DCIT, Circle - 8, Kolkata, Kolkata V. M/s. Mumtaz Hotels Ltd., Kolkata

ITA 629/KOL/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83240 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 25-04-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: UDAY KUMAR SARDAR
• Assessee Lawyers: A K GUPTA F
• Keywords: Retrospective amendment; Revised return
• Section: 43B; 234B; 115JB

Judgement Text

ITA NO . 629 /KOL./201 1 & ITA NO. 671/KOL/2011 ASSESSMENT YEAR: 200 7 - 20 0 8 PAGE 1 OF 8 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA C BENCH, KOLKATA BEFORE SHRI SHAMIM YAHYA (ACCOUNTANT MEMBER) , AND SHRI GEORGE MATHAN (JUDICIAL MEMBER) I.T.A. NO. 629 /KOL . / 20 1 1 ASSESSMENT YEAR : 200 7 - 20 0 8 DEPUTY COMMISSIONER OF INCOME TAX,......... .. ... ...... .. .APP ELL ANT CIRCLE - 8, KOLKATA, AAYAKAR BHAWAN, 5 TH FLOOR, P - 7, CHOWRINGHEE SQUARE, KOLKATA - 700 069 - VS. - M/S. MUMTAZ HOTELS LIMITED, ............................ . RESPONDENT 4, MANGOE LANE, KOLKATA - 700 001 [PAN : AADCM 7414 Q] & I.T.A. NO. 671 /KOL./ 20 11 ASSESSMENT YEAR : 200 7 - 2008 M/S. MUMTAZ HOTELS LIMITED,............................ . APPELLANT 4, MANGOE LANE, KOLKATA - 700 001 [PAN : AADCM 7414 Q] - VS. - DEPUTY COMMISSIONER OF INCOME TAX,.................... .. . RESPONDE NT CIRCLE - 8, KOLKATA, AAYAKAR BHAWAN, 5 TH FLOOR, P - 7, CHOWRINGHEE SQUARE, KOLKATA - 700 069 APPEARANCES BY: SHRI UDAY KUMAR SARDAR, JCIT, SR. D.R, FOR THE DEPARTMENT SHRI A.K. GUPTA , F. C.A. , FOR THE ASSESSEE DATE OF CONCLUDING THE HEARING : DEC EM BER 1 7 , 2 01 4 DATE OF PRONOUNCING THE ORDER : DEC EM BER 19 , 201 4 ITA NO . 629 /KOL./201 1 & ITA NO. 671/KOL/2011 ASSESSMENT YEAR: 200 7 - 20 0 8 PAGE 2 OF 8 O R D E R PER GEORGE MATHAN : ITA 629/KOL/2011 IS AN APPEAL FILED BY THE REVENU E AND ITA 671/KOL/2011 IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOM E TAX (APPEALS) - VI II , KOLKATA IN APPEAL NO. 28 1/ CIT(A) - VIII/KOL/09 - 10 DATED 23 .1 2 .2010 FOR THE ASSESSMENT YEAR 200 7 - 0 8 . 2 . SHRI UDAY KUMAR SARDAR , J CIT , SR. D.R. , REPRESENTED ON BEHALF OF THE REVENUE AND SHRI A.K. GUPTA, F.C.A., REPRESENTED ON BEHALF OF T HE ASSESSEE . 3. ITA NO.629/KOL/2011 : IN THE REVENU E S APPEAL, THE REVENU E HAS RAISED THE FOLLOWING GROUNDS: - (1) THAT THE LD. CIT(A) HAS ERRED ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW BY HOLDING THAT LATE DEPOSIT OF EMPLOYEES CONTRIBUTION TO PF IS COVERED BY SECTION 43B OF THE ACT AND HENCE, SHOULD BE ALLOWED IF PAID BEFORE DUE DATE OF FILING RETURN WHEN THE SAME IS ACTUALLY COVERED BY SECTION 36(I)(VA) OF THE ACT. (2) THAT THE LD. CIT(A) HAS ERRED ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW BY ALLOWING ASSSSEE S CLAIM OF EXPENSES EVEN WHEN THIS CLAIM WAS NOT MADE BY THE ASSESSEE IN ITS ORIGINAL AND REVISED RETURNS. (3) THAT THE LD. CIT(A) HAS ERRED ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW BY HOLDING THAT THE EXTRA ORDINARY ITEMS LIKE PRIOR PERIOD EXPENSES AND MISCELLANEOUS EXPENSES SHOULD NOT BE ADDED BEFORE ARRIVING AT BOOK PROFIT U/S. 115JB OF THE ACT. (4) THAT THE IMPUGNED ORDER OF THE CIT(A) IS PERVERSE AND DESERVES TO BE SET ASIDE AND THE ORDER OF THE AO TO BE RESTORED. 4. IT WAS SUBMITTED BY THE LD. SR. D.R. THAT IN GROUND NO. 1, THE ISSUE WAS AGAINST THE ACTION OF THE LD. CIT(APPEALS) IN ALLOWING THE CLAIM OF DEDUCTION OF THE LATE DEPOSIT OF EMPLOYEES CONTRIBUTION TO PROVIDENT ITA NO . 629 /KOL./201 1 & ITA NO. 671/KOL/2011 ASSESSMENT YEAR: 200 7 - 20 0 8 PAGE 3 OF 8 FUND. LD. SR. D.R. SUBMITTED THAT THE EMPLOYE ES CONTRIBUTION TO P.F. FOR THE MONTH OF SEPTEMBER HAD NOT BEEN PAID WITHIN THE DUE DATE AND CONSEQUENTLY THE SAME HAD BEEN DISALLOWED BY THE ASSESSING OFFICER UNDER SECTION 43B. IT WAS THE SUBMISSION THAT THE LD. CIT(APPEALS) ERRED IN ALLOWING THE CLAIM OF THE ASSESSEE. 5 . IN REPLY, LD. A.R. SUBMITTED THAT THE ISSUE WAS SQUARELY COVERED BY THE DECISION OF THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF VIJAY SHREE LIMITED IN ITAT NO. 245 OF 2011 IN G.A. NO. 2607 OF 2011 DATED 06.09.2011 , WHEREIN THE ISSUE HAD BEEN HELD IN FAVOUR OF THE ASSESSEE. IT WAS THE SUBMISSION THAT THE ORDER OF THE LD. CIT(APPEALS) WAS LIABLE TO BE CONFIRMED. 6 . WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. AS IT IS NOTICED THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF T HE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF VIJAY SHREE LIMITED, THE ISSUE OF THE CLAIM OF DEDUCTION OF THE EMPLOYEES CONTRIBUTION TO P.F. IS RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR VERIFICATION AS TO WHETHER THE AMOUNT HAS BEEN PAID BEF ORE THE DUE DATE OF FILING OF THE RETURN FOR THE RELEVANT ASSESSMENT YEAR. IF THE SAME HAS BEEN PAID BEFORE THE DUE DATE OF FILING OF THE RETURN, THE CLAIM OF THE ASSESSEE IS LIABLE TO BE ALLOWED. CONSEQUENTLY GROUND NO. 1 OF THE REVENUE S APP E AL IS ALLOWE D FOR STATISTICAL PURPOSES. 7 . IN RESPECT OF GROUND NO. 2, IT WAS THE SUBMISSION BY THE LD. SR. D.R. THAT THE ISSUE WAS AGAINST THE ACTION OF THE LD. CIT(APPEALS) IN ALLOWING THE ASSESSEE S CLAIM OF EXPENSES EVEN WHEN THE SAID CLAIM WAS NOT MADE BY THE AS SESSEE IN ITS ORIGINAL AND REVISED RETURN. IT WAS THE SUBMISSION THAT THE ASSESSEE HAD CLAIMED AN EXPENDITURE OF RS.4,46,040/ - IN THE COURSE OF ASSESSMENT. IT WAS THE SUBMISSION THAT THE ASSESS E E HAD NOT MADE THE CLAIM IN ITS ORIGINAL RETURN OR IN ITS REVI SED RETURN. IT WAS THE SUBMISSION THAT THE LD. CIT(APPEALS) ERRED IN ALLOWING THE CLAIM OF THE ASSESSEE BY HOLDING THAT THE ASSESSING O FFICER HAD NOT FOUND ANY OTHER ITA NO . 629 /KOL./201 1 & ITA NO. 671/KOL/2011 ASSESSMENT YEAR: 200 7 - 20 0 8 PAGE 4 OF 8 DEFECT NOR ANYTHING WRONG IN THE ASSESSEE S CLAIM EXCEPT THAT THE SAME WAS NOT CLAIMED IN THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION. IT WAS THE SUBMISSION THAT THE ISSUE COULD BE RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR VERIFICATION. 8 . TO THIS SUBMISSION, LD. A.R. SUBMITTED THAT THE ORDER OF THE LD. CIT(APPEALS) WAS LIABL E TO BE CONFIRMED. 9 . WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. IT IS NOTICED THAT THE ASSESSING OFFICER HAS NOT GIVEN ANY FINDING IN RESPECT OF THE NATURE OF THE EXPENDITURE OR THE ALLOWABILITY OF THE SAME IN THE COURSE OF ASSESSMENT. THE ASSESSING OFFIC ER SAYS THAT THE EXPENDITURE WAS NOT CLAIMED IN THE ORIGINAL RETURN OR IN THE REVISED RETURN AND, THEREFORE, THE SAME COULD NOT BE CONSIDERED. IN THESE CIRCUMSTANCES, IN VIEW OF THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF GOETZ E INDIA LIMITED VS. - CIT [2006] 284 ITR 323 (SC) , TH E ISSUE IS RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR VERIFICATION OF THE DETAILS OF THE EXPENDITURE. IF THE EXPENDITURE IS RELATABLE TO THE RELEVANT ASSESSMENT YEAR THEN THE ASSESSING OFFICER IS DIRECTED TO ALLO W THE CLAIM OF THE ASSESSEE. IN THE RESULT, GROUND NO. 2 OF THE REVENUE S APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 10 . IN RESPECT OF GROUND NO. 3, IT WAS SUBMITTED BY THE LD. SR. D.R. THAT THE ISSUE RELATED TO THE PRIOR PERIOD EXPENSES AND MISCE LLANEOUS EXPENSES WHICH HAD BEEN INCLUDED BY THE ASSESSING OFFICER BEFORE ARRIVING AT THE BOOK PROFIT UNDER SECTION 115JB OF THE ACT. IT WAS THE SUBMISSION THAT THE LD. CIT(APPEALS) ERRED IN HOLDING THAT THE ADJUSTMENT TO THE BOOK PROFIT MADE BY THE ASSESS ING OFFICER WAS NOT PERMISSIBLE FOR THE PURPOSE OF COMPUTING THE ASSESSEE S TAX LIABILITY UNDER SECTION 115JB OF THE ACT. HE VEHEMENTLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER. ITA NO . 629 /KOL./201 1 & ITA NO. 671/KOL/2011 ASSESSMENT YEAR: 200 7 - 20 0 8 PAGE 5 OF 8 11 . IN REPLY, LD. A.R. DREW OUR ATTENTION TO THE DECISION OF THE HON BLE MADRAS HIGH COURT IN THE CASE OF A V T NATURA L PRODUCTS LIMITED REPORTED IN [2011] 330 ITR 360 (MADRAS), WHEREIN IT HAS BEEN HELD THAT THE ASSESSING OFFICER WA S NOT ENTITLED TO GO INTO THE PROFIT & LOSS ACCOUNT PREPARED BY THE ASSESSEE AS PER THE PROVISIONS CONTAINED UNDER THE COMPANIES ACT AND THE BOOK PROFIT WAS TO BE ARRIVED AT ONLY ON THE BASIS OF THE PROVISIONS OF SECTION 115JA OF THE ACT. HE ALSO PLACED RELIANCE UPON THE DECISION OF THE HON BLE DELHI HIGH COURT IN THE CASE OF CHEMICALS & PHAR MACEUTICALS LIMITED REPORTED IN 307 ITR 150. IT WAS THE SUBMISSION THAT THE ORDER OF THE LD. CIT(APPEALS) WAS LIABLE TO BE UPHELD. 12 . WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PERUSAL OF THE PROVISIONS OF SECTION 115JB ALONGWITH THE DECISIONS OF THE HO N BLE MADRAS HIGH COURT, HON BLE DELHI HIGH COURT REFERRED TO SUPRA CLEARLY SHOWS THAT THE PROVISIONS OF SECTION 115JA IS IDENTICAL TO THE PROVISIONS OF SECTION 115JB AND THE ADJUSTMENTS TO THE BOOK PROFIT AS MADE BY THE ASSESSING OFFICER ARE NOT PERMISSIB LE FOR THE PURPOSE OF COMPUTING THE ASSESSEE S TAX LIABILITY UNDER SECTION 115JB. THIS VIEW OF OURS ALSO FINDS SUPPORT FROM THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF APOLLO TYRES LIMITED VS. - CIT REPORTED IN [2002] 255 ITR 273 (SC) . 13 . I N THE RESULT, GROUND NO. 3 OF THE REVENUE S APPEAL STANDS DISMISSED. 1 4 . GROUNDS NO. 4, & 5 ARE GENERAL IN NATURE AND DO NOT NEED ANY ADJUDICATION. 1 5 . IN THE RESULT, THE APPEAL OF THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 1 6 . ITA 671/KOL/2 012 : - IN THE ASSESSEE S APPEAL, THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS : - ITA NO . 629 /KOL./201 1 & ITA NO. 671/KOL/2011 ASSESSMENT YEAR: 200 7 - 20 0 8 PAGE 6 OF 8 ( 1 ) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(APPEALS) AS WELL AS THE ASSESSING OFFICER ERRED IN DENYING THE CLAIM MADE BY THE APPELLANT ON ACCOUNT OF P ROVISION FOR LEAVE ENCASHMENT OF RS.1,02,000/ - ON ACCRUAL BASIS IN COMPUTING INCOME UNDER THE NORMAL PROVISIONS OF THE ACT. ( 2 ) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(APPEALS) AS WELL AS THE ASSESSING OFFICER FAILED TO APPRECIATE THAT CLAUSE (F) OF SECTION 43B PROVIDING FOR ALLOWANCE OF LEAVE ENCASHMENT ON PAYMENT BASIS IS ARBITRARY, UNCONSCIONABLE AND DE HORS THE SUPREME COURT DECISION IN THE CASE OF BHARAT EARTH MOVERS, AS HELD BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF EXI DE INDUSTRIES LIMITED (292 ITR 470). ( 3 ) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(APPEALS) ERRED IN NOT CORRECTLY ADJUDICATING GROUND NO. 7 TAKEN BY THE APPELLANT IN RESPECT OF ERRONEOUS CHARGING OF INTEREST BY THE AO U/S 234B OF RS .25,35,608/ - AND U/S. 234C OF RS.5,82,957/ - BY MERELY HOLDING THE SAME AS CONSEQUENTIAL IN NATURE. ( 4 ) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(APPEALS) FAILED TO APPRECIATE THAT THE AO WHILE DETERMINING TAX LIABILITY ON BOOK PROFIT COMPUTED UNDER THE PROVISIONS OF SECTION 115JB, ERRED IN CHARGING INTEREST U/S. 234B AND 234C ON ADJUSTMENTS MADE TO BOOK PROFITS PURSUANT TO RETROSPECTIVE AMENDMENT BROUGHT IN BY FINANCE ACT, 2008 BY INSERTING CLAUSE (H) IN EXPLANATION 1 TO SECTION 115JB (2). ( 5 ) WITHOUT PREJUDICE TO GROUND NO. 3 & 4 TAKEN HEREINABOVE, THE AUTHORITIES BELOW FAILED TO APPRECIATE THAT INTEREST U/S. 234C IS CHARGEABLE ONLY ON RETURNED INCOME AND NOT ON ASSESSED INCOME. 17 . IN RESPECT OF GROUNDS NO. 1 & 2, IT WAS THE SUBMISSIO N BY THE LD. A.R. THAT THE ISSUE WAS AGAINST THE ACTION OF THE LD. CIT(APPEALS) IN NOT ALLOWING THE CLAIM OF THE ASSESSEE ON ACCOUNT OF THE PROVISIONS FOR LEAVE ENCASHMENT ON ACCRUAL BASIS. IT WAS THE SUBMISSION THAT THE DECISION OF THE HON BLE JURISDICTIO NAL HIGH COURT IN THE CASE OF EXIDE INDUSTRIES ITA NO . 629 /KOL./201 1 & ITA NO. 671/KOL/2011 ASSESSMENT YEAR: 200 7 - 20 0 8 PAGE 7 OF 8 LIMITED VS. - UNION OF INDIA REPORTED IN 292 ITR 470, WHICH WAS IN FAVOUR OF THE ASSESSEE, HAS BEEN STAYED BY THE HON BLE SUPREME COURT. IT WAS THE SUBMISSION THAT HE HAD NO OBJECTION IF THE ISSUE WAS RESTORED TO THE FILE OF THE ASSESSING OFFICER TO RE - ADJUDICATE THE ISSUE AFTER THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF EXIDE INDUSTRIES LIMITED. 1 8 . TO THIS SUBMISSION, LD. SR. D.R. DID NOT RAISE ANY SERIOUS OBJECTION. CONSEQUENTLY THIS ISSUE IS RESTORED TO THE FILE OF THE ASSESSING OFFICER TO A WAIT THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF EXIDE INDUSTRIES LIMITED AND RE - ADJUDICATE THE ISSUE AFTER THE DECISION OF THE HON BLE SUPREME COURT. CONSEQUENTLY GROUNDS NO. 1 & 2 OF THE ASSE SSEE S APPEAL ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. 1 9 . IN RESPECT OF GROUNDS NO. 3, 4 & 5, IT WAS SUBMITTED BY THE LD. A.R. THAT THE ISSUE WAS AGAINST THE LEVY OF INTEREST UNDER SECTIONS 234B AND 234C OF THE ACT ON THE COMPUTATION OF THE TAX LIABI LITY UNDER SECTION 115JB OF THE ACT. IT WAS THE SUBMISSION THAT THE ASSESSMENT YEAR INVOLVED IS THE ASSESSMENT YEAR 2007 - 08 AND THE RETROSPECTIVE AMENDMENT WAS BROUGHT IN BY THE FINANCE ACT, 2008 BY INSERTING CLAUSE (H) IN EXPLANATION 1 TO SECTION 115JB (2) OF THE ACT. IT WAS THE SUBMISSION THAT THE RETROSPECTIVE LEVY WAS NOT PERMISSIBLE IN VIEW OF THE DECISION OF THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF E MAMI LIMITED REPORTED IN [2011] 337 ITR 470 (CAL.), WHEREIN IT HAS BEEN HELD THAT THE LIABIL ITY ARISING DUE TO AMENDMENT OF THE PROVISIONS WITH RETROSPECTIVE EFFECT, THE INTEREST UNDER SECTIONS 234B AND 234C COULD NOT BE LEVIED. IT WAS THE SUBMISSION THAT THE LEVY OF INTEREST UNDER SECTIONS 234B AND 234C MAY BE DELETED. 20 . I N REPLY, LD. SR. D.R . VEHEMENTLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND LD. CIT(APPEALS). ITA NO . 629 /KOL./201 1 & ITA NO. 671/KOL/2011 ASSESSMENT YEAR: 200 7 - 20 0 8 PAGE 8 OF 8 21 . WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. IT IS NOTICED THAT THE ISSUE IN THIS APPEAL IN RESPECT OF THE LEVY OF INTEREST UNDER SECTIONS 234B AND 234C ON ACCOUNT OF THE RET ROSPECTIVE AMENDMENT IS SQUARELY COVERED BY THE DECISION OF THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF E MAMI LIMITED REFERRED TO SUPRA. IN THESE CIRCUMSTANCES, RESPECTFULLY FOLLOWING THE DECISION OF THE HON BLE JURISDICTIONAL HIGH COURT IN THE CA SE OF EMAMI LIMITED REFERRED TO SUPRA, THE ASSESSING OFFICER IS DIRECTED TO DELETE THE LEVY OF INTEREST UNDER SECTIONS 234B AND 234C. 22 . IN THE RESULT, THE APPEAL OF THE REVENUE AND THE APPEAL OF THE ASSESSEE BOTH ARE PARTLY ALLOWED FOR STATISTICAL PURPO SES. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH D EC EM BER, 2014. SD/ - SD/ - SHAMIM YAHYA GEORGE MATHAN ( ACCOUNTANT MEMBER) ( JUDICIAL MEMBER) KOLKATA, THE 19 TH D AY OF DEC EM B ER , 201 4 COPIES TO : (1) DEPUTY COMMIS SIONER OF INCOME TAX, CIRCLE - 8, KOLKATA, AAYAKAR BHAWAN, 5 TH FLOOR, P - 7, CHOWRINGHEE SQUARE, KOLKATA - 700 069 (2) M/S. MUMTAZ HOTELS LIMITED, 4, MANGOE LANE, KOLKATA - 700 001 (3) COMMISSIONER OF INCOME - T AX (APPEALS) (4) COMMISSIONER OF INCOME TAX ( 5 ) THE DEPARTMENTAL REPRESENTATIVE ( 6 ) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.