Sea Horse Hospitals Pvt. Ltd., Trichy V. Principal CIT, Trichy

ITA 845/CHNY/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4250 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 05-04-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DR M M BHUSARI
• Assessee Lawyers: K RAVI
• Keywords: Depreciation; Unabsorbed depreciation
• Section: 143(3); 148; 263; 154

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : CHENNAI . . . , ! , ' #$ % [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ] ./ I.T.A.NO. 845/MDS/2017 / ASSESSMENT YEAR : 2007-2008. M/S. SEA HORSE HOSPITALS PVT. LTD (PRESENTLY KMC SPECIALTY HOSPITAL I LTD) 6, ROYAL ROAD, CANTONMENT, TIRUCHIRAPALLAI 620 001. VS. THE PRINCIPAL COMMISSIONER OF INCOME TAX, TRICHY -1 [PAN AADCS 0189E] ( &' / APPELLANT) ( ()&' /RESPONDENT) / APPELLANT BY : SHRI. K. RAVI, ADVOCATE /RESPONDENT BY : DR. M.M. BHUSARI, CIT. / DATE OF HEARING : 13-06-2017 / DATE OF PRONOUNCEMENT : 19-06-2017 / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE PRINCIPAL COMMISSIONER OF INCOME-TAX, TRICHY, DATED 30.03.2017 FOR THE ASSESSMENT YEAR 2007-2008. ITA NO.845/MDS/2017. :- 2 -: 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY FILED ITS RETURN OF INCOME FOR THE AY 2007- 08 ON 26/10/2007, ADMITTING A BUSINESS LOSS OF ? 65,22,67 7/- AND CARRY FORWARD LOSS OF ?18,39 ,06,826 / - WHICH INCL UDED UNABSORBED DEPRECIATION OF ?17,73,84,149/-. THE CA SE WAS SELECTED FOR SCRUTINY AND NOTICE U/S 143(2)WAS ISSU ED ON 18/09/2008 AND THE ASSESSMENT ORDER U/S.143(2) WAS ISSUED ON 22/12/2009 ACCEPTING THE LOSS RETURN OF ?65,22,677/ - AND DETERMINING THE LOSS CARRY FORWAR D FOR SET OFF AGAINST FUTURE PROFITS AT ?18,39,06,826/- . THE ASSESSING OFFICER PROPOSED TO WITHDRAW THE DEPRECIATION ALLOW ED TO BE CARRIED FORWARD TO THE TUNE OF ?.13,71,60,209/- BY INVOKING SECTION 154 OF THE INCOME TAX ACT BY STATING THAT UNABSORBED DEPRECIATION RELATING TO THE ASSESSMENT YEARS 1989-90 TO 1998-99 ARE NOT ELIGIBLE TO BE CARRIED F ORWARD AFTER A PERIOD OF EIGHT ASSESSMENT YEARS. THE ASSE SSING OFFICER HAS STATED THAT THE INELIGIBLE CARRY FORWA RD OF UNABSORBED DEPRECIATION RELATING TO THE ASSESSMENT YEARS 1997-98 AND 1998-99 ARE REQUIRED TO BE WITHDRAWN (?13,71,60,209/- FOR THE ASSESSMENT YEARS 1989-90 T O 1998-99). THE ASSESSEE FILED A LETTER DATED 22/03/2 011 OBJECTING TO THE PROPOSED RECTIFICATION UNDER SECTI ON 154 AS ITA NO.845/MDS/2017. :- 3 -: THIS IN THE OPINION OF THE ASSESSEE IS NOT A 'MISTA KE APPARENT ON RECORD'. BASED ON THE OBJECTION THE ASS ESSING OFFICER DROPPED THE PROCEEDINGS UNDER SECTION 154 O F THE INCOME TAX ACT, 1961. THE ASSESSING OFFICER ISSUED A NOTICE U / S 148 FOR THE ASSESSMENT YEAR 2007-08 ON 23/03/ 2011 AND WHICH WAS SERVED ON THE ASSESSEE ON 28.03.2011 CITING THE SAME REASON AS IN THE PROPOSAL U/S 154 O F THE INCOME TAX ACT 1961 INITIATED EARLIER. IN PURSUANCE OF THIS NOTICE U/S.148, THE ASSESSMENT ORDER WAS FRAMED BY THE ASSESSING OFFICER ON 29/12/2011 AND THE CARRY FORWA RD LOSS WAS RESTRICTED TO ?4,67,46,621/-. THE ASSESSEE AGA INST THIS WITHDRAWALS AND INTERALIA, RELIED ALSO ON THE DECIS ION OF DEVESH METCAST LTD VS. JCIT(2011) 338 ITR 130 (GUJ) ., WHICH STATED THE LAW RELATING TO THE UNDERSTANDING OF THE EFFECT OF RESTORATION AFTER CHANGE IN LAW RELATING TO UNABSOR BED DEPRECIATION. THIS HOWEVER WAS NOT ACCEPTED BY THE ASSESSING OFFICER. THE WITHDRAWN, UNABSORBED DEPREC IATION TO THE TUNE OF ?13,71,60,209/- AS STATED IN THE ASSESS MENT ORDER DATED 29/ 12/2011, FOR THE ASSESSMENT YEAR 20 07 -08, PERTAINS TO ASSESSMENT YEARS 1997-98 AND 1998-99 AN D THE SET OFF IS NOT GRANTED. CONSEQUENTLY, THE ASSESSED RETURNED LOSS WAS DETERMINED AT ?24,67,46,621/-. ITA NO.845/MDS/2017. :- 4 -: 3. AGGRIEVED, THE ASSESSEE MOVED IN APPEAL BEFORE LD. COMMISSIONER OF INCOME TAX (APPEALS) BUT DID ME ET WITH ANY SUCCESS. 4. AGAINST THIS, ASSESSEE FILED AN APPEAL BEFORE THE T RIBUNAL. THE TRIBUNAL VIDE ORDER 5 TH MAY, 2014 IN ITA NO.458/MDS/2014 HELD AS UNDER:- 8.THEREFORE, IT IS TO BE SEEN THAT WHEREVER UNABSORBED DEPRECIATION WAS NOT ALLOWED TO BE SET OFF AGAINST THE PROFITS ARISING AFTER THE PERIOD OF EIGHT YEARS, SHOULD BE AGAIN CONSIDERED TO BE SET OFF, AF TER THE AMENDMENT. WHEN THE QUANTUM OF UNABSORBED DEPRECIATION IS COMPUTED AFTER THE AMENDMENT, WHATEVER BALANCE OF UNABSORBED DEPREDATION IS AVAILABLE TO THE CREDIT OF THE ASSESSEE, MUST BE DETERMINED AS UNABSORBED DEPRECIATION ELIGIBLE FOR CARRY FORWARD AND SET OF! THE INTERREGNUM RESTRICTI ON OF LIMITING OF THE CLAIM FOR EIGHT-YEAR PERIOD DOES NOT TAKE AWAY THE RIGHT OF A N ASSESSEE TO CLAIM THE BALANCE OF UNABSORBED DEPRECIATION, FOREVER. THE BALANCE OF UNABSORBED DEPRECIATION REVIVES BACK INTO LIFE AND BECOMES ELIGIBLE FOR CARRY FORWARD AND SET OFF ALONG WITH THE OTHER PART UNABSORBED DEPRECIATION AVAILABLE TO THE CREDIT OF THE ASSESSEE. 4.1 THE REVENUE HAD APPEALED AGAINST THE TRIBUNAL O RDER BEFORE THE JURISDICTIONAL HIGH COURT IN TCA NO.62 OF 2015, WHI CH IS STILL PENDING. ITA NO.845/MDS/2017. :- 5 -: 4.2 THE LD. ASSESSING OFFICER PASSED AN ORDER DATED 25.09.2014 GIVING EFFECT TO THE ORDER OF THE TRIBUNAL WITH TH E CARRY FORWARD LOSS DETERMINED AT ?18,39,06,826/- AS FOLLOWS:- TOTAL LOSS ASSESSED AS PER ORDER DATED 29.12.2011 ?65,22,677 ADD: BROUGHT FORWARD LOSS OF EARLIER YEARS ?17,73,8 4,149 LOSSES CARRIED FORWARD FOR SET OFF AGAINST FUTURE PROFITS. ?18,39,06,826 4.3 THE PRINCIPAL COMMISSIONER OF INCOME TAX ISSU ED A SHOW CAUSE NOTICE DATED 26.12.2016 U/S. 263 OF THE ACT AGAINS T GIVING EFFECT ORDER OF THE LD. ASSESSING OFFICER DATED 25.09.2014 GRANT ING THE BROUGHT FORWARD LOSS OF ?17,73,84,149/- AND PASSED ORDER U /S. 263 OF THE ACT ON 30.3.2017 AND GIVING DIRECTIONS AS UNDER:- THE ORDER OF THE ASSESSING OFFICER IS THUS ERRONEOU S AND PREJUDICIAL TO THE INTEREST OF REVENUE, SINCE THE SAME HAS BEEN PASSED WITHOUT ENQUIRY OR VERIFICATIO N. THE ORDER PASSED IS ONLY A STEREOTYPED ORDER, SIMPL Y ACCEPTING WHAT THE ASSESSEE HAS STATED IN HIS RETUR N WITHOUT MAKING ENQUIRIES WHICH ARE CALLED FOR IN TH E CIRCUMSTANCE OF THE CASE. THE ASSESSING OFFICER OUG HT TO HAVE MADE FURTHER ENQUIRIES WITHOUT MERELY RESTO RING THE ORIGINAL ORDER. AS HELD BY THE HON'BLE MADRAS H IGH COURT IN K.A.RAMASAMY CHETTIAR VS CIT (L996) 220 IT R 657, WHEN THE OFFICER IS EXPECTED TO MAKE AN ENQUIR Y OF INCOME AND IF HE DOES NOT MAKE AN ENQUIRY AS EXPECTED, IT IS TO BE A GROUND TO INTERFERE WITH TH E ORDER ITA NO.845/MDS/2017. :- 6 -: PASSED BY THE ASSESSING OFFICER SINCE SUCH AN ORDE R PASSED BY THE OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. IN AS MUCH THE ORDER IN C.NO. PAN: AADCS0189E/CIR- L(1)TRY/2014-15 DATED 25.09.2014 OF THE ASSESSING OFFICER, GIVING EFFECT TO THE ORDER OF THE ITAT IN ITA NO. 458/MDS/2014 DATED 05.05.2014 WAS WITHOUT MAKING ENQUIRIES OR VERIFICATION OR COMPUTATION WHICH SHOU LD HAVE BEEN MADE, I CONSIDER THE ORDER PASSED BY THE AO IS BOTH ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVENUE AS PER SECTION 263(1) OF THE LNCOME TAX ACT , 1961. THEREFORE THE ORDER IN C.NO. PAN:AADCS 0189E/CIR- 1(1)/TRY/2014-15 DATED 25.06.2014 OF THE ASSESSING OFFICER, GIVING EFFECT TO THE ORDER OF THE ITAT IN ITA NO. 458/MDS/2014 DATED 05.05.2014 IS SET ASIDE TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO RE-DO THE ASSESSMENT AFTER CAUSING NECESSARY ENQUIRIES AND VERIFICATION REGARDING THE POINTS MENTIONED ABOVE. IT IS NEEDLESS TO SAY THAT SUFFICIENT OPPORTUNITY SHALL BE AFFORDED BEFORE PASSING THE ORDER. AGAINST THIS, THE ASSESSEE IS IN APPEAL BEFORE US. 5. THE MAIN CONTENTION OF THE LD. AUTHORISED REPRESENT ATIVE IS THAT THE TRIBUNAL HAD ALREADY DECIDED THE ISSUE IN DISPUTE IN ITA NO.458/MDS/2014, FOR THE SAME ASSESSMENT YEAR VIDE ORDER DATED 05.05.2014 IN FAVOUR OF THE ASSESSEE AS UNDER:- 7. ON GOING THROUGH THE ORDERS OF THE ASSESSING O FFICER AND THE COMMISSIONER OF INCOME TAX (APPEALS), WE FI ND THAT BOTH THE AUTHORITIES HAVE CONSIDERED DIFFERENT CASE LAWS NOT RELEVANT FOR THE ISSUE IN HAND. IT IS TRUE THAT FOR AN INTERREGNUM PERIOD, THE ELIGIBILITY OF UNABSORBED DEPRECIATION TO BE CARRIED FORWARD WAS LIMITED FOR A PERIOD OF EIGHT YEARS. BUT, THE OLD POSITION THAT UNABSORB ED DEPRECIATION BECOMES THE CURRENT DEPRECIATION UNDER ITA NO.845/MDS/2017. :- 7 -: SECTION 32(2) AND THEREFORE ELIGIBLE FOR CARRY FORW ARD AND SET OFF WITHOUT ANY LIMITATION, WAS RESTORED BY THE AMENDMENT BROUGHT IN WITH EFFECT FROM THE ASSESSMEN T YEAR 2002-03. 8. THEREFORE, IT IS TO BE SEEN THAT WHEREVER UNABSO RBED DEPRECIATION WAS NOT ALLOWED TO BE SET OFF AGAINST THE PROFITS ARISING AFTER THE PERIOD OF EIGHT YEARS, SH OULD BE AGAIN CONSIDERED TO BE SET OFF, AFTER THE AMENDMENT . WHEN THE QUANTUM OF UNABSORBED DEPRECIATION IS COMPUTED AFTER THE AMENDMENT, WHATEVER BALANCE OF UNABSORBED DEPRECIATION IS AVAILABLE TO THE CREDIT OF THE ASSE SSEE, MUST BE DETERMINED AS UNABSORBED DEPRECIATION ELIGIBLE F OR CARRY FORWARD AND SET OFF. THE INTERREGNUM RESTRICTION OF LIMITING OF THE CLAIM FOR EIGHT-YEAR PERIOD DOES NOT TAKE AW AY THE RIGHT OF AN ASSESSEE TO CLAIM THE BALANCE OF UNABSO RBED DEPRECIATION, FOREVER. THE BALANCE OF UNABSORBED DEPRECIATION REVIVES BACK INTO LIFE AND BECOMES ELI GIBLE FOR CARRY FORWARD AND SET OFF ALONG WITH THE OTHER PART UNABSORBED DEPRECIATION AVAILABLE TO THE CREDIT OF THE ASSESSEE. 9. THEREFORE, WE SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES ON THIS ISSUE AND DIRECT THE ASSESSING OFFICER TO RE-DETERMINE THE UNABSORBED DEPRECIATION ELIGIBLE F OR CARRY FORWARD AND SET OFF IN THE ABOVE LINES. AND CONSEQUENTLY , LD. ASSESSING OFFICER PASSED GIV ING EFFECT ORDER OF THE TRIBUNAL IN ITA NO.458/MDS/2014, DATED 05.05.2014 O N 25.09.2014. ITA NO.845/MDS/2017. :- 8 -: 5.1 FURTHER, LD. AUTHORISED REPRESENTATIVE SUBMITT ED THAT ASSESSING OFFICER PASSED ABOVE ORDER IN CONFORMITY WITH THE FINDINGS OF THE TRIBUNAL (SUPRA) AND CANNOT BE ANY CHANCE FOR REVIS ION BY PRINCIPAL COMMISSIONER OF INCOME TAX U/S. 263 OF THE ACT. 6. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED WHILE COMPLETING THE ASSESSMENT, THE ASSE SSING OFFICER HAS NOT MADE ANY ENQUIRY OR VERIFICATION ABOUT THE ASS ESSMENT YEAR WISE UNABSORBED DEPRECIATION ELIGIBLE TO BE CARRIED FORW ARD, WHICH SHOULD HAVE BEEN MADE WITH REGARD TO THE DIRECTIONS OF THE HON 'BLE ITAT BEFORE GIVING EFFECT TO THE ORDER OF THE HON'BLE ITAT. THE ASSESS ING OFFICER HAS SIMPLY RESTORED THE ORIGINAL ORDER PASS ED U/S 143(3) DATED 22. 12.2009. WHILE DOING SO THE ASSESSING OFFICER HAS EVEN NOT MENTIONED THE ASSESSMENT YEAR WISE AMOUNT OF BUSINE SS LOSS AND UNABSORBED DEPRECIATION LOSS WHICH WERE ALLOWED TO BE CARRIED FORWARD. SINCE, THE ORDER GIVING EFFECT TO THE ITAT WAS COMPLETED BY THE ASSESSING OFFICER WITHOUT APPLICATION OF MIND A ND WITHOUT ANY COMPUTATION / ENQUIRY, THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTERES T OF REVENUE IN TERMS OF SECTION 263 OF THE INCOME TAX ACT, 1961 AND HENCE PRAYED FOR DISMISSING THE APPEAL. ITA NO.845/MDS/2017. :- 9 -: 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIAL ON RECORD. WE HAVE CAREFULLY GONE THROUGH THE ORDER OF THE TRIBUNAL (CITED SUPRA). IN THIS CASE, THE TRIBUNAL HAD GIVE N A FINDING IN PARA 9 AS UNDER:- 9. THEREFORE, WE SET ASIDE THE ORDERS OF THE LOWE R AUTHORITIES ON THIS ISSUE AND DIRECT THE ASSESSING OFFICER TO RE-DETERMINE THE UNABSORBED DEPRECIATION ELIGIBLE F OR CARRY FORWARD AND SET OFF IN THE ABOVE LINES. THIS FINDING OF THE TRIBUNAL WAS NOT COMPLIED BY T HE LD. ASSESSING OFFICER WHILE GIVING EFFECT TO THE TRIBUNAL ORDER. AS SEEN FROM THE ABOVE, THERE WAS A DIRECTION GIVEN BY THE TRIBUNAL IN ITS ORDER TO LD. ASSESSING OFFICER TO RE-DETERMINE THE UNABSORBED DE PRECIATION ELIGIBLE FOR CARRY FORWARD AND SET OFF AS DISCUSSED IN PARA 7 & 8 OF ITS ORDER. TO THAT EXTENT, LD. COMMISSIONER OF INCOME TAX (APPEALS) IS JUSTIFIED IN INVOKING THE PROVISIONS OF SEC. 263 O F THE ACT ON THIS ISSUE SO AS TO GIVE DIRECTION TO LD. ASSESSING OFFICER T O PASS FRESH ORDER. WHEN SUCH DIRECTION WAS GIVEN BY THE TRIBUNAL, IT IS INCUMBENT ON THE PART OF THE LD. ASSESSING OFFICER TO ENQUIRY ABOUT THAT ISSUE AND COME TO A CONCLUSION. IN THE PRESENT CASE, LD. ASSESSIN G OFFICER BEING A QUASI- JUDICIARY AUTHORITY HAS NOT MADE AN ENQUIRY ON THIS ISSUE. HE CANNOT TAKE A VIEW, EITHER AGAINST OR IN FAVOUR OF THE ASSESSEE, WITHOUT MAKING PROPER ENQUIRES AND WITHOUT PROPER EXAMINATI ON OF THE CLAIM MADE BY THE ASSESSEE IN THE LIGHT OF THE APPLICABLE LAW. LD. CIT IS ITA NO.845/MDS/2017. :- 10 -: EMPOWERED TO INITIATE SUO-MOTU PROCEEDINGS U/S. 263 OF THE ACT EITHER WHERE LD. ASSESSING OFFICER TOOK A WRONG DECISION W ITHOUT CONSIDERING AVAILABLE MATERIAL ON RECORD OR HE TOOK DECISION WI THOUT MAKING AN ENQUIRY INTO THE MATTERS, WHERE SUCH ENQUIRY PRIME FACIE WARRANTED. IN THE PRESENT CASE, LD. ASSESSING OFFICER ABSOLUTE LY CLOSED HIS EYES, ACCEPTED THE CLAIM OF THE ASSESSEE AS THOUGH THERE WAS A SPECIFIC DIRECTION BY THE TRIBUNAL AS DISCUSSED IN ITS ORDER IN PARA 9. THUS, LD. CIT REQUIRED THE LD. ASSESSING OFFICER TO CAUSE NEC ESSARY ENQUIRY AND THEREFORE HE DIRECTED THE LD. ASSESSING OFFICER TO CARRY FURTHER ENQUIRY ON THIS MATTER. BEING SO, WE DO NOT FIND ANY INFIR MITY IN INVOKING REVISIONARY POWER VESTED WITH THE LD. CIT U/S. 263 OF THE ACT. THIS GROUND OF THE ASSESSEE IS REJECTED. 8. LD. AUTHORISED REPRESENTATIVE ALSO RAISED ANOTHER G ROUND WITH REGARD TO ORDER PASSED U/S. 263 OF THE ACT BY THE LD. CIT IS TIME BARRED. IN THE PRESENT CASE, THE LD.CIT PASSED THE REVISION ORDER U/S. 263 OF THE ACT WITH REGARD TO GIVE EFFECT TO THE O RDER OF THE TRIBUNAL IN ITA NO.458/MDS/2014, DATED 05.05.2014 WHICH WAS PASSED BY THE LD. ASSESSING OFFICER ON 25.09.2014. THE TIME LIMI T AVAILABLE TO THE LD. CIT U/S. 263 OF THE ACT TO BE COMPUTED FROM THE ASS ESSMENT ORDER DATED 25.09.2014 AND NOT FROM ANY EARLIER ORDER REL ATING TO ASSESSMENT YEAR 2007-2008. BEING SO, WE DO NOT FIN D ANY MERIT IN THE ITA NO.845/MDS/2017. :- 11 -: ARGUMENT OF THE LD. AUTHORISED REPRESENTATIVE. ACC ORDINGLY, THIS GROUND OF THE ASSESSEE IS ALSO DISMISSED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMI SSED. ORDER PRONOUNCED ON MONDAY, THE 19TH DAY OF JUNE, 2 017, AT CHENNAI. SD/- SD/- ( . . . ! ) (N.R.S. GANESAN) / JUDICIAL MEMBER ( ! ) (CHANDRA POOJARI) ' / ACCOUNTANT MEMBER '# / CHENNAI $% / DATED:19TH JUNE, 2017 KV %&'' ()'*) / COPY TO: ' 1 . / APPELLANT 3. ' +',! / CIT(A) 5. )-.' / / DR 2. / RESPONDENT 4. ' + / CIT 6. .0'1 / GF