SHARDA CROP CHEM LIMITED , MUMBAI V. DEPUTY COMMISSIONER OF INCOME TAX-13(2)(2), MUMBAI

ITA 7219/MUM/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 4819 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Assessment Year: 2012-2013
• Appeal Filed On: 20-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHAUDHARY ARUN KUMAR SINGH LD
• Assessee Lawyers: DHARMESH SHAH LD
• Keywords: Revised return; Revenue expenditure
• Section: 244A; 154

Judgement Text

ITA NOS.7219 /MUM/2017 & 704/MUM/2018 SHARDA CROPCHEM LIMITED ASSESSMENT YEAR :2012-13 1 IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI , , BEFORE HONBLE SHRI PAWAN SINGH, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.7219/MUM/2017 ( / ASSESSMENT YEAR: 2012-13 SHARDA CROPCHEM LIMITED 2 ND FLOOR, PRIME BUSINESS PARK DASHRATHLAL JOSHI ROAD VILE PARLE (WEST) MUMBAI 400 056 / VS. DEPUTY CO MMISSIONER OF INCOME TAX-CIRCLE-13(2)(2) 2 ND FLOOR, ROOM NO.146 AAYKAR BHAVAN, M.K.ROAD MUMBAI-400 020 ./ ./PAN/GIR NO. AAICS-0137-P ( /APPELLANT ) : ( / RESPONDENT ) & ./ I.T.A. NO.704/MUM/2018 ( / ASSESSMENT YEAR: 2012-13 DEPUTY COMMISSIONER OF INCOME TAX-CIRCLE-13(2)(2) 2 ND FLOOR, ROOM NO.146 AAYKAR BHAVAN, M.K.ROAD MUMBAI-400 020 / VS. SHARDA CROPCHEM LIMITED 2 ND FLOOR, PRIME BUSINESS PARK DASHRATHLAL JOSHI ROAD VILE PARLE (WEST) MUMBAI 400 056 ./ ./PAN/GIR NO. AAICS-0137-P ( /APPELLANT ) : ( / RESPONDENT ) ASSESSEE BY : DHARMESH SHAH, LD. AR REVENUE BY : CHAUDHARY ARUN KUMAR SINGH, LD.DR !' / DATE OF HEARING : 04/02/2019 !' / DATE OF PRONOUNCEMENT : 14/02/2019 ITA NOS.7219 /MUM/2017 & 704/MUM/2018 SHARDA CROPCHEM LIMITED ASSESSMENT YEAR :2012-13 2 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THESE ARE CROSS-APPEALS FOR ASSESSMENT YEAR [AY] 2012-13 WHICH CONTEST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-21, MUMBAI [CIT(A)] , APPEAL NO. CIT(A)-21/DCIT-13(2)(2)/IT-525/2016-17 DATED 27/10/2017 ON DIFFERENT GROUNDS OF APPEAL . 2.1 FACTS IN BRIEF ARE THAT THE ASSESSEE BEING RESIDENT CORPORATE ENTITY WAS ASSESSED FOR IMPUGNED AY ON 19/06/2014 U/S 143( 3) BY LD. DEPUTY COMMISSIONER OF INCOME TAX-CIRCLE 9(3), MUMBAI [AO] AT RS.72.25 CRORES AFTER CERTAIN ADDITIONS / DISALLOWANCES AS A GAINST REVISED RETURNED INCOME OF RS.52.03 CRORES E-FILED BY THE ASSESSEE ON 24/07/2013. THE ASSESSEE HAD CLAIMED AN EXPENDITURE OF RS.13.38 LAC S U/S 35D, BEING 1/5 TH OF EXPENDITURE OF RS.66.93 LACS INCURRED BY THE AS SESSEE DURING IMPUGNED AY ON ACCOUNT OF INCREASE IN SHARE CAPITAL . THE SAME BEING CAPITAL IN NATURE, WAS DISALLOWED IN TERMS OF RATIO OF HONBLE APEX COURT RENDERED IN BROOKE BOND (I) LTD. VS CIT [255 ITR 798]. THE STATED ISSUE ATTAINED FINALITY SINCE THE ASSESSEE DID NOT CONTES T THE SAME BEFORE FIRST APPELLATE AUTHORITY. 2.2 THE ASSESSMENT WAS CONTESTED BEFORE FIRST APPEL LATE AUTHORITY QUA OTHER ADDITIONS / DISALLOWANCES VIDE ORDER DATED 07 /03/2016, THE APPEAL EFFECT OF WHICH WAS GIVEN VIDE ORDER DATED 01/06/20 16. THE APPEAL GIVING EFFECT ORDER WAS SUBJECTED TO RECTIFICATION U/S 154 BY LD. AO VIDE NOTICE DATED 01/09/2016 TO RECTIFY THE OPENING WDV OF PRODUCT REGISTRATION EXPENDITURE . ITA NOS.7219 /MUM/2017 & 704/MUM/2018 SHARDA CROPCHEM LIMITED ASSESSMENT YEAR :2012-13 3 2.3 IN THE MEANWHILE, THE ASSESSEE MOVED RECTIFICAT ION PETITION TO LD. AO ON 04/04/2016 TO SUBMIT THAT EXPENDITURE ON BONU S SHARES WAS FULLY ALLOWABLE AS REVENUE EXPENDITURE IN TERMS OF JUDGME NT OF HONBLE BOMBAY HIGH COURT RENDERED IN CIT VS WMI CRANES LIMITED. [326 ITR 523] AS WELL AS THE DECISION OF HONBLE APEX COURT RENDE RED IN CIT VS GENERAL INSURANCE CORPORATION [286 ITR 232]. THE LD. AO, WHILE RECTIFYING THE OPENING WDV OF PRODUCT REGISTRATION EXPENDITURE, HOWEVER, DECLINED TO ALLOW THE EXPENDITURE OF RS.66.93 LACS AS CLAIMED BY THE ASSESSEE. 3. THE ASSESSEE CONTESTED THE STAND OF AO WITHOUT A NY SUCCESS VIDE IMPUGNED ORDER DATED 27/10/2017 WHEREIN LD. FIRST A PPELLATE AUTHORITY OPINED THAT THERE WAS NO MISTAKE APPARENT FROM RECO RD EITHER IN ORIGINAL ASSESSMENT ORDER PASSED ON 19/06/2014 OR IN ORDER G IVING APPEAL EFFECT DATED 01/06/2016 AND THEREFORE, THE CLAIM COULD NOT BE ALLOWED AT THAT STAGE. AGGRIEVED, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4. THE LD. AUTHORIZED REPRESENTATIVE FOR ASSESSEE [ AR] SUBMITTED THAT THE ASSESSEES CLAIM, ON MERITS, WAS ALLOWABLE IN TERMS OF DECISION OF JURISDICTIONAL HIGH COURT AS WELL AS HONBLE APE X COURT AND NON- CONSIDERATION OF THE SAME CONSTITUTE MISTAKE APPARE NT FROM RECORD IN TERMS OF JUDGEMENT OF HONBLE APEX COURT RENDERED I N ACIT VS. SAURASHTRA KUTCH STOCK EXCHANGE LTD. [305 ITR 227]. IT HAS ALSO BEEN SUBMITTED THAT THERE WAS NO BAR ON APPELLATE AUTHOR ITIES TO CONSIDER THE NEW CLAIM IF THE SAME WAS ADMISSIBLE TO THE ASSESSE E. PER CONTRA, LD. DR RELIED UPON THE IMPUGNED ORDER AND SUBMITTED THA T THE CLAIM, ON MERITS, WAS NOT ALLOWABLE IN TERMS OF JUDGEMENT OF HONBLE GUJARAT HIGH COURT RENDERED IN CIT VS. AJIT MILLS LTD. [210 ITR 658] AS WELL AS DECISION ITA NOS.7219 /MUM/2017 & 704/MUM/2018 SHARDA CROPCHEM LIMITED ASSESSMENT YEAR :2012-13 4 OF HONBLE BOMBAY HIGH COURT RENDERED IN JAYA HIND INDUSTRIES LTD. VS CIT [25 TAXMAN 36]. 5.1 WE HAVE CAREFULLY HEARD THE RIVAL SUBMISSIONS A ND PERUSED RELEVANT MATERIAL ON RECORD INCLUDING JUDICIAL PRON OUNCEMENTS AS CITED BEFORE US. THE UNDISPUTED POSITION THAT EMERGES IS THE FACT THAT THE ASSESSEE HAS MOVED RECTIFICATION PETITION U/S 154 F OR THE FIRST TIME TOWARDS HIS CLAIM U/S 35D RELYING UPON THE DECISION OF HONBLE APEX COURT AS WELL AS THE DECISION OF JURISDICTIONAL HIG H COURT. THE DISALLOWANCE OF ORIGINAL CLAIM TO THE EXTENT OF 1/5 TH OF TOTAL EXPENDITURE AS MADE IN THE RETURN OF INCOME HAD ALREADY ATTAINED F INALITY SINCE THE ASSESSEE DID NOT PREFERRED ANY APPEAL BEFORE FIRST APPELLATE AUTHORITY. THE ONLY BASIS ON WHICH THE SAME HAS BEEN DENIED BY FIRST APPELLATE AUTHORITY IS THE FACT THAT THERE WAS NO MISTAKE APP ARENT FROM RECORD IN ANY OF THE ORDERS THAT REQUIRE RECTIFICATION. HOWEV ER, THE HONBLE APEX COURT IN ACIT VS. SAURASHTRA KUTCH STOCK EXCHANGE LTD. [305 ITR 227] HAS HELD THAT: - RECTIFICATION OF AN ORDER STEMS FROM THE FUNDAMENTA L PRINCIPLE THAT JUSTICE IS ABOVE ALL. IT IS EXERCISED TO REMOVE THE ERROR AND TO DISTURB THE FINALITY. A PATENT, MANIFEST AND SELF-EVIDENT ERROR WHICH DOE S NOT REQUIRE ELABORATE DISCUSSION OF EVIDENCE OR ARGUMENT TO ESTABLISH IT, CAN BE SAID TO BE AN ERROR APPARENT ON THE FACE OF THE RECORD AND CAN BE CORRE CTED WHILE EXERCISING CERTIORARI JURISDICTION. AN ERROR CANNOT BE SAID TO BE APPARENT ON THE FACE OF THE RECORD IF ONE HAS TO TRAVEL BEYOND THE RECORD T O SEE WHETHER THE JUDGMENT IS CORRECT OR NOT. AN ERROR APPARENT ON THE FACE OF THE RECORD MEANS AN ERROR WHICH STRIKES ON MERE LOOKING AND DOES NOT NEED LON G DRAWN OUT PROCESS OF REASONING ON POINTS WHERE THERE MAY CONCEIVABLY BE TWO OPINIONS. SUCH ERROR SHOULD NOT REQUIRE ANY EXTRANEOUS MATTER TO SHOW IT S INCORRECTNESS. TO PUT IT DIFFERENTLY, IT SHOULD BE SO MANIFEST AND CLEAR THA T NO COURT WOULD PERMIT IT TO REMAIN ON RECORD. IF THE VIEW ACCEPTED BY THE COURT IN THE ORIGINAL JUDGMENT IS ONE OF THE POSSIBLE VIEWS, THE CASE CANNOT BE SAID TO BE COVERED BY AN ERROR APPARENT ON THE FACE OF THE RECORD. ITA NOS.7219 /MUM/2017 & 704/MUM/2018 SHARDA CROPCHEM LIMITED ASSESSMENT YEAR :2012-13 5 FINALLY, IT WAS HELD BY APEX COURT THAT NON-CONSIDE RATION OF A DECISION OF JURISDICTIONAL COURT OR OF THE SUPREME COURT COULD BE TERMED AS 'MISTAKE APPARENT FROM THE RECORD'. RESPECTFULLY, F OLLOWING THE SAME, WE HOLD THAT THE AFORE-SAID CLAIM MADE BY THE ASSESSEE IN TERMS OF DECISION OF JURISDICTIONAL HIGH COURT AS WELL AS THE DECISIO N OF HONBLE SUPREME COURT COULD BE SUBJECT MATTER OF RECTIFICATION APPL ICATION U/S 154 NOTWITHSTANDING THE FACT THAT THE SAME WAS NOT CLAI MED BY THE ASSESSEE DURING ORIGINAL ASSESSMENT PROCEEDINGS AS WELL AS D URING APPELLATE PROCEEDINGS. 5.2 LOOKING FROM ANOTHER ANGLE, WE FIND THAT IN TER MS OF ARTICLE 265 OF THE CONSTITUTION OF INDIA, NO TAX IS TO BE LEVIED O R COLLECTED EXCEPT BY THE AUTHORITY OF LAW. THERE COULD BE NO ESTOPPEL AGAINS T LAW. ACQUIESCENCE COULD NOT TAKE AWAY FROM A PARTY THE RELIEF THAT HE WAS ENTITLED TO WHERE THE TAX IS LEVIED OR COLLECTED WITHOUT THE AUTHORIT Y OF LAW. FURTHER, IT IS OBLIGATORY ON THE PART OF LD. AO TO APPLY HIS MIND TO THE FACTS DISCLOSED IN THE RETURN AND ASSESS THE ASSESSEE KEEPING IN MI ND THE LAW HOLDING THE FIELD. IT IS TRITE LAW THAT TRUE INCOME WAS TO BE ASSESSED AND THE REVENUE COULD NOT DERIVE BENEFIT OUT OF ASSESSEES IGNORANCE OR PROCEDURAL DEFECTS. WE BELIEVE SO. 5.3 SO FAR AS THE MERITS OF THE CASE IS CONCERNED, WE FIND THAT HONBLE APEX COURT IN THE CITED DECISION OF CIT VS GENERAL INSURANCE CORPORATION [286 ITR 232], AFTER CONSIDERING VARIOUS CONTRARY DECISIONS INCLUD ING THE DECISION OF HONBLE GUJARAT HIGH COURT RENDERED IN CIT VS. AJIT MILLS LTD., HELD THAT ISSUE OF BONUS SHARES BY CAPITALIZATION O F RESERVES IS MERELY A REALLOCATION OF COMPANYS FUNDS AND THERE IS NO INF LOW OF FRESH FUNDS OR ITA NOS.7219 /MUM/2017 & 704/MUM/2018 SHARDA CROPCHEM LIMITED ASSESSMENT YEAR :2012-13 6 INCREASE IN THE CAPITAL EMPLOYED. THEREFORE, IT COU LD NOT BE SAID THAT THE COMPANY ACQUIRED A BENEFIT OR ADVANTAGE OF ENDURING NATURE. THE TOTAL FUNDS AVAILABLE WITH THE COMPANY WILL REMAIN THE SA ME AND THE ISSUE OF BONUS SHARES WOULD NOT RESULT IN EXPANSION OF CAPIT AL BASE OF THE COMPANY. THEREFORE, EXPENDITURE INCURRED ON ISSUANC E OF BONUS SHARES WOULD BE REVENUE EXPENDITURE. THE RATIO OF THIS DEC ISION HAS SUBSEQUENTLY BEEN FOLLOWED BY HONBLE BOMBAY HIGH C OURT RENDERED IN THE CITED DECISION OF CIT VS WMI CRANES LTD. THE FACTUAL MATRIX OF JAYA HIND INDUSTRIES LTD. VS CIT [25 TAXMAN 36] IS DISTINGUISHABLE AND DO NOT APPLY TO THE FACTS OF THE PRESENT CASE . RESPECTFULLY FOLLOWING THE CITED DECISIONS, WE HOLD THAT THE EXPENDITURE OF RS.66.93 LACS ON ACCOUNT OF ISSUANCE OF BONUS SHARES WOULD BE REVENUE IN NATURE AND HENCE, FULLY ALLOWABLE IN THE IMPUGNED AY. THE ASSESSEE HAS PLAC ED ON RECORD, THE COMPUTATIONS / ASSESSMENT ORDERS OF SUBSEQUENT YEAR S TO DEMONSTRATE THAT THE DEDUCTION OF THIS EXPENDITURE HAS NOT BEEN CLAIMED / ALLOWED BY THE ASSESSEE IN SUBSEQUENT YEARS AND HENCE, THERE I S NO DOUBLE DEDUCTION. THE MATERIAL ON RECORD SUPPORTS THE SAME . ACCORDINGLY, THE ASSESSEES APPEAL STANDS ALLOWED. THE LD. AO IS DIR ECTED TO ALLOW THE DEDUCTION OF RS.66.93 LACS IN FULL AS CLAIMED BY TH E ASSESSEE. 6. THE REVENUES APPEAL STEM FROM THE FACT THAT THE LD. CIT(A) HAS ERRED IN ADJUDICATING THE ASSESSEES GROUND PERTAIN ING TO CLAIM OF INTEREST U/S 244A ON SELF-ASSESSMENT TAX PAID WITHO UT APPRECIATING THE FACT THAT ALLOWABILITY OF INTEREST U/S 244A IN NOT APPEALABLE BEFORE CIT(A) AS THE SAME IS NOT PART OF ORDER U/S 154. 7. BRIEF FACTS OF THE SAME ARE THAT AFTER GIVING AP PEAL EFFECT, CERTAIN REFUND ACCRUED TO THE ASSESSEE WHICH WAS DETERMINED AFTER CONSIDERING ITA NOS.7219 /MUM/2017 & 704/MUM/2018 SHARDA CROPCHEM LIMITED ASSESSMENT YEAR :2012-13 7 INTEREST U/S 244. HOWEVER, THE ASSESSEE HAD PAID SE LF-ASSESSMENT TAX OF RS.175 LACS WHILE FILING THE RETURN OF INCOME, AGAI NST WHICH THE INTEREST WAS NOT ALLOWED. AGGRIEVED, THE ASSESSEE AGITATED T HE SAME BEFORE FIRST APPELLATE AUTHORITY RELYING UPON THE DECISION OF HO NBLE BOMBAY HIGH COURT RENDERED IN STOCK HOLDING CORPORATION OF INDIA LTD. [373 ITR 28 2]. THE FIRST APPELLATE AUTHORITY, AFTER APPRECIATING T HE STATUTORY PROVISIONS AS CONTAINED IN SECTION 244A, CONCLUDED THAT THE ASSES SEES CASE APPEARS TO FALL UNDER CLAUSE (AA) OF SECTION 244A(1) OF THE ACT. ACCORDINGLY, LD. AO WAS DIRECTED TO VERIFY THE FACTUAL MATRIX AND AL LOW THE INTEREST AS PER LAW. AGGRIEVED, THE REVENUE IS IN FURTHER APPEAL BE FORE US WHEREIN LD. DR HAS SUPPORTED THE STAND OF LD.AO. 8. UPON DUE CONSIDERATION, WE ARE OF THE OPINION TH AT THE ASSESSEE WAS ENTITLED FOR LEGITIMATE INTEREST AS PER LAW AND THE DIRECTIONS GIVEN BY FIRST APPELLATE AUTHORITY WERE MERELY CONSEQUENTIAL IN NATURE SINCE LD. AO WAS DIRECTED TO VERIFY THE ASSESSEES CLAIM QUA INTEREST AT THE THRESHOLD OF STATUTORY PROVISIONS AS CONTAINED IN S ECTION 244A AND ASCERTAIN THE CORRECT AMOUNT OF INTEREST DUE TO THE ASSESSEE. NO PERVERSITY COULD BE FOUND IN THE IMPUGNED DIRECTION . ACCORDINGLY, THE REVENUES APPEAL STANDS DISMISSED. 9. FINALLY, THE ASSESSEES APPEAL STANDS ALLOWED WH EREAS THE REVENUES APPEAL STANDS DISMISSED IN TERMS OF OUR A BOVE ORDER. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH FEBRUARY, 2019. SD/- SD/- (PAWAN SINGH) (MA NOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER ITA NOS.7219 /MUM/2017 & 704/MUM/2018 SHARDA CROPCHEM LIMITED ASSESSMENT YEAR :2012-13 8 MUMBAI; DATED : 14.02.2019 SR.PS, THIRUMALESH / COPY OF THE ORDER FORWARDED TO : 1. ! / THE APPELLANT 2. '# ! / THE RESPONDENT 3. % ( ) / THE CIT(A) 4. % / CIT CONCERNED 5. & ''() , ) , / DR, ITAT, MUMBAI 6. ' +,- / GUARD FILE / BY ORDER, / % (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.