Emami Frank Ross Ltd.(A/c Real Value Projects P. Ltd.)(since merged), Kolkata V. DCIT, Central Circle - VIII, Kolkata, Kolkata

ITA 773/KOL/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54546 (ITAT-KOLKATA)
• Duration Of Justice: 3 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-09-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 19-05-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: AJAY KUMAR SINGH
• Assessee Lawyers: D K KOTHARI
• Keywords: Depreciation; Opportunity of being heard; Assessment record; Unabsorbed depreciation
• Section: 143(3); 115JB; 263

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : KOLKATA ( ) . . , , , , , , ) [BEFORE HONBLE SRI S.V. MEHROTRA, A.M. & HONBLE SRI MAHAVIR SINGH, J.M.] ' ' ' ' / I.T.A NO. 773/KOL/2011 #$ %& / ASSESSMENT YEAR : 2006-2007 EMAMI FRANK ROSS LTD. (A/C. REAL VALUE PROJECTS P. LTD.) -VS.-DEPUTY COMMISSIONER OF INCOME TAX, (SINCE MERGED), KOLKATA (PAN : AAACF 3726 D) CENTRAL CIRCLE-VIII, KOLKATA ( '( /APPELLANT ) ( )*'( / RESPONDENT ) FOR THE APPELLANT : SHRI D.K. KOTHARI, A.R. FOR THE RESPONDENT : SHRI AJAY KUMAR SINGH, D.R. + / ORDER PER SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER/ . . , :- THE ASSESSEE HAS FILED THIS APPEAL FOR ASSESSMENT YEAR 2006-07 AGAINST ORDER OF LD. COMMISSIONER OF INCOME TAX (CENTRAL-I), KOLKATA DAT ED 15.03.2011. 2. THE EFFECTIVE GROUND OF APPEAL IS THAT THE ORDER OF LD. CIT UNDER SECTION 263 IS VOID, ILLEGAL AND WRONG AND THE SAME DESERVES TO BE SET A SIDE. 3. BRIEF FACTS OF THE CASE ARE THAT ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) ON 24.10.2008 DETERMINING TOTAL INCOME AT RS.7,20,960/ -. LD. CIT EXAMINED THE ASSESSMENT RECORDS AND NOTICED THAT DEPRECIATION ON BUILDING W AS PROVIDED @ 18.18% OF THE WRITTEN DOWN VALUE, ALTHOUGH AS PER SCHEDULE XIV OF THE COMPANIE S ACT, RATE OF DEPRECIATION FOR BUILDING (OTHER THAN FACTORY BUILDING) WAS 5% UNDER WDV. HE FURTHER NOTICED THAT ASSESSEE PROVIDED DEPRECIATION FOR EARLIER YEARS AMOUNTING TO RS.96,9 3,642/-. LD. CIT CONCLUDED THAT SUCH EXCESS PROVISION OF DEPRECIATION IN THE ACCOUNTS WAS NOT A S PER PART II & III OF SCHEDULE VI OF THE COMPANIES ACT AND, THUS, EXCESS PROVISION OF DEPREC IATION IN THE PROFIT & LOSS A/C. RESULTED IN UNDERSTATEMENT OF BOOK PROFIT BY IDENTICAL AMOUNT. IN THIS BACKGROUND, LD. CIT OBSERVED THAT ASSESSING OFFICER HAD NOT EXAMINED THE APPLICABILIT Y OF THE PROVISION OF SECTION 115JB OF THE INCOME TAX ACT. AFTER CONSIDERING THE ASSESSEES SU BMISSION, LD. CIT CONCLUDED THAT ASSESSING OFFICER HAD NOT EXAMINED THE ISSUES RAISED IN THE S HOW-CAUSE NOTICE WHILE PASSING THE ITA NO. 773/KOL./2011 2 ASSESSMENT ORDER UNDER SECTION 143(3) OF THE ACT. A FTER EXAMINING THE FACTS OF EXCESS PROVISION OF DEPRECIATION MADE IN THE ACCOUNTS, LD. CIT CONCL UDED THAT THIS WAS DONE TO AVOID PAYMENT OF TAX UNDER SECTION 115JB OF THE ACT. HE, THEREFORE, HELD THAT THE ASSESSMENT ORDER UNDER SECTION 143(3) DATED 24.10.2008 WAS APPARENTLY ERRONEOUS AN D PREJUDICIAL TO THE INTEREST OF REVENUE ON ACCOUNT OF NON-EXAMINATION OF PROVISIONS OF SECTION 115JB. HE, THEREFORE, SET ASIDE THE ASSESSMENT ORDER WITH A DIRECTION TO ASSESSING OFFI CER TO COMPLETE IT AS PER LAW AFTER AFFORDING PROPER OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. . 4. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ASSE SSING OFFICER HAD DULY EXAMINED THE DEPRECIATION CHARGED BY ASSESSEE AND HAD TAKEN ONE POSSIBLE VIEW. IN SUPPORT OF HIS ARGUMENT, HE RELIED ON THE FOLLOWING DECISIONS :- (I) MALABAR INDUSTRIAL CO. LTD. VS.- CIT (2000) 243 ITR 83 (SC); (II) TAMIL NADU INDUSTRIAL INVESTMENT CORPN. LTD. VS.- CIT (1999) 237 ITR 889, 893 901 (SC); (III) CIT VS.- PRADEEP KUMAR TODI (2009) 181 TAXMA N 29 (CAL.); (IV) CIT VS.- HINDUSTAN COCA COLA BEVERAGES PVT. L TD. 2011 TMI 201786 DELHI HIGH COURT. IN VIEW OF ABOVE, HE SUBMITTED THAT THE ASSESSMENT ORDER WAS NOT ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. LD. COUNSEL FOR THE ASSESS EE FURTHER POINTED OUT THAT ASSESSING OFFICER HAD TAKEN THE LOSS AS PER PROFIT & LOSS A/C. BUT HA D NOT CONSIDERED THE UN-ABSORBED DEPRECIATION AS PER ACCOUNTS. THEREFORE, EVEN OTHER WISE THE PROVISIONS OF SECTION 115JB WOULD NOT BE APPLICABLE ONCE FULL EFFECT IS GIVEN TO SUCH UNABSORBED DEPRECIATION. 5. LD. CIT, D.R. REFERRED TO PAGE 6 OF LD. CITS OR DER AND POINTED OUT THAT HE HAS OBSERVED AS UNDER :- FROM THE SCRUTINY OF PREVIOUS RECORDS OF THE ASSES SEE, IT IS OBSERVED THAT THE ASSESSEE HAD CHANGED ITS ACCOUNTING POLICY FREQUENTLY IN LAST SIX YEARS AS FOR AS CLAIMING OF DEPRECIATION IS CONCERN ED. ASSESSEE CLAIMED DEPRECIATION WHENEVER IT WAS ABOUT TO COME UNDER TH E PROVISIONS OF SECTION 115JB. IT IS CLEAR THAT THE ASSESSEE HAS BEEN CHARGING DE PRECIATION ON BUILDING WHENEVER IT WAS LIKELY TO COME UNDER THE P ROVISIONS OF SECTION 115JB. FROM THE RECORDS, IT APPEARS THAT ASSESSING OFFICER HAS NOT ITA NO. 773/KOL./2011 3 EXAMINED THE APPLICABILITY OF PROVISIONS OF SECTION 115JB IN HIS ORDER UNDER SECTION 143(3). 5.1. HE, THEREFORE, SUBMITTED THAT ASSESSING OFFICE R HAS NOT AT ALL EXAMINED THE APPLICABILITY OF PROVISIONS OF SECTION 115JB OF THE ACT. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL AVAILABLE ON RECORD. ADMITTEDLY IN THE ASSESSMENT ORDER, ASSESSING OFFIC ER HAS NOT AT ALL REFERRED TO THE PROVISIONS OF SECTION 115JB, THE APPLICABILITY OF WHICH REQUIR ES TO BE EXAMINED IN ACCORDANCE WITH LAW. EVEN DURING THE ASSESSMENT STAGE, ASSESSING OFFICER HAD NOT RAISED THE ISSUES UNDER SECTION 115JB. NON-EXAMINATION OF PROVISIONS OF SECTION 115 JB RENDERS THE ASSESSMENT ORDER ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF REVENUE. THEREFORE, LD. CIT HAS RIGHTLY INVOKED THE PROVISIONS OF SECTION 263. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT EVEN IF THE ASSESSMENT PROCEEDINGS UNDER SECTION 263 ARE UPHELD , THEN ASSESSING OFFICER SHOULD EXAMINE THE ISSUES WITHOUT ANY BIAS BASED ON THE OBSERVATIO NS OF LD. CIT. WE FIND THAT LD. CIT HIMSELF HAS ONLY SET ASIDE THE ASSESSMENT ORDER WITH A DIRE CTION TO ASSESSING OFFICER TO COMPLETE THE ASSESSMENT AS PER LAW. THEREFORE, THE ASSESSING OFF ICER HAS TO EXAMINE THE ISSUES DE NOVO IN ACCORDANCE WITH LAW. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 13/ 09/2011. SD/- SD/- [ MAHAVIR SINGH / ] [S.V. MEHROTRA/ ( . . )] JUDICIAL MEMBER/ ACCOUNTANT MEMBER/ DATED : 13/ 09/ 2011 COPY OF THE ORDER FORWARDED TO: 1. EMAMI FRANK ROSS LTD. (A/C. REAL VALUE PROJECTS P. LTD. (SINCE MERGED), EMAMI MARKET, 3, LORD SINHA ROAD, KOLKATA-71. 2 DCIT, CENTRAL CIRCLE-VIII, KOLKATA, PODDAR COURT, 18, RABINDRA SARANI, KOLKATA-700 001. 3. CIT(APPEALS)- ,KOLKATA 4. CIT- , KOLKATA 5 . DR, KOLKATA BENCHES, KOLKATA (TRUE COPY) BY ORDER ASSISTANT REGISTRAR, I.T.A.T., KOLKATA LAHA, SR. P.S.