Andrew Yule & Co Ltd., Kolkata V. PCIT, -2, KOLKATA, Kolkata

ITA 798/KOL/2015

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0147 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 04-06-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: S BHOWMICK
• Keywords: Depreciation; Opportunity of being heard
• Section: 143(3); 142(1); 263

Judgement Text

ITA NO. 798/KOL/2015 A.Y. 2010-2011 ANDREW YULE & CO. LIMITED 1 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA A BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, VICE-PRESIDENT (KZ) AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER I.T.A. NO. 798/KOL/2015 ASSESSMENT YEAR: 2010-2011 ANDREW YULE & CO. LIMITED,......................... ..............................APPELLANT YULE HOUSE, 8, DR. RAJENDRA PRASAD SARANI, KOLKATA-700 001 [PAN: AACCA 4245 Q] -VS.- PRINCIPAL COMMISSIONER OF INCOME TAX-2,............ ................RESPONDENT KOLKATA, AAYAKAR BHAWAN, 3 RD FLOOR, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 APPEARANCES BY: SHRI J.P. KHAITAN, SR. ADVOCATE, SHRI P. JHUNJHUNWA LA, ADVOCATE AND SHRI S. BHOWMICK, ADVOCATE FOR THE APPELLANT SHRI DEVI SHARAN SINGH, CIT, D.R. , FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : NOVEMBER 27, 2018 DATE OF PRONOUNCING THE ORDER : DECEMBER 07, 2018 O R D E R PER SHRI P.M. JAGTAP, VICE-PRESIDENT (KZ):- THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF LD. PRINCIPAL COMMISSIONER OF INCOME TAX-2, KOLKATA DAT ED 31.03.2015 PASSED UNDER SECTION 263 OF THE INCOME TAX ACT, 196 1. 2. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY, W HICH IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF TEA AND ENGINEERIN G GOODS. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED B Y IT ON 27.09.2010 DECLARING A LOSS OF RS.5,39,95,743/- AND AFTER SETT ING OFF THE UNABSORBED ITA NO. 798/KOL/2015 A.Y. 2010-2011 ANDREW YULE & CO. LIMITED 2 DEPRECIATION, THE NIL INCOME WAS DECLARED BY THE AS SESSEE. IN THE ASSESSMENT COMPLETED UNDER SECTION 143(3) VIDE AN O RDER DATED 13.03.2013, THE TOTAL INCOME OF THE ASSESSEE WAS DE TERMINED BY THE ASSESSING OFFICER AT RS.7,82,89,048/- AFTER MAKING VARIOUS ADDITIONS/DISALLOWANCES. THE RECORD OF THE SAID ASS ESSMENT CAME TO BE EXAMINED BY THE LD. PRINCIPAL CIT AND ON SUCH EXAMI NATION, HE FOUND THAT THE INCOME EARNED BY THE ASSESSEE FROM PROFIT ON SA LE OF INVESTMENT OF RS.68.42 CRORES AND DEDUCTED IN THE COMPUTATION OF INCOME WAS NOT CONSIDERED BY THE ASSESSING OFFICER IN THE ASSESSME NT ORDER FOR THE PURPOSE OF TAXATION UNDER THE HEAD LONG-TERM CAPIT AL GAINS. ACCORDING TO THE LD. PRINCIPAL CIT, LONG-TERM CAPITAL GAIN ON SALE OF THE SAID INVESTMENT AFTER DEDUCTING THE INDEXED COST OF ACQU ISITION WAS TO THE TUNE OF RS.58.20 CRORES AND SINCE THE SAME WAS NOT EXEMPT UNDER SECTION 10(38), THE ASSESSMENT ORDER PASSED BY THE ASSESSIN G OFFICER UNDER SECTION 143(3) WAS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. SHE, THEREFORE, ISSUED A SHOW-CAUSE NOTICE UNDER SECTION 263 ON 23.12.2013 REQUIRING THE ASSESSEE TO OFFER ITS EXPL ANATION IN THE MATTER. IN REPLY, IT WAS SUBMITTED ON BEHALF OF THE ASSESSE E-COMPANY THAT THE ISSUE OF TAXABILITY OR OTHERWISE OF THE PROFIT ON T HE SALE OF SHARES OF PHOENIX YULE LTD. AND DISHERGARH POWER SUPPLY CO. L TD. WAS UNDER CONSIDERATION OF BIFR AND THE BIFR VIDE ITS ORDER D ATED 24 TH SEPTEMBER, 2013 HAD DIRECTED THE INCOME TAX DEPARTMENT TO CONS IDER THE CLAIM OF THE ASSESSEE FOR EXEMPTION UNDER SECTION 45 OF THE ACT. IT WAS SUBMITTED THAT A DETAILED SUBMISSION WAS FILED BY THE INCOME TAX DEPARTMENT IN THIS REGARD AND THE MATTER WAS STILL PENDING BEFORE THE BIFR. THIS SUBMISSION MADE ON BEHALF OF THE ASSESSEE DID NOT FIND FAVOUR WITH THE LD. PRINCIPAL CIT. SHE HELD THAT THIS MATTER HAD NOT BEEN EXAMINE D BY THE ASSESSING OFFICER AT ALL DURING THE COURSE OF ASSESSMENT PROC EEDINGS AND SUCH NON- EXAMINATION BY THE ASSESSING OFFICER RENDERED THE A SSESSMENT ORDER PASSED BY HIM UNDER SECTION 143(3) ERRONEOUS AS WEL L AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. SHE ACCORDINGLY SET AS IDE THE SAID ORDER VIDE AN ORDER DATED 31.03.2015 PASSED UNDER SECTION 263 WITH A DIRECTION TO ITA NO. 798/KOL/2015 A.Y. 2010-2011 ANDREW YULE & CO. LIMITED 3 THE ASSESSING OFFICER TO COMPLETE THE ASSESSMENT AF RESH BY PASSING A SPEAKING ORDER AFTER GIVING THE ASSESSEE NECESSARY OPPORTUNITY OF BEING HEARD. AGGRIEVED BY THE ORDER OF THE LD. PRINCIPAL CIT UNDER SECTION 263, THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE T RIBUNAL. 3. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE LONG-TERM CAPITAL GAIN EARNED BY THE ASSESSEE FROM THE SALE O F SHARES IN QUESTION WAS CLAIMED TO BE EXEMPT AND THE MATTER RELATING TO THE SAID CLAIM WAS PENDING BEFORE BIFR. HE SUBMITTED THAT THE ASSESSIN G OFFICER WAS AWARE OF THIS POSITION AND AFTER EXAMINING THE RELEVANT D ETAILS, HE TOOK A CONSIDERATE DECISION TO ALLOW THE CLAIM OF THE ASSE SSEE FOR EXEMPTION UNDER THE IMPRESSION THAT IT WOULD BE ALLOWED BY BI FR. HE INVITED OUR ATTENTION TO THE COPY OF NOTICE ISSUED BY THE ASSES SING OFFICER UNDER SECTION 142(1) ON 25.10.2011 PLACED AT PAGE NO. 46 OF THE PAPER BOOK AND POINTED OUT THAT THE DETAILS OF QUOTED AND UNQUOTED SHARES WERE CALLED FOR BY THE ASSESSING OFFICER DURING THE COURSE OF A SSESSMENT PROCEEDINGS. HE ALSO INVITED OUR ATTENTION TO THE COPY OF REPLY DATED 22.11.2012 FILED BY THE ASSESSEE PLACED AT PAGES NO. 49 & 50 OF THE PAPER BOOK TO SHOW THAT THE RELEVANT DETAILS REQUIRED BY THE ASSESSING OFFICER WERE DULY FURNISHED BY THE ASSESSEE. HE ALSO INVITED OUR ATTE NTION TO THE LETTER DATED FEBRUARY 23, 2012 WRITTEN BY THE SECRETARY OF THE DEPARTMENT OF HEAVY INDUSTRY TO THE SECRETARY OF THE DEPARTMENT O F REVENUE (COPY AT PAGE NO. 304 OF THE PAPER BOOK) RECOMMENDING CONSID ERATION OF ASSESSEES CLAIM FAVOURABLY TO OBVIATE FINANCIAL HA RDSHIP AND DERAILMENT OF THE REVIVAL PROCESS. HE ALSO REFERRED TO THE LET TER DATED MARCH 13, 2013 RECEIVED BY THE ASSESSEE FROM JT. DIRECTOR OF INCOM E TAX (RECOVERY) (COPY AT PAGES NO. 191 & 192 OF THE PAPER BOOK) AND REPLY GIVEN BY THE ASSESSEE VIDE LETTER DATED APRIL 04, 2013 (COPY AT PAGES NO. 193 & 194 OF THE PAPER BOOK) TO SHOW THAT THE ISSUE RELATING TO THE ASSESS EES CLAIM FOR EXEMPTION WAS STILL IN DISPUTE. HE CONTENDED THAT T HE ISSUE RELATING TO THE ASSESSEES CLAIM FOR THE SAID EXEMPTION THUS WAS EX AMINED BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT P ROCEEDINGS AND BEING ITA NO. 798/KOL/2015 A.Y. 2010-2011 ANDREW YULE & CO. LIMITED 4 AWARE OF THE LATEST DEVELOPMENT, THE CLAIM OF THE A SSESSEE FOR EXEMPTION WAS ALLOWED BY HIM BY TAKING A CONSCIOUS AND WELL C ONSIDERED VIEW. HE CONTENDED THAT THERE WAS THUS NO ERROR IN THE ORDER OF THE ASSESSING OFFICER AS ALLEGED BY THE LD. PRINCIPAL CIT CALLING FOR REVISION UNDER SECTION 263 OF THE ACT. IN SUPPORT OF THIS CONTENTI ON, THE LD. COUNSEL FOR THE ASSESSEE RELIED ON THE DECISION OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS.- MULCHAND BAGRI [68 TAXMAN 215 ]. 4. THE LD. D.R. CONTENDED THAT THE CLAIM OF THE ASS ESSEE FOR EXEMPTION ON ACCOUNT OF LONG-TERM CAPITAL GAIN ARISING FROM T HE SALE OF SHARES WAS REJECTED BY THE BIFR AND THERE WAS NO POSITIVE DEVE LOPMENT WHATSOEVER IN THE MATTER BY THE TIME THE ASSESSMENT ORDER UNDE R SECTION 143(3) WAS PASSED BY THE ASSESSING OFFICER. HE CONTENDED THAT THERE IS NOTHING ON RECORD TO SHOW THAT THE ASSESSING OFFICER HAD SOME BASIS TO GET AN IMPRESSION THAT THE ASSESSEES CLAIM WAS BEING ALLO WED BY BIFR. HE CONTENDED THAT THE ASSESSING OFFICER, IN FACT, HAD NOT MADE ANY ENQUIRY WHATSOEVER ON THIS ISSUE AS RIGHTLY POINTED OUT BY THE LD. PRINCIPAL CIT IN HER IMPUGNED ORDER. HE CONTENDED THAT THE CLAIM OF THE ASSESSEE FOR EXEMPTION HAS NOT BEEN FINALLY ACCEPTED BY THE BIFR , WHICH CLEARLY SHOWS THAT THE ORDER PASSED BY THE ASSESSING OFFICER ALLO WING THE CLAIM OF THE ASSESSEE FOR EXEMPTION WITHOUT MAKING ANY ENQUIRY I N THE MATTER WAS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE AND THE LD. PRINCIPAL CIT WAS FULLY JUSTIFIED IN SETTING ASIDE THE SAME BY EXERCISING THE POWERS CONFERRED UPON HER UNDER SECTION 263 OF THE ACT. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND ALS O PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. ALTHOUGH THE LD. COUNSEL FOR THE ASSESSEE HAS RELIED ON THE NOTICE DATED 25.10.2011 ISSUED BY THE ASSESSING OFFICER UNDER SECTION 142(1) OF THE ACT ( COPY AT PAGES NO. 46 TO 48 OF THE PAPER BOOK) AND THE REPLY DATED 22.11.201 2 FILED BY THE ASSESSEE (COPY AT PAGES NO. 49 & 50 OF THE PAPER BO OK) TO CONTEND THAT THE ISSUE RELATING TO THE ASSESSEES CLAIM FOR EXEM PTION ON ACCOUNT OF ITA NO. 798/KOL/2015 A.Y. 2010-2011 ANDREW YULE & CO. LIMITED 5 LONG-TERM CAPITAL GAIN ARISING FROM THE SALE OF SHA RES WAS ENQUIRED INTO AND EXAMINED BY THE ASSESSING OFFICER, WE FIND THAT WHAT THE ASSESSING OFFICER HAD CALLED FOR WERE ONLY THE DETAILS OF QUO TED AND UNQUOTED SHARES FROM THE ASSESSEE AND WHAT THE ASSESSEE HAD FURNISHED IN THIS REGARD VIDE ITS REPLY DATED 22.11.2012 WAS ONLY THA T THERE WERE NO PURCHASE OF QUOTED AND UNQUOTED SHARES DURING THE Y EAR UNDER CONSIDERATION EXCEPT THE SALE OF SHARES OF PHOENIX YULE LTD. AND DISHERGARH POWER SUPPLY CO. LTD. OF 1,19,43,074 AND 3,01,119 RESPECTIVELY. BESIDES THIS, THERE IS NOTHING BROUGH T ON RECORD TO SHOW THAT ANY ENQUIRY WHATSOEVER WAS MADE BY THE ASSESSI NG OFFICER TO ASCERTAIN THE PROFIT ARISING FROM THE SALE OF THE S AID SHARES AND TAXABILITY OF THE SAME IN THE HANDS OF THE ASSESSEE-COMPANY. T HERE IS ALSO NOTHING BROUGHT ON RECORD TO SHOW THAT THE ASSESSING OFFICE R WAS AWARE OF THE CLAIM MADE BY THE ASSESSEE FOR THE EXEMPTION OF THE SAID PROFIT FROM TAX AND ANY POSITIVE DEVELOPMENT IN THE MATTER, WHICH C OULD GIVE AN IMPRESSION TO THE ASSESSING OFFICER THAT THE CLAIM OF THE ASSESSEE FOR SUCH EXEMPTION WAS LIKELY TO BE ALLOWED BY BIFR. AS A MA TTER OF FACT, THE CASE OF THE ASSESSEE WAS ALREADY PROCESSED WITH THE APPR OVAL OF CBDT FOR IMPLEMENTATION OF THE SANCTIONED SCHEME AND THE DEC ISION WAS COMMUNICATED BY THE INCOME TAX DEPARTMENT TO THE BI FR AS WELL AS TO THE ASSESSEE-COMPANY ON 14.03.2011 DENYING RELIEF U NDER SECTION 111A, 112 AND 10(38) OF THE INCOME TAX ACT. IT APPEARS TH AT THE ASSESSEE, HOWEVER, STILL SOUGHT RELIEF UNDER SECTION 45 OF TH E INCOME TAX ACT AND THE SAME WAS ALSO FINALLY DENIED BY THE INCOME TAX DEPARTMENT VIDE LETTER DATED 20.05.2013 CLARIFYING THAT NO RELIEF U NDER SECTION 45 OF THE INCOME TAX ACT WAS ENVISAGED IN THE SANCTIONED SCHE ME OF BIFR. AS RIGHTLY CONTENDED BY THE LD. D.R., THERE WAS THUS N O POSITIVE DEVELOPMENT WHATSOEVER TO SHOW THAT THE CLAIM OF THE ASSESSEE F OR EXEMPTION WAS UNDER CONSIDERATION AND THE SAME WAS LIKELY TO BE A LLOWED AT THE RELEVANT TIME WHEN THE ASSESSMENT ORDER CAME TO BE PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) ON 13.03.2013. ITA NO. 798/KOL/2015 A.Y. 2010-2011 ANDREW YULE & CO. LIMITED 6 6. IN THE CASE OF MULCHAND BAGRI (SUPRA) RELIED UPO N BY THE LD. COUNSEL FOR THE ASSESSEE IN SUPPORT OF THE ASSESSEES CASE, A FINDING WAS RECORDED BY THE TRIBUNAL THAT THE ASSESSING OFFICER HAD ACTU ALLY MADE AN ENQUIRY INTO THE SALE OF SILVER UTENSILS AND SINCE THIS FIN DING OF FACT BY THE TRIBUNAL HAD NOT BEEN CHALLENGED, THE HONBLE CALCU TTA HIGH COURT HELD THAT THE COMMISSIONER WAS NOT RIGHT IN HIS CONCLUSI ON THAT THE CASE OF THE ASSESSEE HAD BEEN ACCEPTED BY THE ASSESSING OFFICER WITHOUT ANY ENQUIRY. THE FACTS INVOLVED IN THE PRESENT CASE, HOWEVER, AR E DIFFERENT, INASMUCH AS, THE ASSESSING OFFICER, AS ALREADY NOTED BY US, HAD NOT MADE ANY ENQUIRY ON THE ISSUE OF PROFIT EARNED BY THE ASSESS EE FROM THE SALE OF SHARES AND TAXABILITY OF THE SAME IN THE HANDS OF T HE ASSESSEE. THERE IS ALSO NOTHING ON RECORD TO SHOW THAT THERE WAS ANY B ASIS, WHICH RESULTED IN GIVING AN IMPRESSION TO THE ASSESSING OFFICER TH AT THE CLAIM OF THE ASSESSEE FOR EXEMPTION AS PER THE SANCTIONED SCHEME OF BIFR WAS LIKELY TO BE ALLOWED. KEEPING IN VIEW ALL THESE FACTS OF T HE CASE, WE ARE OF THE VIEW THAT THE ORDER OF THE ASSESSING OFFICER PASSED UNDER SECTION 143(3) ALLOWING THE CLAIM OF THE ASSESSEE FOR EXEMPTION ON THIS ISSUE WAS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE AND THE LD. PRINCIPAL CIT WAS FULLY JUSTIFIED IN SETTING ASIDE THE SAME VIDE HER IMPUGNED ORDER PASSED UNDER SECTION 263. WE, THEREF ORE, UPHOLD THE SAID ORDER OF THE LD. PRINCIPAL CIT AND DISMISS THIS APP EAL OF THE ASSESSEE. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON DECEMBER 07, 2018. SD/- SD/- (S.S. VISWANETHRA RAVI) (P.M. JAGTAP) JUDICIAL MEMBER VICE -PRESIDENT (KZ) KOLKATA, THE 7 TH DAY OF DECEMBER, 2018 COPIES TO : (1) ANDREW YULE & CO. LIMITED, YULE HOUSE, 8, DR. RAJENDRA PRASAD SARANI, KOLKATA-700 001 ITA NO. 798/KOL/2015 A.Y. 2010-2011 ANDREW YULE & CO. LIMITED 7 (2) PRINCIPAL COMMISSIONER OF INCOME TAX-2, KOLKAT A, AAYAKAR BHAWAN, 3 RD FLOOR, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 (3) COMMISSIONER OF INCOME TAX- , (4) THE DEPARTMENTAL REPRESENTATIVE (5) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.