Hyderabad District Co-operative Central Bank Limited, Hyd, Hyderabad V. DCIT, Circle-5(1), Hyd, Hyderabad

ITA 664/HYD/2015

• Counselvise Citation: 66422514 RSA 2015
• Duration Of Justice: 3 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 18-08-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 18-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAMAKRISHNA BANDI
• Assessee Lawyers: D V ANJANEYULU
• Keywords: Depreciation; Retrospective amendment; Revised return
• Section: 143(3); 148; 54; 154

Judgement Text

ITA NO.664 OF 2015 HYDERABAD DISTRICT COOPERATIVE C ENTRAL BANK LTD HYDERABAD PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO.664/HYD/2015 (ASSESSMENT YEAR: 2007-08) HYDERABAD DISTRICT COOPERATIVE CENTRAL BANK LTD, HYDERABAD PAN: AABCT 6299 A VS. DCIT, CIRCLE 5 (1) HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI D.V. ANJANEYULU FOR REVENUE : SHRI RAMAKRISHNA BANDI, DR DATE OF HEARING : 18 .08.2015 DATE OF PRONOUNCEMENT : 28 .08 .2015 O R D E R PER SMT.P. MADHAVI DEVI, J.M. THIS IS ASSESSEES APPEAL AGAINST THE ORDER OF THE LD CIT (A)- 4, HYDERABAD DATED 12.03.2015 PERTAINING TO A.Y 200 7-08. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, A COOPERATIVE SOCIETY, CARRYING ON THE BUSINESS OF BANKING. IT FI LED ITS RETURN OF INCOME FOR A.Y 2007-08 ON 31.10.2007, DECLARING AN INCOME OF RS.3,23,20,164. THE RETURN OF INCOME WAS PROCESSED U/S 143(1) OF THE I.T. ACT. THEREAFTER, ON PERUSAL OF THE ASSE SSMENT RECORD, AO OBSERVED THAT THE ASSESSEE HAS CLAIMED DEPRECIAT ION TOWARDS OFFICE EQUIPMENT @ 25% AS AGAINST THE APPLICABLE RA TE OF 15% FOR THIS CATEGORY OF ASSET. IN ORDER TO DISALLOW THE EX CESS DEPRECIATION CLAIM, AO REOPENED THE ASSESSMENT BY I SSUANCE OF NOTICE U/S 148 OF THE ACT. IN RESPONSE TO THE NOTIC E ISSUED U/S ITA NO.664 OF 2015 HYDERABAD DISTRICT COOPERATIVE C ENTRAL BANK LTD HYDERABAD PAGE 2 OF 6 148, ASSESSEE FILED ITS RETURN OF INCOME ON 21.05.2 010 BY DECLARING THE SAME INCOME AS OFFERED WHILE FILING T HE RETURN U/S 139(1) OF THE ACT. THE REASONS FOR REOPENING OF THE ASSESSMENT WAS FURNISHED TO THE ASSESSEE AND UPON THE RECEIPT OF THE SAME, ASSESSEE VOLUNTARILY ACCEPTED THAT IT HAS CLAIMED E XCESS DEPRECIATION ON OFFICE EQUIPMENT TO THE EXTENT OF R S.3,20,342. THEREFORE, THE SAME WAS AGREED TO BE ADDED TO THE R ETURNED INCOME OF THE ASSESSEE. DURING THE RE-ASSESSMENT PR OCEEDINGS, ASSESSEE HAD FILED TWO APPLICATIONS U/S 154 OF THE ACT FOR ALLOWING THE DEDUCTIONS U/S 36(1)(VIIA) OF THE ACT. THE FIRST WAS TOWARDS RECTIFICATION OF A MISTAKE APPARENT FROM RE CORD IN THE RETURN ACCEPTED U/S 143(1) OF THE I.T. ACT AND THE OTHER WAS FOR THE RECTIFICATION OF THE MISTAKE APPARENT FROM RECO RD IN THE RETURN FILED IN RESPONSE TO NOTICE U/S 148 OF THE I .T. ACT. AO OBSERVED THAT THE RECTIFICATION APPLICATION FILED U /S 154 OF THE ACT TOWARDS ORIGINAL RETURN CANNOT BE ENTERTAINED AS TH ERE IS NO MISTAKE APPARENT FROM RECORD AND THAT A FRESH CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 36(1)(VIIA) CANNOT BE TR EATED AS A MISTAKE APPARENT FROM RECORD. HE HELD THAT THE CLAI M OF DEDUCTION U/S 36(1)(VIIA) SHOULD HAVE BEEN MADE BY THE ASSESSEE IN THE ORIGINAL RETURN AND THE APPLICATION U/S 154 IS ONLY AN AFTER THOUGHT AND CANNOT BE ALLOWED. 3. AS REGARDS THE SECOND APPLICATION U/S 154 FOR RE CTIFICATION OF THE RETURN FILED IN RESPONSE TO SECTION 148, AO HELD THAT THE SAME CANNOT BE ALLOWED AS THE ASSESSEE IS NOT ELIGI BLE FOR DEDUCTION U/S 36(1)(VIIA) OF THE ACT AS THE DEDUCTI ON U/S 36(1)(VIIA) OF THE ACT IS AVAILABLE ONLY FROM A.Y 2 008-09 ONWARDS AND NOT TO THE A.Y 2007-08 BEFORE HIM. THEREFORE, T HE 2 ND APPLICATION U/S 154 OF THE ACT WAS ALSO REJECTED. A GAINST THE FIRST ITA NO.664 OF 2015 HYDERABAD DISTRICT COOPERATIVE C ENTRAL BANK LTD HYDERABAD PAGE 3 OF 6 APPLICATION U/S 154 OF THE ACT, ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A) WHICH WAS REJECTED BY HIM. ASSESSEE IS I N 2 ND APPEAL BEFORE US. 4. THE LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT T HE ASSESSEE BEING A COOPERATIVE BANK WAS ELIGIBLE FOR DEDUCTION U/S 80P OF THE ACT TILL A.Y 2006-07. FROM A.Y 2007-08 O INWARDS, ASSESSEE WAS ELIGIBLE FOR DEDUCTION U/S 36(1)(VIIA) OF THE ACT AND THE ASSESSEE, BY MISTAKE, HAD NOT MADE ANY CLAIM IN THE ORIGINAL RETURN OF INCOME AND IT WAS ONLY AFTER RECEIPT OF T HE NOTICE U/S 148, THAT THE ASSESSEE REALISED ITS MISTAKE AND THE REFORE, HAD FILED AN APPLICATION U/S 154 OF THE I.T. ACT TO REC TIFY THE ORIGINAL RETURN OF INCOME AND ANOTHER APPLICATION U/S 154 WA S ALSO FILED TO RECTIFY THE MISTAKE IN THE RETURN FILED IN RESPO NSE TO NOTICE U/S 148. HE SUBMITTED THAT THE PROIVISIONS OF SECTION 1 54 ARE ALSO APPLICABLE TO A DEEMED INTIMATION U/S 143(1) AND TH EREFORE, AO OUGHT TO HAVE CONSIDERED THE ASSESSEES APPLICATION FOR RECTIFICATION OF A MISTAKE APPARENT FROM RECORD IN THE ORIGINAL RETURN OF INCOME FILED BY THE ASSESSEE. HE SUBMITTE D THAT THE AO AS WELL AS THE CIT (A) HAVE ERRONEOUSLY REJECTED AS SESSEES CLAIM WITHOUT ANY APPLICATION OF MIND. HE HAS ALSO DRAWN OUR ATTENTION TO THE FINANCE BILL OF 2007 WHEREIN THE P ROVISIONS OF SECTION 36(1)(VIIA) WERE INSERTED AND IT IS STATED THAT THE AMENDMENT WILL TAKE EFFECT RETROSPECTIVELY FROM 1.4 .2007 AND WILL ACCORDINGLY APPLY IN RELATION TO THE A.Y 2007-08 AN D SUBSEQUENT YEARS. HE SUBMITTED THAT EVEN THOUGH THE ASSESSEE M AY NOT HAVE CLAIMED EXEMPTION AS PER LAW, AO IS OBLIGED TO COMP UTE THE INCOME IN ACCORDANCE WITH LAW. HE SUBMITTED THAT TH E ASSESSEE, AFTER REALISING ITS MISTAKE IN NOT CLAIMING THE SAM E IN THE ORIGINAL RETURN OF INCOME, HAS FILED AN APPLICATION U/S 154 OF THE ACT FOR ITA NO.664 OF 2015 HYDERABAD DISTRICT COOPERATIVE C ENTRAL BANK LTD HYDERABAD PAGE 4 OF 6 RECTIFICATION OF THE MISTAKE AND THE AO OUGHT TO HA VE CONSIDERED THE SAME. 5. THE LD DR, ON THE OTHER HAND, SUPPORTED THE ORDE RS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSEE H AS FAILED TO MAKE ANY SUCH CLAIM IN ITS ORIGINAL RETURN OF INCOM E OR IN THE RETURN OF INCOME FILED IN RESPONSE TO NOTICE U/S 14 8 OF THE ACT. HE SUBMITTED THAT THE ASSESSEE OUGHT TO HAVE FILED A REVISED RETURN OF INCOME MAKING THE CLAIM AND FURTHER THAT THE SECTION 36(1)(VIIA) WAS INTRODUCED W.E.F. 1.4.2007 AND THER EFORE, IT IS APPLICABLE ONLY FROM A.Y 2008-09 ONWARDS. HE FURTHE R SUBMITTED THAT THE INTIMATION U/S 143(1) HAS ALREADY MERGED W ITH THE ASSESSMENT ORDER U/S 143(3) R.W.S. 147 OF THE ACT A ND THEREFORE, THE APPLICATION TO RECTIFY THE ORIGINAL RETURN U/S 154 OF THE I.T. ACT IS NOT MAINTAINABLE. 6. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, WE FIND THAT THE APPEAL BEFORE US IS AGAINS T THE DISMISSAL OF THE APPLICATION U/S 154 OF THE ACT FILED FOR REC TIFICATION OF THE INTIMATIN U/S 143(1) OF THE ACT. AS REGARDS THE OBJ ECTION OF THE REVENUE ABOUT ITS MAINTAINABILITY AS THE ASSESSMENT WAS SUBSEQUENTLY COMPLETED U/S 143(3) R.W.S. 147, WE FI ND THAT THE REOPENING OF THE ASSESSMENT AND THE REASSESSMENT TH EREAFTER WAS ON ALLEGED EXCESS CLAIM OF DEPRECIATION AND NOT ON THE ALLOWABILITY OR OTHERWISE OF DEDUCTION U/S 36(1)(VI IA) OF THE ACT. THEREFORE, THERE WAS NO MERGER OF THE INTIMATION U/ S 143(1) WITH THE ASSESSMENT ORDER U/S 143(3) R.W.S. 147 OF THE A CT. AS REGARDS THE OBJECTION OF THE REVENUE THAT THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 36(1)(VIIA) CANNOT BE ENTERTAINED WIT HOUT THE ASSESSEE FILING THE REVISED RETURN OF INCOME, WE FI ND THAT THE ITA NO.664 OF 2015 HYDERABAD DISTRICT COOPERATIVE C ENTRAL BANK LTD HYDERABAD PAGE 5 OF 6 ASSESSEE WAS ELIGIBLE FOR DEDUCTION U/S 80P OF THE ACT ONLY TILL THE A.Y 2006-07, ON ITS WITHDRAWAL BY THE FINANCE A CT, 2006 W.E.F. 1.4.2007. HOWEVER, THE BENEFIT U/S 36(1)(VII A) WAS GIVEN WITH RETROSPECTIVE EFFECT I.E. A.Y 2007-08 ALSO ONL Y BY THE FINANCE ACT OF 2007. THE ASSESSEE FILED ITS RETURN OF INCOM E ON 31.10.2007 WHILE THE FINANCE ACT OF 2007 WAS PASSED SUBSEQUENTLY EXTENDING THE BENEFIT TO THE ASSESSEE ALSO. THEREFORE, THERE WAS NO WAY THE ASSESSEE COULD HAVE MADE THE CLAIM IN ITS ORIGINAL RETURN OR FILE A REVISED RETU RN AS THE INTIMATION U/S 143(1) WAS ALLEGEDLY NOT SERVED ON T HE ASSESSEE. THE ASSESSEE THEREFORE MADE THE CLAIM BY FILING THE APPLICATION U/S 154 OF THE ACT. IN THESE PECULIAR CIRCUMSTANCES , WE HOLD THAT APPLICATION U/S 154 IS MAINTAINABLE. 7. THE NEXT ISSUE IS WHETHER THE ASSESSEE IS ELIGIB LE FOR THE DEDUCTION U/S 36(1)(VIIA) OF THE ACT FOR THE RELEVA NT A.Y 2007-08. WE FIND THAT UNDISPUTEDLY ASSESSEE IS A COOPERATIVE CENTRAL BANK AND WAS ELIGIBLE FOR DEDUCTION U/S 80P OF THE I.T. ACT UNTIL IT WAS WITHDRAWN FROM 1.4.2007 BY VIRTUE OF THE INS ERTION OF SUB SECTION (4) TO SECTION 80P BY FINANCE ACT 2006. THE PROVISIONS OF SECTION 36(1)(VIIA) HAVE ALSO BEEN AMENDED W.E.F. 1 .4.2007 ITSELF TO INCLUDE COOPERATIVE BANK WITHIN THE DEFINITION O F SCHEDULED BANK TO EXTEND THE BENEFIT OF SECTION 36(1)(VIIA) OF THE ACT. WE FIND THAT THE FINANCE BILL PROPOSED THAT IT IS APPL ICABLE W.E.F. 2007-08, AND CBDT CIRCULAR NO.3 DATED 12.03.2008 WH ILE EXPLAINING THE AMENDMENT TO SECTION 36(1)(VIIA) HAS CLARIFIED THAT THESE AMENDMENTS WILL TAKE EFFECT RETROSPECTIVELY F ROM 1.4.2007 AND WILL ACCORDINGLY APPLY IN RELATION TO THE A.Y 2 007-08 AND SUBSEQUENT A.YS. THEREFORE, THE ASSESSEE IS ELIGIBL E FOR DEDUCTION U/S 36(1)(VIIA) OF THE ACT FROM THE RELEVANT A.Y. 2 007-08 AS ITA NO.664 OF 2015 HYDERABAD DISTRICT COOPERATIVE C ENTRAL BANK LTD HYDERABAD PAGE 6 OF 6 RIGHTLY CONTENDED BY THE ASSESSEE. THEREFORE, AO WA S NOT CORRECT IN REJECTING THE ASSESSEES APPLICATION U/S 154 OF THE I.T. ACT. AS THE PROVISIONS OF CLAUSE (B) OF SUB SECTION 154 OF THE I.T. ACT MAKES IT AMPLY CLEAR THAT THE PROVISIONS OF SECTION 154 ARE APPLICABLE TO THE INTIMATION U/S 143(1) AS WELL AND SINCE THERE IS A MISTAKE APPARENT FROM RECORD, THE APPLICATION U/S 154 NEEDS CONSIDERATION. IN VIEW OF THE SAME, WE ALLOW THE AS SESSEES APPEAL BY REMITTING THE ISSUE TO THE FILE OF THE AO TO CONSIDER THE APPLICATION ON ITS MERITS AND ALSO FOR QUANTIFICATI ON OF THE DEDUCTIONS IN ACCORDANCE WITH LAW. 7. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH AUGUST, 2015. S D / - S D/ - (B. RAMAKOTAIAH) (P. MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 28 TH AUGUST, 2015. VNODAN/SPS COPY TO: 1. M/S.ANJANEYULU & CO. CAS, 30 BHAGYALAKSHMI NAGAR, GANDHINAGAR, HYDERABAD 500080 2. DY. COMMISSIONER OF INCOME TAX, CIRCLE 5(1), HYDERA BAD 3. CIT (A)-4, HYDERABAD 4. CIT-4, HYDERABAD 5. THE DR, ITAT, HYDERABAD 6. GUARD FILE BY ORDER