DCIT RG 8(2), MUMBAI V. LASTRA NIRAJ P. LTD, MUMBAI

ITA 709/MUM/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3493 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-06-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Assessment Year: 2004-2005
• Appeal Filed On: 25-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRITAM SINGH
• Assessee Lawyers: K M MODI
• Keywords: Depreciation; Unabsorbed depreciation
• Section: 115JB

Judgement Text

, INCOME TAX APPELLATE TRIBUNAL, MUMBAI - I BENCH. . . , ,, , ! ! ! ! , BEFORE S/SH. B.R. MITTAL, JUDICIAL MEMBER & RAJ ENDRA, ACCOUNTANT MEMBER . / ITA NO. 709/MUM/2011 ' ' ' ' # # # # / ASSESSMENT YEAR 2004-05 DCIT RG 8(2) MUMBAI. VS. LASTRA NIRAJ P. LTD. LAXMI MILLS ESTATE, OFF DR. E. MOSES RD, MAHALAXMI MUMBAI- 400014 PAN: AAACL2683D ( $% / APPELLANT ) ( &'$% / RESPONDENT ) C.O. NO. 01/MUM/2013 (ARISING OUT OF ITA NO. 709/MUM/2011) LASTRA NIRAJ P. LTD. LAXMI MILLS ESTATE, OFF DR. E. MOSES RD, MAHALAXMI MUMBAI- 400014 VS. DCIT RG 8(2) MUMBAI. PAN: AAACL2683D ( $% / APPELLANT ) ( &'$% / RESPONDENT ) REVENUE BY : MR. PRITAM SINGH ASSESSEE BY : K.M. MODI ' ( )* / DATE OF HEARING : 12-06-2013 +,# ( )* / DATE OF PRONOUNCEMENT : 12-06-2013 ' ' ' ' , 1961 ( (( ( 254(1) )-) )-) )-) )-) . . . . ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA, A.M. CROSS APPEALS HAVE BEEN FILED BY THE ASSESSING OFFI CER (AO) AND THE ASSESSEE- COMPANY RAISING THE FOLLOWING GROUNDS OF APPEAL AGA INST THE ORDER DATED 28.10.2010 OF THE CIT(A)-17/MUMBAI: ITA NO. 709/MUM/2011 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. 1)CIT(A) ERRED IN NOT APPRECIATING THE FACT THAT FO R THE PURPOSE OF CLAUSE(III) OF EXPLANATION 1 TO SECTION 115JB, ELIGIBILITY FOR DEDUCTIONS TO B E CONSIDERED ON YEAR TO YEAR BASIS 2)ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE IA CIT(A) ERRED IN HOLDING THAT FOR THE PURPOSE OF CLAUSE(LII) OF EXPL ANATION 1 TO SECTION 115JB,, ONE CONSOLIDATED FIGURE OF BROUGHT FORWARD LOSSES OR UN ABSORBED DEPREDATION FOR THE EARLIER YEARS IN TOTALITY IS TO BE TAKEN AND NOT ON YEAR TO YEAR BASIS. 3) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE CIT(A) ERRED IN NOT APPRECIATING THAT THE ASSESSING OFFICER HAD RIGHTLY RECOMPUTED THE BOOK PROFIT U/S. 1154JB BY RESTRICTING THE DEDUCTION OF UNABSORBED DEPRECIATIO N FROM THE NET PROFIT OF RS. 42,93,505/- INSTEAD OF RS. 2,44,70,900/- AS CLAIM IN THE RETURN OF INCOME. 4)THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE A.O. BE RESTORED. 5)THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUNDS OR ADD A NEW GROUND WHICH MAY BE NECESSARY. ITA NO. 709/MUM/2011 LASTRA NIRAJ P. LTD. 2 C.O. NO. 01/MUM/2013 WRONG INTERPRETATION OF CIT(A)S ORDER ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED ASSESSING OFFICER ERRED IN WRONGLY INTERPRETING CIT (A)S ORDER BY MAKING F RESH COMPUTATION OF THE INCOME LIABLE TO TAX INSPITE OF CLEAR FINDINGS OF THE LEARNED CIT (A ) THAT THE APPEAL HAS BEEN ALLOWED BY HIM ON MERIT. 2.NOT ADJUDICATING ON VALIDITY OF LEGAL GROUND ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-17 ERRED IN NOT ADJUDICATING O N THE VALIDITY OF LEGAL GROUND RAISED, CHALLENGING THE VALIDITY OF REASSESSMENT PROCEEDING S. THE APPELLANT CRAVES LEAVE TO AMEND, ADD AND/OR SUB STITUTE THE ABOVE GROUNDS AS AND WHEN NECESSARY 2. ASSESSEE COMPANY, ENGAGED IN THE BUSINESS OF MANUFA CTURING OF OFFSET PRINTING PLATES AND CHEMICALS, FILED ITS RETURN OF INCOME ON 30.10.2004 DECLARING TOTAL INCOME AS NIL. ASSESSMENT WAS FINALISED BY THE AO ON 20.11 .2009 DETERMINING THE TOTAL INCOME RS. NIL, AFTER SETTING OF UNABSORBED DEPRECI ATION AND CARRIED FORWARD LOSSES OF EARLIER YEARS.WHILE CALCULATING THE BOOK PROFIT U/S 115JB OF THE ACT, AO ASSESSED BOOK PROFIT AT RS.1.18 CRORES. 2.1. ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPEL LATE AUTHORITY (FAA). AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE ASSESSMENT ORDER FAA HELD THAT ASSESSEE HAD CALCULATED THE AMOUNT OF LOSS AVAILABL E FOR SETTING OFF ON CUMULATIVE BASIS, THAT AO HAS ALLOWED THE SET OFF ON YEARLY BA SIS AS PER THE PROVISIONS OF EXPLANATION(III) TO SEC.15JB OF THE ACT. FOLLOWING ORDER IN THE CASE OF M. LINE TEXTILES PVT. LTD. DELIVERED BY THE A BENCH OF MU MBAI ITAT (ORDER DATED 04.11.2008- ITA NO. 5491/MUM/2006- AY 2003-04),FAA HELD THAT CLAUSE OF EXPLANATION 1 TO SEC.115JB STATED THAT AMOUNT OF LO SS BROUGHT FORWARD/UNABSORBED DEPRECIATION WHICHEVER LOSS HAD TO BE REDUCED FROM THE NET PROFIT, THAT AS PER THE PLAIN LANGUAGE OF THE SAID PROVISION THE WORD USED IN THE SECTION WAS AMOUNT, AND NOT AMOUNTS, THAT THE INTENTION OF THE LEGISLATUR E WAS TO CONSIDER ONE CONSOLIDATED FIGURE OF BROUGHT FORWARD LOSS /UNABSORBED DEPRECIA TION FOR THE EARLIER YEARS IN TOTALITY AND NOT ON YEAR TO YEAR BASIS. FINALLY FAA DIRECTED THE AO TO RECOMPUTE PROFIT U/S 115JB ACCORDINGLY 2.2. BEFORE US DEPARTMENTAL REPRESENTATIVE (DR) SUBMITTE D THAT UNABSORBED DEPRECIATION /LOSS WAS TO BE ALLOWED ON YEAR TO YEA R BASIS, THAT PROVISIONS OF SECTION 115JB EXPLANATION1CLAUSE (III) CLEARLY INDICATED TH AT CONSOLIDATED FIGURE WAS NOT TO BE ALLOWED.AR SUBMITTED THAT ISSUED WAS DIRECTLY COVER ED BY THE ORDER OF MUMBAI ITAT BENCH IN THE CASE OF M. LINE TEXTILES PVT. LTD. (27 SOT 152).HE FURTHER RELIED UPON THE ORDER OF SHRI SYNTHETICS LTD. DELIVERED BY THE HONBLE M.P. HIGH COURT (238 ITR 333). 2.3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. WE FIND THAT THE ISSUE BEFORE US HAS BEEN DELIBERATED UPON AND DECIDED BY THE A BENCH MUMBAI ITAT IN THE CASE OF M. LINE TEXTILES PVT. LT D. (SUPRA). IN THAT CASE WHILE COMPUTING BOOK PROFIT U/S 115JB FOR THE ASSESSMENT YEAR 2003-04, ASSESSEE HAD REDUCED THE AGGREGATE AMOUNT OF LOSS BROUGHT FORWAR D AND UNABSORBED DEPRECIATION RELATING TO EARLIER YEARS THAT WAS DISALLOWED BY TH E AO AND THE FAA. THEY HELD THAT BROUGHT FORWARD LOSS/UNABSORBED DEPRECIATION WAS TO BE CONSIDERED ON YEAR TO YEAR BASIS AND NOT AS AGGREGATE FIGURE FOR ALL THE YEARS . WHILE DECIDING THE ISSUE TRIBUNAL HAS HELD AS UNDER: THE REFERENCE TO THE AMOUNT OF BROUGHT FORWARD L OSS OR UNABSORBED DEPRECIATION WHICHEVER IS LESS SHOWS THE INTENTION OF THE LEGISL ATURE FOR CONSIDERING ONE CONSOLIDATED FIGURE OF BROUGHT FORWARD LOSS OR UNAB SORBED DEPRECIATION FOR THE ITA NO. 709/MUM/2011 LASTRA NIRAJ P. LTD. 3 EARLIER YEARS IN TOTALITY AND NOT ON YEAR TO YEAR B ASIS. THE USE OF THE WORD AMOUNT IN SINGULAR CONVEYS THE AIM OF REFERRING IT TO ONE FIGURE.MOVING STILL FURTHER, FROM THE LANGUAGE OF THIS CLAUSE, THERE IS NO REFERENCE TO CONSIDERING THE BROUGHT FORWARD LOSS OR UNABSORBED DEPRECIATION ON YEAR TO YEAR BAS IS. THERE IS NOTHING IN THE LANGUAGE OF SECTION WHICH COULD SUGGEST, EVEN REMOT ELY, THAT THE LEGISLATURE INTENDED TO CONSIDER YEAR-WISE FIGURESTO PUT IT SIMPLY, IF ONE OF THESE TWO FIGURES IS NIL, THEN THE OTHER FIGURE WILL BE IGNORED ALTOGETHER. T HE RATIONALE BEHIND THIS PORTION OF ENACTMENT IS NOT TO UNNECESSARILY ALLOW THE REDUCTI ON OF ONE, IF THE OTHER IS NOT THERE SINCE THE LOSS IS TO BE CONSIDERED BEFORE THE DEPRE CIATION AND IF THERE IS BROUGHT FORWARD LOSS ONLY, BUT NO CORRESPONDING UNABSORBED DEPRECIATION OR VICE VERSA, THEN NO REDUCTION IS TO BE MADE OF THE AMOUNT OF BROUGHT FORWARD LOSS OR UNABSORBED DEPRECIATION, AS THE CASE MAY BE. IF THERE IS LOSS BROUGHT FORWARD AND UNABSORBED DEPRECIATION FOR MORE THAN ONE YEAR, THEN ONE COMBI NE FIGURE EACH OF UNABSORBED DEPRECIATION AND BROUGHT FORWARD LOSS.FOR SUCH YEA RS IS TO BE DETERMINED FOR CONSIDERATION. ADVERTING TO THE FACTS OF INSTANT CA SE, IT WAS FOUND THAT NONE OF THE FIGURES OF UNABSORBED DEPRECIATION OR BROUGHT FORWA RD LOSS WAS NIL, HENCE THIS PART OF THE EXPLANATION WAS NOT RELEVANT.IN VIEW OF THE FOREGOING DISCUSSION, THE LOWER OF THE SOLITARY FIGURES OF THE UNABSORBED DEPRECIAT ION OR LOSS BROUGHT FORWARD FOR ALL THE EARLIER YEARS TAKEN TOGETHER WAS TO BE REDUCED FOR THE PURPOSE OF COMPUTING BOOK PROFIT UNDER SECTION 115JB. RESPECTFULLY FOLLOWING THE ORDER OF THE COORDINATIN G BENCH, WE UPHOLD THE ORDER OF THE FAA. GROUNDS OF APPEAL FILED BY THE AO ARE DISMISSE D DECIDED AGAINST HIM AS A RESULT APPEAL FILED BY THE AO STANDS D ISMISSED. C.O. NO. 01/MUM/2011 3. DURING THE COURSE OF HEARING BEFORE US, AR OF THE A SSESSEE SUBMITTED THAT ASSESSEE WAS NOT INTERESTED IN PERUSING THE CROSS OBJECTION FILED IT. HENCE C.O. FILED BY THE ASSESSEE IS DISMISSED AS NOT PRESSED. APPEAL AND CO FILED BY THE AO AND THE COMPANY STAN D DISMISSED ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH JUNE, 2013 . ( +,# 0 1' 12 4',2013 , ( - 7 SD/- SD/- ( . . / B.R. MITTAL ) ( ! / RAJENDRA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / MUMBAI, 1'/ DATE: 12 TH JUNE, 2013 SHARWAN . . . . ( (( ( &)9 &)9 &)9 &)9 : 9#) : 9#) : 9#) : 9#) / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / $% 2. RESPONDENT / &'$% 3. THE CONCERNED CIT (A) / ; < 4. THE CONCERNED CIT / ; < 5. DR I BENCH, ITAT, MUMBAI / 9=- &)' > , . . . ITA NO. 709/MUM/2011 LASTRA NIRAJ P. LTD. 4 6. GUARD FILE/ - ? SK/- '9) &) //TRUE COPY// .' / BY ORDER, @ / A DY./ASST. REGISTRAR , /ITAT, MUMBAI