ACIT, CHENNAI V. M/s. Carburettors Ltd., CHENNAI

ITA 661/CHNY/2011

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5339 (ITAT-CHENNAI)
• Duration Of Justice: 7 year(s) 9 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 09-01-2018
• Assessment Year: 1992-1993
• Appeal Filed On: 11-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R CLEMENT RAMESH KUMAR
• Assessee Lawyers: R RAJASEKARAN
• Keywords: Valuation report
• Section: 143(3); 263; 154

Judgement Text

, , IN THE INCOME-TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . , . , BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY, JUDICIAL MEMBER I.T.A. NO. 619 AND 1778/CHNY/2011 ASSESSMENT YEARS: 1992-93 M/S. CARBURETTORS LTD., REHEJA TOWERS, 7 TH FLOOR, SIGMA WING, NO. 177, ANNA SALAI, CHENNAI 600 002. [PAN:AAACC1299E] VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE 1(3), CHENNAI 600 034. ( /APPELLANT) ( /RESPONDENT) ./ I.T.A.NO.661/CHNY/2011 / ASSESSMENT YEAR: 1992-93 & C.O. NO. 76/CHNY/2011[IN I.T.A. NO. 1169/CHNY/2018] THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE 1(3), CHENNAI 600 034. VS. M/S. CARBURETTORS LTD., REHEJA TOWERS, 7 TH FLOOR, SIGMA WING, NO. 177, ANNA SALAI, CHENNAI 600 002. ( /APPELLANT) (RESPONDENT/CROSS OBJECTOR) ASSESSEE BY : SHRI R. RAJASEKARAN, C.A. DEPARTMENT BY : SHRI R. CLEMENT RAMESH KUMAR, ADDL. CIT / DATE OF HEARING : 17.01.2019 /DATE OF PRONOUNCEMENT : 29.01.2019 / O R D E R PER BENCH: BOTH THE APPEALS FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) III, CHENNAI I.T.A. NOS. 619, 1778 & 661/CHNY/11 & C.O. NO. 76/CHNY/11 2 PASSED IN ITA NO. 587/07-08/A-III DATED 31.01.2011 PASSED UNDER SECTION 143(3) R.W.S. 254 OF THE INCOME TAX ACT, 1961 [ACT IN SHORT] AND THE ORDER UNDER SECTION 154 OF THE ACT DATED 23.09.2011 FOR THE ASSESSMENT YEAR 1992-93. THE REVENUE ALSO FILED AN APPEAL AGAINST THE ORDER OF THE LD. CIT(A) PASSED IN ITA NO. 587/07-08/A-III DATED 31.01.2011 AGAINST WHICH, THE ASSESSEE PREFERRED CROSS OBJECTION. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE WAS A MANUFACTURER OF CARBURETORS AND FILED THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 199293 ON 3L.12.1992 DECLARING INCOME AT 'NIL'. THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT WAS COMPLETED ON 09.03.1995 DETERMINING THE TOTAL INCOME AT 'NIL' AFTER SETTING OFF THE BUSINESS LOSSES OF EARLIER YEARS TO THE EXTENT OF INCOME AVAILABLE AMOUNTING TO .32,06,683/-. IN THE COMPUTATION OF INCOME, THE ASSESSING OFFICER DETERMINED THE LOSS FROM BUSINESS AT .1,77,82,817/- AND THE INCOME FROM THE CAPITAL GAINS AT .2,09,89,500/-. THE CIT(A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER, AGAINST WHICH, THE ASSESSEE FILED SECOND APPEAL BEFORE THE ITAT. DURING THE PENDENCY OF APPEAL WITH CIT(A), THE CITI, CHENNAI PASSED REVISIONARY ORDER UNDER SECTION 263 OF THE ACT AND DIRECTED THE ASSESSING OFFICER TO SUBSTITUTE .597 LAKHS IN PLACE OF .300 LAKHS ADOPTED BY HIM FOR CAPITAL GAINS PURPOSES IN THE ASSESSMENT ORDER. THIS WAS CHALLENGED BEFORE THE ITAT WHICH HELD THAT THE ASSESSING I.T.A. NOS. 619, 1778 & 661/CHNY/11 & C.O. NO. 76/CHNY/11 3 OFFICER HAD RIGHTLY TAKEN .300 LAKHS AS THE CONSIDERATION. ON FURTHER APPEAL, THE HON'BLE MADRAS HIGH COURT REMANDED THE ISSUE OF QUANTUM OF CAPITAL GAIN ARISING ON TRANSFER OF THE MANUFACTURING UNIT BY THE ASSESSEE TO THE ITAT. THUS, TWO APPEALS WERE PENDING BEFORE THE HON'BLE ITAT. VIDE ITS ORDERS IN ITA NOS.1846/MDS/2002 AND 531/MDS/1996, BOTH DATED 22.09.2006, THE ITAT SET ASIDE THE MATTERS TO THE ASSESSING OFFICER TO EXAMINE (I) CHARGEABILITY OF THE SUM RECEIVED BY THE ASSESSEE AS CAPITAL GAIN/PROFIT UNDER SECTION 41(2) AND (II) TO DECIDE THE QUANTUM OF CAPITAL GAIN, WHETHER IT WAS .3 CRORES OR .5.97 CRORES. 3. IN ORDER TO GIVE EFFECT TO THE ABOVE DIRECTIONS, THE ASSESSING OFFICER ISSUED NOTICE UNDER SECTION 143(2) ON 14.11.2006. HE ALSO PROVIDED EXTRACT OF THE VALUATION REPORT OF THE CHARTERED ENGINEER TO THE ASSESSEE. AFTER OBTAINING THE EXPLANATION AND VARIOUS DETAILS ON THE SUBJECT ISSUES, THE ASSESSING OFFICER PASSED ORDER UNDER SECTION 143(3) R.W.S. 254 OF THE ACT ON 28.12.2007. IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HELD THAT THE SALE OF THE UNIT CANNOT BE CONSIDERED AS 'SLUMP SALE' AND DETERMINED SHORT TERM CAPITAL GAIN UNDER SECTION 50(2) OF THE ACT AT .8,09,86,551/- AND ADDED THE SAME TO THE TOTAL INCOME AND ASSESSED IT AT .5,70,61,506/-. 4. ON APPEAL, THE LD. CIT(A) PARTLY ALLOWED THE APPEAL FILED BY THE ASSESSEE, AGAINST WHICH, BOTH THE ASSESSEE AS WELL AS REVENUE PREFERRED I.T.A. NOS. 619, 1778 & 661/CHNY/11 & C.O. NO. 76/CHNY/11 4 FURTHER APPEAL BEFORE THE TRIBUNAL. IN ADDITION TO THE ABOVE, AGAINST THE ABOVE ORDER OF THE LD. CIT(A), THE ASSESSEE ALSO FILED A RECTIFICATION PETITION BEFORE THE LD. CIT(A). VIDE ORDER UNDER SECTION 154 OF THE ACT DATED 23.09.2011, THE LD. CIT(A) DISMISSED THE RECTIFICATION PETITION, AGAINST WHICH, THE ASSESSEE PREFERRED FURTHER APPEAL BEFORE THE TRIBUNAL. 5. WHEN THE APPEALS WERE TAKEN UP FOR HEARING, BY FILING COPY OF THE JUDGEMENT OF THE HONBLE HIGH COURT OF JUDICATURE AT CHENNAI IN T.C.(APPEAL) NO. 859 OF 2007 [AGAINST THE ORDER OF THE TRIBUNAL IN I.T.A. NO. 531/MDS/1996] & T.C.(APPEAL) NO. 387 OF 2007 DATED 09.02.2007 [AGAINST THE ORDER OF THE TRIBUNAL IN I.T.A. NO. 1846/MDS/2002] AND BY APPLICATION DATED 12.01.2019, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT IN LIEU OF THE JUDGEMENT OF THE HONBLE JURISDICTIONAL HIGH COURT (SUPRA), SETTING ASIDE THE MATTER TO THE FILE OF THE ASSESSING OFFICER, ALL THE PRESENT APPEALS AS WELL AS CO FILED BEFORE THE TRIBUNAL BECOME INFRUCTUOUS AND ARE LIABLE TO BE DISMISSED. 6. THE LD. DR DID NOT OBJECT TO THE SUBMISSIONS OF THE LD. COUNSEL. IN VIEW OF THE ABOVE SUBMISSIONS OF THE LD. COUNSEL FOR THE ASSESSEE AND THERE BEING NO OBJECTION RAISED BY THE LD. DR, BOTH THE APPEALS AS WELL AS CO FILED BY THE ASSESSEE AND THE APPEAL FILED BY THE REVENUE ARE DISMISSED. I.T.A. NOS. 619, 1778 & 661/CHNY/11 & C.O. NO. 76/CHNY/11 5 7. IN THE RESULT, BOTH THE APPEALS AS WELL AS CO FILED BY THE ASSESSEE AND THE APPEAL FILED BY THE REVENUE ARE DISMISSED. ORDER PRONOUNCED ON THE 29 TH JANUARY, 2019 IN CHENNAI. SD/- SD/- (A.MOHAN ALANKAMONY) ACCOU NTANT MEMBER (DUVVURU RL REDDY) JUDICIAL MEMBER CHENNAI, DATED, 29.01.2019 VM/- /COPY TO: 1. / APPELLANT, 2. / RESPONDENT, 3. ( ) /CIT(A), 4. /CIT, 5. /DR & 6. /GF.