Appeal details
Counselvise Citation
[2023] 140 COUNSELVISE.COM (IT) 132083 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
2 month(s) 14 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
25-05-2023
Appeal Filed By
Assessee
Order Result
PartlyAllowed
Bench Allotted
I
Next Hearing Date
23-05-2023
Assessment Year
2020-2021
Appeal Filed On
12-03-2023
Judgement Text
vk;dj vihyh; vf/kdj.k eqacbZ ihB ßvk;Þ eaqcbZ Jh fodkl voLFkh] U;kf;d lnL; ,oa Jh xxu xks;y] ys[kkdkj lnL; ds le{k IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “I” BENCH BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER & SHRI GAGAN GOYAL, ACCOUNTANT MEMBER vk-vk-la- 777@eaqcbZ@2023 ¼fu-oa- 2020&21½ ITA No.777/MUM/2023 (A.Y.2020-21) Shelf Drilling Offshore Resources Limited II 4 th Floor, Schindler House, Main Street Hiranandani Gardens, Mumbai-400 076 PAN No. AATCS6808E ..... vihykFkhZ/Appellant cuke Vs. Assistant Commissioner of Income Tax (IT)-4(2)(1) Room No.1708, 17 th Floor, Air India Building, Nariman Point, Mumbai-400 021 ..... izfroknh/Respondent vk-vk-la- 778@eaqcbZ@2023 ¼fu-oa- 2020&21½ ITA No.778/MUM/2023 (A.Y. 2020-21) Shelf Drilling J. T. Angel Limited 4 th Floor, Schindler House, Main Street Hiranandani Gardens, Mumbai-400 076 PAN No. AASCS2719P ..... vihykFkhZ/Appellant cuke Vs. Assistant Commissioner of Income Tax (IT)-4(2)(1) Room No.1708, 17 th Floor, Air India Building, Nariman Point, Mumbai-400 021 ..... izfroknh/Respondent P a g e | 2 ITA No.777,778,779/MUM/2023 (A.Y.2020-21) vk-vk-la- 779@eaqcbZ@2023 ¼fu-oa- 2020&21½ ITA No.779/MUM/2023 (A.Y. 2020-21) Shelf Drilling Trident XII Ltd. 4 th Floor, Schindler House, Main Street Hiranandani Gardens, Mumbai-400 076 PAN No. AASCS2714A ..... vihykFkhZ/Appellant cuke Vs. Assistant Commissioner of Income Tax (IT)-4(2)(1) Room No.1708, 17 th Floor, Air India Building, Nariman Point, Mumbai-400 021 ..... izfroknh/Respondent vihykFkhZ }kjk@Appellant by : Shri Nitesh Joshi, Advocate izfroknh }kjk@Respondent by : Shri Avneesh Tiwari, Sr. DR lquokbZ dh frfFk@Date of hearing : 24/05/2023 ?kks”k.kk dh frfFk@Date of pronouncement : 26/05/2023 vkns’k/ ORDER PER VIKAS AWASTHY, JM: These three appeals by three different assessees (from the same group) are taken up together as the core issue raised in all the three appeals is identical. The appeal in ITA No.778/Mum/2023 is taken as lead case, hence, the facts are narrated from the said appeal. ITA No.778/MUM/2023 (A.Y. 2020-21) 2. This appeal by the assessee is directed against the final assessment order dated 18.01.2023 passed u/s 143(3) r.w.s. 144C (13) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”), for the assessment year 2020-21. P a g e | 3 ITA No.777,778,779/MUM/2023 (A.Y.2020-21) 3. The brief facts of the case as emanating from records are: The assessee company was incorporated in Cayman Islands. The assessee is engaged in the business of providing drilling services for exploration and production of mineral oil. The assessee filed its return of income for AY 2020-21 declaring total income of Rs.3,71,40,180/-. The assessee claimed refund of Rs.3,46,14,230/-. During the assessment proceedings, the Assessing Officer (AO) noted that the assessee has claimed set off of unabsorbed business loss to the tune of Rs.7,06,34,786/- pertaining to AY 2014-15 in the impugned assessment year. The AO denied set off of unabsorbed business loss pertaining to AY 2014-15. The assessee filed objections before the Dispute Resolution Panel (DRP) inter-alia assailing denial of set off of unabsorbed business loss pertaining to AY 2014-15. The DRP vide directions dated 21.09.2022 rejected the objections. The AO vide impugned order gave effect to the directions of the DRP. Hence, the present appeal by the assessee. 4. Shri Nitesh Joshi appearing on behalf of the assessee submitted that ground no.1 of appeal is general. 4.1 In respect of ground no.2, the ld. Counsel submitted that the AO has erred in not allowing set off of unabsorbed business loss pertaining to AY 2014-15 in the AY 2020-21. The ld. Counsel narrating the facts submitted that in AY 2014-15, the assessee had filed return of income declaring loss. The AO while completing the assessment rejected the claim of assessee and determined the total income as profit. The issue travelled to the Tribunal. The Tribunal vide order dated 04.10.2019 in ITA No. 7414/Mum/2017 set aside the assessment order for AY 2014-15 and restored the issue back to the file of AO for de novo assessment. In second round, the AO again in draft assessment order dated 28.09.2021 determined total taxable income of assesse as profit. The assessee filed Writ Petition No.2661 of 2021 before Hon’ble Bombay High Court challenging the said assessment order. The Hon’ble High Court vide order dated 30.03.2022 as ad-interim relief stayed the operation of P a g e | 4 ITA No.777,778,779/MUM/2023 (A.Y.2020-21) assessment order dated 28.09.2021. The ld. Counsel stated at Bar that the said Writ Petition is still pending for final disposal and is now listed for hearing on 21.07.2023. The ld. Counsel further pointed that in the case of assessee for AY 2016-17 & 2017- 18, similar issue had come up before the Tribunal in ITA No.1890 & 1892/Mum/2020, respectively. The Tribunal vide order dated 05.01.2021 directed the AO to allow set off of brought forward losses of AY 2014-15. The Tribunal in assessee’s case for AY 2015-16 in ITA No.2135/Mum/2020 decided on 25.01.2023 following the order of Tribunal for AY 2016-17 and 2017-18 granted set off of brought forward losses for AY 2014-15. The ld. Counsel for the assessee prayed that there has been no change in the facts in impugned assessment year, therefore, ground no.2 of appeal be decided in the light of aforementioned decisions of the Tribunal in assessee’s case for the preceding assessment years. 4.2 The ld. Counsel submitted that in ground no.3 of appeal, the assessee has assailed short grant of TDS Credit. He pointed that the assessee has filed Rectification Petition dated 23.05.2023 before the AO for seeking necessary relief. 4.3 In ground no. 4 of appeal, the assessee has assailed erroneous levy of interest u/s 234A of the Act. The ld. Counsel pointed that the time period for filing of appeal was extended by the CBDT. The assessee filed return of income within extended period, hence, no interest u/s 234A of the Act was leviable. 5. Per contra, Shri Avneesh Tiwari representing the Department vehemently defended the impugned order and prayed for dismissing appeal of the assessee. However, the ld. Departmental Representative (DR) fairly admitted that the issue of carry forward and set off of unabsorbed business loss pertaining to AY 2014-15 was considered by the Tribunal in assessee’s appeal for the preceding assessment years. 6. Both sides heard. Orders of authorities below examined. The ground no.1 of appeal is general in nature, hence, require no separate adjudication. P a g e | 5 ITA No.777,778,779/MUM/2023 (A.Y.2020-21) 7. The primary ground raised in appeal by the assessee is ground no.2 impugning disallowance of carry forward and set off of unabsorbed business loss of AY 2014-15 in AY 2020-21. We find that identical ground was raised by the assessee in AY 2015-16, 2016-17 and 2017-18 before the Tribunal in appeal for the respective assessment years. The Co-ordinate Bench vide order dated 05.01.2021 common for AY 2016-17 and 2017-18 in ITA No.1890 & 1892/Mum/2020 restored this issue back to the file of AO with the following observations. 8. Having given our careful consideration to the rival contentions and having perused the material on record, we see merits, in principle, in the stand of the assessee. As the things as on now, the assessment proceedings for the assessment year 2014-15 are not yet finalized, and, therefore, any determination of tax liability, on the assumption that the claim of loss in the said income tax return is untenable in law, is certainly uncalled for, and, at the minimum, premature. This is, however, precisely what the Assessing Officer ends up doing when he declines the set off of the loss, as claimed by the assessee, in the income tax return for the assessment year 2014-15. In our considered view, therefore, the set off of the loss claimed by the assessee, at this stage, cannot indeed be declined. However, as we hold so, let us also deal with the apprehension of the learned Departmental Representative so far as refund becoming due to the assessee even as a related assessment, having crucial bearing on the refund, is in progress. That position, if correct, does seem incongruous at the first sight, but that does not seem to be the correct legal position. The reason is this. When one carefully looks at the scheme of Section 240, the apprehensions seem to be perhaps ill conceived. Section 240, inter alia, provides that "(w)here, as a result of any order passed in appeal or other proceeding under this Act. refund of any amount becomes due to the assessee, the Assessing Officer shall, except as otherwise provided in this Act, refund the amount to the assessee without his having to make any claim in that behalf: Provided that where, by the order aforesaid, an assessment is set aside or cancelled and an order of fresh assessment is directed to be made, the refund, if any, shall become due only on the making of such fresh assessment". In the present case, the coordinate bench decision, by virtue of which the assessment under section 143(3) was remanded to the Assessing Officer, was passed on 4th October 2019, whereas the related income tax returns for the present assessment years were filed by the assessee much before that date. The refunds, if any due to the assessee, have thus become due as a result of the appellate order dated 4" October 2019. and, to borrow the words of section 240, "by the order aforesaid, an assessment is set aside or cancelled and an order of fresh assessment is directed to be made". It would appear to us that the law does not provide that the assessment in which the refund has arisen must be the assessment set aside or cancelled. Therefore, a view is indeed possible that even though the assessment set aside and directed P a g e | 6 ITA No.777,778,779/MUM/2023 (A.Y.2020-21) to made afresh may be of an year other than the assessment year in which the refund has arisen, refund will become due only on such fresh assessment being made. There does, therefore, seem to be a prima facie valid school of thought that in such a situation, as in the present case, refund of taxes for the present assessment years must wait the finalization of the assessment for the assessment year 2014-15 because of which the refund may arise. Viewed thus, the apprehension of the learned Departmental Representative, therefore, does not seem valid. In any case, the remanded assessment is to be finalized, as learned Departmental Representative himself accepts, within less than three months from today, and, therefore, this situation of uncertainty is too transitory and too short by any standard. As soon as the remanded assessment is finalized, any variations in the assessed loss/income will have to be taken into account by suitably amending these set off claims in these years as well. 9. In view of the above discussions, as also bearing in mind entirety of the case, we uphold the plea of the assessee that so far as set off of loss returned by the assessee in the assessment year 2014-15 is concerned, the same cannot be declined by the Assessing Officer in the assessment years 2016-17 and 2017-18, if otherwise admissible, only for the reason that the assessment for the assessment year 2014-15 is in progress. We direct the Assessing Officer to allow, for the time being, the claim for set off of loss brought forward, in the light of the above observations. The above direction, however, should not be construed as our direction for the grant of refund, if any is found admissible as a result of income computed as above, for the simple reason that a call will have to be taken by the Assessing Officer as to whether, in the light of the discussions above, refund of taxes is permissible in such a situation in the light of first proviso to Section 240. While doing so, needless to say, the Assessing Officer shall give a due and reasonable opportunity of hearing to the assessee on this point as well. Ordered, accordingly.” The facts in the impugned assessment year are identical. Similar reasons have been assigned by AO in AY 2020-21 for disallowing assessee’s claim of set off of brought forward unabsorbed business losses of AY 2014-15. Since, the facts in the impugned assessment year are pari-materia, we follow the aforementioned order of the Tribunal in the impugned assessment year and restore the issue back to the file of AO with similar directions. Thus, ground no. 2 of appeal is allowed for statistical purpose. 8. In ground no. 3 of appeal, the assessee has assailed short grant of TDS Credit. The ld. Counsel for the assessee has pointed that the assessee has filed Rectification P a g e | 7 ITA No.777,778,779/MUM/2023 (A.Y.2020-21) Petition before the AO on 23.05.2023. The AO is directed to dispose of the aforesaid Rectification Petition, in accordance with law preferably within a period of six months from the date of receipt of this order. Thus, ground no.3 of appeal is allowed for statistical purpose. 9. In ground no. 4 of appeal, the assessee has assailed charging of interest u/s 234A and 234B of the Act. The contention of the assessee is that the assessee had filed return of income for the impugned assessment year within the extended period as notified by the Board. Therefore, no interest u/s 234A of the Act is leviable. Without commenting on merits, we restore this issue back to the file of AO for re-examining in the light of Board notification and thereafter pass order, in accordance with law. Insofar as levy of charges interest u/s 234B of the Act, the same is mandatory and consequential. The ground no.4 of appeal is thus partly allowed for statistical purpose. 10. In ground no. 5 of appeal, the assessee has assailed initiation of penalty proceedings u/s 270A of the Act. Challenge to penalty proceedings at this stage is premature. Hence, ground no.5 of appeal is dismissed. 11. In the result, appeal of the assessee is partly allowed for statistical purpose, in terms of aforesaid. ITA No.777/MUM/2023 (A.Y. 2020-21) 12. This appeal by the assessee is against the assessment order passed u/s 143(3) r.w.s. 144C(13) of the Act, dated 18.01.2023, for the assessment year 2020- 21. The ld. Counsel for the assessee submitted that the facts germane to the issue of denial of set off of carry forward business loss in AY 2020-21 are similar to the facts in appeal ITA No.778/Mum/2023. The only difference is the assessment year of which business loss is carried forward. In the instant case, the assessee has set P a g e | 8 ITA No.777,778,779/MUM/2023 (A.Y.2020-21) off brought forward business losses of AY 2018-19. The ld. Counsel submitted that the assessee had filed return of income of loss for AY 2018-19. The AO while passing draft assessment order, assessed the taxable income in profit. The assessee assailed the draft assessment order in Writ Petition No.3060 of 2021 before the Hon’ble Bombay High Court. The Hon’ble High Court as ad-interim relief stayed the operation of draft assessment order. 13. The ld. DR stated that the facts in the impugned assessment year are similar to the facts in appeal ITA No.778/Mum/2023 (supra) except for the assessment year of brought forward losses that has been set off by the assessee in AY 2020-21. 14. We have heard the submissions made by rival sides. Both sides are unanimous in stating that the facts germane to the issue in appeal is identical to the facts narrated in respect of ground no. 2 in ITA No.778/Mum/2023 (supra). The findings given by us while deciding ground no. 2 in ITA No.778/Mum/2023 would mutatis mutandis apply to the ground no .2 of present appeal. Consequently, ground no. 2 is allowed for statistical purpose, in similar terms. 15. In ground no.3 of appeal, the assessee has assailed initiation of penalty proceedings u/s 270A of the Act. Challenge to penalty proceedings at this stage is premature. The ground no.3 is dismissed, accordingly. 16. In the result, appeal of the assessee is partly allowed for the statistical purpose. ITA No.779/MUM/2023 (A.Y. 2020-21) 17. This appeal by the assessee is against the assessment order passed u/s 143(3) r.w.s. 144C(13) of the Act, dated 18.01.2023, for the assessment year 2020- 21. The grounds raised by the assessee in appeal are identical to the grounds raised in appeal ITA No.777/Mum/2023. Both sides unanimously stated that the facts in P a g e | 9 ITA No.777,778,779/MUM/2023 (A.Y.2020-21) this appeal are similar to the facts in ITA No.777/Mum/2023. Hence, the submissions made in the said appeal would equally hold good for the present appeal. Since, the facts in instant appeal are similar to the facts in ITA No.777/Mum/2023 (supra). The findings given by us while deciding the grounds of appeal would mutatis mutandis apply to the grounds in present appeal. For parity of reasons, appeal is partly allowed for statistical purpose. Order pronounced in the open court on Friday the 26 th day of May 2023. Sd/- Sd/- (GAGAN GOYAL) (VIKAS AWASTHY) Yks[kkdkj lnL;/ACCOUNTANT MEMBER U;kf;d lnL;/JUDICIAL MEMBER eaqcbZ/Mumbai, fnukad/Dated: 26/05/2023 Mahesh R. Sonavane P a g e | 10 ITA No.777,778,779/MUM/2023 (A.Y.2020-21) izfrfyih vxzsf”kr Copy of the Order forwarded to: 1. vihykFkh/The Appellant , 2. izfroknh/The Respondent. 3. vk;dj vk;qDr/ CIT 4. foHkkxh; izfrfu/kh] vk;- vih- vf/k-] eqacbZ/DR, ITAT, Mumbai 5. xkMZ QkbZy/Guard file. BY ORDER, //True Copy// (Dy. /Asst. Registrar)/ Sr. Private Secretary ITAT, Mumbai
AI Insights
The case involves three appeals by Shelf Drilling Offshore Resources Limited II, Shelf Drilling J. T. Angel Limited, and Shelf Drilling Trident XII Ltd., against the Assistant Commissioner of Income Tax, concerning the denial of set off of unabsorbed business losses from the assessment year 2014-15 to the assessment year 2020-21. The primary legal contention revolves around the carry forward and set off of unabsorbed business losses, which the Assessing Officer initially denied. The Dispute Resolution Panel upheld this decision, leading to the current appeals. The Tribunal, referencing previous decisions, directed the Assessing Officer to allow the set off of losses, emphasizing that the ongoing assessment for AY 2014-15 should not preclude the set off in subsequent years.
