ACIT, New Delhi V. M/s. Aamby Valley Ltd., Mumbai

ITA 5600/DEL/2016

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 8436 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 11 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 28-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Depreciation; Difference of opinion; Change of opinion; Reassessment proceedings
• Section: 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH A AA A : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI G.S. PANNU BEFORE SHRI G.S. PANNU BEFORE SHRI G.S. PANNU BEFORE SHRI G.S. PANNU, ,, , VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND SHRI K. NARASIMHA CHARY SHRI K. NARASIMHA CHARY SHRI K. NARASIMHA CHARY SHRI K. NARASIMHA CHARY, JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER ITA NO. ITA NO. ITA NO. ITA NO. 5600/DEL/2016 5600/DEL/2016 5600/DEL/2016 5600/DEL/2016 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR : : : : 2007 2007 2007 2007 - -- - 08 0808 08 ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE- -- -1, 1,1, 1, NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. VS. VS. VS. VS. M/S AAMBY VALLEY LIMITED, M/S AAMBY VALLEY LIMITED, M/S AAMBY VALLEY LIMITED, M/S AAMBY VALLEY LIMITED, R/O HOTELS SAHARA STAR, R/O HOTELS SAHARA STAR, R/O HOTELS SAHARA STAR, R/O HOTELS SAHARA STAR, OPP. DOMESTIC AIRPORT, OPP. DOMESTIC AIRPORT, OPP. DOMESTIC AIRPORT, OPP. DOMESTIC AIRPORT, VILE PARLE (EAST), VILE PARLE (EAST), VILE PARLE (EAST), VILE PARLE (EAST), MUMBAI MUMBAI MUMBAI MUMBAI 400 009. 400 009. 400 009. 400 009. PAN : AAGCA0045C. PAN : AAGCA0045C. PAN : AAGCA0045C. PAN : AAGCA0045C. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SANJAY GOEL, CIT - DR. RESPONDENT BY : SHRI ADIT YA VOHRA, ADVOCATE & SHRI ARPIT GOYAL, CA. DATE OF HEARING : 09.10.2019 09.10.2019 09.10.2019 09.10.2019 DATE OF PRONOUNCEMENT : 09.10.2019 09.10.2019 09.10.2019 09.10.2019 ORDER ORDER ORDER ORDER PER G.S. PANNU PER G.S. PANNU PER G.S. PANNU PER G.S. PANNU, , , , VP VPVP VP : :: : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE O RDER OF LEARNED CIT(A)-23, NEW DELHI DATED 17 TH AUGUST, 2016 WHICH IN TURN HAS ARISEN FROM THE ORDER OF THE ASSESSING OFFICER PASSED UNDE R SECTION 147 READ WITH SECTION 143(3) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT) DATED 31 ST MARCH, 2015 FOR THE ASSESSMENT YEAR 2007-08. 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE READ A S UNDER :- 1. THE ORDER OF LD.CIT(A) IS NOT CORRECT IN LAW AN D ON FACTS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) HAS ERRED IN LAW IN DELETING THE ADDITION OF ITA-5600/DEL/2016 2 `34,47,86,260/- MADE BY THE AO ON ACCOUNT OF DISALLOWANCE OF DEPRECIATION AND ADDED TO THE CAPITA L WIP OF THE ASSESSEE AND NOT SUBSTITUTING THE CORRECT AMOUNT O F DEPRECIATION WHICH WAS CLAIMED BY THE ASSESSEE AS PER INCOME TAX ACT, 1961. 3. THE APPELLANT CRAVES LEAVE TO ADD, AMEND ANY/ALL THE GROUND OF APPEAL BEFORE OR DURING THE COURSE OF HEAR ING OF THE APPEAL. 3. BEFORE US, AT THE OUTSET, THE LEARNED REPRESENTATIV ES FOR THE RESPONDENT POINTED OUT THAT THE APPEAL FILED BY THE REVENUE IS QUITE MISCONCEIVED INASMUCH AS THE REVENUE HAS NOT CHALLENGE D THE ACTION OF THE CIT(A) IN HOLDING THAT THE REOPENING OF ASSESSM ENT UNDER SECTION 147/148 OF THE ACT WAS NOT SUSTAINABLE IN LAW . IN ORDER TO APPRECIATE THE AFORESAID PRELIMINARY POINT, THE FOLL OWING DISCUSSION IS RELEVANT. 4. THE RESPONDENT-ASSESSEE IS A COMPANY INCORPORATED UND ER THE PROVISIONS OF THE COMPANIES ACT, 1956 AND, IS INTER AL IA, ENGAGED IN THE BUSINESS OF CONSTRUCTION, DEVELOPERS, COLONIZERS AND CONT RACTORS IN THE FIELD OF RESIDENTIAL AND COMMERCIAL COMPLEXES AND TOW NSHIPS. FOR THE INSTANT ASSESSMENT YEAR, IN PURSUANCE TO A RETURN OF INCO ME FILED ON 29 TH OCTOBER, 2007, AN ASSESSMENT UNDER SECTION 143(3) OF T HE ACT WAS FINALIZED BY THE ASSESSING OFFICER ON 30 TH DECEMBER, 2009 DETERMINING A LOSS OF `164,02,44,875/-. SUBSEQUENTLY, THE ASSESSMENT WAS REOPENED BY INVOKING SECTION 147/148 OF THE ACT ON 30 TH MARCH, 2014. IN RESPONSE TO THE NOTICE ISSUED UNDER SECTION 148 OF T HE ACT, ASSESSEE FILED A RETURN OF INCOME ON 30 TH APRIL, 2014 DECLARING A LOSS OF `116,64,66,061/-. IN THE ENSUING ASSESSMENT FINALIZED UNDER SECTION 143(3) READ WITH SECTION 147 OF THE ACT DATED 31 ST MARCH, 2015, THE ASSESSING OFFICER ASSESSED THE INCOME AT A LOSS OF `164,02,4 4,875/- AS ASSESSED ORIGINALLY UNDER SECTION 143(3) OF THE ACT (SUP RA). HOWEVER, IN THE COURSE OF THE IMPUGNED REASSESSMENT PROCEEDINGS, T HE ITA-5600/DEL/2016 3 ASSESSING OFFICER NOTED THAT A DEPRECIATION OF `68.96 C RORES CLAIMED IN THE PROFIT & LOSS ACCOUNT WAS NOT ALLOWABLE AS THE SAME WAS REQUIRED TO BE CAPITALIZED. AS PER THE ASSESSING OFFICER, THE ASSE TS ON WHICH THE DEPRECIATION WAS CLAIMED WERE SIMULTANEOUSLY USED FOR T HE PURPOSES OF PROJECT WORK-IN-PROGRESS (WIP) AS WELL AS FOR REVENU E GENERATING ACTIVITY. ACCORDINGLY, THE ASSESSING OFFICER TREATED 50% OF THE DEPRECIATION CLAIMED OF `68,95,72,519/-, I.E., A SUM OF `34,47,86,260/- AS RELATABLE TO CAPITAL WORK-IN-PROGRESS AND DISALLOWE D THE SAME. AT THE SAME TIME, THE ASSESSING OFFICER NOTED THAT THE AFOR ESAID WOULD NOT AFFECT THE TOTAL INCOME OF THE CURRENT YEAR BUT IT WAS TO BE TAKEN INTO ACCOUNT AS AND WHEN ASSESSEE CLAIMS DEPRECIATION AS E XPENDITURE RELATING TO WORK-IN-PROGRESS. BE THAT AS IT MAY, THE AFORESAID ACTION OF THE ASSESSING OFFICER WAS CARRIED IN APPEAL BEFORE THE C IT(A). 5. BEFORE THE CIT(A), ASSESSEE CHALLENGED THE ORDER OF THE ASSESSING OFFICER ON FACTS AS WELL AS ON POINT OF LAW. ON THE POINT OF LAW, ASSESSEE CHALLENGED THE INITIATION OF PROCEEDINGS U NDER SECTION 147/148 OF THE ACT. EVEN ON MERIT, THE ASSESSEE SOUGHT TO CHALLENGE THE ACTION OF THE ASSESSING OFFICER. THE CIT(A) HAS SINCE FOUND THE ACTION OF THE ASSESSING OFFICER OF INITIATION OF PROCE EDINGS UNDER SECTION 147 OF THE ACT TO BE NOT SUSTAINABLE IN LAW, AND HE HAS QUASHED THE REASSESSMENT PROCEEDINGS. IN THIS CONTEXT, W E ARE REPRODUCING PARAGRAPH 4.2.4 OF THE ORDER OF THE CIT (A) :- 4.2.4 ON THE CONSPECTUS OF FACTS IN MY OPINION THE REOPENING OF ASSESSMENT U/S 147 OF THE ACT WAS NOT BASED ON COGENT REASONS AND THERE WAS NO NEW MATERIAL AVAILA BLE TO THE AO WHICH COULD INDICATE THAT THERE WAS FAILUR E ON THE PART OF THE APPELLANT TO FULLY AND TRULY DISCLOSE ALL MATERIAL FACTS FOR THE PURPOSE OF ASSESSMENT AS IS THE CONDITION IN CASES ORIGINALLY ASSESSED U/S 143(3) OF THE ACT. IT IS SE TTLED LAW THAT ASSESSMENTS U/S 143(3) OR 147 CANNOT BE REOPENED U/S 147 OF THE ACT BASED ON THE SAME FACTS AND MATERIAL ALREADY ON RECORD AND BASED ON CHANGE OF ITA-5600/DEL/2016 4 OPINION. IN THIS CASE EVEN THE CHANGE OF OPINION IS N ON- EXISTENT IN AS MUCH AS ALL THE GROUNDS TAKEN IN THE R EASONS RECORDED ARE EITHER ASSUMPTIONS OR OBSERVATIONS OF LACK OF DETAILS ON FILE WHICH TOO FALLS ON PERUSAL OF THE ASSESSM ENT ORDER WHERE NO SUCH DEFICIENCY HAS BEEN NOTED IN RESPE CT OF ANY ACCOUNT. EVEN THE ADDITION ON ACCOUNT OF DEPRECIATION IS BASED ON ESTIMATE AND PRESUMPTION AND NOT ON RELEVANT FACTS WHICH COULD SUGGEST THAT DEPREC IATION HAD INDEED BEEN CLAIMED ON THE WIP CAPITALIZED IN T HE ACCOUNTS. IN THIS VIEW OF THE MATTER THE REOPENING OF ASSESSMENT U/S 147 OF THE ACT IS NOT SUSTAINABLE AND THE REASSESSMENT ORDER IS ACCORDINGLY QUASHED. 6. A PERUSAL OF THE AFORESAID SHOWS THAT THE CIT(A) HA S NOT ONLY UPHELD THE POINT OF LAW RAISED BY THE ASSESSEE BUT ALSO F OUND THE ADDITION TO BE NOT MAINTAINABLE ON MERITS ALSO. IN T HIS BACKGROUND, WE MAY NOW PERUSE THE GROUNDS OF APPEAL RAISED BY THE REV ENUE, WHICH WE HAVE REPRODUCED IN THE EARLIER PART OF THIS ORDER . 7. IT IS POINTED OUT BY THE LEARNED REPRESENTATIVE OF THE RESPONDENT- ASSESSEE THAT THE REVENUE HAS NOT CHALLENGED THE DECISION OF THE CIT(A) IN SETTING ASIDE THE INITIATION OF PROCEEDINGS UNDER SECTION 147 OF THE ACT AS NOT BEING SUSTAINABLE IN LAW. IN FACT, IN THE MATTER OF REOPENING OF ASSESSMENT UNDER SECTION 147 OF THE ACT, THE REASSESSMENT ORDER HAS BEEN QUASHED. LEARNED CIT-DR SHR I SANJAY GOEL, WHO APPEARED FOR THE REVENUE QUITE FAIRLY AGR EED TO THE AFORESAID INFIRMITY SOUGHT TO BE POINTED OUT BY THE L EARNED REPRESENTATIVE, WHICH IS QUITE EVIDENT FROM A PERUSAL OF GROUNDS RAISED BY THE REVENUE IN THE MEMO OF APPEAL, WHICH HAVE BE EN REPRODUCED BY US IN THE EARLIER PART OF THIS ORDER. 8. OSTENSIBLY, IN THE GROUNDS OF APPEAL, THE ONLY CHAL LENGE BY THE REVENUE IS WITH REGARD TO THE ACTION OF THE CIT(A) I N DELETING THE ADDITION WHICH WAS MADE BY THE ASSESSING OFFICER ON ACC OUNT OF DEPRECIATION, BUT NO GROUND HAS BEEN RAISED CHALLENG ING THE ITA-5600/DEL/2016 5 UNSUSTAINABILITY OF THE INITIATION OF PROCEEDINGS UND ER SECTION 147/148 OF THE ACT. THUS, FOR THE SAKE OF ARGUMENT, EVEN IF WE WERE TO TAKE UP THE GROUND OF THE REVENUE AND THE REVENUE WAS TO SUCC EED, IT WOULD HAVE NO IMPACT ON THE ULTIMATE CONCLUSION OF THE CIT (A) IN QUASHING THE ASSESSMENT, SINCE INVALIDITY OF THE INITIATION OF P ROCEEDINGS UNDER SECTION 147/148 OF THE ACT HAS NOT BEEN CHALLENGED. ON THIS PLEA ITSELF, WE FIND THAT THE APPEAL, AS PREFERRED BY THE REVENUE, DESERVES TO BE DISMISSED. WE HOLD SO. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED . ABOVE ORDER WAS DICTATED AND PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF BOTH THE PARTIES AT THE CONCLUSION OF THE HEARING ON 9 TH OCTOBER, 2019. SD/- SD/- ( (( ( K. NARASIMHA CHARY K. NARASIMHA CHARY K. NARASIMHA CHARY K. NARASIMHA CHARY ) )) ) (G.S. PANNU (G.S. PANNU (G.S. PANNU (G.S. PANNU ) )) ) JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VK. COPY FORWARDED TO: - 1. APPELLANT : ASSISTANT COMMISSIONER OF INCOME TA X, ASSISTANT COMMISSIONER OF INCOME TAX, ASSISTANT COMMISSIONER OF INCOME TAX, ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE- -- -1, NEW DELHI. 1, NEW DELHI. 1, NEW DELHI. 1, NEW DELHI. 2. RESPONDENT : M/S AAMBY VALLEY LIMITED, M/S AAMBY VALLEY LIMITED, M/S AAMBY VALLEY LIMITED, M/S AAMBY VALLEY LIMITED, R/O HOTELS SAHARA STAR, OPP. DOMESTIC AIRPORT, R/O HOTELS SAHARA STAR, OPP. DOMESTIC AIRPORT, R/O HOTELS SAHARA STAR, OPP. DOMESTIC AIRPORT, R/O HOTELS SAHARA STAR, OPP. DOMESTIC AIRPORT, VILE PARLE (EAST), MUMBAI VILE PARLE (EAST), MUMBAI VILE PARLE (EAST), MUMBAI VILE PARLE (EAST), MUMBAI 40 4040 400 009. 0 009. 0 009. 0 009. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR