABLING THE AO TO GIVE SUCH CONSEQUENTIAL EFFECTS AS THE SAME IS VERY MUCH EMBEDDED IN THE SCHEME OF THE ACT. HE SUBMITTED THA T EVEN THE LOSSES DETERMINED IN EARLIER YEARS ARE ALLOWED TO BE SET OFF IN THE S UBSEQUENT YEARS WHILE GIVING CONSEQUENTIAL EFFECTS WITHOUT THERE BEING ANY SEPAR ATE OR SPECIFIC AUTHORITY OF LAW GIVEN IN THE INCOME TAX ACT. HE SUBMITTED THAT SIMI LARLY ENHANCEMENT OF CLOSING STOCK IN THE EARLIER YEAR IS SUITABLY COMPENSATED B Y INCREASING THE OPENING STOCK OF THE SUBSEQUENT YEAR AS A CONSEQUENTIAL EFFECT WITHO UT ANY SPECIFIC PROVISION IN THE ACT ENABLING SUCH ADJUSTMENT. HE CONTENDED THAT THE ASSESSEE AS A MATTER OF FACT, CANNOT BE SAID TO HAVE ANY GRIEVANCE BY THE ORDERS PASSED BY THE AO FOR THE ASSESSMENT YEARS UNDER CONSIDERATION GIVING CONSEQU ENTIAL EFFECT TO THE ORDER OF THE TRIBUNAL FOR THE EARLIER YEARS BECAUSE AS A RES ULT OF ALLOWANCE OF DEPRECIATION ON THE LEASED ASSETS TREATING THE RELEVANT TRANSAC TIONS AS LEASE AND NOT FINANCE, THE ENTIRE LEASE RENTAL INCLUDING PRINCIPAL ELEMENT WAS CHARGEABLE TO TAX IN THE HANDS OF THE ASSESSEE EVEN IN THE SUBSEQUENT YEARS. HE POINT ED OUT THAT AT LEAST IN COUPLE OF YEARS UNDER CONSIDERATION, THE ASSESSEE COMPANY ITS ELF HAD OFFERED THE SAID AMOUNT 7 ITA NOS.5264 TO 5268/MUM/2008 C.O. NOS. 16 TO 20/MUM/2010 TO TAX WHICH THE AO EXCLUDED AS A RESULT OF HIS DEC ISION TREATING THE RELEVANT LEASE TRANSACTION AS FINANCE TRANSACTION. 6. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. IN THIS CASE, DEPRECIATION CLAI MED BY THE ASSESSEE IN ASSESSMENT YEARS 1996-97 AND 1997-98 ON THE ASSETS GIVEN ON LE ASE AT THE RATE OF 100% WAS DISALLOWED BY THE AO HOLDING THAT THE RELEVANT TRAN SACTIONS OF LEASE WERE PURELY FINANCE TRANSACTIONS. CONSEQUENTLY, THE LEASE RENTA L RECEIVED BY THE ASSESSEE IN THE SAID YEARS AS WELL AS IN THE SUBSEQUENT YEARS I.E. ASSESSMENT YEARS 1998-99 TO 2002- 03 WAS TREATED BY THE AO AS REPAYMENT OF LOAN GIVEN BY THE ASSESSEE AND THE PRINCIPAL ELEMENT INVOLVED THEREIN WAS EXCLUDED BY HIM FROM THE TOTAL INCOME OF THE ASSESSEE AS ASSESSED FOR ALL THESE YEARS. THE I SSUE RELATING TO DISALLOWANCE OF DEPRECIATION WAS CARRIED BEFORE THE TRIBUNAL IN ASS ESSMENT YEARS 1996-97 AND 1997-98 AND THE SAME WAS DECIDED BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE HOLDING THAT THE RELEVANT TRANSACTIONS WERE PURELY LEASE TRANSACTIONS. ACCORDINGLY THE CLAIM OF THE ASSESSEE FOR DEPRECIATION AT THE R ATE OF 100% ON THE ASSETS GIVEN ON LEASE WAS ALLOWED BY THE TRIBUNAL IN ASSESSMENT YEA RS 1996-97 AND 1997-98. WHILE GIVING EFFECT TO THE ORDER OF THE TRIBUNAL FO R ASSESSMENT YEARS 1996-97 AND 1997-98, THE AO PASSED THE ORDERS EVEN FOR THE SUBS EQUENT YEARS I.E. ASSESSMENT YEARS 1998-99 TO 2002-03 WHICH ARE UNDER CONSIDERAT ION REVISING THE ASSESSMENTS FOR THE SAID YEARS BY INCLUDING THE PRINCIPAL ELEME NT OF LEASE RENTAL IN THE TOTAL INCOME OF THE ASSESSEE AS A CONSEQUENTIAL EFFECT OF THE ORDER OF THE TRIBUNAL PASSED FOR ASSESSMENT YEARS 1996-97 AND 1997-98. ACCORDING TO THE AO, AS A RESULT OF THE ORDER OF THE TRIBUNAL FOR ASSESSMENT YEARS 1996-97 AND 1997-98 TREATING THE RELEVANT TRANSACTIONS AS GENUINE LEASE TRANSACTION S, THE ENTIRE LEASE RENTAL RECEIVED BY THE ASSESSEE IN RESPECT OF THE SAID TRANSACTIONS FOR ASSESSMENT YEARS 1998-99 TO 2002-03 WAS LIABLE TO BE TAXED IN THE HANDS OF THE ASSESSEE AS A NECESSARY 8 ITA NOS.5264 TO 5268/MUM/2008 C.O. NOS. 16 TO 20/MUM/2010 CONSEQUENTIAL EFFECT AND THIS POSITION HAS NOT BEEN DISPUTED EVEN BY THE LEARNED COUNSEL FOR THE ASSESSEE AT THE TIME OF HEARING BEF ORE US. HE, HOWEVER, HAS CONTENDED THAT WHILE GIVING EFFECT TO THE ORDER OF THE TRIBUNAL FOR ASSESSMENT YEARS 1996-97 AND 1997-98, THE ASSESSMENTS FOR THE SUBSEQ UENT YEARS CANNOT BE REVISED TO GIVE SUCH CONSEQUENTIAL EFFECT. HE HAS SUBMITTED THAT THE LEARNED CIT(APPEALS) HAS PROCEEDED TO UPHOLD THE ORDERS OF THE AO PASSED FOR THE YEARS UNDER CONSIDERATION WHILE GIVING EFFECT TO THE ORDER OF T HE TRIBUNAL FOR ASSESSMENT YEARS 1996-97 AND 1997-98 ON THE FOOTING THAT EVEN IN THE ABSENCE OF ANY SPECIFIC PROVISIONS AUTHORIZING THE AO TO GIVE SUCH CONSEQUE NTIAL EFFECTS, THE AO IS DUTY BOUND TO HARMONIOUSLY INTERPRET THE DIRECTION OF TH E APPELLATE AUTHORITY AND GIVE CONSEQUENTIAL EFFECTS TO SUCH DIRECTION OR DECISION . THE LEARNED COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT THERE ARE IN FACT SUCH PROVISIONS CONTAINED IN SECTION 150 WHICH GIVE POWER TO THE AO TO ISSUE NOTICE U/S 148 AT ANY TIME FOR THE PURPOSE OF MAKING AN ASSESSMENT OR REASSESSMENT OR RECOMPUT ATION IN CONSEQUENCE OF OR TO GIVE EFFECT TO ANY FINDING OR DIRECTION CONTAINED I N AN ORDER PASSED BY ANY AUTHORITY, INTER ALIA, IN ANY PROCEEDINGS UNDER THE ACT BY WAY OF APPEAL. HE HAS CONTENDED THAT THE ISSUE INVOLVED IN THE CASE OF TH E ASSESSEE BEFORE THE TRIBUNAL FOR ASSESSMENT YEARS 1996-97 AND 1997-98 WAS RELATING T O ITS CLAIM FOR DEPRECIATION ON THE ASSETS GIVEN ON LEASE AND NOT RELATING TO INCLU SION OF PRINCIPAL ELEMENT INVOLVED IN THE LEASE RENTAL IN THE TOTAL INCOME OF THE ASSE SSEE. HE HAS CONTENDED THAT THERE WAS THUS NO FINDING OR DIRECTION CONTAINED IN THE O RDER OF THE TRIBUNAL PASSED FOR ASSESSMENT YEARS 1996-97 AND 1997-98 ON THE ISSUE O F INCLUSION OF SUCH PRINCIPAL ELEMENT IN THE TOTAL INCOME OF THE ASSESSEE AND IN THE ABSENCE OF SUCH FINDING OR DIRECTION, THE AO HAD NO POWER TO ISSUE NOTICES U/S 148 FOR THE YEARS UNDER CONSIDERATION IN ORDER TO RECOMPUTE THE TOTAL INCOM E OF THE ASSESSEE IN 9 ITA NOS.5264 TO 5268/MUM/2008 C.O. NOS. 16 TO 20/MUM/2010 CONSEQUENCE OF OR TO GIVE EFFECT TO THE ORDER OF TH E TRIBUNAL PASSED FOR ASSESSMENT YEARS 1996-97 AND 1997-98. 7. AFTER HAVING CONSIDERED THE RIVAL SUBMISSIONS AN D PERUSED THE RELEVANT PROVISIONS OF THE ACT AS WELL AS THE JUDICIAL PRONO UNCEMENTS AVAILABLE ON THE ISSUE, WE FIND IT DIFFICULT TO ACCEPT THE CONTENTIONS RAIS ED BY THE LEARNED COUNSEL FOR THE ASSESSEE. IN OUR OPINION, WHILE DISPOSING OF THE AP PEALS EMANATING FROM THE ASSESSMENTS MADE BY THE AO U/S 143 OR 144 OF THE IN COME-TAX ACT, 1961, THE APPELLATE AUTHORITIES HAVE THE POWER TO CONFIRM, RE DUCE OR CANCEL THE ASSESSMENTS MADE BY THE AO OR TO DIRECT THE AO TO MAKE THE SAME AFRESH IN ACCORDANCE WITH THE DIRECTIONS GIVEN. IN CASE OF CONFIRMATION OR RE DUCTION OF THE ASSESSMENT BY THE APPELLATE AUTHORITIES, THE ORIGINAL ORDER OF ASSESS MENT STANDS MODIFIED TO THAT EXTENT AND WHAT REMAINS AS A FINAL ORDER AFTER GIVING EFFE CT TO THE ORDERS OF THE APPELLATE AUTHORITY IS NOTHING BUT AN ORDER OF ASSESSMENT MAD E U/S 143 OR 144. THE ORDER PASSED BY THE AO GIVING EFFECT TO THE ORDER OF THE APPELLATE AUTHORITY THUS IS AN ORDER PASSED U/S 143 OR 144. THE PROVISIONS OF SECT ION 150 REFERRED TO BY THE LEARNED COUNSEL FOR THE ASSESSEE IN THIS CONTEXT AR E APPLICABLE ONLY FOR THE PURPOSE OF MAKING AN ASSESSMENT OR REASSESSMENT OR RECOMPUT ATION IN CONSEQUENCE OF OR TO GIVE EFFECT TO ANY FINDING OR DIRECTION CONTAINED I N AN ORDER OF APPELLATE AUTHORITY. IN THE PRESENT CASE, THERE IS, HOWEVER, NO SUCH FIN DING OR DIRECTION GIVEN BY THE TRIBUNAL IN ITS APPELLATE ORDER FOR THE ASSESSMENT YEARS 1996-97 AND 1997-98 ON THE ISSUE OF INCLUSION OF PRINCIPAL ELEMENT OF RENTAL I NCOME IN THE TOTAL INCOME OF THE ASSESSEE FOR THE YEARS UNDER CONSIDERATION BECAUSE THIS ISSUE WAS NOT INVOLVED AT ALL IN THE APPEALS FILED BY THE ASSESSEE BEFORE THE TRI BUNAL FOR ASSESSMENT YEARS 1996- 97 AND 1997-98. HOWEVER, IT CANNOT BE DENIED THAT A S A RESULT OF THE DECISION OF THE TRIBUNAL RENDERED IN ASSESSMENT YEARS 1996-97 AND 1 997-98 HOLDING THE RELEVANT TRANSACTIONS AS GENUINE LEASE TRANSACTIONS AND ALLO WING THE CLAIM OF THE ASSESSEE 10 ITA NOS.5264 TO 5268/MUM/2008 C.O. NOS. 16 TO 20/MUM/2010 FOR DEPRECIATION ON ASSETS GIVEN ON LEASE, THE ENTI RE LEASE RENTAL RECEIVED BY THE ASSESSEE EVEN IN THE SUBSEQUENT YEARS BECAME CHARG EABLE TO TAX IN THE HANDS OF THE ASSESSEE INCLUDING THE PRINCIPAL ELEMENT INVOLVED T HEREIN WHICH WAS EARLIER EXCLUDED BY THE AO FROM THE TOTAL INCOME OF THE ASS ESSEE ON THE GROUND THAT THE RELEVANT LEASE TRANSACTIONS WERE PURELY FINANCE TRA NSACTIONS. THIS WAS THE CONSEQUENTIAL EFFECT OF THE ORDER OF THE TRIBUNAL P ASSED FOR ASSESSMENT YEARS 1996- 97 AND 1997-98 AFFECTING DIRECTLY THE TOTAL INCOME OF THE ASSESSEE FOR THE ASSESSMENT YEARS 1996-97 AND 1997-98 AS WELL AS FO R THE SUBSEQUENT YEARS WHICH ARE UNDER CONSIDERATION. IN SO FAR AS ASSESSMENT YE ARS 1996-97 AND 1997-98 ARE CONCERNED, THERE IS NOTHING ON RECORD TO SHOW THAT THE ASSESSEE HAS CHALLENGED THE ORDERS PASSED BY THE AO IN THESE YEARS GIVING EFFEC T TO THE ORDER OF THE TRIBUNAL. IN ANY CASE, THE SAID ORDERS, AS ALREADY HELD BY US, A RE ORDERS PASSED BY THE AO U/S 143 WHEREBY THE ORDERS PASSED ORIGINALLY U/S 143(3 ) STOOD REVISED AS A RESULT OF THE DECISION OF THE APPELLATE AUTHORITY. THIS VIEW TAKEN BY US GETS SUPPORT FROM THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE O F CALTEX OIL REFINING (INDIA) LTD. VS. CIT REPORTED IN 202 ITR 375 WHEREIN IT WAS HELD THAT THE ORDER PASSED BY THE AO PURSUANT TO THE ORDER OF APPELLATE AUTHORITY WITH A VIEW TO GIVE EFFECT TO THE SAID ORDER IS AN ORDER OF ASSESSMENT WITHIN THE MEA NING OF SECTION 143 OR 144 OF THE ACT. IT WAS HELD THAT THE POWER OF THE AO TO AM END THE ASSESSMENT IN CONSEQUENCE OF DECISION IN AN APPEAL/REVISION/REFER ENCE IS NOT TRACEABLE TO SECTION 154 BUT IS INHERENT AND TRACEABLE TO SECTION 143 AN D 144 OF THE INCOME-TAX ACT. 8. HAVING HELD THAT THE ORDER PASSED BY THE AO WITH A VIEW TO GIVE EFFECT TO THE ORDER OF THE APPELLATE AUTHORITY IS NOTHING BUT AN ORDER PASSED U/S 143 OR 144, THE NEXT QUESTION ARISES IS WHAT IS THE POSITION IN RES PECT OF ORDERS PASSED BY THE AO GIVING CONSEQUENTIAL EFFECT TO THE ORDERS OF THE AP PELLATE AUTHORITY FOR EARLIER YEARS IN THE SUBSEQUENT YEARS. IT IS OBSERVED THAT IN THE CASE OF PENINSULA LAND LTD. VS. 11 ITA NOS.5264 TO 5268/MUM/2008 C.O. NOS. 16 TO 20/MUM/2010 CIT REPORTED IN 307 ITR 183, A SIMILAR ISSUE HAD CO ME UP FOR CONSIDERATION BEFORE THE HONBLE BOMBAY HIGH COURT. IN THE SAID CASE, TH E ASSESSEE HAD FILED A NIL RETURN OF INCOME FOR ASSESSMENT YEAR 1994-95. THE A O PASSED AN ASSESSMENT ORDER DETERMINING THE TOTAL INCOME OF THE ASSESSEE AT RS.5,23,32,724/- WHICH HE SUBSEQUENTLY REDUCED TO RS.4,49,39,949/- BY AN ORDE R PASSED U/S 154. THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(APPEALS) AND AFTER G IVING EFFECT TO HIS ORDER, THE INCOME OF THE ASSESSEE WAS DETERMINED AT RS.2,67,71 ,123/-. MEANWHILE, THE APPEALS OF THE ASSESSEE FOR ASSESSMENT YEARS 1992-9 3 AND 1993-94 CAME TO BE DISPOSED OF WHEREBY THE BALANCE AMOUNT OF CARRIED F ORWARD DEPRECIATION TO THE EXTENT OF RS.76,52,499/- AND RS.1,77.46,283/- RELAT ING TO ASSESSMENT YEARS 1992-93 AND 1993-94 RESPECTIVELY BECAME AVAILABLE TO THE AS SESSEE FOR SET OFF. THE ASSESSEE MOVED AN APPLICATION CLAIMING SET OFF OF THE SAID U NABSORBED DEPRECIATION PERTAINING TO ASSESSMENT YEARS 1992-93 AND 1993-94 WHICH HAD BECOME AVAILABLE TO HIM FOR SET OFF AGAINST INCOME FOR ASSESSMENT YE AR 1994-95 WHICH WAS DETERMINED AT RS.2,67,71,132/ AFTER GIVING APPEAL E FFECT. THE AO PASSED AN ORDER U/S 154 ALLOWING THIS CLAIM OF THE ASSESSEE AND DET ERMINED THE REVISED TOTAL INCOME OF THE ASSESSEE FOR ASSESSMENT YEAR 1994-95 AT RS.1 3,72,341/-. THEREAFTER AN ORDER U/S 154 WAS PASSED BY THE AO ON FEBRUARY 22, 2007 H OLDING THAT THE ORDER PASSED EARLIER ON JUNE 9, 2006 U/S 154 WAS BEYOND STATUTOR Y PERIOD OF LIMITATION AND COULD NOT CONFER BENEFIT ON THE PETITIONER. THE ASSESSEE FILED A WRIT PETITION BEFORE THE HONBLE BOMBAY HIGH COURT SEEKING TO QUASH AND SET ASIDE THE ORDER PASSED U/S 154 DATED FEBRUARY 22, 2007. WHILE DISPOSING OF THE SAID PETITION, IT WAS HELD BY THE HONBLE BOMBAY HIGH COURT THAT THE ORDER DATED 9 TH JUNE, 2006 PURPORTING TO BE AN ORDER PASSED U/S 154 AND GRANTING THE SET OFF AS CLAIMED BY THE ASSESSEE WAS NOT AN ORDER PASSED U/S 154 BUT THE SAME WAS AN ORD ER PASSED U/S 143. IT WAS HELD THAT THE LIMITATION AS CONTAINED IN SECTION 154(7) OF THE ACT, THEREFORE, WAS NOT 12 ITA NOS.5264 TO 5268/MUM/2008 C.O. NOS. 16 TO 20/MUM/2010 APPLICABLE TO THE PASSING OF THE SAID ORDER. IN SUP PORT OF THIS CONCLUSION, REFERENCE WAS MADE BY THE HONBLE BOMBAY HIGH COURT TO ITS JU DGMENT IN THE CASE OF CALTEX OIL REFINING (INDIA) LTD. (SUPRA) WHEREIN IT WAS HE LD THAT WHAT REMAINS AS A FINAL ORDER AFTER GIVING EFFECT TO THE ORDERS OF THE APPE LLATE AUTHORITIES IS AN ORDER OF ASSESSMENT U/S 143 OR 144 AND IT CANNOT BE ANY THIN G ELSE. IT WAS HELD BY THE HONBLE BOMBAY HIGH COURT IN THE JUDGMENT PASSED IN THE CASE OF PENINSULA LAND LTD. (SUPRA) THAT THE RATIO LAID DOWN IN THE C ASE OF CALTEX OIL REFINING (INDIA) LTD. (SUPRA), WHICH IS APPLICABLE TO ORDERS GIVING EFFECT TO THE APPEALLATE/REVISIONAL/REFERENCE/ JUDICIAL ORDERS IN RESPECT OF ANY ASSESSMENT YEARS UNDER CONSIDERATION, CAN ALSO BE LOGICALLY EXTENDED TO CONSEQUENT AMENDMENTS IN RESPECT OF ANY SUCCEEDING YEARS. ACCORDINGLY THE OR DER PASSED BY THE AO ALLOWING THE SET OFF OF UNABSORBED DEPRECIATION RELATING TO ASSESSMENT YEARS 1992-93 AND 1993-94 WHICH HAD BECOME AVAILABLE TO THE ASSESSEE AS A RESULT OF APPELLATE ORDERS FOR THE SAID YEARS AGAINST INCOME FOR THE SUBSEQUEN T YEAR I.E. 1994-95 WAS UPHELD BY THE HONBLE BOMBAY HIGH COURT. IN OUR OPINION, T HE RATIO OF THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF PENINSULA LAND LTD. (SUPRA) IS SQUARELY APPLICABLE TO THE ISSUE INVOLVED IN THE PR ESENT CASE AND RESPECTFULLY FOLLOWING THE SAME, WE UPHOLD THE IMPUGNED ORDERS O F THE LEARNED CIT(APPEALS) CONFIRMING THE ORDERS PASSED BY THE AO FOR THE YEAR S UNDER CONSIDERATION I.E. ASSESSMENT YEARS 1998-99 TO 2002-03 GIVING CONSEQUE NTIAL EFFECT TO THE ORDER OF THE TRIBUNAL PASSED FOR EARLIER YEARS I.E. ASSESSM ENT YEARS 1996-97 AND 1997-98 TO INCLUDE THE PRINCIPAL ELEMENT OF LEASE RENTAL IN TH E TOTAL INCOME OF THE ASSESSEE. 9. AS REGARDS THE OTHER ISSUE RAISED BY THE ASSESSE E IN THESE APPEALS RELATING TO ITS ALTERNATIVE CLAIM THAT A DIRECTION MAY BE GIVEN TO THE AO THAT IN THE EVENT THE ORDER OF THE TRIBUNAL FOR ASSESSMENT YEARS 1996-97 AND 1997-98 IS SUBSEQUENTLY REVERSED, THE PRINCIPAL ELEMENT OF LEASE RENTALS IN CLUDED IN THE TOTAL INCOME OF THE 13 ITA NOS.5264 TO 5268/MUM/2008 C.O. NOS. 16 TO 20/MUM/2010 ASSESSEE SHOULD BE EXCLUDED, WE ARE OF THE VIEW THA T THE ASSESSEE IS ENTITLED TO SUCH CONSEQUENTIAL RELIEF IF THE TRIBUNALS ORDER F OR ASSESSMENT YEARS 1996-97 AND 1997-98 IS REVERSED BY THE HONBLE HIGH COURT AUTO MATICALLY IN ACCORDANCE WITH LAW EVEN WITHOUT ANY SPECIFIC DIRECTION TO THIS EFF ECT. WE, THEREFORE, DO NOT DEEM IT NECESSARY OR EXPEDIENT TO GIVE SUCH DIRECTION. 10. IN ITS CROSS OBJECTIONS, THE REVENUE HAS MERELY SUPPORTED THE IMPUGNED ORDERS OF THE LEARNED CIT(APPEALS) BY SEEKING THAT THE OBJECTION OF THE ASSESSEE FOR NON-TAXING OF PRINCIPAL COMPONENT OF THE LEASE SHOU LD BE DISMISSED. AS WE HAVE ALREADY UPHELD THE IMPUGNED ORDERS OF THE LEARNED C IT(APPEALS) ON THIS ISSUE WHILE DISPOSING OF THE APPEALS OF THE ASSESSEE, THE CROSS OBJECTIONS FILED BY THE REVENUE HAVE BECOME INFRUCTUOUS. THE SAME ARE ACCOR DINGLY DISMISSED. 11. IN THE RESULT, THE APPEALS OF THE ASSESSEE AS W ELL AS CROSS OBJECTIONS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST OCT., 2011. SD/- SD/- (R.S. PADVEKAR) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 21 ST OCT., 2011. WAKODE 14 ITA NOS.5264 TO 5268/MUM/2008 C.O. NOS. 16 TO 20/MUM/2010 COPY TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR, G-BENCH. 6. GUARD FILE. (TRUE COPY ) BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI