SPN Roads Infrstructure Pvt.Ltd, Osmanabad V. Pr. Commissioner of Income-tax -2, Aurangabad

ITA 663/PUN/2018

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 5494 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-05-2021
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 06-05-2021
• Assessment Year: 2013-2014
• Appeal Filed On: 10-04-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: ARISES OUT OF DATED PASSED
• Keywords: Depreciation; Unabsorbed depreciation
• Section: 115JB; 263; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH, A PUNE VIRTUAL COURT BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI S.S.VISWANETHRA RAVI, JUDICIAL MEMBER . / ITA NO.663/PUN/2018 / ASSESSMENT YEARS : 2013-14 SPN ROADS INFRASTRUCTURE PVT. LTD., SHOP NO.7, KOHINOOR PLAZA, ANANDNAGAR, OSMANABAD 413 501 PAN : AAJCS6048J VS. PR. COMMISSIONER OF INCOME-TAX-2, AURANGABAD APPELLANT RESPONDENT / ORDER PER R.S. SYAL, VP : THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDER DATED 26-03-2018 PASSED BY THE PRINCIPAL COMMISSIONER OF IN COME- TAX-2, AURANGABAD U/S.263 OF THE INCOME-TAX ACT, 1961 (HEREINAFTER ALSO CALLED THE ACT) IN RELATION TO THE ASSESSMENT YEAR 2013 -14. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSE SSEE FILED ITS RETURN OF INCOME DECLARING NIL INCOME AFTER ADJUSTMENT OF BROUGHT FORWARD LOSSES OF EARLIER YEARS. THE ASSESSMEN T WAS COMPLETED U/S.143(3) ON 14-03-2016 DETERMINING TOTAL INCOME A T RS.54,42,770/- BY MAKING DISALLOWANCE U/S.40(A)(IA) AND A LSO NOT ALLOWING DEDUCTION U/S.80IA(4). THE ASSESSEE PREFERRED A PPEAL BEFORE THE LD. CIT(A), WHO, VIDE HIS ORDER DATED 23-12-2 016 DELETED ASSESSEE BY NONE REVENUE BY SHRI J.P. CHANDRAKAR DATE OF HEARING 06-05-2021 DATE OF PRONOUNCEMENT 06-05-2021 ITA NO.663/PUN/2018 SPN ROADS INFRASTRUCTURE PVT. LTD., 2 THE DISALLOWANCE U/S.40(A)(IA) AND ALSO HELD THE ASSESSEE E LIGIBLE FOR BENEFIT OF SECTION 80IA(4), THEREBY AGAIN COMPUTING THE TOTAL INCOME AT NIL. THE LD. PCIT, EXERCISING POWER U/S.263 OF THE ACT, CAME TO HOLD THE ASSESSMENT ORDER TO BE ERRONEOUS AND PR EJUDICIAL TO THE INTEREST OF REVENUE ON THE GROUND THAT THE ASSESSING OFF ICER (AO) FAILED TO APPLY SECTION 115JB WHICH WAS APPLICABLE IN THIS CASE BECAUSE OF THE ASSESSEE BEING A PRIVATE LIMITED COMPA NY. THE ASSESSEES CONTENTIONS WERE CONSIDERED AND DISMISSED, WHIC H HAS BROUGHT THE ASSESSEE IN APPEAL BEFORE THE TRIBUNAL. 3. WE HAVE HEARD THE LD. DR THROUGH VIRTUAL COURT AND GON E THROUGH THE RELEVANT MATERIAL ON RECORD. THE ASSESSEE HAS FILED AN APPLICATION DATED 19-11-2020 URGING THE TRIBUNAL TO DISPOSE O F THE APPEAL ON MERITS AFTER TAKING INTO CONSIDERATION THE WRITTEN SUBMISSION FILED ON 23-12-2019. WE HAVE METICULOUSLY GONE THROUGH THE WRITTEN SUBMISSION FILED ON BEHALF OF THE ASSESSE E. ADMITTEDLY, THE ASSESSEE IS A PRIVATE LIMITED COMPANY AND THE PROVISIONS OF SECTION 115JB ARE APPLICABLE IN THIS CASE. IN FRAMING THE ASSESSMENT, THE AO DID NOT APPLY SUCH PROVISIONS. RATH ER, THERE IS NO WHISPER IN THE ASSESSMENT ORDER ON SECTION 115JB. G IVEN THE FACT THAT SUCH PROVISIONS WERE REQUIRED TO BE APPLIED FOR CO MPUTING THE TOTAL INCOME OF A COMPANY IN ADDITION TO THE REGULAR PROVIS IONS, ITA NO.663/PUN/2018 SPN ROADS INFRASTRUCTURE PVT. LTD., 3 THE AO ERRED IN CORRECTLY APPLYING THE LAW TO THE FACTS OF TH E CASE, WHICH RENDERED THE ASSESSMENT ORDER ERRONEOUS AND PREJU DICIAL TO THE INTEREST OF REVENUE. 4. THE ASSESSEE HAS SUBMITTED THROUGH WRITTEN SUBMISSIO NS THAT THERE WAS BROUGHT FORWARD LOSS WHICH WAS ALSO TO BE DED UCTED IN COMPUTING THE BOOK PROFIT U/S.115JB OF THE ACT AND IF SUCH LO SS IS CONSIDERED, THERE WONT BE ANY DIFFERENCE IN THE COMPUTATION OF INCOME UNDER THE REGULAR PROVISIONS AND U/S.115JB OF THE A CT. HOWEVER, NO SUCH COMPUTATION SHOWING NIL DIFFERENCE IN INCO ME UNDER BOTH THE SCENARIOS HAS BEEN PLACED ON RECORD. 5. THE CASE OF THE ASSESSEE IS THAT THE AMOUNT OF BRO UGHT FORWARD BUSINESS LOSS WOULD REDUCE `BOOK PROFIT UNDER SECTION 11 5JB AS UNDER THE NORMAL COMPUTATION OF INCOME. IN THIS REGARD, WE FIND THAT COMPUTATION OF BOOK PROFIT HAS BEEN DEALT WITH IN EXPLANA TION 1 TO SECTION 115JB. CLAUSE (III) OF EXPLANATION 1 SPECIFICALLY PROVIDES : THAT THE AMOUNT OF LOSS BROUGHT FORWARD OR UNABSORBED DEPRECIATION WHICHEVER IS LESS AS PER THE BOOKS OF ACCOUNTS SHALL BE REDUCED FROM THE AMOUNT OF PROFIT AS PER THE PROFIT AND LOSS A CCOUNT IN THE COMPUTATION OF BOOK PROFIT. THE LD. PCIT HAS NOTED IN THE IMPUGNED ORDER THAT THE AMOUNT OF UNABSORBED DEPRECIATION IN THIS CASE IS NIL AND BY APPLYING THE PROVISIONS OF CLAUSE (III) OF ITA NO.663/PUN/2018 SPN ROADS INFRASTRUCTURE PVT. LTD., 4 EXPLANATION 1, THERE WILL BE NIL DEDUCTION ON THIS COUNT. NOTHING HAS BEEN SAID IN THE WRITTEN SUBMISSION TO COUNTER THIS POSITION. SECONDLY, THE AMOUNT OF DEDUCTION U/S 80IA(4) COMPUTED IN TH E NORMAL COMPUTATION OF INCOME WOULD ALSO NOT GO TO REDUCE TH E `BOOK PROFIT U/S 115JB. 6. THE NEXT CONTENTION TAKEN UP BY THE ASSESSEE IS THAT THE ASSESSMENT ORDER WAS SUBJECT MATTER OF APPEAL BEFORE THE LD . CIT(A) AND HENCE POWER OF REVISION WAS OUSTED. IN THIS REGARD, WE FIND THAT EXPLANATION 1(C) TO SECTION 263 PROVIDES THAT: WHERE AN ORDER PASSED BY THE AO HAS BEEN THE SUBJECT MATTER OF APPEAL, TH E POWERS OF CIT UNDER THE SECTION SHALL EXTEND AND SHALL BE DEEMED ALWAYS TO HAVE EXTENDED TO SUCH MATTERS AS HAD NOT BEEN CONSIDERED AND DECIDED IN SUCH APPEAL. ASSIMILATING THE FACTS OF THE INSTANT CASE, WE FIND THAT THE ISSUE OF SECTION 115JB WAS NOT AT ALL TOUCHED UPON BY THE AO NOR HAS THE LD. CIT(A) DEALT WITH IT. IN THAT VIEW O F THE MATTER, THIS PART OF THE ASSESSMENT ORDER CANNOT BE SAID TO HAVE MERGED WITH THE ORDER OF THE LD. CIT(A) SO AS TO BAR REVIS ION U/S.263 OF THE ACT. 7. IT IS CLEAR FROM THE AFORE NOTED FACTS THAT THE AO DID NO T APPLY SECTION 115JB WHICH OUGHT TO HAVE BEEN APPLIED. THIS BRING S US TO A SITUATION WHERE THE AO FAILED TO APPLY THE PROVISIONS OF THE ACT IN ITA NO.663/PUN/2018 SPN ROADS INFRASTRUCTURE PVT. LTD., 5 TERMS OF SECTION 115JB OF THE ACT. THE ASSESSEE IN ITS WR ITTEN SUBMISSION HAS RELIED ON THE JUDGMENT OF HONBLE SUPREME CO URT IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. VS. CIT (2000) 243 ITR 83 (SC) . THIS JUDGMENT HAS APPROVED THE VALIDITY OF THE APPLICATION OF SECTION 263, INTER ALIA, IN A CASE OF INCORRECT APPLICATION OF LAW AND THE ASSESSMENT ORDER HAS BEEN PASSED WITHOUT APPLICATION OF MIND. IT IS AXIOMATIC THAT INCORRECT APPLICATION OF LAW ALSO ENVELOPES WITHIN ITS SCOPE A CASE OF NON-APPLICATION OF THE RELEVANT PROVISIONS OF LAW. WE HAVE BEEN CONFRONTED WITH A SITUATION IN WHICH THE AO INCORRECTLY APPLIED THE LAW BECAUSE SECTION 115JB WAS OMITTED TO BE APPLIED, WHICH OUGHT TO HAVE BEEN APPLIED. IN THE HUE OF TH IS FACTUAL SCENARIO, IT IS CLEAR THAT THE ASSESSMENT ORDER PASSED BY THE AO CAN BE CLEARLY DESCRIBED AS ERRONEOUS AND ALSO PREJUDICIAL TO THE INTEREST OF THE REVENUE, WARRANTING THE INVOCATION OF SECTION 263 OF THE ACT. 8. IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 06 TH MAY, 2021. SD/- SD/- ( S.S.VISWANETHRA RAVI ) (R.S.SYAL) JUDICIAL MEMBER VIC E PRESIDENT PUNE; DATED : 06 TH MAY, 2021 ITA NO.663/PUN/2018 SPN ROADS INFRASTRUCTURE PVT. LTD., 6 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. THE PCIT-2, AURANGABAD 4. 5. DR, ITAT, A BENCH, PUNE / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR P RIVATE SECRETARY , / ITAT, PUNE DATE 1. DRAFT DICTATED ON 06-05-2021 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 06-05-2021 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. DATE OF UPLOADING ORDER SR.PS 8. FILE SENT TO THE BENCH CLERK SR.PS 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK 10. DATE ON WHICH FILE GOES TO THE A.R. 11. DATE OF DISPATCH OF ORDER. *