M/S. ARSHIYA TECHNOLOGIES INTERNATIONAL LTD.(NOW KNOWN AS ARCHIYA INTERNATION LTD), MUMBAI V. ITO 2(2)1, MUMBAI

ITA 565/MUM/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 79431 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 6 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Next Hearing Date: 21-07-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 20-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Question of law; Scheme of amalgamation; Revised return

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI JH FOT; IKY JKO U;KF;D LNL; JH FOT; IKY JKO U;KF;D LNL; JH FOT; IKY JKO U;KF;D LNL; JH FOT; IKY JKO U;KF;D LNL; ,OA ,OA ,OA ,OA JH JKTSUNZ] YS[KK LNL; DS LE{K JH JKTSUNZ] YS[KK LNL; DS LE{K JH JKTSUNZ] YS[KK LNL; DS LE{K JH JKTSUNZ] YS[KK LNL; DS LE{K BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI RAJENDRA, ACCOUNTANT MEMBER VK;DJ VIHY LA[;K / ITA NO.565/MUM/2011 FU/KKZJ.K O'KZ @ ASSESSMENT YEAR: - 2006-07 M/S ARSHIYA TECHNOLOGIES INTERNATIONAL LTD. ( NOW KNOWN AS ARCHIYA INTERNATIONAL LTD) 7 TH FLOOR, C-WING, TWIN ARCADE, MILITARY ROAD, MAROL MAROSHI ANDHERI (E) MUMBAI 400 059 VS. INCOME TAX OFFICER ITO-2(2)(1), AAYAKAR BHAVAN MUMBAI. PAN:-AAACI2679A APPELLANT RESPONDENT ASSESSEE BY / FU/KKZFJRH DH VKSJ LS FU/KKZFJRH DH VKSJ LS FU/KKZFJRH DH VKSJ LS FU/KKZFJRH DH VKSJ LS SHRI ASHWINI KUMAR REVENUE BY/ JKTLO DH VKSJ LS JKTLO DH VKSJ LS JKTLO DH VKSJ LS JKTLO DH VKSJ LS SHRI SUNIL AGARWAL ORDER PER VIJAY PAL RAO, JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 30.11.2010 OF CIT(A) FOR THE A.Y. 2006-07. THE ASSESSEE HAS RA ISED FOLLOWING GROUNDS IN THIS APPEAL:- 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED AO HAS ERRED IN LAW AND IN FACTS IN IGNORING THE REVISED RETURN OF INCO ME (FOR GIVING THE EFFECT OF AMALGAMATION APPROVED BY HON'BLE HIGH COURT) WHICH COULD NOT BE UPLOADED ON DATE OF HEARING 21.07.2014 DATE OF PRONOUNCEMENT 25.07.2014 M/S ARSHIYA TECHNOLOGIES INTERNATIONAL LTD. 2 | P A G E ACCOUNT OF TECHNICAL SNAG ON THE WEBSITE OF THE INC OME TAX DEPARTMENT. FURTHER, THE LEARNED AO HAS ERRED IN LAW AND IN FACTS IN ASS ESSING THE INCOME OF THE APPELLANT AS PER THE ORIGINAL RETURN OF INCOME INCL UDING THE INCOME AMOUNTING TO RS. 96,40,481/- OF BOP INDIA PVT. LTD. ON PROTECTIVE BA SIS.' 2. CREDIT FOR TAX DEDUCTED AT SOURCE (TDS) - RS. 14 .26.408/- 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED AO HAS ERRED IN LAW AND IN FACTS IN NOT GIVING THE CREDIT OF TOS AMOUNT ING TO RS. 14,26,4081- ON THE CORRESPONDING INCOME ASSESSED IN THE HANDS OF APPEL LANT.' 3. CREDIT FOR ADVANCE TAX PAID - RS. 14.00.000/- 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED AO HAS ERRED IN LAW AND IN FACTS IN NOT GIVING THE CREDIT OF ADVANCE TA X PAID AMOUNTING TO RS. 14, 00,0001-.' 2. GROUND NO. 1 IS REGARDING NON ACCEPTANCE OF REVI SED RETURN OF INCOME BY THE ASSESSING OFFICER AND CONFIRMED BY THE CIT(A). THE ASSESSEE FILED ITS RETURN OF INCOME ON 23.10.2006 DECLARING TOTAL INCOME OF RS. 20,72,218/-. SUBSEQUENTLY THE ASSESSEE FILED REVISED RETURN DECLARING TOTAL LOSS OF RS. 20,85,021/-. THE REVISED RETURN WAS FILED BY THE ASSESSEE CONSEQUENT TO THE AMALGAMATION OF BDP INDIA LTD., APPROVED BY THE HONBLE HIGH COURT VIDE ORDER DATED 2.2.2007. THE REVISED RETURN WAS FILED BY THE ASSESSEE ON 1.4.2008 WHICH WAS BELATED BY ONE DAY, THEREFORE, THE ASSESSING OFFICER TREATED THE SAID R EVISED RETURN AS INVALID. THE ASSESSING OFFICER DISALLOWED THE CLAIM OF LOSS MADE IN THE REVISED RETURN AS THE RETURN WAS TREATED AS INVALID. FURTHER THE INCOME O FFERED BY THE BDP INDIA LTD IN THE ORIGINAL RETURN WAS ALSO ASSESSED IN THE HANDS OF T HE ASSESSEE. 3. BEFORE CIT(A), THE ASSESSEE SUBMITTED THAT PURSU ANT TO THE SCHEME OF AMALGAMATION, BDP INDIA LTD GOT AMALGAMATED WITH TH E ASSESSEE W.E.F 1.1.2006. SINCE THE TRANSFERER COMPANY WAS CEASED TO EXIST W. E.F 1.1.2006, THEREFORE ALL THE INCOMES AND EXPENSES OF THE BDP INDIA PVT LTD W.E.F THE SAID DATE REQUIRES TO BE ASSESSED IN THE HANDS OF THE ASSESSEE. ACCORDINLGY THE ASSESSEE CLAIMED THAT BY VIRTUE OF SCHEME OF AMALGAMATION AND AS PER THE PRO VISIONS OF SECTION 170(1) OF THE M/S ARSHIYA TECHNOLOGIES INTERNATIONAL LTD. 3 | P A G E INCOME TAX ACT, THE INCOME/LOSSES OF THE TRANSFER O F COMPANY FOR THE PERIOD OF 1.1.2006 TO 31 ST MARCH 2006 REQUIRES TO BE ASSESSED IN THE HANDS OF THE ASSESSEE. THE CIT(A) DID NOT ACCEPT THE CONTENTION OF THE ASS ESSEE AND HELD THAT THE ASSESSING OFFICER IS CORRECT IN NOT ACCEPTING THE R EVISED LOSSES. 4. BEFORE US, THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE HAS SUBMITTED THAT THERE WAS ONLY ONE DAY DELAY IN FILING THE REV ISED RETURN WHICH WAS TREATED BY THE ASSESSING OFFICER AS INVALID AND, THEREFORE, TH E CLAIM OF LOSS OF BDP INDIA LTD INCLUDED IN THE INCOME OF THE ASSESSEE WAS NOT ACCE PTED BY THE ASSESSING OFFICER. HE HAS FURTHER SUBMITTED THAT THERE IS NO BAR IN EN TERTAINING THE CLAIM WHICH IS CONSEQUENTIAL TO THE AMALGAMATION OF BDP INDIA LTD AS FAR AS THE POWERS AND JURISDICTION OF CIT(A) IS CONCERNED AND, THEREFORE, DESPITE THE FILING OF REVISED RETURN BELATEDLY, THE CIT(A) SHOULD HAVE ACCEPTED THE CLAI M WHICH IS AS PER THE PROVISIONS OF INCOME TAX ACT AND AS A RESULT OF AMALGAMATION O F BDP INDIA LTD WITH THE ASSESSEE. HE HAS RELIED UPON THE FOLLOWING DECISION S:- ( I) CIT VS. JAI PRABOLIC SPRINGS LTD.: (2008) 306 ITR 42 (DELHI) (II) CIT VS PRUTHVI BROKERS AND SHAREHOLDERS PVT. L TD., 349 ITR 336 (III) CIT V. RAMCO INTERNATIONAL ( 332 ITR 306 ) 5. ON THE OTHER HAND, THE LD. DR HAS SUBMITTED THAT THE ASSESSING OFFICER AND CIT(A) HAS NOT ACCEPTED THE CLAIM OF LOSS BY CONSID ERING THE FACT THAT BDP INDIA LTD ITSELF HAS OFFERED THE INCOME IN RETURN OF INCOME, THEREFORE, THE CLAIM OF LOSS CANNOT BE ACCEPTED AT THE HANDS OF THE ASSESSEE. HE HAS RE LIED UPON THE ORDERS OF AUTHORITIES BELOW. 6. HAVING CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD, WE NOTE THAT THERE IS AN AMALGAMATION OF M/ S BDP INDIA LTD. WITH THE ASSESSEE W.E.F 1.1.2006 AS PER THE SCHEME OF AMALGA MATION WHICH WAS APPROVED M/S ARSHIYA TECHNOLOGIES INTERNATIONAL LTD. 4 | P A G E BY THE HONBLE HIGH COURT VIDE ORDER DATED 2.2.2007 . THOUGH THE ASSESSEE WAS HAVING ENOUGH TIME TO FILE THE REVISED RETURN UP TO 31 ST MARCH 2008, HOWEVER THE ASSESSEE FILED THE REVISED RETURN ON 01.04.2008 WHI CH IS BELATED BY ONE DAY AND CONSEQUENTLY THE ASSESSING OFFICER TREATED THE REVI SED RETURN AS INVALID. THE ASSESSING OFFICER WHILE FRAMING THE ASSESSMENT INCL UDED THE INCOME OF BDP INDIA LTD IN THE TOTAL INCOME OF THE ASSESSEE AND ASSESSE D THE SAME IN THE HANDS OF THE ASSESSEE AS PER THE PROVISIONS OF SECTION 170 OF TH E INCOME TAX ACT . THE CIT(A) HAS ALSO REJECTED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT UNDER THE PROVISIONS OF SECTION 170(1) AND 72A ONLY THOSE ITEM OF INCOME OR LOSS WHICH STANDS QUALIFIED AND DETERMINED ARE TO BE CONSIDERED WHICH ARE SUBJE CT MATTER OF AUTOMATIC TRANSFER OF COMPANY FROM 1.1.2006 TO 31.03.2006 ANY CLAIM WH ICH IS NOT FALLING UNDER THE AUTOMATIC TRANSFER HAS TO GO THROUGH THE PROCESS OF REVISED RETURN AND SINCE THE ASSESSEES REVISED RETURN IS TREATED AS INVALID THE CLAIM IS NOT ALLOWABLE. IT IS PERTINENT TO NOTE THAT THOUGH THERE IS A BAR ON THE JURISDICTION OF THE ASSESSING OFFICER IN ENTERTAINING THE NEW CLAIM OTHER THAN PA RT OF THE REVISED RETURN HOWEVER, NO SUCH RESTRICTION IS PROVIDED ON THE JURISDICTION OF THE CIT(A) OR OF THIS TRIBUNAL. THE HON'BLE SUPREME COURT IN THE CASE OF GOETZE (IN DIA) LTD. V. CIT ( 284 ITR 323 ) AND IN THE CASE OF NATIONAL THERMAL POWER CO. LTD. V. CIT [1998] 229 ITR 383, HAS HELD THAT THE TRIBUNAL HAS THE JURISDICTION TO EXAM INE THE QUESTION OF LAW WHICH AROSE FROM THE FACT AS FOUND BY THE INCOME TAX AUTH ORITIES HAVING THE BEARING ON THE TAX LIABILITY OF THE ASSESSEE. IN THE CASE IN H AND, THERE IS NO DISPUTE THAT BDP INDIA LTD WAS AMALGAMATED WITH THE ASSESSEE W.E.F 1 .1.2006 AND CONSEQUENTLY THE ASSESSEE CLAIMED THE LOSSES DUE TO THE ADDITIONAL E XPENDITURE INCURRED. THE CLAIM OF THE ASSESSEE WAS DISALLOWED BY THE AUTHORITIES B ELOW WITHOUT EXAMINATION ON MERITS AND EVEN THE ASPECT WHETHER THE CLAIM IS BON AFIDE OR BOGUS ONE BUT THE CLAIM HAS BEEN DISALLOWED SIMPLY ON THE GROUND THAT NO SUCH CLAIM CAN BE ENTERTAINED IN THE ABSENCE OF VALID REVISED RETURN. SINCE THERE IS NO RESTRICTION ON THE POWERS OF CIT(A) IN ENTERTAINING THE CLAIM WHIC H IS CONSEQUENTIAL TO THE DEVELOPMENT OF AMALGAMATION BETWEEN THE COMPANIES W HICH HAS BEEN DULY M/S ARSHIYA TECHNOLOGIES INTERNATIONAL LTD. 5 | P A G E APPROVED BY THE HONBLE HIGH COURT, THEREFORE, THE CLAIM OF THE ASSESSEE WAS REQUIRED TO BE EXAMINED ON MERITS BY THE CIT(A). IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE SET ASIDE THIS ISSUE TO THE RECORD OF THE ASSESSING OFFICER TO EXAMINE AND VERIFY THE ALLOWABILITY OF THE CLAIM OF THE ASS ESSEE ON MERITS AFTER GIVING AN OPPORTUNITY OF HEARING TO THE ASSESSEE. 7. GROUND NO. 2 AND 3 ARE CONSEQUENTIAL TO GROUND N O. 1, THEREFORE, THE SAME ARE ALSO SET ASIDE TO THE RECORD OF THE ASSESSING O FFICER TO CONSIDER AS PER THE OUTCOME OF THE GROUND NO. 1. 8. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT TODAY I.E 25 -7-2014 SD/- SD/- ( RAJENDRA ) (VIJAY PAL RAO) (ACCOUNTANT MEMBER/ YS[KK LNL; YS[KK LNL; YS[KK LNL; YS[KK LNL; ) (JUDICIAL MEMBER/ U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; ) MUMBAI DATED 25-7 -2014 SKS SR. P.S, COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, I BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI