INDFOS INDUSTRIES P.LTD ( PREVIOUSLY KNOWN AS INDFOS INDUSTRIES LTD), MUMBAI V. DCIT (OSD) 2(2), MUMBAI

ITA 5571/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 87918 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-01-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I
• Assessment Year: 2008-2009
• Appeal Filed On: 27-08-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SACHIDANAND DUBEY
• Assessee Lawyers: HEENA DOSHI
• Keywords: Business income; Depreciation; Reasonable cause; Unabsorbed depreciation
• Section: 143(3)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL I , BENCH MUMBAI , BEFORE SHRI R.C.SHARMA , A M & SHRI VIJAY PAL RAO , J M ITA NO. 5571 / MUM/20 1 3 ( ASSESSMENT YEAR : 200 8 - 0 9 ) INDFOS INDUSTRIES PVT. LIMITED (PREVIOUSLY KNOWN AS INDFOS INDUSTRIES LTD.) , MEGHAL INDUSTRIES ESTATE, GALA NO.22, 1 ST FLOOR, DEVI DAYAL ROAD, MULUND (WEST) , MUMBAI - 80 VS. DCIT (O SD) - 2(2), MUMBAI PAN/GIR NO. : A AACI 2581 H ( APPELLANT ) .. ( RESPONDENT ) /ASSESSEE BY : MS.HEENA DOSHI /REVENUE BY : SHRI SACHIDANAND DUBEY DA TE OF HEARING : 1 ST JANUARY , 201 5 DATE OF PRONOUNCEMENT : 7 TH JANUARY , 201 5 O R D E R PER R.C.SHARMA ( A .M.) : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A), DATED 10 - 2 - 2012 , FOR THE ASSESSMENT YEAR 200 8 - 0 9 , IN THE MATTER OF ORDER PASSED UNDER SECTION 143(3) OF THE I.T. ACT, WHEREIN FOLLOWING TWO GROUNDS HAVE BEEN TAKEN BY THE ASSESSEE : - 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED COMMISSIONER OF INCOME TAX (APPE ALS) - 5, MUMBAI HAS ERRED IN NOT DEALING WITH GROUND NO.2 WHICH READS AS UNDER: 'GROUND NO.2. THE DCTO HAS DENIED THE BENEFIT OF CARRY FORWARD OF LOSS OF ASSESSMENT YEAR 2006 - 07 AFTER REJECTING THE CONTENTION OF THE APPELLANT THAT IT IS A PUBLIC COMPANY AND HAS ERRONEOUSLY DENIED THE SAID BENEFIT ON THE SCORE THAT THE APPELLANT IS A PRIVATE COMPANY WHICH FACT IS FUNDAMENTALLY ERRONEOUS.' ITA NO. 5571 /20 1 3 2 HE OUGHT NOT TO HAVE DONE SO. 3. PLAIN READING OF SECTION 79 OF THE ACT SHOWS THAT IT APPLIES ONLY WHEN THE CARRY FORWARD OF THE LOSSES IS ACCOMPANIED BY CLAIM FOR SET OFF AND NOT OTHERWISE. 2 . RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. FACTS IN BRIEF ARE THAT ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURE AND SALE OF PRESSURE AND TEMPERATURE CONTROLS , HYDRAULIC TROLLEY AND OVERLOAD PROTECTOR. THE APPEAL IS DELAYED BY 454 DAYS. WE HAD CONSIDERED THE CONTENTION OF LD. AR AND DR WITH RESPECT TO THE REASONS OF DELAY AND ALSO GONE THROUGH THE AFFIDAVIT FILED BY THE ASSESSEE SUPPORTING THE REASON OF DELAY A ND FOUND THAT DUE TO LONG ILLNESS OF SENIOR PARTNER OF CHARTERED ACCOUNTANT FIRM, WHO WAS SUPPOSED TO FILE APPEAL, WHICH WAS FOLLOWED BY HIS DEATH, THE DELAY HAS OCCURRED. THE ASSESSEE HAS FILED AN AFFIDAVIT TO SUPPORT THE REASONS FOR DELAY AND REQUEST FOR CONDONATION OF DELAY. WE ARE SATISFIED THAT THERE WAS A REASONABLE CAUSE FOR DELAY, KEEPING IN VIEW THE INTEREST OF SUBSTANTIAL JUSTICE AS PRONOUNCED BY THE HONBLE SUPREME COURT IN THE CASE OF COLLECTOR, LAND ACQUISITION VS. MST. KATIJI: 167 ITR 471 , WE CONDONE THE DELAY AND APPEAL IS BEING HEARD ON MERIT. 3 . IN GROUND NO.1, ASSESSEE HAS ALLEGED THAT THE CIT(A) HAS NOT DECIDED THE GROUND NO.2 TAKEN FOR CARRY FORWARD OF LOSS OF THE ASSESSMENT YEAR 2006 - 07. THE ASSESSEE HAS ALSO ALLEGED APPLICATION OF SE CTION 79 ON THE PLEA THAT ASSESSEE HAS JUST CLAIMED CARRIED FORWARD LOSS AND NOT ITS SET UP. FROM THE RECORD, WE FOUND THAT F OR THE YEAR UNDER CONSIDERATION, THE RETURN OF INCOME WAS FILED CLAIMING C ARRIED FORWARD OF LOSSES OF RS. 2,55,59,314/ - RELATING TO ASSESSMENT YEAR 2006 - 07 UNDER THE HEAD 'BUSINESS INCOME'. THE ASSESSEE ALSO CLAIMED LOSS OF RS. 39,51,937 / - ITA NO. 5571 /20 1 3 3 RELATING TO ASSESSMENT YEAR UNDER CONSID ERATION. THE SAID AMOUNT OF RS. 39,51,937 / - INCLUDED RS. 26,53,937 / - BEING UNABSORBED DEPRECIATION FOR THE AS SESSMENT YEAR 2006 - 07. IN THE ASSESSMENT ORDER DATED 22ND DECEMBER, 2010 THE AO APPLIED SECTION 79 OF THE ACT TO THE CARRY FORWARD OF THE LOSSES ON THE GROUND OF CHANGE IN CONTROLLING SHAREHOLDING OF 51% BUT MADE REFERENCE ONLY TO DISALLOWANCE OF RS. 26,53, 937/ - AS LOSSES WHICH AMOUNT WAS IN FACT UNABSORBED DEPRECIATION OF ASSESSMENT YEAR 2006 - 07. NO REFERENCE WAS MADE TO DISALLOWANCE OF CLAIM FOR CARRY FORWARD OF LOSS OF RS.2,55,59,314/ - RELATING OF ASSESSMENT YEAR 2006 - 07 IN THE ASSESSMENT ORDER. IT WAS CLARIFIED THAT W HILE DRAFTING THE APPEAL TO CIT(A) FOR THE ASSESSMENT YEAR 2008 - 09 UNDER CONSIDERATION , THE CA OF ASSESSEE OVERLOOKED THE OMISSION ON THE PART OF THE AO CONCERNING THE CLAIM FOR CARRY FORWARD OF LOSS OF RS. 2,55,59,314/ - RELATING TO ASSESSM ENT YEAR 2006 - 07 AND MADE REFERENCE ONLY TO RS. 26,53,937/ - WHICH IN FACT WAS UNABSORBED DEPRECIATION . BEFORE THE CIT(A), THE ASSESSEE CONTESTED APPLICATION OF SECTION 79 OF THE ACT BUT RAISED THE PLEA ONLY RELATING TO RS. 26,53,937/ - WHICH PLEA WAS ALLOWE D ON THE GROUND OF THE SAME BEING UNABSORBED DEPRECIATION AND DID NOT ATTRACT SECTION 79 OF THE ACT. THE CIT(A) HAS NOT DEALT WITH THE CONTENTION OF THE ASSESSEE THAT SECTION 79 OF THE ACT DID NOT APPLY IN RELATION TO CARRY FORWARD OF THE LOSSES AND THAT S ECTION 79 OF THE ACT WOULD APPLY ONLY WHEN THERE WAS 'SET OFF' CLAIMED OF THE CARRIED FORWARD LOSSES. 4 . IN VIEW OF THE ABOVE DISCUSSION AND ALSO GROUND TAKEN BY THE LD A R THAT THE CIT(A) HAS NOT DECIDED THE GROUND WITH REGARD TO CARRIED FORWARD ITA NO. 5571 /20 1 3 4 LOSS, WE RESTORE THE APPEAL TO THE FILE OF CIT(A) FOR DECIDING THE ISSUE AFRESH AS PER LAW AFTER GIVING DUE OPPORTUNITY TO THE ASSESSEE. 5 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED IN PART FOR STATISTICAL PURPOSES . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 7 TH JANUARY . 201 5 . 7 TH JAN,201 5 SD/ - SD/ - ( ) ( VIJAY PAL RAO ) ( ) ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 0 7 / 01/201 5 /PKM , PS COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( ASSTT. REGISTRAR) / ITAT, MUMBAI 1. / TH E APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A) MUMBAI. 4. / CIT 5. / DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//