ACIT 12(3)(2), MUMBAI , MUMBAI V. METROGLOBAL LIMITED, MUMBAI , MUMBAI

ITA 6337/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 3664 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2012-2013
• Appeal Filed On: 04-10-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH MISHRA
• Keywords: Business income; Depreciation; Audit objection; Tax effect; Reason to believe; Unabsorbed depreciation; Set aside
• Section: 143(3); 250; 143(2); 139(1); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI S RIFAUR RAHMAN, ACCOUNTANT MEMBER & SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO. 6337/MUM/2019 (A.Y: 2012-13) ACI T 12(3)(2) R.NO. 128H, 1 ST FLOOR, AAYAKAR BHAVAN, MK ROAD, MUMBAI 400020. VS. METROGLOBAL LTD., 508, SHILP, CG ROAD, AHMEDABAD, GUJARAT 380009. ./ ./ PAN/GIR NO. : AAACG1343F APPELLANT .. RESPONDENT APPELLANT BY : SHRI RAJESH MISHRA, DR RESPONDENT BY : SHRI BHADRESH DO SHI, AR DATE OF HEARING 18 .0 5 .2021 DATE OF PRONOUNCEMENT 24 .0 5 .2021 / O R D E R PER PAVAN KUMAR GADALE JM: THE REVENUE HAS FILED THE APPEAL AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - 20, MUMB AI, PASSED U/S.143(3) R.W.S 147 AND 250 OF THE INCOME T AX ACT, 1961. THE REVENUE HAS RAISED THE FOLLOWING GR OUNDS OF APPEAL: 1. WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE LD. CIT(A) IS JUSTIFIED IN ALLOWING THE CARRY FORWARD AND SET OFF OF UNABSORBED DEPRECIATION PERT AINING TO A.Y 1989-99 BEYOND 8 YEARS CONTRARY THE PROVISIO NS OF SEC. 32(2) AS APPLICABLE TO THAT YEAR (A.Y 1998-99) . ITA NO. 6337/MUM/2019 METROGLOBAL LTD., MUMBAI - 2 - 2. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE, THE HONBLE IS REQUESTED TO ENTERTAIN THIS APPEAL THOUGH THE TA X EFFECT IS BELOW THE MONETARY LIMIT PRESCRIBED IN THE CBDT CIRCULAR NO. 17/2019 DATED 08.08.2019 R.W CIRCULAR NO. 03/20 18 DATED 11.07.2018 AS AMENDED ON 20.08.2018 AS THE CA SE FALLS IN THE EXCEPTION PROVIDED IN PARA 10(C) OF TH E SAID INSTRUCTION IN AS MUCH AS THE ADDITION IS PURSUANT TO REVENUE AUDIT OBJECTION WHICH HAS BEEN ACCEPTED BY THE DEPARTMENT. 3. THE APPELLANT PRAYS THAT THE ORDER OF THE LD. CIT(A ) ON THE GROUNDS BE SET ASIDE AND THAT OF THE AO BE RESTORED . 4. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTER A LL OR ANY OF THE GROUNDS OF APPEAL. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E COMPANY IS ENGAGED IN TRADING IN CHEMICALS, DYES, D YES- INTERMEDIATES, INFRASTRUCTURE AND REALTY DEVELOPMEN T AND FINANCIAL ACTIVITIES. THE ASSESSEE HAS FILED THE RE TURN OF INCOME ON 25.09.2012 DECLARING A TOTAL INCOME OF RS . NIL FOR THE A.Y 2012-13 AND THE ASSESSMENT WAS COMPLETE D U/S 143(3) OF THE ACT ON 11.03.2015 ACCEPTING THE T OTAL INCOME OF RS. NIL. THE ASSESSEE COMPANY IS FORMED BECAUSE OF AMALGAMATION OF METROLOGICAL CHEMICAL INDUSTRIES LTD WITH GLOBAL BOARD LTD. THE A.O FOUN D THAT THE UNABSORBED DEPRECIATION OF RS. 83,22,358/- PERT AINS TO A.Y 1998-99 HAS BEEN SET OFF AGAINST THE CURRENT YEAR INCOME. THEREFORE, THE TOTAL INCOME WAS DISCLOSED A T RS. NIL. THEREFORE THE A.O. HAS REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT AND ISSUED NOTICE U/S 148 OF THE ACT. THE ASSESSEE HAS FILED THE OBJECTIONS TO THE R EASONS ITA NO. 6337/MUM/2019 METROGLOBAL LTD., MUMBAI - 3 - RECORDED AND ALSO A LETTER WAS FILED TO TREAT THE R ETURN FILED U/S 139(1) OF THE ACT ON 25.09.2012 AS A COMP LIANCE TO NOTICE U/S 148 OF THE ACT. THE ASSESSEES OBJEC TIONS ON REASSESSMENT REASONS WERE DISPOSED OFF VIDE ORDER D ATED 16.12.2018. SUBSEQUENTLY, NOTICE U/S 143(2) OF TH E ACT WAS ISSUED. IN COMPLIANCE, THE ASSESSEE EXPLAINED THAT THE COMPANY IS SICK COMPANY UNDER THE SUB SEC.(1) SECTION 17 OF SICK INDUSTRIAL COMPANY( SPECIAL PROV ISIONS) ACT AND AS PER THE BIFR TERMS AND CONDITIONS, THE L IMIT OF 8 YEARS IS NOT APPLICABLE TO THE ASSESSEE COMPANY. 3. THE ASSESSEE HAS FILED THE COPY OF THE BIFR ORDE R DATED 30.08.2001 DECLARING THAT THE ASSESSEE COMPANY IS A SICK INDUSTRIAL COMPANY. THE ASSESSEE FILED SUBMIS SIONS IN RESPECT OF SETOFF OF UNABSORBED DEPRECIATION O F EARLIER ASSESSMENT YEAR,WHICH CAN BE CARRIED FORWARD BEYOND THE 8 YEARS LIMIT REFERRED AT PAGE 3 PARA 8 OF THE ASSE SSMENT ORDER. WHEREAS, THE A.O. FOUND THAT THE CLAIM OF TH E ASSESSEE COMPANY CANNOT BE CONSIDERED AS THE UNABSORBED DEPRECIATION FOR THE A.Y 1997-98 TO 2001 -02 IS NOT ELIGIBLE FOR RELIEF GRANTED BY AMENDED SEC. 32(2) OF THE ACT IN THE A.Y 2002-03. THE A.O DEALT ON THE AM ENDED PROVISIONS IN RESPECT OF UNABSORBED DEPRECIATION, C ARRY FORWARD AND SET OFF AGAINST THE BUSINESS INCOME. F INALLY, THE A.O. OBSERVED THAT THE ASSESSEE DOES NOT QUALIF Y FOR THE SET OFF OF UNABSORBED DEPRECIATION OF RS. 83,22 ,358/- ITA NO. 6337/MUM/2019 METROGLOBAL LTD., MUMBAI - 4 - AND ASSESSED THE TOTAL INCOME OF RS. 83,22,350/- AN D PASSED ORDER PASSED U/S 143(3) R.W.S 147 OF THE ACT DATED 22.12.2018. 4. AGGRIEVED BY THE ORDER, THE ASSESSEE HAS FILED A N APPEAL BEFORE THE CIT(A). THE LD.CIT(A) CONSIDERED THE GROUNDS OF APPEAL, FINDINGS OF THE A.O, SUBMISSIONS OF THE ASSESSEE AND UPHELD THE VALIDITY OF THE REASSESSMEN T PROCEEDINGS. WHEREAS, IN RESPECT OF THE GROUND OF APPEAL ON BROUGHT FORWARD OF DEPRECIATION ALLOWANCE PERTAI NING TO THE A.Y 1998-99, THE CIT(A) AFTER CONSIDERING TH E EXPLANATIONS AT PARA 5.3 OF THE ORDER AND THE JUDI CIAL DECISIONS HAS GRANTED THE RELIEF BY ALLOWING THE SE T OFF OF BROUGHT FORWARD UNABSORBED DEPRECIATION RELYING ON THE JURISDICTIONAL HONBLE HIGH COURT AND COORDINATE BEN CH OF HONBLE TRIBUNAL DECISIONS AND PARTLY ALLOWED THE ASSESSEE APPEAL. AGGRIEVED BY THE ORDER OF THE LD.C IT(A) THE REVENUE HAS FILED AN APPEAL BEFORE THE HONBLE TRIBUNAL. 5. AT THE TIME OF HEARING, THE LD. DR SUBMITTED THA T THE CIT(A) ERRED IN GRANTING THE RELIEF OF SET OFF OF U NABSORBED DEPRECIATION PERTAINING TO A.Y 1998-99 BEYOND 8 YEA RS PERIOD OVERRULING THE PROVISIONS OF SEC. 32(2) OF T HE ACT . FURTHER, THE JUDICIAL DECISIONS RELIED BY THE LD.CI T(A) ARE ITA NO. 6337/MUM/2019 METROGLOBAL LTD., MUMBAI - 5 - CONTESTED IN THE HIGHER FORUMS BY THE REVENUE AND PRAYED FOR RESTORATION OF ORDER OF THE A.O. 6.CONTRA, THE LD. AR SUPPORTED THE ORDER OF THE LD. CIT(A) AND SUBSTANTIATED HIS ARGUMENTS RELYING ON THE JUD ICIAL DECISIONS AND ALSO SUBMITTED THAT THE TAX EFFECT I N THE REVENUE APPEAL IS BELOW THE MONETARY LIMIT AND PRAY ED FOR DISMISSAL OF THE REVENUE APPEAL. 7. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE REVENUE HAS CHALLENGED THE SET OFF OF UNABSORBED DEPRECATION PERTAINING TO A.Y 1998-99 BEYOND THE PERIOD OF 8 YEARS AS PER THE FINDINGS OF THE CIT(A). WE FOUND THAT THE LD.CIT(A) HAS RELIED ON T HE DECISION OF THE JURISDICTIONAL HONBLE BOMBAY HIGH C OURT IN THE CASE OF PR. CIT VS. SUPREME PETROCHEM IN ITA NO. 661 OF 2007 DATED 07.06.2019, WHERE THE HONBLE HIG H COURT HAS DISMISSED THE REVENUE APPEAL HOLDING THAT THE ISSUED RAISED IN ABOVE APPEALS ARE SQUARELY COVERED BY THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN T HE CASE OF GENERAL MOTORS IND PVT LTD., VS. DCIT IN 1773 OF 2012 AND ALSO CBDT CIRCULAR DATED 22.11.2001. WE FIND TH AT ON THIS DISPUTED ISSUE, THE HONBLE SUPREME COURT O F INDIA IN CIT VS ASSOCIATED CABLES (P) LTD (2019) 1 05 TAXMANN.COM 114 HAS DISMISSED THE SLP FILED BY THE REVENUE AGAINST THE JURISDICTIONAL BOMBAY HIGH COUR T ITA NO. 6337/MUM/2019 METROGLOBAL LTD., MUMBAI - 6 - ORDER. FURTHER,THE LD.DR COULD NOT CONTROVERT THE OBSERVATIONS OF THE CIT(A) WITH ANY NEW COGENT EVID ENCE OR INFORMATION AND RELIED ON THE ORDER OF THE A.O. WHERAS, THE LD.CIT(A) RELIED ON THE JURISDICTIONAL HONBLE H IGH COURT AND HONBLE TRIBUNAL DECISIONS AND PASSED A REASONED ORDER. ACCORDINGLY, WE DO NOT FIND ANY INF IRMITY IN THE ORDER OF THE LD.CIT(A) AND UPHOLD THE SAME A ND DISMISSED THE GROUNDS OF APPEAL OF THE REVENUE. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 24.05.2021 SD/- SD/- (S RIFAUR RAHMAN) (PAVAN KUMAR GADALE) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 24.05.2021 KRK, PS COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A) 4. ( ) / CONCERNED CIT 5. '#$%&&' , )* , / DR, ITAT, MUMBAI 6. %-./0 / GUARD FILE. / BY ORDER, '& //TRUE COPY// 1. ( ASST. REGISTRAR) ITAT, MUMBAI