DCIT 10(1), MUMBAI V. ITD CEMENTATION INDIA LTD, MUMBAI

ITA 6476/MUM/2013

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2219 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-12-2015
• Appeal Filed By: Department
• Bench Allotted: I
• Next Hearing Date: 16-04-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 01-11-2013
• Court: TRIBUNAL
• Assessee Lawyers: HARSH BHUTA
• Keywords: Depreciation; Rule of consistency; Unabsorbed depreciation
• Section: 14A; 115JB; 37

Judgement Text

IN THE INCO ME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI SANDEEP GOSAIN, JUDICIAL MEMBER I.T.A. NO. 6476/M/2013 (ASSESSMENT YEAR : 2008 - 2009 ) DCIT, CIRCLE 10(1), R.NO.432, 4 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 20. / VS. M/S. ITD CEMENTATION INDIA LTD., 1 ST FLOOR, DANI WOOLTEX COMPOUND, 158, VIDYANAGARI MARG, KALINA, SANTACRUZ (E), MUMBAI 400 098. ./ PAN : AAACT1426A ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI G.M. DOSS, CIT - DR / RESPONDENT BY : SHRI HARSH BHUTA / DATE OF HEARING : 08.10.2015 / DATE OF PRONOUNCEMENT : 08 .12.2015 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE REVENUE ON 1.11.2013 IS AGAINST THE ORDER OF THE CIT (A) - 21, MUMBAI DATED 14.8.2013 FOR THE ASSESSMENT YEAR 2008 - 2009. IN THIS APPEAL, REVENUE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) ERRED IN DELETING THE ADDITIONS OF RS. 7,14,92,402/ - ON ACCOUNT OF NON - RECONCILIATION OF AIR DATA WITHOUT APPRECIATING THE FACT THAT THE TRANSACTIONS WERE CARRIED OUT ON PAN OF THE ASSESSEE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) ERRED IN ALLOWING THE ASSESSEES CLAIM OF UNFORESEEN LOSSES OF RS. 4,82,62,449/ - WHICH IS CONTINGENT LOSS AND ARE NOT ALLOWABLE AS PER THE PROVISION OF THE SECTION 37 OF THE ACT. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) ERRED IN DELETING THE ADDITION OF RS. 13.85 LAKHS MADE IN ACCORDANCE WITH RULE 8D R.W.S 14A OF THE ACT. 2. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE IS A CIVIL CONTRACTOR AND FILED THE RETURN OF INCOME FOR THE AY 2008 - 09 DECLARING THE TOTAL INCOME OF RS. 52,48,377/ - AFTER SET - OFF OF UNABSORBED DEPRECIATION OF RS. 2 9,14,38,861/ - . ASSESSMENT WAS COMPLETED U/S 143(3)(II) OF THE ACT AND THE ASSESSED INCOME WAS DETERMINED AT RS. 20,19,52,818/ - UNDER THE NORMAL PROVISIONS AND BOOK PROFITS U/S 115JB WAS DETERMINED AT RS. 17,13,70,000/ - . IN THE ASSESSMENT, AO MADE CERTAIN ADDITIONS VIZ (I) RS. 7,4 4,01,605/ - ON ACCOUNT OF NON - RECONCILIATION OF AIR ENTRIES WITH THAT OF THE BOOKS OF ACCOUNTS OF THE ASSESSEE; (II) RS. 4,82,62,449/ - ON ACCOUNT OF FUTURE LOSSES; (III) DISALLOWANCE OF RS. 15.29 LAKHS U/S 14A R.W. RULE 8D OF THE ACT ARE SOME OF THE ADDITIO NS MADE BY THE AO. AGGRIEVED WITH THE SAID DECISION OF THE AO, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 3. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AN D ON PERUSAL OF THE RELEVANT MATERIAL PLACED BEFORE HIM, CIT (A) GRANTED PART RELIEF TO THE ASSESSEE. AGGRIEVED WITH THE SAID DECISION OF THE CIT (A), REVENUE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE ABOVE MENTIONED GROUNDS. 4. GROUND NO.1 RELATES TO THE DELETION OF ADDITION BY THE CIT (A) FOR ASSESSEES DENIAL OF ALLEGED TRANSACTION AND AOS FAILURE TO ESTABLISH THAT THE IMPUGNED TRANSACTIONS BELONG TO THE ASSESSEES ONLY. CIT (A) DELETED THE ADDITION CONSIDERING THE AOS FAILURE TO DISCHARGE HIS ONUS. ON THIS ISSUE, CIT (A) PASSED A SPEAKING ORDER AS EVIDENT FROM PARA 2.3 OF HIS ORDER. RELEVANT LINES FROM THE SAID PARA 2.3 OF THE CIT (A)S ORDER ARE EXTRACTED AS UNDER: 2.3........ ............. IN VIEW OF THE ABOVE DECISIONS, IT IS CLEAR THAT A PPELLANT HAD DENIED THE ABOVE TRANSACTIONS FROM THE BEGINNING AND AO ALSO COULD NOT PROVE POSITIVELY THAT ABOVE TRANSACTIONS BELONG TO APPELLANT, HENCE, ADDITION CANNOT BE SUSTAINED. THIS GROUND OF APPEAL IS ALLOWED. 5. AFTER HEARING THE LD REPRESENTATI VES OF BOTH THE PARTIES, WE FIND THAT AO EXPECTS AN IMPOSSIBILITY TO MEET. HOW WILL ASSESSEE RECONCILE THE TRANSACTION, WHICH DOES NOT PERTAIN TO HIM AT ALL? THEREFORE, ON PERUSAL OF THE RELEVANT MATERIAL ON THIS ISSUE PLACED BEFORE US AS WELL AS THE ORD ERS OF THE REVENUE AUTHORITIES, WE ARE OF THE CONSIDERED OPINION THAT THE DECISION TAKEN BY THE CIT (A) ON THIS ISSUE IS FAIR AND REASONABLE AND IT DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, GROUND NO.1 RAISED BY THE REVENUE IS DISMISSED. 3 6. GROUND NO.2 RELATES TO THE DELETION OF ADDITION OF RS. 4.83 CRS (ROUNDED OF) . BEFORE US, ON THIS ISSUE, LD COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO PARA 3 OF THE ORDER OF THE CIT (A) AND SUBMITTED THAT SIMILAR ADDITION WAS MADE IN EARLIER YEARS IN ASSESSEES OWN CASE AND THE MATTER TRAVELLED TO THE ITAT VIDE ITA NO.2991/MUM/2011, DATED 17.5.2013. PARA 3.3 OF THE CIT (A)S ORDER IS RELEVANT IN THIS REGARD. WHILE ADJUDICATING THIS ISSUE, CIT (A) EXTRACTED PARA 18 AND 19 OF THE SAID TRIBUNALS ORDER (SUPRA) DATED 17.5.2013 IN PARA 3.3 OF HIS ORDER AND DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. FOR THE SAKE OF COMPLETENESS OF THIS ORDER, RELEVANT LINES FROM THE CIT (A)S CONCLUSION ON THE ISSUE UNDER CONSIDERATION ARE EXTRACTED AS UNDER: 3.3....... .... IN THE APPELLANTS OWN CASE, HONBLE ITAT DECIDED THE CASE IN FAVOUR OF THE APPELLANT HENCE, FOLLOWING THE ABOVE DECISION; THE ADDITION MADE BY THE AO IS DELETED . THIS GROUND OF APPEAL IS ALLOWED. 7. CONSIDERING THE ABOVE, WE ARE OF THE OPINION THAT WHILE DECIDING THE ISSUE IN FAVOUR OF THE ASSESSEE, CIT (A) RELIED ON THE DECISION OF THE ITAT AND RIGHTLY FOLLOWED THE PRINCIPLE OF CONSISTENCY. THEREFORE, IN OUR VIEW, THE DECISION TAKEN BY THE CIT (A) IS FAIR AND REASONABLE AND IT DOES NOT CALL FO R ANY INTERFERENCE. ACCORDINGLY, GROUND NO.2 RAISED BY THE REVENUE IS DISMISSED. 8. GROUND NO.3 RELATES TO THE DISALLOWANCE OF RS. 13.85 LAKHS MADE U/S 14A R.W. RULE 8D OF THE ACT. BRIEF FACTS IN THIS REGARD ARE THAT THE ASSESSEE EARNS SHARE INCOME FOR A COUPLE OF JOINT VENTURES IE (I) RS. 362.69 LAKHS FROM ONE JV NAMED ITD - ITD CEM AND (II) RS. 56.32 LAKHS FROM ANOTHER JV NAMED ITD CEMINDIA JV. IN THE ASSESSMENT, AO APPLIED THE RULE 8D R.W.S 14A OF THE ACT AND DISALLOWED THE SUM OF RS. 15.29 LAKHS (IE 13 .85 LAKHS OUT OF INTEREST AND RS. 1.44 LAKHS OUT OF OTHER EXPENSES @ 0.5% OF AVERAGE AMOUNT OF INVESTMENTS). MATTER TRAVELLED TO THE FIRST APPELLATE AUTHORITY. 9. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY, ASSESSEE DEMONSTRATED THE EXISTENCE OF ADEQUATE INTEREST FREE FUNDS OF THE ASSESSEE BEFORE THE CIT (A) TO HIS SATISFACTION. ACCORDINGLY, RELYING ON THE BINDING JUDGMENT OF THE HONBLE BOMBAY HIG H COURT IN THE CASE OF CIT VS. RELIANCE UTILITIES AND POWER LTD [2009] 313 ITR 340 (BOM.), CIT (A) GRANTED RELIEF ON THIS PART OF THE ADDITION. HOWEVER, CIT (A) CONFIRMED THE OTHER ADDITION OF RS. 1.44 LAKHS. ASSESSEE ACCEPTED 4 THE SAID ADDITION OF THE CI T (A) AS EVIDENT FROM THE FACT OF ABSENCE OF ANY APPEAL BEFORE THE TRIBUNAL. 10. DURING THE PROCEEDINGS BEFORE US, LD COUNSELS OF BOTH THE PARTIES RELIED ON THE ORDERS OF THE AO / CIT (A) AS THE CASE MAY BE. AFTER HEARING BOTH THE PARTIES AND ON PERUSAL O F THE ORDERS OF THE REVENUE AUTHORITIES, WE FIND THAT THE DECISION TAKEN BY THE CIT (A) BY RELYING ON THE BINDING JUDGMENT OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF RELIANCE UTILITIES (SUPRA) IS FAIR AND REASONABLE AND IT DOES NOT CALL FOR ANY INTERF ERENCE. ACCORDINGLY, GROUND NO.3 RAISED BY THE REVENUE IS DISMISSED . 11. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 8 T H DECEMBER, 2015. S D / - S D / - ( SANDEEP GOSAIN ) (D. KAR UNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 8 /12/2015 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI