APPOLLO FINVEST (I) LTD, MUMBAI V. ACIT 9(1), MUMBAI

ITA 6550/MUM/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75617 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 5 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 23-01-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 06-09-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M L PERUMAL
• Keywords: Opportunity of being heard; Reasonable cause
• Section: 115JB

Judgement Text

A IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI SANJAY GARG, JM ./I.T.A. NO.6550/M/2010 ( / ASSESSMENT YEAR: 2005 - 2006 ) M/S. APPOLLO FINVEST (INDIA) LTD., C/O. SHANKARLAL JAIN & ASSOCIATES,12, ENGINEER BUILDING,265, PRINCES STREET, MUMBAI 400 0 02. / VS. ACIT - 9 (2 ), MUMBAI. ./ PAN : AAACA 0952A ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI S.L. JAIN / RESPONDENT BY : SHRI M.L. PERUMAL, DR / DATE OF HEARING : 23.1.2014 / DATE OF PRONOUNCEMENT : 19 .2.2014 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 6.9.2010 IS AGAINST THE ORDER OF THE CIT (A) - 19, MUMBAI DATED 8.4.2010 FOR THE ASSESSMENT YEAR 2005 - 2006. 2. IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING GROUNDS AS WELL AS THE ADDITIONAL GRO UNDS WHICH READ AS UNDER: 1. THE LD CIT (A) ERRED IN HOLDING THAT CAPITAL LOSS OF RS. 90,12,331/ - OF AY 2001 - 2002 BEING LONG TERM CAPITAL LOSS IS NOT AVAILABLE FOR SET OFF AGAINST THE SHORT TERM CAPITAL GAIN OF RS. 54,38,407/ - DURING AY 2004 - 2005 WITHOUT PROPERLY APPRECIATING THE FACT THAT PRIOR TO AMENDMENT OF SECTION 70 AND 74 BY THE FINANCE ACT OF 2002 , THERE WAS ONLY ONE CATEGORY OF CARRIED FORWARD CAPITAL LOSS WHICH WAS AVAILABLE FOR SET OFF AGAINST THE C APITAL GAIN FOR SUBSEQUENT ASSESSMENT YEAR. 2 2. THE LD CIT (A) ERRED IN HOLDING THAT LOSS PERTAINING TO AY 2001 - 2002 RIGHT OF THE APPELLANT OF SET OFF AND CARRY FORWARD LOSS OF AY 2001 - 2002 GOT EXTINGUISHED BY AMENDMENT TO THE ACT W.E.F. AY 2003 - 04 WITHOUT PROPERLY APPRECIATING THE LAW ON THE SUBJECT. 3. THE LD CIT (A) ERRED IN NOT HOLDING THAT PROFIT OF THE APPELLANT FOR THE YEAR UNDER PROVISIONS OF 115JB BE REDUCED BY RS. 31,61,936/ - BEING WITHDRAWAL OF PROVISION FOR DIMINUTION OF VALUE OF INVESTM ENT WHICH WAS ADDED TO THE PROFIT IN AY 2004 - 2005 WITHOUT APPRECIATING THE FACT OF THE CASE AND LAW APPLICABLE THERETO. 4. THE APPELLANT PRAY THAT WHILE CALCULATING NORMAL PROFIT, SHORT TERM CAPITAL GAIN EARNED BY THE APPELLANT DURING THE YEAR BE ADJUSTED AGAINST CARRIED FORWARD CAPITAL LOSS OF EARLIER YEARS AND BOOK PROFIT BE REDUCED BY WITHDRAWAL OF PROVISIONS FOR DIMINUTION IN VALUE OF INVESTMENT OF EARLIER YEAR. ADDITIONAL GROUND: 5. THE AO AS WELL AS THE CIT (A) ERRED IN HOLDING THAT CAPITAL GAIN EARNE D BY THE ASSESSEE OF RS. 39,99,990/ - ON SALE OF PLANT & MACHINERY ASSESSED U/S 50 IS NOT LONG TERM CAPITAL GAIN AND HENCE NOT ELIGIBLE FOR SET OFF AGAINST CAPITAL LOSS OF AY 2001 - 2002. EVEN IF CAPITAL LOSS OF AY 2001 - 2002 IS LONG TERM LOSS, SAME IS ELIGIB LE TO SET OFF AGAINST PROFIT ON SALE OF PLANT & MACHINERY. 3. AT THE OUTSET, SHRI S.L. JAIN, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THERE IS A DELAY OF 64 DAYS IN FILING THE APPEAL BEFORE THE TRIBUNAL DUE TO CLERICAL ERROR, WHICH IS AN UNINTENTIONAL ONE . IN THIS REGARD, LD COUNSEL BROUGHT OUR ATTENTION TO THE AFFIDAVIT DATED 12.3.2012 , FILED BY SHRI ANJU R INNANI, MANAGING DIRECTOR OF THE ASSESSEE AND READ OUT THE RELEVANT PORTIONS OF THE SAID AFFIDAV IT WHICH ARE AS UNDER: 2. I SOLEMNLY DECLARE AND STATE THAT THE APPELLANT ORDER WAS RECEIVED IN THE OFFICE OF THE COMPANY ON 5.5.2010. HOWEVER, DUE TO CLERICAL ERROR, THE APPELLATE ORDER WAS MIXED UP WITH OTHER OFFICE PAPERS AND COULD NOT BE FORWARDED TO THE CHARTERED ACCOUNT FOR FILING NECESSARY APPEAL. THEREAFTER, WHEN THE APPELLANT ORDER CAME TO THE LIGHT, IT WAS FORWARDED TO THE CHARTERED ACCOUNTANT AND AN APPEAL HAS BEEN FILED THEREAFTER ON 6 TH SEPT. 2010. 3. I MOST RESPECTFULLY PRAY TO THE HONBLE INCOME TAX APPELLATE TRIBUNAL TO CONDONE THE DELAY AS THE SAID DELAY WAS CAUSED ON ACCOUNT OF CLERICAL ERROR AND IS UNINTENTIONAL ONE. THE APPELLANT COMPANY IS HAVING GOOD CASE IN APPEAL. HENCE, IT IS PRAYED THAT THE DELAY BE CONDONED. 4. CONSIDERING TH E ABOVE, WE ARE OF THE OPINION THAT THERE IS A REASONABLE CAUSE FOR NOT FILING THE APPEAL BEFORE THE TRIBUNAL WITHIN THE STIPULATED TIME, THEREFORE, THE DELAY OF 64 DAYS IN FILING THE APPEAL IS CONDONED AND WE PROCEED TO ADJUDICATE THE APPEAL ON MERITS. 5. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE FILED THE RETURN OF INCOME DECLARING THE TOTAL INCOME OF RS. NIL UNDER THE NORMAL PROVISIONS OF THE ACT AND RS. 12.49 LAKHS AS BOOK PROFITS U/S 115JB OF THE ACT. DURING THE ASSESSMENT, 3 AO DET ERMINED THE TOTAL INCOME UNDER THE NORMAL PROVISIONS AT RS. 24,68,840/ - AND RS. 34,24,459/ - AS BOOK PROFITS UNDER SECTION 115JB OF THE ACT. AO MADE ADDITION ON ACCOUNT OF SHORT TERM CAPITAL GAIN IN THE ASSESSMENT. MATTER TRAVELLED TO THE FIRST APPELLAT E AUTHORITY. 6. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, CIT (A) DISMISSED THE APPEAL OF THE ASSESSEE. EVENTUALLY, THE ASSESSEES CLAIM RELATING TO SET OFF OF THE CARRIED FORWARDED CAPI TAL LOSS OF RS. 9,01,233/ - AGAINST THE CURRENT YEAR LONG TERM CAPITAL GAIN OF RS. 54,38,407/ - WAS DENIED. THEREFORE, THE ASSESSEE RAISED GROUND NO.1 AND 2 IN THIS APPEAL. 7. DURING THE PROCEEDINGS BEFORE US, AT THE OUTSET, REFERRING TO THE ISSUES INVOLV ED IN GROUND NO.1 AND 2 OF THIS APPEAL , LD COUNSEL FOR THE ASSESSEE MENTIONED THAT THESE ISSUES STAND COVERED IN FAVOUR OF THE ASSESSEE BY VIRTUE OF THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME - TAX VS ACE BUILDERS P. LTD. (BOM) 281 ITR 210 AND MANY OTHER DECISIONS OF THIS TRIBUNAL SUCH AS (1) GEETANJALI TRAING LTD VS. ITO VIDE ITA NO.5428/M/2007, DATED 24.12.2002 (2) MANALI INVESTMENTS VS. ACIT, 45 SOT 128 (MUM) (URO) ETC. SOME OF THESE D E C I S I O N S WERE NOT AVAILABLE T O THE AO / CIT (A) AT THE APPROPRIATE POINT OF TIME. THEREFORE, IN OUR CONSIDERED OPINION, THE ISSUE SHOULD BE REMANDED TO THE FIL ES OF THE CIT (A) WITH A DIRECTION TO EXAMINE THE APPLICABILITY OF THE SAID DECISIONS TO THE FACTS OF THE PRESENT CASE AND D E C I D E THE GROUNDS AS WELL AS THE ADDITIONAL GROUNDS AS THE CASE MAY BE AFTER GRANTING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ACCORDINGL Y, GROUND NO.2 AND 3 A S W E L L A S T H E A D D I T I O N A L G R O U N D S ARE ALLOWED IN THE ABOVE MENTIONED MANNER. 8. IN CONNECTION WITH GROUND NOS. 3 & 4 , LD COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE FACT THAT THE PROVISIONS FOR DIMINUTION OF THE VALUE OF INVESTMENT CONSTITUTES AN ALLOWABLE DEDUCTION FOR THE PURPOSE OF COMPUTING THE BOOK PROFITS AND THE SAME ISSUE STANDS COVERED BY THE DECISION OF THE ITAT, KOLKATA BENCH IN THE CASE OF DCIT VS. MCLEOD RUSSEL INDIA LTD (2013) 24 ITR 262 (KOLKAT A) AND THE RELEVANT CONCLUSION OF THE SAID DECISION READS AS UNDER: 4 CONCLUSION: - ASSESSEE WAS HELD ENTITLED TO DEDUCTION OF PROVISION FOR DIMINUTION IN VALUE OF INVESTMENT AND PROVISION FOR CONTINGENCY WRITTEN BACK IN P & L ACCOUNT WHILE COMPUTING BOOK P ROFIT, WHEN DEDUCTION WAS NOT ALLOWED IN COMPUTING THE BOOK PROFITS OF YEAR IN WHICH PROVISION WERE CREATED. 9. ON PERUSAL OF THE SAID DECISION OF THE TRIBUNAL, WE DIRECT THE CIT (A) TO EXAMINE THE SAID DECISION AND D E C I D E THE CLAIM OF THE ASSESSEE. ACCOR DINGLY, GROUND NOS.3 AND 4 RAISED BY THE ASSESSEE ARE TREATED AS ALLOWED F O R S T A T I S T I C A L P U R P O S E S . 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED IN THE ABOVE MENTIONED MANNER. ORDER PRONO UNCED IN THE OPEN COURT ON 1 9 T H FEBRUARY, 2014. S D / - S D / - (SANJAY GARG ) (D. KARUNAKARA RAO ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 1 9 .2.2014 . . ./ 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