Cosmic Kitchen Pvt. Ltd., New Delhi V. ACIT, New Delhi

ITA 5418/DEL/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 4084 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 3 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 18-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHIMA NEB
• Keywords: Depreciation; Opportunity of being heard; Principle of natural justice
• Section: 143(3); 115JB; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: B, NEW DELHI BEFORE SHRI H. S. SIDHU, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER I.T.A. NO. 5418/DEL/2016 ASSESSMENT YEAR: 2013-14 COSMIC KITCHEN PRIVATE LIMITED, VS. ACIT, CIRCLE 6 (2), B-109, GREATER KAILASH, ROOM NO. 390, PART-I, C.R. BUILDING, NEW DELHI 110 048 NEW DELHI (PAN: AACCC5193K) (ASSESSEE) (RESPONDENT) ASSESSEE BY : SH. GAURAV JAIN, ADV. REVENUE BY : MS. ASHIMA NEB, SR. DR ORDER PER H.S. SIDHU, JM THIS APPEAL IS FILED BY ASSESSEE AGAINST THE ORDER DATED 19.8.2016 PASSED BY THE LD. CIT(A)-35, DELHI RELATI NG TO ASSESSMENT YEAR 2013-14 ON THE FOLLOWING GROUND:- THAT THE COMMISSIONER OF INCOME TAX APPEALS ['CIT(A)'] ERRED ON FACTS AND IN LAW IN PASSING EX-PARTE ORDER, PARTLY CONFIRMING THE ADJUSTMENTS MADE BY THE ASSESSING OFFICER TO THE RETURNED INCOME UNDER THE NORMAL PROVISIONS AS ALSO TO BOOK PROFIT UNDER SECTION 2 115JB IN THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961 ('THE ACT'), WITHOUT PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE APPELLANT. 1.1 THAT THE CIT(A) ERRED ON FACTS AND IN LAW IN PASSING ORDER IN UNDUE HASTE IN GROSS VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE AND MAKING FALSE AND BASELESS ALLEGATIONS WHILE DISMISSING THE APPEAL OF THE APPELLANT, EX-PARTE. 2. THAT THE CIT(A) ERRED ON FACTS AND IN LAW IN SUSTAINING ADDITION OF RS. 34,68,198, BEING THE DIFFERENCE BETWEEN CURRENT YEAR DEPRECIATION AND EXCESS DEPRECIATION OF THE EARLIER YEAR(S), ARISING ON ACCOUNT OF CHANGE IN THE METHOD OF DEPRECIATION, WHICH WAS REVERSED AND CREDITED TO THE P&L ACCOUNT, TO BOOK PROFITS UNDER SECTION 115JB OF THE ACT. 2.1 THAT THE CIT(A) ERRED ON FACTS AND IN LAW IN NOT APPRECIATING THAT THE AFORESAID DIFFERENTIAL DEPRECIATION ALREADY STOOD ADDED 3 TO BOOK PROFIT AND THE ADDITION MADE HAD RESULTED IN DOUBLE ADDITION OF SAME AMOUNT TO BOOK PROFITS. 3. THAT THE CIT(A) ERRED ON FACTS AND IN LAW IN SUSTAINING THE DISALLOWANCE OF INTEREST EXPENDITURE OF RS. 20,78,334 INCURRED ON LOANS TAKEN FROM SUBSIDIARY/ SISTER CONCERN UNDER PROVISO TO SECTION 36(1 )(III) OF THE ACT ON THE GROUND THAT THE SAME WAS INCURRED FOR ACQUIRING NEW ASSETS. 3.1 THAT THE ASSESSING OFFICER ERRED ON FACTS AND IN LAW IN NOT APPRECIATING THAT PROVISO TO SECTION 36(1)(III) OF THE ACT WAS NOT APPLICABLE, SINCE THE BORROWED FUNDS FOR ACQUIRING ASSETS FOR THE PURPOSES OF EXISTING BUSINESS OF THE APPELLANT AND NOT IN RELATION TO EXTENSION OF EXISTING BUSINESS COVERED WITHIN THE SCOPE OF THE SAID PROVISO. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER, TO AMEND OR VARY FROM THE AFORESAID GROUNDS OF APPEAL AT OR BEFORE THE TIME OF HEARING. 4 2. FACTS NARRATED BY THE REVENUE AUTHORITIES ARE NO T DISPUTED BY BOTH THE PARTIES, HENCE, THE SAME ARE NOT REPEAT ED HERE FOR THE SAKE OF BREVITY. 3. AT THE TIME OF HEARING, LD. COUNSEL OF THE ASSES SEE HAS STATED THAT LD. CIT(A) HAS NOT PROVIDED SUFFICIEN T OPPORTUNITY OF HEARING TO THE ASSESSEE AND PASSED THE EXPARTE ORDE R, THEREFORE, HE REQUESTED THAT THE ISSUES INVOLVED IN THE APPEAL MAY BE SET ASIDE TO THE FILE OF THE LD. CIT(A) TO DECIDE THE S AME AFRESH, AFTER GIVING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE A SSESSEE. 4. ON THE CONTRARY, LD. DR RELIED UPON THE ORDER P ASSED BY THE LD. CIT(A) AND STATED THAT ASSESSEE WAS GIVEN SUFFICIENT OPPORTUNITY FOR SUBSTANTIATING HIS CLAIM, BUT HE COULD NOT AVAIL THE SAME. THEREFORE, THE ORDER OF THE AUTHORITIES B ELOW ESPECIALLY THE IMPUGNED ORDER MAY BE UPHELD AND APPEAL OF THE ASSESSEE MAY BE DISMISSED. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ECORDS, ESPECIALLY THE IMPUGNED ORDER PASSED BY THE LD. CI T(A). AFTER EXAMINING THE IMPUGNED ORDER, WE ARE OF THE CONSID ERED VIEW THAT LD. CIT(A) HAS PASSED THE EXPARTE ORDER AND DID NOT PROVIDE SUFFICIENT OPPORTUNITY, AS A RESULT THEREOF, THE AS SESSEE COULD NOT SUBSTANTIATE ITS CASE BEFORE THE LD. CIT(A). THEREF ORE, IN THE 5 INTEREST OF JUSTICE, WE SET ASIDE THE ISSUES IN DIS PUTE TO THE FILE OF THE LD. CIT(A) WITH THE DIRECTIONS TO DECIDE THE SA ME AFRESH, UNDER THE LAW, AFTER GIVING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 22/01/2018. SD/- SD/- [O.P. KANT] [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 22/01/2018 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES