ACIT 1(3), MUMBAI V. GENERAL INSURANCE CORPORATION OF INDIA, MUMBAI

ITA 6450/MUM/2010

• Counselvise Citation: 645019914 RSA 2010
• Duration Of Justice: 4 year(s) 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-01-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 20-11-2014
• Assessment Year: 2002-2003
• Appeal Filed On: 01-09-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S PADMAJA
• Assessee Lawyers: LATHA KRISHNAN
• Section: 143(3); 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G, MUMBAI , ,, , BEFORE SHRI R.C. SHARMA, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER 6450 ITA NO. : 6450/MUM/2010 (ASSESSMENT YEAR: 2002-03) DEPUTY COMMISSIONER OF INCOME TAX - 1(3), ROOM NO. 540/564, 5 TH FLOOR, AAYAKAR BHAVAN, M K ROAD, NEW MARINE LINES, MUMBAI -400 020 VS GENERAL INSURANCE CORPORATION OF INDIA, SURAKSHA 170 J TATA ROAD, CHURCHGATE, MUMBAI -400 002 .: PAN: AAACG 0615 N (APPELLANT) ! (RESPONDENT) APPELLANT BY : SMT. S PADMAJA RESPONDENT BY : SMT LATHA KRISHNAN '# $ %& /DATE OF HEARING : 20-11-2014 '() $ %& / DATE OF PRONOUNCEMENT : 02-01-2015 + , + , + , + , O R D E R PER VIVEK VARMA, JM: THE APPEAL IS FILED BY THE DEPARTMENT AGAINST THE ORDER O F CIT(A) 2, MUMBAI, DATED 11.06.2010, WHEREIN THE DEPARTMENT HAS RAISED THE FOLLOWING GROUNDS: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, AND IN LAW THE CIT(A) ERRED IN DIRECTING THE AO NOT TO BRING TO CHARGE TOTAL INCOME IN ACCORDANCE WITH SECTION 115JB OF THE INCOME TAX ACT ? 2. THE FACTS ARE THAT THE COORDINATE BENCH OF THE ITAT IN ASSESSEES CASE IN ITAS NO. 6500 TO 6502/MUM/2005 DAT ED GENERAL INSURANCE CORPORATION OF INDIA ITA 6450/M/2010 2 22.10.2009 GAVE CERTAIN DIRECTIONS TO THE AO WITH REGARD TO TAXATION OF PROFIT ON SALE OF INVESTMENT. 3. THE AO, AFTER GIVING EFFECT TO THE ORDER OF THE ITAT, COMPUTED THE TOTAL INCOME OF THE ASSESSEE U/S 115JB AN D MADE CERTAIN ADJUSTMENT. 4. IN THE APPEAL BEFORE THE CIT(A), THE ASSESSEE SUBMITTE D THAT THE ISSUE OF COMPUTATION U/S 115JB WAS NEVER THE ISSUE AND JURISDICTION CAST UPON BY THE ITAT TO THE AO AND T HEREFORE, THE AO EXCEEDED HIS JURISDICTION WHEN HE DELVED ON AN I SSUE WHICH HE WAS NOT SUPPOSED TO BE. 5. THE CIT(A), ON THE ABOVE SUBMISSIONS OBSERVED, I HAVE PERUSED THE FACTS OF THE CASE. INCOME U/S.11 5JB HAD NOT BEEN OFFERED TO TAX IN THE RETURN OF INCOME BY THE ASSESSEE. IN THE INTIMATION U/S. 143(1) AS WELL AS IN THE ORDER OF ASSESSMENT U/S. 143(3) THE PROVISIONS OF SEC.115JB WERE NOT INVOKED. THESE ARE UNDISPUTED FACTS. THE ISSUE OF SEC.115JB WAS ALSO NOT BEFORE HON'BLE TRIBUNAL AND IS THEREFORE NOT A PART OF THE ORDER OF HON'BLE TRIBUNAL. IN THE ORDER UNDER CONSIDERATI ON ASSESSING OFFICER IS ONLY GIVING EFFECT TO THE ORDE R OF HON'BLE TRIBUNAL AND THEREFORE HIS JURISDICTION IS RESTRICTED TO TERMS CONTAINED IN THE ORDER OF TRIBU NAL. THESE DIRECTIONS ARE ABSOLUTELY SILENT ON INVOKING THE PROVISIONS OF SEC.115JB. THEREFORE IN NOW INVOKING SEC.115JB ASSESSING OFFICER HAS EXCEEDED HIS AUTHOR ITY. APPLICATION OF SEC. 115JB IS NOT MECHANICAL. IT REQ UIRES APPLICATION OF MIND, ADJUSTMENT HAD TO BE ARGUED AN D THEN ONLY A FIGURE OF PROFIT CAN BE ARRIVED AT. VER Y MOOT ISSUE RAISED BY APPELLANT IS IN GROUND OF APPEAL NO .2 WHERE IT HAS BEEN CONTENDED THAT SEC.115JB IS NOT APPLICABLE TO APPELLANT AT ALL. ACCORDING TO LD. CO UNSEL ONE OF THE BASIC REQUIREMENTS OF SEC.115JB IS THAT ACCOUNTS ARE PREPARED IN ACCORDANCE WITH SCHEDULE V I OF THE COMPANY'S ACT. IN THE CASE OF APPELLANT ACCOUNT S ARE NOT PREPARED UNDER THE COMPANY'S ACT BUT ARE PREPAR ED UNDER THE INSURANCE ACT. THEREFORE, THE APPLICABILI TY OF SEC.115JB ITSELF HAS BEEN CHALLENGED. THEREFORE, ASSESSING OFFICER IN GIVING EFFECT TO THE ORDER OF TRIBUNAL COULD NOT HAVE DECIDED IN A MECHANICAL MANNER THAT INCOME U/S.115JB WAS REQUIRED TO BE BROUGHT TO CHAR GE TO TAX. NOT ONLY THIS, LD. COUNSEL OF APPELLANT HAS ALSO ARGUED THAT WHEN THE INCOME OF APPELLANT IS BEING COMPUTED UNDER RULE 5 OF THE FIRST SCHEDULE R.W.S. 44 OF THE I.T. ACT, THE APPLICABILITY OF SEC.115JB CANNOT BE GENERAL INSURANCE CORPORATION OF INDIA ITA 6450/M/2010 3 ROPED INTO. ALL THESE ARGUMENTS ARE REVOLVING AROUN D GROUND OF APPEAL NO.2 OF APPELLANT AND HAVE A LOT O F FORCE TO ESTABLISH THAT SEC.115JB CANNOT BE INVOKED IN A MECHANICAL MANNER. THEREFORE, THE CONTENTION OF APPELLANT THAT IN BRINGING TO TAX TOTAL INCOME IN ACCORDANCE WITH PROVISIONS OF SEC.115JB, 'ASSESSING OFFICER HAS EXCEEDED JURISDICTION IS CORRECT. THE F IRST GROUND OF APPEAL IS CONSEQUENTLY ALLOWED AND ASSESS ING OFFICER IS DIRECTED NOT TO BRING TO CHARGE TOTAL IN COME IN ACCORDANCE WITH SEC.115JB AT THIS STAGE 6. THE CIT(A), THEREFORE, NEGATED THE ACTION OF THE AO. 7. AGAINST THIS ORDER, THE DEPARTMENT IS IN APPEAL BEFORE THE ITAT. 8. BEFORE US, THE AR REITERATED THE SUBMISSIONS MADE BEFO RE THE CIT(A) AND SUBMITTED THAT THE CIT(A) HAD RIGHTLY CONC LUDED THAT PROVISIONS OF SECTION 115JB ARE NOT APPLICABLE ON ACC OUNT AS MAINTAINED BY THE INSURANCE COMPANIES. 9. WE FIND THE ISSUE WAS DEALT WITH BY THE CO-ORDINATE BE NCH IN ITA NO. 3554/MUM/2011 IN ASSESSMENT YEAR 2007-08 AN D THE ITAT HAD HELD THAT THE MAT PROVISIONS ARE NOT APP LICABLE AND HAS ALSO BEEN FOLLOWED IN ASSESSMENT YEAR 2008-09. 10. SINCE THE REASONING GIVEN BY THE CIT(A) IN PARA 3 OF T HE IMPUGNED ORDER HAS BEEN ACCEPTED AS LEGALLY CORRECT, WE DO NOT FIND ANY REASON TO DEVIATE FROM THE ORDERS OF THE CO-ORD INATE BENCHES IN ASSESSEES OWN CASES AND CONSEQUENTLY DO NOT INTEND TO DISTURB THE CORRECT FINDING OF THE CIT(A), WHICH WE SUSTAIN. 11. CONSEQUENTLY, THE GROUNDS OF APPEAL OF THE DEPARTME NT AS FILED IS REJECTED. GENERAL INSURANCE CORPORATION OF INDIA ITA 6450/M/2010 4 12. IN THE RESULT, THE APPEAL AS FILED BY THE DEPARTMENT IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 ND JANUARY, 2015. SD/- SD/- ( ) ( ) + + + + + + + + (R C SHARMA) ( VIVEK VARMA ) ACCOUNTANT MEMBER J UDICIAL MEMBER MUMBAI, DATE: 2 ND JANUARY, 2015 %/ COPY TO:- 1) / THE APPELLANT. 2) ! / THE RESPONDENT. 3) THE CIT(A)-2, MUMBAI. 4) THE CIT -1, MUMBAI. 5) /#01 %' , , / THE D.R. G BENCH, MUMBAI. 6) 123 4 COPY TO GUARD FILE. +,' / BY ORDER / / TRUE COPY / / 5 / 6 , DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI * *CHAVAN, SR.PS