ACIT, New Delhi V. M/s. Oriental Bank of Commerce, Gurgaon

ITA 6068/DEL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 7466 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 19-05-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 08-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SUNIL CHANDER SHARMA
• Keywords: Depreciation; Wrong claim; Difference of opinion; Scheme of amalgamation; Unabsorbed depreciation; Change of opinion
• Section: 143(3); 54; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E, NEW DELHI BEFORE SHRI N K SAINI, ACCOUNTANT MEMBER AND SMT. BEENA A. PILLAI, JUDICIAL MEMBER I.T.A. NO.5866/DEL/2013 (ASSESSMENT YEAR 2005-06) ORIENTAL BANK OF COMMERCE, VS. ACIT, CIRCLE 13(1), CENTRAL ACCOUNTS OFFICER, PLOT NO.5, NEW DELHI SECTOR 32, INDUSTRIAL AREA, GURGAON GIR / PAN : AAACO0191M I.T.A.NO. 6068/DEL/2013 (ASSESSMENT YEAR 2005-06) ACIT, CIRCLE 13(1), VS. ORIENTAL BANK OF COMMERCE, NEW DELHI CENTRAL ACCOUNT OFFICE, PLOT NO.5, SECTOR 32, GURGAON (APPELLANT) (RESPONDENT) APPELLANT BY :SHRI KVSR KRISHNA CA RESPONDENT BY :SHRI SUNIL CHANDER SHARMA, CIT DR DATE OF HEARING: 07.06.2016 DATE OF PRONOUNCEMENT: 10.06.2016 ORDER PER BEENA A. PILLAI, JM: THE PRESENT CROSS APPEALS HAVE BEEN FILED BY THE ASSESSEE AS WELL AS REVENUE AGAINST THE ORDER DATED 16.08.2013 PASSED BY LD. CIT(A) XVI NEW DELHI FOR T HE ASSESSMENT YEAR 2005-06 ON THE FOLLOWING GROUNDS OF APPEAL: 2 I.T.A.NOS.5866 &6068/DEL/2013 A. I.T.A.NO. 5866/DEL/2013: 1. THE LD CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE PENALTY U/S 271 (1 )(C) ON CLAIM OF DEPRECIATION ON TEMPORARY WOODEN STRUCTURES LIKE INTERIORS, GLOW SIGNS ETC; TAKEN OVER FROM ERSTWHIL E GTB UPON AMALGAMATION PURSUANT TO GOI NOTIFICATION, OF RS. 7,13,13,797/- @ 100%. THE PENALTY LEVIED IS WRONG AND BAD IN LAW AND HAS TO BE DELETED. 2. THE APPELLANT CONTENDS THAT IT HAD OFFERED EXPLANATION WHICH HAS NOT BEEN FOUND TO BE FALSE NO R UNSUBSTANTIATED. THE EXPLANATION IS SUPPORTED BY FACTS AND DETAILS AS WELL AS LEGAL PROVISIONS FOR C LAIM OF DEPRECIATION IN THE CASE OF AMALGAMATION. THEREFORE, THE ALLEGATION OF THE CIT(A) AS WELL AS AO THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME IS WRONG AND BAD IN LAW AND O N FACTS. THERE IS NO CASE FOR LEVY OF ANY PENALTY U/S 271(1)(C). 3. THE CIT(A) HAS FAILED TO APPRECIATE THAT THE ERSTWHILE GLOBAL TRUST BANK WAS AMALGAMATED INTO OBC ON 14.8.2004 BY THE GOVT. OF INDIA U/S 45(7) OF THE BANKING REGULATION ACT TO SAFEGUARD THE INTERES T OF THE DEPOSIT HOLDERS. THEREFORE, THE ENTIRE ASSET S BLOCK, STOCK AND BARREL AT WDV BECAME THE ACTUAL COST TO OBC PURSUANT TO SUCH AMALGAMATION READ WITH SEC. 43(6) CLAUSE (C) EXPLANATION 2(B). THE ASSESSE E HAS APPLIED THE DEPRECIATION RATES ON SUCH ASSETS A S APPLICABLE TO SUCH ASSETS I.E. 100% ON PURELY TEMPORARY ERECTIONS SUCH AS WOODEN STRUCTURES AS PRESCRIBED IN INCOME TAX RULES, 1962. THEREFORE, TH ERE IS NO FURNISHING OF INACCURATE PARTICULARS OF INCOM E. THE PENALTY SHOULD BE DELETED. 4. THE APPELLANT CONTENDS THAT IN THE ABOVE SCHEME OF AMALGAMATION APPROVED BY THE GOI AND RBI, THE ASSESSEE WAS MANDATED TO REVIEW THE ASSETS AND TAKE OVER AT WDV AS PER BOOKS OR AT REALIZABLE VALU E. THE ASSETS DESCRIBED UNDER FURNITURE & FIXTURES 3 I.T.A.NOS.5866 &6068/DEL/2013 NAMELY GLOW SIGNS, INTERIORS OF THE ERSTWHILE BANK HAS NIL VALUE AND SHOULD BE WRITTEN OFF 100% WHICH HAS BEEN DONE BY THE ASSESSEE. THEREFORE, THE CLAIM MAD E BY THE ASSESSEE IS BONAFIDE AND NO PENALTY SHOULD B E LEVIED. 5. WITHOUT PREJUDICE, WHETHER THE ASSESSEE WOULD BE ALLOWED DEPRECIATION ON TEMPORARY WOODEN STRUCTURES @15% OR 100% IS A DEBATABLE ISSUE AND CANNOT BE CALLED AS A GROUND FOR LEVYING PENALTY. T HE CIT(A) HAS FAILED TO APPRECIATE THAT THE DEPRECIATI ON CLAIMED BY THE BANK IN THE CASE OF AMALGAMATION IS GOVERNED BY SECTION 43(1), 43(6) EXPLANATION 2 AS W ELL AS SECTION 32. THE AO HAS MECHANICALLY SUBSTITUTED RATE OF DEPRECIATION @ 15% INSTEAD OF 100%. THEREFO RE ALSO ON SUCH DEBATABLE ISSUE, NO PENALTY SHOULD BE LEVIED. 6. THE ABOVE GROUNDS ARE INDEPENDENT AND WITHOUT PREJUDICE TO ONE ANOTHER. 2. LD. ASSESSING OFFICER HAS INITIATED PENALTY PROCEEDINGS ON A CLAIM OF DEPRECIATION BY THE ASSES SEE AS THE LD. A.O. FOUND EXPLANATION OFFERED BY THE ASSES SEE TO BE FALSE / UNSUSTAINABLE. LD. A.R. SUBMITTED THAT THIS TRIBUNAL IN I.T.A. NO. 21/DEL/2011 IN ASSESSEES OW N CASE, FOR THE QUANTUM APPEAL, HAS DELETED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER ON ACCOU NT OF DEPRECIATION. THE HONBLE TRIBUNAL HELD AS UNDER: 5. WE HEARD THE RIVAL SUBMISSION AND PERUSED THE MATERIAL ON RECORD. IN THE PRESENT APPEAL, WE ARE REQUIRED TO ADJUDICATE WHETHER THE ASSESSING OFFICE R WAS JUSTIFIED IN EXERCISING THE JURISDICTION UNDER SECTION 154 OF THE ACT OR NOT. THE ASSESSING OFFICE R WITHDRAWN THE DEPRECIATION TO THE EXTENT OF RS.12,14,26,196/- ON INTERIOR TEMPORARY WOODEN 4 I.T.A.NOS.5866 &6068/DEL/2013 STRUCTURES. THE ASSESSING OFFICER AT THE TIME OF ORIGINAL ASSESSMENT AFTER GOING THROUGH THE DETAILS FILED BY THE ASSESSEE BANK ALLOWED THE DEPRECIATION @ 100%, WHEREAS VIDE THE IMPUGNED PROCEEDINGS, THE ASSESSING OFFICER ALLOWED THE DEPRECIATION ONLY @ 1 5% TREATING AS A FURNITURE AND FIXTURES AND THE BALANC E OF DEPRECIATION CLAIM OF RS.12,14,26,126/- WAS WITHDRAWN BY HIM VIDE ORDER DATED 30.11.2007 PASSED UNDER SECTION 154 OF THE ACT. THE SOLE GROUN D, ON WHICH THE ASSESSING OFFICER EXERCISED THE POWER OF RECTIFICATION IS THAT IN THE HANDS OF GLOBAL TRUST BANKS LTD. WHICH HAD BEEN AMALGAMATED WITH THE ASSESSEE BANK ON 14TH AUGUST, 2004 VIDE GOVERNMENT OF INDIA NOTIFICATION DATED 13TH AUGUST, 2004, THE DEPRECIAT ION WAS ALLOWED @ 15 TILL THE DATE OF AMALGAMATION. IN OUR CONSIDERED OPINION, THIS REASONING DOES NOT ENA BLE THE ASSESSING OFFICER TO EXERCISE THE JURISDICTION UNDER SECTION 154 OF THE ACT. THERE IS NO SPECIFIC PROVIS ION UNDER THE PROVISIONS OF INCOME TAX ACT THAT THE DEPRECIATION ON THE ASSETS ACQUIRED PURSUANT TO THE SCHEME OF AMALGAMATION SHOULD BE ALLOWED AT THE SAME RATE OF DEPRECIATION WHICH WAS ALLOWED IN THE HANDS OF THE AMALGAMATING COMPANY. THERE IS NOTHING ON RECORD TO SHOW THAT THE ASSESSEE BANK IS NOT ENTITLED FOR DEPRECIATION @ 100% IN RESPECT OF THE INTERIORS WHICH WAS PURELY WOODEN STRUCTURES AND TH E FULL DETAILS IN RESPECT OF THIS CLAIM OF THE EXPEND ITURE HAVE BEEN FILED AT THE TIME OF ORIGINAL ASSESSMENT PROCEEDINGS. THE ASSESSING OFFICER AFTER CONSIDERIN G THE DETAILS FILED ALLOWED THE CLAIM IN THE ORIGINAL ASSESSMENT PROCEEDINGS. IN THE CIRCUMSTANCES, THE CLAIM FOR DEDUCTION OF DEPRECIATION CANNOT BE WITHDRAWN BY EXERCISING POWER UNDER SECTION 154 OF THE ACT BASED ON THE CHANGE OF OPINION. THE HONBLE SUPREME COURT IN THE CASE OF MEPCO INDUSTRIES LTD. VS. CIT, 319 ITR 208, HELD THAT THE RIGHT TO RECTIF Y THE MISTAKES UNDER SECTION 154 OF THE ACT CANNOT BE INVOKED IN THE CASE OF CHANGE OF OPINION. A RECTIFI ABLE MISTAKE IS A MISTAKE WHICH IS OBVIOUS AND PATENT AN D NOT SOMETHING WHICH HAS TO BE ESTABLISHED BY A LONG DRAWN PROCESS OF REASONING OR WHERE TWO OPINIONS AR E 5 I.T.A.NOS.5866 &6068/DEL/2013 POSSIBLE. FURTHER, IN OUR OPINION, THE ISSUE AT WHA T RATE A PARTICULAR ASSET IS ELIGIBLE FOR DEPRECIATIO N PER SE IS A DEBATABLE ISSUE AS IT REQUIRES EXAMINATION OF MATERIALS, DETAILS, PARTICULARS AND APPLICATION OF MIND AND THEREFORE IT CANNOT BE A SUBJECT MATTER OF RECTIFICATION UNDER SECTION 154 OF THE ACT. THE HON BLE MADRAS HIGH COURT IN THE CASE OF CIT VS. NEW WOODLANDS HOTEL (P.) LTD., (2015) 228 TAXMANN 360 (MAD.) HELD THAT IN A CASE WHERE 100% DEPRECIATION WAS ALLOWED IN THE ASSESSMENT PROCEEDINGS ON VAPOR ABSORPTION MACHINE AND THE ASSESSING OFFICER BY EXERCISING THE POWER UNDER SECTION 154 OF THE ACT SOUGHT TO ALLOW DEPRECIATION @ 25% ON THE GROUND TH AT THE SAID MACHINE WAS A PART OF CENTRALIZED AIR CONDITION. THE HIGH COURT HELD THAT SUCH POWER CANN OT BE EXERCISED AS IT IS A DEBATABLE ISSUE WHICH REQUI RES THE EXAMINATION OF MATERIAL DETAILS, PARTICULARS AN D APPLICATION OF MIND. SIMILARLY, THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. HERO CYCLE PVT. LTD., 228 ITR 463 HELD THAT THE RECTIFICATION UNDER SECTION 1 54 CAN ONLY BE MADE WHEN A GLARING MISTAKE OF FACT OR LAW COMMITTED BY THE OFFICER PASSING THE ORDER AS APPARENT FROM THE RECORD. RECTIFICATION IS NOT POSS IBLE WHEN QUESTION IS DEBATABLE. MOREOVER, A POINT WHICH WAS NOT EXAMINED ON THE FACTS OR IN LAW CANNOT BE DEALT WITH AS A MISTAKE APPARENT FROM THE RECORD. THEREFORE, FOLLOWING THE RATIO LAID DOWN IN THE ABO VE CASE, WE HOLD THAT THE ISSUE WHETHER THE DEPRECATIO N @100% OR 15% ON INTERIORS WHICH ARE PURELY WOODEN STRUCTURES IS A DEBATABLE POINT AS IT REQUIRES EXAMINATION OF DETAILS AND CANNOT BE RECTIFIED BY EXERCISING THE POWER VESTED UNDER SECTION 154 OF TH E ACT. THEREFORE, WE QUASH THE ORDER OF THE ASSESSING OFFICER DATED 30TH NOVEMBER, 2007 PASSED UNDER SECTION 154 OF THE ACT AND ALLOW THIS GROUND OF APPEAL. 3. ON PERUSAL OF ABOVE ORDER IN THE QUANTUM APPEAL, IN ASSESSEES OWN CASE, IT IS OBSERVED THAT THE ORDER PASSED U/S 154 OF THE ACT DATE 30.11.2007 HAS BEEN QUASHED BY 6 I.T.A.NOS.5866 &6068/DEL/2013 THIS TRIBUNAL. THIS TRIBUNAL HAS OBSERVED THAT THE ISSUE RELATING TO DEPRECIATION IS A DEBATABLE ISSUE AS IT REQUIRES EXAMINATION OF DETAILS AND CANNOT BE RECTIFIED U/S 154 OF THE ACT. AS THE ORDER UNDER WHICH DISALLOWANCE OF DEPRECIATION WAS MADE, STANDS CANCELLED BY THIS TRI BUNAL, THE PENALTY PROCEEDINGS INITIATED IN RESPECT OF THE SAME CANNOT BE SUSTAINED. WE ACCORDINGLY QUASH THE PENA LTY ORDER PASSED BY THE ASSESSING OFFICER. ACCORDINGLY , THE GROUNDS RAISED BY THE ASSESSEE IN THIS APPEAL, STAN DS ALLOWED. 3.1 IN THE RESULT, APPEAL FILED BY THE ASSESSEE STA NDS ALLOWED. B. I.T.A.NO. 6068/DEL/2013: ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE, T HE LD. (IT(A) HAS ERRED IN REDUCING THE PENALTY BY RS.2,60,93,718/- IMPOSED BY THE ASSESSING OFFICER U/S 271(1)(C) OF THE ACT ON ACCOUNT OF WRONG CLAIM OF BROUGHT FORWARD LOSSES/UNABSORBED DEPRECIATION. 1.1 ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE , THE LD. (IT (A) HAS ERRED IN NOT APPRECIATING THE F ACT THAT THE ADDITION WAS CONFIRMED BY THE FIRST APPELL ATE AUTHORITY. 1.2 ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE , THE LD. (IT (A) HAS ERRED IN NOT APPRECIATING THE F ACT THAT IN QUANTUM APPEAL THE FIRST APPELLATE AUTHORIT Y HAS WELL ESTABLISHED THE FACTOR THAT THE ASSESSEE H AD MISAPPROPRIATED WITH THE FIGURES AT THE TIME OF FIL ING OF RETURN. 4. THE REVENUE HAS PREFERRED THIS APPEAL BEFORE US AGAINST THE PENALTY BEING DELETED IN RESPECT OF CLA IM BEING 7 I.T.A.NOS.5866 &6068/DEL/2013 DISALLOWED RELATING TO DEPRECATION ON ACCOUNT OF FU RNITURE AND FIXTURES. 4.1 LD. CIT(A) WHILE DEALING WITH THIS ISSUE, IN IT S ORDER HAS HELD AS UNDER: 5. SO FAR AS THE SECOND ISSUE IS CONCERNED, AT THE TIME OF FILING OF RETURN BY OBC THE LOSSES OF EGTB OF RS. 111,45,95,050/- WHICH WERE AVAILABLE FOR SET OF F WERE CLAIMED IN THE RETURN. HOWEVER, UPON SUBSEQUENT ASSESSMENT OF EGTB, THE LOSSES WERE ASSESSED AT RS.54,38,96,252/-. THEREFORE, THERE WAS CONSEQUENTIAL REDUCTION IN THE SET OFF OF LOSSES OF EGTB. THE ADDITIONS MADE .IN THE CASE OF EGTB FOR THE A Y 2005-06 WERE DELETED BY THE APPELLATE AUTHORITIES EXCEPT-THE CLAIM OF DEPRECIATION ON 'FURNITURE AND FIXTURE' OF RS.7,13,13,797/-. AFTER APPEAL EFFECT, THE LOSSES OF EGTB ELIGIBLE FOR SETO FF AGAINST THE APPELLANT IS RS.104,32,81,253/- (RS.111,45,95,050/- MINUS RS.7,13,13,797/-) AS AGAINST THE RETURNED LOSS OF RS.111,45,95,050/-. FURTHER, THE BALANCE OF RS.7,13,13,797/- IS CONSEQUENT TO ADDITION IN THE ASSESSMENT OF EGTB AND HAS BEEN CONSIDERED FOR LEVY OF PENALTY IN THE HANDS OF EGTB. SO FAR AS OBC IS CONCERNED IT IS ONL Y GIVING EFFECT TO THE LOSSES OF EGTS WHICH ARE AVAIL ABLE TO OBC. IN VIEW OF THE ABOVE THE DISALLOWANCE OF EXCESS SETOFF OF LOSSES OF RS.7,13,13,797/- BEING O N ACCOUNT OF ADDITIONS MADE IN THE HANDS' OF EGTS, THEREFORE, THE DISALLOWANCE CANNOT BE CONSIDERED AS CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME BY THE APPELLANT. THEREFORE, I AM OF THE CONSIDERED OPINION THAT PENA LTY U/S 271 (1)( C) IS NOT IMPOSABLE UPON THE APPELLANT IN RESPECT OF DISALLOWANCE OF EXCESS SET OFF OF LOSSES OF RS.7,13,13,797/- ON ACCOUNT OF ADDITIONS MADE IN TH E HANDS OF EGTB. 8 I.T.A.NOS.5866 &6068/DEL/2013 4.2 LD. D.R. SUBMITTED THAT THE PENALTY LEVIED MUST BE CONFIRMED AS THE ADDITION HAS BEEN CONFIRMED BY THE FIRST APPELLATE AUTHORITY IN ITS ORDER U/S 143(3) OF THE ACT. 4.3 ON THE CONTRARY, LD. A.R. SUBMITTED THAT LD. CI T(A) IN THE IMPUGNED ORDER HAS HELD THAT THE DISALLOWANC E MADE BY THE LD. A.O. WAS IN RESPECT OF EXCESS SET O FF OF LOSES BEING ON ACCOUNT OF ADDITION MADE IN THE HAND S OF ASSESSEE. HE SUBMITTED THAT LD. CIT(A) HAS HELD THA T SUCH DISALLOWANCE CANNOT BE CONSIDERED AS CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME BY THE ASSESSEE. 4.4 LD. A.R. FURTHER SUBMITTED THAT THE ISSUE WAS N OT RAISED BEFORE THIS TRIBUNAL CONSIDERING THE DISALLO WANCE BEING ACCEPTED. 4.5 WE HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW AND HAVE OBSERVED THAT LD. CIT(A) HAS CATEGORICALLY OBS ERVED THAT SUCH DISALLOWANCE OF EXCESS SET OFF CANNOT BE CONSIDERED AS CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME BY T HE ASSESSEE. MERELY BECAUSE THE ISSUE WAS NOT RAISED BEFORE THE TRIBUNAL IN QUANTUM APPEAL, IT CANNOT BE CONCLU DED THAT THE PENALTY CAN BE LEVIED ON SUCH DISALLOWANCE . WE ARE IN TOTAL AGREEMENT WITH THE FINDING OF LD. CIT( A) AND ARE NOT INCLINED TO INTERFERE WITH IT. ACCORDINGLY , THE GROUNDS RAISED BY THE REVENUE IN THIS APPEAL STAND DISMISSED. 9 I.T.A.NOS.5866 &6068/DEL/2013 5. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED AND THAT OF THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH JUNE, 2016. SD./- SD./- (N. K. SAINI) (BEENA A. PILLAI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 10.06. 2016 SP. COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DELHI. TRUE COPY. BY ORDER (ITAT, NEW DELHI) S.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 7/6 SR. PS/PS 2 DRAFT PLACED BEFORE AUTHOR 8/6 SR. PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/AM 5 APPROVED DRAFT COMES TO THE SR. PS/PS 10/06/16 SR. PS/PS 6 KEPT FOR PRONOUNCEMENT 10/6 SR. PS/PS 7 FILE SENT TO BENCH CLERK 15/6 SR. PS/PS 8 DATE ON WHICH THE FILE GOES TO HEAD CLERK 9 DATE ON WHICH FILE GOES TO A.R. 10 DATE OF DISPATCH OF ORDER