A.C.I.T.-10(2), MUMBAI V. CARTINI INDIA LTD., MUMBAI

ITA 6883/MUM/2011

• Counselvise Citation: 688319914 RSA 2011
• Duration Of Justice: 2 year(s) 7 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 31-12-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 10-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Opportunity of being heard; Unabsorbed depreciation; Reassessment proceedings
• Section: 143(3); 263

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE S/SHRI P.M.JAGTAP (AM) AND DR. S. T. M.PAVALAN (JM) ./I.T.A.NO.6883/MUM/2011 ( / ASSESSMENT YEAR: 2005-06) ASSTT.COM MISSIONER OF INCOME TAX -10(2), ROOM NO.432, 4 TH FLOOR, AAYAKAR BHAVAN, M.K.ROAD, MUMBAI-400020 / VS. M/S CARTINI INDIA LTD. C/O KALYANIWALLA & MISTRY, KALPTARU HERITAGE, 127, MAHATMA GANDHI ROAD, FORT, MUMBAI 400 023 ( / APPELLANT) ( / RESPONDENT) ./ ./PAN/GIR NO. : AAACGO555D / APPELLANT BY : SHRI SANJEEV JAIN /RESPONDENT BY SHRI JITENDRA JAIN # / DATE OF HEARING : 9.4.2014 # /DATE OF PRONOUNCEMENT : 30.5.2014 / O R D E R PER P.M.JAGTAP,AM: THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A)-21, MUMBAI- DATED 4.7.2011 AND THE GRIEVANCE OF THE REV ENUE IS PROJECTED IN THE FOLLOWING SOLITARY GROUND RAISED THEREIN : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AS WELL AS IN LAW, THE LD. CIT(A) ERRED IN ALLOWING UNABSORBED DEPRECIATIO N OF AMALGAMATING COMPANY IGNORING THAT THE FORM NO.62 WHICH IS A STATUTORY REQUIREMENT AS PROVIDED IN RULE 9C(B) R.W. SECTION 72A OF THE IT ACT WAS NOT FILED ALONG WITH THE RETURN OF INCOME AND WAS FILED 5 YEARS LATER DURING THE COURS E OF ASSESSMENT PROCEEDINGS. 2. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY WH ICH IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF SCISSORS, KNIVES AND LOCKS, SEC URITY SYSTEMS ETC.THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILE D BY IT ON 20.10.2005 DECLARING TOTAL I.T.A.NO.6883/MUM/2011 2 INCOME OF RS.1,25,17,708/-. IN THE ASSESSMENT ORIG INALLY COMPLETED U/S 143(3) OF THE INCOME TAX ACT, 1961 (THE ACT) VIDE ORDER DATED 26. 11.2007, THE TOTAL INCOME OF THE ASSESSEE WAS COMPUTED BY AO AT RS.1,27,51,200/-. SUBSEQUENTLY, IT WAS REVEALED ON EXAMINATION OF THE RELEVANT RECORDS THAT THE CLA IM OF THE ASSESSEE FOR THE SET-OFF OF THE UNABSORBED LOSS AND DEPRECIATION OF AMALGAMATIN G COMPANY TO THE TUNE OF RS.41,52,797/- WAS ALLOWED IN THE ASSESSMENT COMPL ETED U/S 143(3) EVEN THOUGH THE PRESCRIBED FORM NO.62 HAD NOT BEEN FILED BY THE ASS ESSEE ALONG WITH ITS RETURN OF INCOME. THE ORDER PASSED BY THE AO U/S 143(3) DA TED 26.11.2007, THEREFORE, WAS HELD TO BE ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF REVENUE BY THE COMMISSIONER OF INCOME TAX VIDE HIS ORDER PASSED U /S 263 OF THE ACT AND CANCELLING THE SAME ON THIS LIMITED ISSUE, THE AO WAS DIRECTE D BY THE CIT TO REFRAME THE SAME ON THIS ISSUE AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD. AS PER THE DIRECTION OF COMMISSIONER OF INCOME TAX, NOTICE U/ S 143(2) OF THE ACT WAS ISSUED BY THE AO, IN RESPONSE TO WHICH THE ASSESSEE APPEARED BEFORE THE AO AND CLAIMED TO HAVE COMPLIED WITH ALL THE PRESCRIBED CONDITIONS PROVI DED U/S 72A (2)(B)(III) READ WITH RULE 9C(B) IN ORDER TO CLAIM THE SET-OFF OF BROUGHT FORW ARD LOSSES AND UNABSORBED DEPRECIATION OF AMALGAMATING COMPANY. THE PRESCRIBE D FORM NO.62 WAS ALSO FILED BY THE ASSESSEE DURING THE COURSE OF THESE PROCEEDIN GS BEFORE THE AO. THE AO, HOWEVER, OVERLOOKED THE SAID FORM BELATEDLY FILED BY THE ASSESSEE AND DISMISSED THE CLAIM OF THE ASSESSEE FOR SET-OFF OF UNABSORBED DEP RECIATION AND BUSINESS LOSS PERTAINING TO THE AMALGAMATING COMPANY VIZ. M/S FINLANDIA CUT LERY PVT LTD TO THE TUNE OF RS.41,52,797/- IN THE FRESH ASSESSMENT COMPLETED U/ S 143(3) R.W. SECTION 263 OF THE ACT. 3. AGAINST THE ORDER PASSED BY THE AO U/S 143(3) READ WITH SECTION 263 OF THE ACT, THE APPEAL WAS PREFERRED BY THE ASSESSEE BEFO RE THE LD. CIT(A) AND AFTER CONSIDERING THE SUBMISSIONS MADE ON BEHALF OF THE ASSESSEE AS WELL AS THE MATERIAL AVAILABLE ON RECORD, THE DISALLOWANCE MADE BY AO ON ACCOUNT OF ASSESSEES CLAIM FOR I.T.A.NO.6883/MUM/2011 3 UNABSORBED DEPRECIATION AND BROUGHT FORWARD LOSSES PERTAINING TO AMALGAMATING COMPANY WAS DELETED BY THE LD. CIT(A) VIDE PARA 2. 3 OF HIS IMPUGNED ORDER WHICH READS AS UNDER: 2.3 I HAVE CONSIDERED THE FACTS OF THE CASE. THE ORIGINAL ASSESSMENT ORDER WAS PASSED U/S 143(3) VIDE ORDER DATED 26.11.2007. HOWEVER, THE CIT-10, MUMBAI CANCELLED THE SAID ASSESSMENT ORDER BY EXERC ISING THE POWERS U/S 263 OF THE ACT FOR THE REASONS THAT THE CONDITIONS PRES CRIBED U/S 72A(2)(III) R.W. RULE 9C(B) OF THE IT RULES WERE NOT COMPLIED WITH BY T HE APPELLANT. THE AO REFRAMED THE ASSESSMENT ORDER U/S 143(3) R.W. 263 O F THE ACT DATED 23.9.2010, HOLDING THAT THE APPELLANT DID NOT COMPLY WITH THE PROVISIONS OF ABOVE SECTIONS. HOWEVER, DURING APPELLATE PROCEEDINGS, THE APPEL LANT HAS ARGUED AND CLAIMED THAT ALL SUCH CONDITIONS PRESCRIBED U/S 72A(2)(III ) R.W. RULE 9C(B) WERE COMPLIED WITH AND FORM NO.62 WAS FILED WITH THE AO DURING RE ASSESSMENT PROCEEDINGS WHICH THE AO OVERLOOKED WHILE REFRAMING THE ASSESSM ENT ORDER THE PRESENT AO IN THE REMAND REPORT HAS CONFIRMED THAT DURING THE REASSESSMENT PROCEEDINGS, THE APPELLANT FILED PRESCRIBED FORM NO.62 THEREBY C OMPLYING WITH THE PROVISIONS OF SECTION 72A OF THE ACT. HAD THE AO CONSIDERED THE SAID FORM NO.62 FILED BY APPELLANT DURING REASSESSMENT PROCEEDINGS, THERE WO ULD NOT HAVE BEEN ANY REASON FOR DISALLOWING APPELLANTS CLAIM OF DEPRECI ATION OF RS.41,52,797/- PERTAINING TO AMALGAMATING COMPANY NAMELY M/S FINL ANDIA CUTLERY PVT LTD. IN VIEW OF THE REMAND REPORT SUBMITTED BY THE AO, TH E DISALLOWANCE MADE BY AO IS DELETED. THIS GROUND OF APPEAL IS ALLOWED AGGRIEVED BY THE ORDER OF LD. CIT(A), THE REVENUE H AS PREFERRED HIS APPEAL BEFORE THE TRIBUNAL. 4. THE LD. DR SUBMITTED THAT PRESCRIBED FORM NO.62 WAS REQUIRED TO BE FILED BY THE ASSESSEE ALONG WITH ITS RETURN OF INCOME, BUT THE SAME WAS FILED BY THE ASSESSEE ONLY ON 6.9.2010 DURING THE COURSE OF PROCEEDINGS BEFOR E THE AO U/S 143(3) R.W.S. 263 OF THE ACT. HE CONTENDED THAT FILING OF THE SAID FORM ALONG WITH THE RETURN OF INCOME WAS A MANDATORY CONDITION TO ALLOW THE CLAIM OF THE ASSES SEE FOR SET-OFF OF BROUGHT FORWARD LOSS AND UNABSORBED DEPRECIATION PERTAINING TO AMA LGAMATING COMPANY AS PER THE PROVISIONS OF SECTION 72A(2)(B)(III) OF THE ACT AN D THE LD. CIT(A) WAS NOT JUSTIFIED TO ALLOW THE CLAIM OF THE ASSESSEE BY TAKING COGNIZANC E OF THE FORM FILED BY THE ASSESSEE BELATEDLY, IGNORING THAT IT WAS MANDATORY ON THE PA RT OF THE ASSESSEE TO FILE THE SAID FORM ALONG WITH THE RETURN OF INCOME. I.T.A.NO.6883/MUM/2011 4 5. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER H AND, SUBMITTED THAT THE CLAIM OF THE ASSESSEE FOR SET-OFF OF BROUGHT FORWARD LOSSES AND UNABSORBED DEPRECIATION PERTAINING TO AMALGAMATING COMPANY WAS ALLOWED BY AO IN THE ORIGINAL ASSESSMENT WITHOUT REQUIRING THE FORM NO.62. HE SUBMITTED TH AT THE ORIGINAL ASSESSMENT MADE BY AO THEREFORE WAS SET ASIDE BY THE LD. CIT(A) U/S 26 3 OF THE ACT WITH A DIRECTION TO THE AO TO DECIDE THE MATTER AFRESH AFTER GIVING THE ASS ESSEE AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. HE CONTENDED THAT THE ASSESSEE TH US GOT OPPORTUNITY FOR THE FIRST TIME TO FILE THE PRESCRIBED FORM NO.62 BEFORE THE AO DUR ING THE COURSE OF SET ASIDE PROCEEDINGS AND DULY AVAILED THE SAME BY FILING THE SAID FORM. HE CONTENDED THAT THE AO, HOWEVER, OVER LOOKED THE SAID FORM FILED BY THE ASSESSEE AND DISALLOWED THE CLAIM OF THE ASSESSEE FOR SET-OFF OF BROUGHT LOSS AND UNA BSORBED DEPRECIATION PERTAINING TO THE AMALGAMATING COMPANY. HE CONTENDED THAT THE LD . CIT(A), ON THE OTHER HAND, RIGHTLY TOOK COGNIZANCE OF THE SAID FORM FILED BY THE ASSESSEE AND ALLOWED THE CLAIM OF THE ASSESSEE. RELYING ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT V/S SHIVANAND ELECTRONICS [1994] 209 ITR 63 (BOM.), HE CONTENDED THAT THE FILING OF FORM NO.62 IS ONLY DIRECTORY AND NOT MANDATORY. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND A LSO PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS OBSERVED THAT THE CLAIM OF THE ASSESSEE FOR THE SET-OFF OF BROUGHT FORWARD LOSSES AND UNABSORBED DEPRECIATION PERTAINING TO THE AMALGAMATING COMPANY WAS ALLOWED BY THE AO IN THE ORIGINAL ASSES SMENT COMPLETED U/S 143(3) EVEN IN THE ABSENCE OF THE PRESCRIBED FORM NO.62 FILED B Y THE ASSESSEE. THE SAID ASSESSMENT, THEREFORE, WAS SET ASIDE BY THE LD. CI T BY EXERCISING HIS POWERS U/S 263 AND THE AO WAS DIRECTED BY HIM TO DECIDE THIS AF RESH AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD. AVAILING THIS OPPOR TUNITY GIVEN TO IT FOR THE FIRST TIME, THE ASSESSEE COMPANY DULY FILED THE PRESCRIBED FORM NO. 62 BEFORE THE AO BUT THE SAME WAS OVERLOOKED BY THE AO AND THE CLAIM OF THE ASSESSEE WAS DISALLOWED BY HIM. THE LD. CIT(A), ON THE OTHER HAND, TOOK COGNIZANCE OF THE SAID FORM AND ALLOWED THE CLAIM OF I.T.A.NO.6883/MUM/2011 5 THE ASSESSEE WHICH, IN OUR OPINION, IS IN CONSONANC E WITH THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF SHIVANAND ELECTRONICS(SUPRA), WHEREIN IT WAS HELD THAT FILING OF SUCH FORM IS ONLY DIRECTORY AND NOT MANDATORY. WE, THEREFORE, FIND NO INFIRMITY IN THE ORDER OF CIT(A) ALLOWING THE CLA IM OF THE ASSESSEE FOR THE SETTING OFF OF BROUGHT FORWARD LOSSES AND UNABSORBED DEPRECIATION PERTAINING TO THE AMALGAMATING COMPANY AND UPHOLDING THE SAME, WE DISMISS THIS A PPEAL FILED BY THE REVENUE. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH MAY, 2014 ( * + 30TH MAY, 2014 SD SD (DR. S. T. M.PAVALAN) (P.M.JAGTAP) ( / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI: ON THIS 30 TH DAY OF MAY, 20 14 . . ./ SRL , SR. PS ! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT /APPLICANT 2. / THE RESPONDENT. 3. 0 ( ) / THE CIT(A)- 4. 0 / CIT 5. 1 3 , # 3 , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) # 3 , /ITAT, MUMBAI