Sujana Universal Industries Ltd., Hyd, Hyderabad V. ACIT, Circle-3(2), Hyd, Hyderabad

ITA 722/HYD/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 6657 (ITAT-HYDERABAD)
• Duration Of Justice: 10 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-04-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 16-03-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 28-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MOHAN KUMAR SINGHANIA
• Assessee Lawyers: P MURALI MOHAN RAO
• Keywords: Difference of opinion; Change of opinion
• Section: 43B; 143(3); 115JB; 263; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SMT P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 722/HYD/2015 ASSESSMENT YEAR: 2006-07 SUJANA UNIVERSAL INDUSTRIES LTD., HYDERABAD PAN AACCS 8630 H VS. ASST. COMMISSIONER OF INCOME-TAX, CIRCLE 3(2), HYDERABAD. (ASSESSEE) (RESPONDENT) ASSESSEE BY : SHRI P. MURALI MOHAN RAO REVENUE BY : SHRI MOHAN KUMAR SINGHANIA DATE OF HEARING 16-03-2016 DATE OF PRONOUNCEMENT 07-04-2016 O R D E R PER S. RIFAUR RAHMAN, A.M.: THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST T HE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS) I V, VIJAYAWADA, DATED 07/12/2014 FOR AY 2006-07. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ORIG INAL ASSESSMENT HAD BEEN COMPLETED IN THIS CASE U/S 143(3) ON 15.07 .2009 DETERMINING THE TOTAL INCOME OF THE APPELLANT AT RS . 5,16,83,281/-. SUBSEQUENTLY, THE CIT-III, HYDERABAD PASSED AN ORDE R U/S 263 DATED 29.03.2012 WITH THE FOLLOWING DIRECTIONS TO THE ASS ESSING OFFICER: '9. WITH REGARD TO THE ISSUE OF TAXABILITY OF PRIO R PERIOD INCOME OF RS.28,28,29,474 U/S 41(1) OF THE I. T. ACT, 196 1, IT IS NOTICED FROM THE DETAILS FILED THAT AN AMOUNT OF RS.194.63 LAKHS OUT OF THE ABOVE AMOUNT OF RS.2828.29 LAKHS REPRESENT 'LI QUIDATED DAMAGES ETC.' FOR EARLIER YEARS. THIS AMOUNT ALLOWE D AS DEDUCTION IN EARLIER YEARS AND HENCE THE PROVISIONS OF SECTION 2 ITA NO. 722 /HYD/2015 SUJANA UNIVERSAL INDUSTRIES LTD. 41(1) APPLIES TO THE ABOVE AMOUNT OF RS.194.63 LAKH S. THEREFORE, THE ASSESSING OFFICER IS DIRECTED TO BRI NG THIS AMOUNT TO TAX UNDER THE NORMAL PROVISIONS OF THE I.T. ACT, 1961. 10.3 IN VIEW OF THE FOREGOING, THE ASSESSING OFFIC ER IS DIRECTED TO RECOMPUTE BOOK PROFITS OF THE ASSESSEE COMPANY B Y ADOPTING RS.37,78,82,427/- AS THE STARTING POINT AND THE SAM E IS TO BE INCREASED BY THE ITEMS SPECIFIED IN CLAUSES (A) TO (F) AND HAS TO BE REDUCED BY THE ITEMS SPECIFIED IN CLAUSES (I) TO (VII) GIVEN IN THE EXPLANATION. 11. IN VIEW OF THE ABOVE, THE ASSESSING OFFICER I S DIRECTED TO DISALLOW THE ABOVE AMOUNT OF RS.5,84,80,000/- U/S 43B AND SHOULD NOT ALLOW THE DEDUCTION CLAIMED OF RS.5,84, 80,000/- IN THE STATEMENT OF COMPUTATION OF INCOME FOR THE AY 2006-07. 12. IN VIEW OF THE ABOVE, THE AO IS DIRECTED TO DI SALLOW THE ABOVE AMOUNT OF RS. 985.39 LAKHS U/S 43B OF THE IT ACT, 1961 13. THE ASSESSING OFFICER IS DIRECTED TO GIVE EFFE CT TO THE ABOVE DIRECTIONS AND RECOMPUTED THE INCOME UNDER THE NOR MAL PROVISIONS AS WELL AS MAT PROVISIONS. ' 4. THE ASSESSING OFFICER GAVE EFFECT TO THESE DIREC TIONS IN HIS ORDER U/S 143(3) R.W.S.263, DATED 6.12.2012 AND ASSESSED THE TOTAL INCOME AT RS. 15,79,42,887/. 5. AGGRIEVED BY THIS ASSESSMENT, THE ASSESSEE CARR IED THE MATTER IN APPEAL BEFORE THE CIT(A) RAISING THE FOLLOWING G ROUNDS OF APPEAL: 1. THE ASSESSING OFFICER IS ERRONEOUS AS IT HAS BE EN PASSED BY MAKING MERE CHANGE OF OPINION AFTER PASSING THE ORD ER U/S 143(3). RELIANCE IS PLACED ON THE CASE LAW OF MALAB AR INDUSTRIAL CO. LTD. VS. CIT [2000] 243 ITR 83 (SC). 2. THE ASSESSING OFFICER HAS ERRED WHILE MAKING ADD ITION OF LIQUIDATE DAMAGES OF RS. 194.63 LACS AS A PRIOR PER IOD ITEM BY WAY OF CREDITING TO P&L A/C U/S 41(1) UNDER NORMAL PROVISIONS OF THE ACT. 3. THE ASSESSING OFFICER HAS ERRED WHILE MAKING ADD ITION OF PRIOR PERIOD ITEMS OF RS. 2838.32 LACS TO BOOK PROFIT U/S 115JB. 3 ITA NO. 722 /HYD/2015 SUJANA UNIVERSAL INDUSTRIES LTD. 4. THE ASSESSING OFFICER HAS ERRED WHILE MAKING ADD ITION OF OUTSTANDING INTEREST PAYABLE TO IDBI OF RS. 584.80 LACS U/S 43B. 5. THE ASSESSING OFFICER HAS ERRED WHILE MAKING ADD ITION OF OUTSTANDING INTEREST PAYABLE TO IFCI OF RS. 985.39 IACS U/S 43B. 6. THE CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE BY OBSERVING AS UNDER: A PERUSAL OF THE ORDER U/S 263 SHOWS THAT THE DIR ECTIONS OF THE CIT WERE CLEAR AND SPECIFIC. THE ASSESSMENT HAD NOT BEEN SET ASIDE TO THE FILE OF THE ASSESSING OFFICER. INSTEAD , THE ASSESSING OFFICER WAS ONLY REQUIRED TO GIVE EFFECT TO THE SPE CIFIC FINDINGS OF THE CIT. IN THE PRESENT APPEAL, THE APPELLANT HAS A GITATED AGAINST THE FINDINGS OF THE CIT IN HIS ORDER U/S 263. SUCH GRIEVANCES AGAINST AN ORDER U/S 263 CANNOT BE THE SUBJECT MATT ER OF APPEAL BEFORE THE UNDERSIGNED. 7. STILL AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFOR E US RAISING THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE LD. CIT (APPEALS) - IV, HYDERAB AD ERRED BOTH IN LAW AND ON FACTS IN DISMISSING THE APPEAL. 2. THE LD. CIT (APPEALS)-IV, HAS ERRED IN NOT DISPO SING OFF THE CASE ON MERITS BASIS. 3. THE LD. CIT (APPEALS)-4, HAS ERRED IN REJECTING THE ASSESSEE GROUNDS OF APPEALS AND DISREGARDING THE SUBMISSIONS MADE BY THE ASSESSEE. 4. THE LD. CIT (APPEALS)-IV, OUGHT TO HAVE ANNULLED THE ORDER OF THE AO APPRECIATING THE DECISION OF THE APEX COURT IN THE CASE OF MALABAR INDUSTRIES CO LTD. VS CIT [200] 243 ITR 83 SC. 5. THE LD. CIT (APPEALS)-IV, ERRED IN NOT CONSIDERI NG THE SUBMISSIONS OF THE ASSESSEE REGARDING THE ADDITION OF LIQUIDATED DAMAGES OF RS. 194.63 LACS AS PRIOR PERIOD ITEMS. 6. THE LD. CIT (APPEALS)-IV, OUGHT TO HAVE APPRECIA TED THE FACT THAT THE ADDITION OF PRIOR PERIOD ITEMS OF RS. 2838 .32 LACS TO BOOK PROFIT U/S 115JB IS NUGATORY AS PER THE PROVISIONS OF THE ACT. 4 ITA NO. 722 /HYD/2015 SUJANA UNIVERSAL INDUSTRIES LTD. 8. THE LD. AR SUBMITTED THAT THE ASSESSEE HAD AGITA TED THE ORDER OF CIT U/S 263 BEFORE THIS TRIBUNAL FOR THE SAME AY UNDER CONSIDERATION. THE ITAT IN ITS ORDER IN ITA NO. 877 /HYD/2012 DATED 11/03/2015 HAD ALREADY ADJUDICATED ON THE SAME ISSU ES UNDER APPEAL. THEY ARE: S.NO. ISSUES AMOUNT FINDINGS OF ITAT 1. LIQUIDATED DAMAGES 194,63,000 SET ASIDE TO AO FOR VERIFICATION 2. INTEREST PAYABLE CONVERSION TO EQUITY SHARES 584,80,000 DELETED THE ADDITION 3. INTEREST PAYABLE CONVERSION TO EQUITY SHARES 985,39,000 -DO 45. PRIOR PERIOD INCOME FOR THE PURPOSE OF 115JB 28,28,29,474 SET ASIDE TO AO FOR VERIFICATION SINCE, THE AO HAD PASSED THE ORDER U/S 143(3) READ WITH SECTION 263 ON THE SAME ISSUES, IT NEEDS TO BE DELETED. 9. LD. DR RELIED ON THE ORDERS OF CIT(A) AND AO. 10. CONSIDERING THE SUBMISSIONS OF BOTH THE PARTIES AND MATERIAL FACTS ON RECORD, WE NOTE THAT THE ASSESSEE HAD ALRE ADY APPEALED AGAINST THE ORDER OF CIT U/S 263 AND THE COORDINATE BENCH OF THIS TRIBUNAL HAS ALREADY ADJUDICATED THE SAME ISSUES, O UT OF FOUR ISSUES UNDER APPEAL, TWO ISSUES VIZ., INTEREST PAYABLE WHE RE DISCHARGED BY ISSUE OF EQUITY SHARES TO THE LENDERS, WERE DELETED AND FOR THE OTHER TWO ISSUES, THE BENCH HAS SET ASIDE THE ISSUES BACK TO THE FILE OF AO FOR FURTHER VERIFICATION. THE AO IS THEREFORE DIREC TED TO FOLLOW THE DIRECTION OF THE EARLIER ORDER OF THIS TRIBUNAL AND COMPLETE THE ASSESSMENT BASED ON THE FINDINGS OF THIS TRIBUNAL. 5 ITA NO. 722 /HYD/2015 SUJANA UNIVERSAL INDUSTRIES LTD. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 7 TH APRIL, 2016. SD/- SD/- (P. MADHAVI DEVI) (S. RIFAUR RAHM AN) JUDICIAL MEMBER A CCOUNTANT MEMBER HYDERABAD, DATED: 7 TH APRIL, 2016 KV COPY TO:- 1) M/S SUJANA UNIVERSAL INDUSTRIES LTD., C/O P. MU RALI & CO., CAS., 6-3-655/2/3, 1 ST FLOOR, SOMAJIGUDA, HYDERABAD 500 082 2) ACIT, CIRCLE 3(2), HYDERABAD 3 CIT(A) IV, HYDERABAD 4) CIT-III, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD.