MAJOR BRANDS (INDIA) LTD, MUMBAI V. DCIT 5(2), MUMBAI

ITA 6856/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 79420 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 08-07-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 08-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: DR K SHIVARAM
• Keywords: Depreciation; Revised return; Unabsorbed depreciation
• Section: 139(5)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUM BAI . . , , BEFORE SHRI I. P. BANSAL, JM AND SHRI SANJAY ARORA , AM ./ I.T.A. NO. 6856/MUM/2012 ( / ASSESSMENT YEAR: 2009-10) MAJOR BRANDS (INDIA) PVT. LTD. 401, SKYLINE ICON, NEAR MITTAL INDL. ESTATE, ANDHERI KURLA ROAD, ANDHERI (E), MUMBAI-400 059 / VS. DY. CIT-5(2) 5 TH FLOOR, AAYAKAR BHAVAN, M. K. ROAD, MUMBAI-400 020 ./ ./PAN/GIR NO. AACCM 4949 B ( /APPELLANT ) : ( !' / RESPONDENT ) # $ / APPELLANT BY : DR. K. SHIVARAM !' # $ / RESPONDENT BY : SHRI RAVINDER SINDHU % &'( # )* / DATE OF HEARING : 08.07.2014 +,- # )* / DATE OF PRONOUNCEMENT : 25.07.2014 . / O R D E R PER SANJAY ARORA, A. M.: THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-9, MUMBAI (CIT(A) FOR SHO RT) DATED 07.09.2012, PARTLY ALLOWING THE ASSESSEES APPEAL CONTESTING ITS ASSES SMENT U/S.143(3) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) FOR THE ASSESSMEN T YEAR (A.Y.) 2009-10 VIDE ORDER DATED 30.12.2011. 2 ITA NO. 6856/MUM/2012 (A.Y. 2009-10) MAJOR BRANDS (INDIA) PVT. LTD. VS. DY. CIT 2.1 EXPLAINING THE ASSESSEES CASE, IT WAS SUBMITTE D BY THE LD. AUTHORIZED REPRESENTATIVE (AR), THE ASSESSEES COUNSEL, THAT T HE INCOME WAS ORIGINALLY RETURNED AT RS.92,75,366/- ON 30.09.2009 (PB PGS.1-2), AT WHICH IT WAS DULY PROCESSED U/S.143(1). NOTICE U/S. 143(2) WAS ISSUED AND SERVED ON 24.08.2 010. THE ASSESSEE FILED A REVISED RETURN U/S. 139(5) ON 26.09.2010 AT A LOSS OF RS.33 ,02,772/- (PB PGS. 3- 4). THE REASON FOR THE SAME WAS THE CLAIM OF DEPRECIATION ON ENTRANCE FEE PAID TO THE PRINCIPAL, M/S. MANGO PUNTO FA, WHICH HAD BEEN CLAIMED IN FULL AS R EVENUE EXPENDITURE FOR THE YEAR/S OF PAYMENT. THE ASSESSEES APPEAL AGAINST ITS DISALLOW ANCE FOR ONE SUCH EARLIER YEAR (A.Y. 2004-05) WAS PENDING BEFORE THE TRIBUNAL AT THE TIM E OF FILING THE ORIGINAL RETURN. THE SAME CAME TO BE DECIDED BY THE TRIBUNAL ON 30.12.20 09, HOLDING IN FAVOUR OF THE REVENUE (IN ITA NO.6930/MUM(F)/2008), SO THAT THE DEPRECATI ON THEREON CAME TO BE ALLOWED (PB PGS.13-19), LEADING TO A REVISED CLAIM FOR DEPRECIA TION FOR THE CURRENT YEAR, WHICH STOOD MADE PER THE REVISED RETURN. THIS WAS DULY EXPLAINE D TO THE ASSESSING OFFICER (A.O.) DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS VID E LETTER DATED 17.10.2011 (PB PGS.6- 7), ALSO ENCLOSING THE CALCULATION IN SUPPORT OF TH E CLAIM FOR DEPRECIATION. HOWEVER, THE A.O. ASSESSED THE INCOME AS ORIGINALLY RETURNED, DI SREGARDING ALSO THE ASSESSEES CLAIM FOR BROUGHT FORWARD LOSS (FOR A.YS. 2005-06 AND 200 6-07), MADE THEREIN. THE ASSESSEE CARRIED THE MATTER IN APPEAL, RAISING THE FOLLOWING GROUNDS: 1. THE LEARNED D.C.I.T. ERRED IN NOT CONSIDERING IN HIS ASSESSMENT ORDER THE REVISED RETURN OF INCOME FOR ASSESSMENT YEAR 20 09-10 FILED U/S 139(5) ON 26.09.2010 VIDE E-FILING ACKNOWLEDGEMENT NO. 160 286941260910 DESPITE THE FACT THAT COMPLETE SUBMISSION WAS MADE TO HIM VIDE LETTER DATED 17 TH OCTOBER, 2011 AND THE MATTER WAS THOROUGHLY DISCUS SED AT LENGTH DURING ASSESSMENT PROCEEDINGS. 2. WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED D.C .I.T. ERRED IN NOT CONSIDERING THE SET OFF CLAIM OF BROUGHT FORWARD LO SSES OF RS.9,275,366/- IN THE ORIGINAL RETURN OF INCOME FILED U/S 139(1). 3. THE LEARNED D.C.I.T. ERRED IN NOT CONSIDERING T HE REFUND OF RS.41,064/- ON FRINGE BENEFIT TAX CLAIMED. THE LD. CIT(A), HOWEVER, DISALLOWED THE ASSESSEES CLAIM WITH REFERENCE TO SECTION 79 OF THE ACT, I.E., WITHOUT ADJUDICATING THE ISSUE ARISING AND ADJUDICATED BEFORE HIM, 3 ITA NO. 6856/MUM/2012 (A.Y. 2009-10) MAJOR BRANDS (INDIA) PVT. LTD. VS. DY. CIT THOUGH DISMISSED ITS GROUND NOS. 1 & 2 BEFORE HIM, SO THAT THE ASSESSEE IS IN APPEAL, RAISING THE FOLLOWING GROUNDS: 1. THE LD. CIT(A) FAILED TO CONSIDER THE REVISED RETURN WITHOUT APPRECIATING THAT SAME WAS FILED WITHIN THE TIME AS PER SECTION 139(5), WITHOUT GIVING ANY REASONS FOR THE SAME. 2. THE LD. CIT(A) ERRED IN NOT ALLOWING THE CONSEQ UENTIAL DEPRECIATION @ 25% ON THE ONE TIME ENTRANCE FEES PAID IN EARLIER YEARS, AS CLAIMED IN THE REVISED RETURN. 3. THE LD. CIT(A) ERRED IN NOT ALLOWING DEDUCTION OF SERVICE TAX EXPENSES OF RS.9,867,066/- ON RENT -CLAIMED IN THE REVISED RETURN. 4. WITHOUT PREJUDICE TO ABOVE, THE LD. CIT(A) FAIL ED TO APPRECIATE THE FACT THAT THE APPELLANT HAS NOT VIOLATED ANY CONDIT IONS AS MENTIONED IN SECTION 79 AND HENCE BROUGHT FORWARD LOSSES MAY BE ALLOWED. 2.2 ON A QUERY BY THE BENCH THAT THE MATTER IN THAT CASE OUGHT TO BE RESTORED BACK TO THE FILE OF THE LD. CIT(A), HE WOULD PLEAD FOR A RE STORATION BACK TO THE FILE OF THE A.O. ON A FURTHER ENQUIRY BY THE BENCH IF THE ASSESSEE HAD ACCEPTED THE ORDER BY THE TRIBUNAL IN ITS CASE FOR A.Y. 2004-05, HE REPLIED IN THE AFFIRMATIV E. 3. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. OUR FIRST OBSERVATION IN THE MATTER IS THAT THE FAC TS OF THE CASE ARE LARGELY UNDISPUTED. THE LAW IN THE MATTER, EVEN AS OBSERVED BY THE BENCH DURING HEARING, IS WELL SETTLED. IN-AS-MUCH AS THE ASSESSEES ORIGINAL RETU RN WAS IN TIME, I.E., U/S.139(1), THE ASSESSEES SECOND RETURN, FILED ON 26.09.2010, IS A VALID RETURN U/S.139(5) (REFER: KUMAR JAGDISH CHANDRA SINHA V. CIT [1996] 220 ITR 67 (SC)), SO THAT IT WOULD SUBSTITU TE THAT FURNISHED U/S.139(1). HOWEVER, WHERE AND TO THE EXT ENT IT RESULTS IN A LOSS FOR THE CURRENT YEAR, WHICH WOULD REQUIRE BEING DETERMINED FIRST BY THE ASSESSING AUTHORITY, THE SAME WOULD STAND NOT TO BE ALLOWED CARRY FORWARD OF FOR SET OFF AGAINST OTHER INCOME FOR THE SUBSEQUENT YEARS, IN VIEW OF SECTION 139(3) R/W S. 80 OF THE ACT. THIS REPRESENTS THE CLEAR AND SETTLED POSITION OF LAW, EFFECTIVE 01/4/1987, I .E., A.Y. 1987-88 ONWARDS. 4 ITA NO. 6856/MUM/2012 (A.Y. 2009-10) MAJOR BRANDS (INDIA) PVT. LTD. VS. DY. CIT THIS WILL, HOWEVER, NOT IMPACT THE ASSESSEES CLAIM WITH REGARD TO DEPRECIATION, A STATUTORY ALLOWANCE U/S.32(1), WHICH THE A.O. IS EV EN OTHERWISE OBLIGED TO GRANT IN TERMS OF THE REVENUES STAND, WHICH, AS IT TRANSPIRES, HA S BEEN UPHELD BY THE TRIBUNAL, AND ALSO ACCEPTED BY THE ASSESSEE. ANY DIFFERENCE IN THE ALL OWANCE, I.E., THE AMOUNT SOUGHT TO BE ALLOWED BY THE A.O. AND CLAIMED BY THE ASSESSEE, IF ANY, WOULD NEED TO BE RESOLVED, AND WHERE NOT RECONCILED, ADJUDICATED BY HIM, STATING R EASONS. THE A.O., IN IGNORING THE ASSESSEES CLAIM IN ITS RESPECT, HAS ACTED CONTRARY TO THE ESTABLISHED PROCESS OF LAW. SIMILARLY, HE CANNOT REMAIN OBLIVIOUS TO THE ASSESS EES CLAIM QUA SERVICE TAX, THOUGH MADE PER THE REVISED RETURN, AND WHICH, AS IT APPEA RS, WOULD BE FURTHER SUBJECT TO SECTION 43B, I.E., WHERE OTHERWISE ALLOWABLE. AS AFORE-MENT IONED, IT IS ONLY AFTER COMPUTING THE ASSESSEES INCOME THAT HE SHALL FURTHER DETERMINE T HE LOSS, WHERE SO, LIABLE TO BE CARRY FORWARD FOR SET OFF, OR NOT SO, IN VIEW OF SECTIONS 80 R/W SS. 139(3) & 139(1) OF THE ACT, ALSO SEGREGATING THE UNABSORBED DEPRECIATION (FOR T HE CURRENT YEAR). NEITHER THE UNABSORBED DEPRECIATION FOR THE CURRENT YEAR NOR FO R THE EARLIER YEARS WOULD THOUGH BE IMPACTED EITHER BY SECTION 79 OR SECTION 80, THE SC OPE OF WHICH EXTENDS ONLY TO UNABSORBED LOSS. SECTION 79 SHALL ONLY IMPACT THE C ARRY FORWARD (AND SET OFF) OF UNABSORBED LOSS BROUGHT FORWARD U/S.72 FROM THE PRE CEDING YEARS. THE ASSESSEE, HOWEVER, DISPUTES THE INVOCATION OF SEC. 79, STATING THAT 51 % OF THE VOTING POWER AS AT THE YEAR-END (31.03.2009) IS WITH THE SAME PERSONS WHO HELD 51% OF THE VOTING POWER AS ON 31.03.2005 AND 31.03.2006; THE ASSESSEES CLAIM U/S .72 BEING IN RESPECT OF A.YS. 2005-06 AND 2006-07, SO THAT THE SAID SECTION WOULD HAVE NO APPLICATION IN THE FACTS OF THE CASE. THE ASSESSEE FACTUALLY DISPUTING THE MATTER, THE A. O. SHALL ALSO ADJUDICATE ON THIS ASPECT OF THE ASSESSMENT, ISSUING DEFINITE FINDINGS OF FAC T, TAKING INTO ACCOUNT THE SHARE-HOLDING PATTERN AND CHANGES THEREIN FROM A.Y. 2005-06 ONWAR DS, ALLOWING THE ASSESSEE AN OPPORTUNITY TO STATE ITS CASE. THE ASSESSEE, FINALL Y, PER ITS FACT SHEET, RAISES ISSUES WITH REGARD TO THE SHORT CREDIT OF TAX CREDIT U/S.115JAA AS WELL AS LEVY OF INTEREST U/SS. 234A & 234B. THE SAME DO NOT ARISE OUT OF THE ASSESSEE GR OUNDS, NOR WERE ARGUED, BEFORE US. THE ASSESSEE MAY, HOWEVER, PURSUE THE MATTER BY ADO PTING THE LEGAL RECOURSE AVAILABLE TO IT. WE DECIDE ACCORDINGLY. 5 ITA NO. 6856/MUM/2012 (A.Y. 2009-10) MAJOR BRANDS (INDIA) PVT. LTD. VS. DY. CIT 4. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. /-)0 &12/) # 3# 456 7 8 ' 9 ) # ) :; ORDER PRONOUNCED IN THE OPEN COURT ON JULY 25, 2014 SD/- SD/- (I. P. BANSAL) (SANJAY ARORA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER % ( MUMBAI; <& DATED : 25.07.2014 '.&../ ROSHANI , SR. PS ! ' #$%& ' &$ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. !' / THE RESPONDENT 3. % =) ( ) / THE CIT(A) 4. % =) / CIT - CONCERNED 5. @'AB !)&C1 , * C1- , % ( / DR, ITAT, MUMBAI 6. BD2 E( / GUARD FILE ! ( / BY ORDER, )/(* + (DY./ASSTT. REGISTRAR) , % ( / ITAT, MUMBAI