M/s. Ace Tractor Parts Ltd., New Delhi V. ITO, New Delhi

ITA 6098/DEL/2012

• Counselvise Citation: 609820114 RSA 2012
• Duration Of Justice: 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 06-08-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 07-12-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MRS RENUKA JAIN GU PTA
• Assessee Lawyers: S C VERMA
• Keywords: Depreciation; Assessment record; Unabsorbed depreciation
• Section: 143(3); 115JB; 154; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH SMC: NEW DELHI) BEFORE SHRI I. C. SUDHIR, JUDICIAL MEMBER ITA NOS: 6097/DEL/2012 & 6098/DEL/2012 (ASSESSMEN T YEAR: 2007-08) ACE TRACTOR PARTS LTD. VS. ITO BLOCK 5, SECTOR-C, WARD-1(2) POCKET 6 & 7, VASANT KUNJ NEW DELHI AAECA0091J (APPELLANT) (RESPONDENT) ASSESSEE BY :SHRI S. C. VERMA, CA REVENUE BY : MRS. RENUKA JAIN GU PTA, SR. D.R ORDER PER I. C. SUDHIR, JUDICIAL MEMBER: IN ITA NO. 6097, THE ASSESSEE HAS QUESTIONED FIRST APPELLATE ORDER MAINLY ON TWO GROUNDS. FIRSTLY, THE LD. COMMISSION ER OF INCOME TAX (APPEALS) HAS ERRED IN UPHOLDING THE ASSESSMENT ORD ER REJECTING THE CLAIM OF THE ASSESSEE FOR ALLOWING/CONSIDERING UNAB SORBED DEPRECIATION OF EARLIER YEARS WHILE APPLYING THE PR OVISIONS OF SECTION 115 JB OF THE ACT BY REJECTING THE APPLICATION U/S 154 OF THE ACT FILED BY THE ASSESSEE. SECONDLY, THE LD. COMMISSIONER OF I NCOME TAX (APPEALS) HAS ERRED IN REJECTING THE CLAIM OF THE ASSESSEE TH AT THE COMPANY IS ALSO NOT LIABLE TO BE TAXED ON LONG TERM CAPITAL GAIN ON THE AMOUNT ITA NOS. 6097 & 6098/DEL/2012 2 EARNED ON SLUMP SALE OF BUSINESS AS THE ASSESSEE CO MPANY WAS HAVING SUFFICIENT UNABSORBED DEPRECIATION OF THE PREVIOUS YEARS ELIGIBLE TO BE TREATED AS CURRENT YEARS DEPRECIATION. 2. THE LD. AR SUBMITTED THAT THERE WAS MISTAKE APPAR ENT FROM THE RECORD IN THE ASSESSMENT ORDER FRAMED U/S 143(3) OF THE ACT, HENCE THE AO WAS NOT JUSTIFIED IN NOT INVOKING PROVISIONS U/S 154 OF THE ACT TO RECTIFY THE MISTAKE ON THE ISSUE OF UNABSORBED DEPR ECIATION AND SLUMP SALE OF BUSINESS AS SUBMISSION IN THIS REGARD MADE BY THE ASSESSEE REMAINED TO BE CONSIDERED. 3. THE LD. DEPARTMENTAL REPRESENTATIVE ON T HE OTHER HAND TRIED TO JUSTIFY THE ORDERS OF THE AUTHORITIES BELOW. SHE R EFERRED CONTENTS OF PARA NO. 3 OF THE ASSESSMENT ORDER U/S 154 OF THE A CT AND PARA NO. 4.3 OF THE FIRST APPELLATE ORDER. 4. HAVING GONE THROUGH THE ORDERS OF THE AUTHORITIE S BELOW, WE FIND THAT IN THE APPLICATION U/S 154 DATED 23/2/201 2 BEFORE THE ASSESSING OFFICER THE ASSESSEE HAD CLAIMED THAT MAT PROVISIONS IN ITS CASE ARE NOT APPLICABLE AND FURTHER THAT IT IS ALSO NOT LIABLE TO BE TAXED ON LONG TERM CAPITAL GAIN ON ACCOUNT OF PROFIT ON SLUMP SALE OF BUSINESS. THE ASSESSING OFFICER HAS REJECTED THIS APPLICATION ON THE BASIS THAT SIMILAR PLEA WAS DULY CONSIDERED IN THE ASSESSMENT ORDER ITSELF AND WAS REJECTED AFTER DUE CONSIDERATION. H E NOTED FURTHER THAT EVEN THE ASSESSEE COMPANY DURING THE COURSE OF ASSE SSMENT PROCEEDINGS VIDE ITS LETTER DATED 26/11/2009 HAD F ILED ITS REVISED ITA NOS. 6097 & 6098/DEL/2012 3 COMPUTATION OF INCOME DECLARING TAX U/S 115 JB AT RS . 53,598/- AND HAD DECLARED LONG TERM CAPITAL GAIN ON SLUMP SALE FOR RS.1,55,970/- . THIS REVISED CLAIM OF THE ASSESSEE WAS ADMITTED DURING THE ASSESSMENT PROCEEDINGS AND AFTER DUE CONSIDERATION OF THE SAME, THE SAME WAS REJECTED. THUS, THE ASSESSING OFFICER HAS REJECTED THE APPLICATION U/S 154 OF THE ACT OF THE ASSESSEE MAIN LY ON THE BASIS THAT THE ASSESSEE COMPANY ITSELF HAD ADMITTED THAT IT WA S LIABLE TO BE TAXED ON THESE ISSUES HENCE THERE WAS NO MISTAKE APPARENT FROM THE RECORD. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS UP HELD THIS ACTION OF THE ASSESSING OFFICER ON THE BASIS THAT THE CLAI M OF THE ASSESSEE IN THE APPLICATION U/S 154 AMOUNTS TO FILING OF REVISE D RETURN WHICH IS BEYOND THE STATUTORY TIME LIMIT PRESCRIBED U/S 139 (5) OF THE ACT AND SECONDLY THE ASSESSEE HAD NOT PREFERRED ANY APPEAL AGAINST THE ASSESSMENT ORDER WHICH ATTAINED FINALITY. THE CONT ENTION OF THE ASSESSEE BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) REMAINED THAT IT HAD FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION ON 15/11/2007 DECLARING NIL I NCOME. THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT ON 1 1/12/2009 AT TOTAL INCOME OF RS.3,54,407/- AND TAX PAYABLE WAS DETERMIN ED AT RS.53,598/- UNDER THE PROVISIONS OF MAT U/S 115JB OF THE ACT. THE ASSESSEE COMPANY HOWEVER, IS NOT LIABLE TO PAY ANY MAT UNDER THE PROVISIONS OF SECTION 115JB OF THE ACT SINCE THE ASSESSEE COMP ANY HAD ACCUMULATED UNABSORBED DEPRECIATION OF RS.18,96,295/ - AS PER ASSESSMENT RECORDS AND THUS NOT LIABLE TO PAY THE T AX AS PER MAT. IT WAS CONTENDED THAT THE ASSESSEE COMPANY HAD ALSO DI SCLOSED THIS FACT ITA NOS. 6097 & 6098/DEL/2012 4 WHILE FILING THE RETURN OF INCOME UNDER SCHEDULE MA T AND COPY OF THE SAME WAS ENCLOSED FOR THE KIND CONSIDERATION BEFORE THE ASSESSING OFFICER. THE ASSESSING OFFICER, HOWEVER, WHILE PAS SING THE ASSESSMENT ORDER HAD IGNORED THE SAME AND PROCEEDED TO CHARGE THE TAX AS PER MAT EVEN THOUGH THE SAME IS NOT ACCEPTABLE. IT WAS SUBMITTED THAT THE ASSESSEE COMPANY WAS NOT LIABLE TO PAY TAX ON THE A MOUNT OF PROFIT ON SLUMP SALE OF BUSINESS AS THE ASSESSEE COMPANY HAD UNABSORBED DEPRECATION OF THE PREVIOUS YEARS ELIGIBLE TO BE TR EATED AS CURRENT YEARS DEPRECIATION AND ACCORDINGLY SHALL BE TREATED AS CU RRENT YEARS LOSS AND AFTER.LONG TERM CAPITAL GAINS OF RS.3,48,248/- TH ERE SHALL BE NIL TAXABLE INCOME. 5. CONSIDERING THE ABOVE SUBMISSION, I AM OF THE VI EW THAT NON- CONSIDERATION OF MATERIAL FACTS AVAILABLE ON RECORD THAT ASSESSEE COMPANY HAD ACCUMULATED UNABSORBED DEPRECIATION OF RS.18,96,295/- AS PER ASSESSMENT RECORDS AND THUS NOT LIABLE TO PA Y TAX AS PER MAT IS ALSO A MISTAKE APPARENT FROM RECORD IN THE ASSESSME NT ORDER WITHIN THE MEANING OF SECTION 154 OF THE ACT. THUS, THERE WAS MISTAKE APPARENT FROM RECORD IN THE ASSESSMENT ORDER IN THIS REGARD. THE CONTENTION OF THE ASSESSEE ALSO REMAINED THAT IT HAD ALSO DISCLOS ED THIS FACT WHILE FILING THE RETURN OF INCOME UNDER SCHEDULE MAT BU T WHILE PASSING THE ASSESSMENT ORDER THE ASSESSING OFFICER HAD IGNO RED THE SAME AND PROCEEDED TO CHARGE THE TAX AS PER MAT. IT IS ALSO WELL ESTABLISHED PROPOSITION OF LAW THAT THE ASSESSING OFFICER IS RE QUIRED TO MAKE JUST ASSESSMENT BY PROPER APPLICATION OF THE PROVISIONS OF LAW. THUS EVEN ITA NOS. 6097 & 6098/DEL/2012 5 IF THE ASSESSEE DID NOT MAKE A CLAIM FOR WHICH IT I S VERY MUCH ENTITLED TO UNDER THE AVAILABLE PROVISIONS OF LAW, IT DOES N OT MEAN THAT THE ASSESSING OFFICER SHOULD NOT ALLOW THOSE RELIEFS WH ILE FRAMING ASSESSMENT. I THUS IN THE INTEREST OF JUSTICE SET ASIDE THE MATTER TO THE FILE OF THE ASSESSING OFFICER TO DISPOSE OF THE APP LICATION U/S 154 OF THE ACT FILED BY THE ASSESSEE, ON ITS MERITS INSTEAD ON THE BASIS THAT THE ASSESSEE COMPANY HAD ITSELF DURING THE ASSESSMENT P ROCEEDINGS ADMITTED THAT IT WAS LIABLE TO MAT AND ACCORDINGLY HAD FILED REVISED COMPUTATION. THE GROUNDS ARE THUS ALLOWED FOR STAT ISTICAL PURPOSE. 6. CONSEQUENTLY, APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 7. IN ITA NO. 6098, THE ASSESSEE HAS QUESTIONED LEV Y OF PENALTY U/S 271 (1) OF THE ACT AT RS.55,000/- UPHELD BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS). 8. THE GRIEVANCE OF THE LD. AR REMAINED THAT THE PEN ALTY IN QUESTION HAS BEEN LEVIED MAINLY ON THE BASIS THAT T HE ASSESSEE COMPANY DESPITE HAVING BOOK PROFIT HAD NOT PAID INC OME TAX ON THE BOOK PROFITS U/S 115JB OF THE ACT WHEREAS THESE PEN ALTY U/S 271(1) OF THE ACT CANNOT BE LEVIED ON ACCOUNT OF NON-PAYME NT OF TAXES PARTICULARLY WHEN THERE WERE NO BOOK PROFITS SINCE CLAIM OF THE PERVIOUS YEAR UNABSORPTION DEPRECIATION OF THE ASSE SSEE HAD NOT BEEN CONSIDERED PROPERLY WHILE PASSING THE ASSESSMENT OR DER/RECTIFICATION ORDER. ITA NOS. 6097 & 6098/DEL/2012 6 9. THE LD. DEPARTMENTAL REPRESENTATIVE OPPOSES THE A PPEAL AND PLACED RELIANCE ON THE ORDERS OF THE AUTHORITIES BE LOW. 10. CONSIDERING THE ABOVE SUBMISSION, WE FULLY AGRE E WITH THE ARGUMENT OF THE LD. AR THAT PENALTY U/S 271 (1) CA NNOT BE LEVIED AS A CONSEQUENCE OF MAKING OF AN ADDITION. FOR INVOCAT ION OF PENAL PROVISION U/S 271 (1) OF THE ACT IN THE PRESENT C ASE, THE ASSESSING OFFICER WAS REQUIRED TO ESTABLISH BEYOND DOUBT THAT WHILE NOT PAYING INCOME TAX ON BOOK PROFITS U/S 115 JB OF THE ACT, T HE ASSESSEE HAD CONCEALED PARTICULARS OF INCOME OR HAD FURNISHED IN ACCURATE PARTICULARS THEREOF. ALSO BECAUSE THE ISSUE AS TO WHETHER THE ASSESSEE WAS LIABLE TO PAY TAX ON BOOK PROFITS U/S 115 JB OF THE ACT OR NOT HAS BEEN SET ASIDE TO THE FILE OF THE ASSESSING OFFICER FOR HIS FRESH CONSIDERATION IN THE ABOVE APPEAL ITA NO- 6097, THE PRESENT APPEAL QUESTIONING THE LEVY OF PENALTY HAS BECOME INFRUCTU OUS AND IS DISMISSED AS SUCH. 11. IN RESULT, APPEAL IS DISMISSED. 12. IN SUMMARY, ITA NO. 6097/DEL/2012 IS ALLOWED FO R STATISTICAL PURPOSE AND ITA NO. 6098/DEL/2012 IS DISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 30 TH AUGUST/ 2013. SD/- (I. C. SUDHIR) JUDICIAL MEMBER DATED THE 30 TH DAY OF AUGUST, 2013 ITA NOS. 6097 & 6098/DEL/2012 7 R. NAHEED COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. CIT (ITAT), NEW DELHI. AR, ITAT NEW DELHI .