ACIT, Bhubaneswar V. M/s Orissa Mining Corporation Ltd, Bhubaneswar

ITA 76/CTK/2010

• Counselvise Citation: 7622114 RSA 2010
• Duration Of Justice: 1 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2011
• Appeal Filed By: Department
• Bench Allotted: DB
• Next Hearing Date: 04-08-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 05-03-2010
• Court: TRIBUNAL
• Department Lawyers: VED JAINP VENUGOPAL RAO ARS
• Assessee Lawyers: PARAMITA TRIPATHY
• Keywords: Condonation of delay; Capital expenditure
• Section: 147; 154

Judgement Text

IN THE INCME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE : HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER, AND HONBLE SHRI K.S.S.PRASAD RAO, JUDICIAL MEMBER. ITA NO. 76,266 AND 240/CTK/2010 (ASSESSMENT YEAR S 2002 - 03, 2003 - 04 AND 2004 - 05) ASST .COMMISSIONER OF INCOME - TAX, CIRCLE 1(1), BHUBANESWAR. VERSUS M/S.ORISSA MINING CORPORATION LTD., OMC HOUSE, BHUBANESWAR PAN: AAACO 0024 L (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI VED JAIN/P.VENUGOPAL RAO, ARS FOR THE RESPONDENT SMT. PARAMITA TRIPATHY, DR ORDER SHRI K.K.GUPTA, ACCOUNTANT MEMBER : THESE APPEALS BY THE REVENUE ARE ON THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) DELETING THE DISALLOWANCES/ADDITIONS MADE BY THE ASSESSING OFFICER FOR THE RESPECTIVE AYS WHICH WE PROPOSE TO T AKE UP INDIVIDUALLY AFTER HEARING THE RIVAL PARTIES. ITA NO.76/CTK/2010 (ASSESSMENT YEAR 2002 - 03) : 2. THE SOLITARY ISSUE RAISED BY THE REVENUE IS WITH RESPECT TO THE LEARNED CIT(A) NOT JUSTIFIED IN DIRECTING THE ASSESSING OFFICER TO ALLOW CARRY FORWARD B USINESS LOS S ES OF 5.16 CRORES PERTAINING TO ASSESSMENT YEAR 1999 - 00, PARTICULARLY WHEN THE RETURN OF INCOME WAS TREATED AS I NVALID IN VIEW OF THE ORDER U/S .119(2)(B) DT.23.6.2008 OF THE CBDT. 3. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSING OFFICER BY WAY OF AN ORDER U/S.154 CONSIDERED THE ORDER OF THE TRIBUNAL , WHEN THE TRIBUNAL HAD DIRECTED THE ASSESSING OFFICER TO VERIFY THE CLAIM OF THE ASSESSEE ON FINDING THAT THE INABILITY OF THE ASSESSEE TO FURNISH THE AUDITED ACCOUNTS ALONG WITH THE RETURN FILED U/S.139(1) SUFFERED FROM DEFECTS WHICH COULD BE REMOVED INDICATING THAT THE NON - CLAIM OF BROUGHT FORWARD LOSSES WAS NOT A DEFECT WHEN ITA NO.76,266 AND 240/CTK/2010 2 THE ASSESSEE ITSELF AGREED TO THE PROPOSITION THAT THE ASSESSEES ACCOUN TS WERE AUDITED BELATEDLY AND IT HAD SUFFERED A DEFECT , WAS A RECTIFIABLE DEFECT NOT TO BE DENIED THE CLAIM WHICH LOSS HAD ALREADY BEEN DETERMINED BY THE ASSESSING OFFICER. THE ASSESSING OFFICER IN TURN TOOK RECOURSE TO THE CBDT DENYING THE CONDONATION OF DELAY IN FILING THE RETURN FOR THE ASSESSMENT YEAR 1999 - 2000 TO 2002 - 03 UNDER THE PROVISIONS OF SECTION 119 AS THE MISTAKE TO BE RECTIFIED UNDER THE PROVISIONS OF SECTION 154. THE ASSESSING OFFICER THEREFORE, HAVING GIVEN EFFECT TO THE ORDER OF THE LEARNED CIT(A) COMPUTED THE INCOME AS PER ASSESSMENT ORDER DT.8.5.2006 AT AN INCOME OF 2.10 CRORES WHICH WAS FURTHER SUBJECT ED TO RELIEF ALLOWED BY THE ITA T WHEN HE SOUGHT TO HOLD THE VIEW THAT THE DIRECTION OF THE TRIBUNAL WAS TO ALLOW THE CLAIM OF THE ASSESSEE AS PER LAW DENYING THE BROUGHT FORWARD LOSSES TO BE ADJUSTED WAS THE DIRECTION FOR THE PURPOSE OF PASSING THE ORDER U/S.154 R.W.S. 254. THE TOTAL LOSS THEREFORE DETERMINED BY THE ASSESSING OFFICER IN HIS ORDER WAS 8.86 CRORES WHICH WAS APPEALED AGAINST BEFORE THE FIRST APPELLATE AUTHORITY. THE LEARNED CIT(A) CLARIFIED THE DIRECTION OF THE TRIBUNAL AS PER LAW BY INDICATING THAT IT ONLY MEANT THAT ANY OTHER LEGAL REQUIREMENT OTHER THAN WHAT WAS THE BONE OF CONTENTION OF THE ASSESSEE BEFORE ITAT WAS TO BE TAKEN CARE OF. HE NOTED THAT THE ASSESSING OFFICER NEEDLESSLY MADE AN ISSUE BETWEEN THE ORDER OF THE ITAT AND THE DENIAL OF THE CONTENTION OF DELAY BY THE C B DT INSOFAR AS THIS ISSUE WAS AGITATED BY THE DEPARTMENT BEFORE THE TRIBUNAL BY WAY OF A MISC. PETI TION WHEN THE TRIBUNAL IN THEIR ORDER DT.2.9.2008 HELD THAT THE PROCEEDINGS BEFORE THE ITAT ARE INDEPENDENT FROM THAT OF THE CBDT AND THERE WAS NO NEED TO CONSIDER THE SAME BY CLEARLY OBSERVING THAT THERE WAS NO MISTAKE IN THE ORDER OF THE TRIBUNAL WHEN TH E RETURN WAS TO BE ACCEPTED UNDER THE PROV ISIONS WHICH THE ASSESSEE AGREED TO THE PROPOSITION TH AT IT HAD NOT FILED THE RETURN O N TIME. THE TRIBUNAL HAD ITA NO.76,266 AND 240/CTK/2010 3 NOTED THAT THE EXPLANATION BELOW SECTION 13 9(9) DID NOT HAVE ANY DIRECT IMPACT ON THE ISSUE ONCE IT HA S BEEN CLARIFIED THAT IT WAS NOT THE ASSESSING OFFICER WHO WAS TO CONTINUE T HAT THE DEFECTS HAD NOT BEEN REMOVED. THE LEARNED COUNSEL FOR THE ASSESSEE HAS RIGHTLY POINTED OUT THAT CARRY FORWARD LOSSES TO BE CONSIDERED ON THE DIRECTION OF THE TRIBUNAL WAS THE LOSS DETERMINED BY THE ASSESSING OFFICER CANNOT BE SUBJECTED TO SCRUTINY EITHER UNDER THE PROVISIONS OF SECTION 154 OR ON REVISITING THE PROVISIONS OF SECTION 139(9) WHEN THE LEARNED DR IS INSISTING THAT THE ORIGINAL INFORMATION AVAILABLE LACKED THE CL AIM OF THE ASSESSEE REQUIRING ADJUSTMENT OF CARRY FORWARD OF LOSSES. THE MISTAKE OR AN ERROR WHICH HAS BEEN SUBJECTED TO SCRUTINY BY THE APPELLATE AUTHORITIES CANNOT BE SUBJECTED TO VERIFICATION U/S.154 THEREFORE WAS TO BE ACTED UPON UNDER THE PROVISIONS O F SECTION 254 NOT TO BE READ WITH SECTION 154 INDICATING THAT THE MISC. PETITION ALREADY BEFORE THE TRIBUNAL HAD BEEN DISMISSED WAS TO BE FURTHER SUBJECTED TO RECTIFICATION U/S.154. THE LEARNED COUNSEL FOR THE ASSESSEE HAS ENCLOSED IN THE PAPER BOOK THE VA RIOUS TRIBUNALS ORDER WHICH WERE TO BE GIVEN APPEAL EFFECT U/S.254 IN ACCORDANCE WITH THE PROVISIONS OF LAW THEREFORE COULD NOT BE SEPARATELY INVOKED FOR RECTIFICATION U/S.154 WAS RIGHTLY CONSIDERED BY THE LEARNED CIT(A). THE ORDER OF THE LEARNED CIT(A) I S, THEREFORE, UPHELD AND THE APPEAL OF THE REVENUE IS DISMISSED. ITA NO. 240/CTK/2010 (ASSESSMENT YEAR 2004 - 05) : 4. HERE THE ISSUE RAISED BY THE REVENUE IS WITH RESPECT TO DELETION OF ADDITION OF 8.79 CRORES MADE BY THE ASSESSING OFFICER UNDER THE HEAD NET PRESENT VALUE (NPV) TREATING THE SAME AS CAPITAL EXPENDITURE. 5. THE LEARNED DR HAS SUBMITTED THAT THE LEARNED CIT(A) IS NOT JUSTIFIED IN ITA NO.76,266 AND 240/CTK/2010 4 HOLDING THAT THE PAYMENT OF NPV DOES NOT BRING ANY ENDU RING BENEFIT WHEREAS THE ASSESSEE ENJOYS LONG RUN BENEFIT FOR YEARS TOGETHER BY RAISING MINERALS FROM THE LAND FOR WHICH NPV IS PAID. 6. AT THE OUTSET THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE IS COVERED BY THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2007 - 08 WHICH ORDER DT.27.5.2011 IS DIRECTLY ON THE ISSUE WHEN THE TRIBUNAL WAS PLEASED TO CONSIDER THE ISSUE FROM ALL ANGLE BY UPHOLDING THE ORDER OF THE LEARNED CIT(A) WHO HAD NOTED THAT AS PER THE CONTRACT WITH THE STATE GOVERNMENT, THE ASSESSEE WAS REQUIRED TO PAY THE AFORESAID AMOUNT ON EACH RENEWAL OF THE LEASE FOR SUCH LAND MAKING IT MINEABLE. THE PAYMENT OF SUCH AMOUNT WAS FOR PROTECTION OF ENVIRONMENT AND NOT RELATING TO ANY PROPRIETARY RIGHTS WHICH WA S ORIGINALLY CONSIDERED BY THE ASSESSING OFFICER AS CAPITAL IN NATURE. THE LEARNED CIT(A) THEREFORE, DISTINGUISHED THE FACTS AS WERE NARRATED IN THE CASE LAWS CITED BY THE LEARNED ASSESSING OFFICER BY RELYING ON THE DECISION OF THE ITAT, CUTTACK BENCH FOR THE ASSESSMENT YEAR 1991 - 9 2 AND EARLIER IN THE CASE OF ORISSA FOREST DEVELOPMENT CORPORATION LTD., WHEN IT WAS SEEN THAT THE PAYMENTS HAD BEEN MADE TO EARMARK ED ACCOUNTS OF THE GOVERNMENT OF INDIA, MINISTRY OF ENVIRONMENTS AND FOREST NAMELY COMPENSATORY A FFORESTATION FUND MADE PURSUANT TO AN GOVERNMENT ORDER AND SIMILARLY TO SETTLE PAYMENTS. THIS PAYMENT WAS ON THE BASIS OF DIRECTION OF THE HONBLE SUPREME COURT IN THE CASE OF T.N. GOIDAVARMAN THIRUMULPAD V. UOI & ORS [ WP(C) NO.202 OF 1995 WHEN HONBLE C OURT OBSERVED THAT THIS AFFORESTATION WILL HAVE A LONG TERM BENEFIT FOR FUTURE GENERATION. WE ARE OF THE CONSIDERED VIEW THAT THE LEARNED CIT(A) RIGHTLY DIRECTED TO DELETE THE SAME FROM THE DISALLOWANCE INSOFAR AS THE ENDURING BENEFIT WAS TO FUTURE GENERAT ION AND NOT TO THE ASSESSEE IN VIEW OF THE FACT THAT THE ASSESSEE WAS REQUIRED TO MAKE THIS PAYMENT WAS ITA NO.76,266 AND 240/CTK/2010 5 COMPENSATORY FOR HAVING RENDERED INCOME FROM ORIGINAL SOURCE WAS REVENUE IN NATURE AND WAS RIGHTLY CLAIMED AND CONSIDERED BY THE LEARNED CIT(A). IN THIS VIEW OF THE MATTER, THE ISSUE AGITATED BY THE REVENUE IS DISMISSED. ITA NO.266/CTK/2010 (ASSESSMENT YEAR 2004 - 05) : 7. THE ISSUE AS RAISED IN THE APPEAL FOR THE ASSESSMENT YEAR 2002 - 03 HAS BEEN RAISED IN THIS APPEAL FOR THE ASSESSMENT YEAR 2004 - 05 AS WEL L WHEN ON DETAIL FINDING OF FACT IT HAS BEEN SUBMITTED THAT THE ASSESSING OFFICER INITIATED PROCEEDINGS U/S.147/148 WHEN HE RECOMPUTED THE DISALLOWANCE OF LOSSES WHICH THE LEARNED CIT(A) HAD CONSIDERED IN THE LIGHT OF THE FACT THAT THE CBDT HAS REFUSED T O CONDONE THE DELAY IN FILING THE RETURN S BY THE ASSESSEE WHEN THE ASSESSING OFFICER HIMSELF AFFORDED AN OPPORTUNITY TO THE ASSESSEE FOR FILING THE RETURN UNDER THE PROVISIONS OF SECTIONS 147/148. THEREFORE, THE SAME FACTS AS HAVE BEEN CONSIDERED IN THE A SSESSMENT YEAR 2002 - 03 IN THE ORDER U/S.154 ARE NOW BEING CONSIDERED UNDER THE PROVISIONS OF SECTION 147 IS CLEARLY AN ACTION OF THE ASSESSING OFFICER WHICH IS TAKING RECOURSE NOT AS A DIRECT FINDING OF MISTAKE APPARENT FROM RECORD BY PURSUING AN ISSUE AFT ER GIVING AN OPPORTUNITY TO THE ASSESSEE TO FILE A RETURN UNDER THE PROVISIONS OF SECTION 147 . THEREBY IT WAS TO ACCEPT THE SAME FACTS IN STATING THE TRIBUNALS DECISION WAS TO BE A CON TROVERTING DECISION FOR THE ASSESSEE TO COMMIT ANOTHER MISTAKE. THE CBD T HAD DENIED CONDONATION OF DELAY CANNOT BE STATED TO BE THE REASON FOR ASSESSING OFFICER TO INITIATE PROCEEDINGS U/S.147. THE ASSESSEE RIGHTLY CLAIMED RELIEF BEFORE THE LEARNED CIT(A) OF NON - INCLUSION OF RELIEF GRANTED BY THE ITAT FOR DETERMINING THE LOSS FOR THE ASSESSMENT YEAR 2002 - 03 WAS THEREFORE, CONSIDERED BY THE LEARNED CIT(A) BEING A GENERAL DIRECTION TO THE ASSESSING OFFICER IN THE MATTER OF CARRY FORWARD / SET OFF OF ITA NO.76,266 AND 240/CTK/2010 6 LOSSES COULD NOT BE INCOME HAVING ESCAPED ASSESSMENT U/S.147/148. IN VIEW OF THE ABOVE, WE DO NOT FIND MERIT IN THE GROUND RAISED BY THE REVENUE IN THIS REGARD. WE THEREFORE, UPHOLD THE ORDER OF THE LEARNED CIT(A) AND DISMISS THE APPEAL OF THE REVENUE. 8. IN THE RESULT, ALL THE APPEALS OF THE REVENUE ARE DISMISSED. PRONOUNCED IN OPEN COURT ON DT. 12.08.2011 SD/ - SD/ - (K.S.S.PRASAD RAO) JUDICIAL MEMBER (K.K.GUPTA) ACCOUNTANT MEMBER DATE: 12.08.2011 H.K.PADHEE, SENIOR PRIVATE SECRETARY. COPY OF THE ORDER F ORWARDED TO : 1. THE APPELLANT: ASST.COMMISSIONER OF INCOME - TAX, CIRCLE 1(1), BHUBANESWAR. 2. THE RESPONDENT: M/S.ORISSA MINING CORPORATION LTD., OMC HOUSE, BHUBANESWAR 3. THE CIT, 4. THE CIT(A), 5. THE DR, CUTTACK 6. GUARD FILE (IN DUPLICATE) TRUE COPY, BY ORDER, SENIOR PRIVATE SECRETARY.