GEBBS HEALTHCARE SOLUTIONS P.LTD, MUMBAI V. DCIT 8(1), MUMBAI

ITA 87/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8005 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2008-2009
• Appeal Filed On: 07-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V VIDHYADHAR
• Assessee Lawyers: A V SONDE
• Keywords: Revised return
• Section: 115JB; 10B; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN (AM) & SHRI RAM LAL NEGI (JM) I.T.A. NO. 87/MUM/2016 (ASSESSMENT YEAR 2008 - 09) M/S. GEBBS HEALTHCARE SOLUTIONS PVT. LTD., GEBBS HOUSE, 13 TH STREET, CENTRAL ROAD, MIDC MAROL, ANDHERI (E), MUMBAI 400093. VS. DY. COMMISSIONER OF INCOME TAX - 8(1), MUMBAI. ( APPELLANT ) .. ( RESPONDENT ) PAN NO. AALCS4978H ASSESSEE BY : SHRI A.V. SONDE DEPARTMENT BY : SHRI V. VIDHYADHAR DATE OF HEARING : 22 .1 1 .2017 DATE OF PRONOUNCEMENT : 20 . 12.2017 O R D E R PER B.R. BASKARAN, AM : THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 28 - 10 - 2015 PASSED BY LD CIT(A) - 16, MUMBAI AND IT RELATES TO THE ASSESSMENT YEAR 2008 - 09. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF LD CIT(A) IN CONFIRMING THE REJECTION OF RECTIFICATION PETITION FILED BY THE ASSESSEE U/S 154 OF THE ACT. 2. THE FACTS RELATING TO THE ISSUE ARE DISCUSSED IN BRIEF. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF PROVIDING REVENUE CYCLE MANAGEMENT (RCM) SERVICES TO HEALTH CARE INDUSTRY. IT IS REGISTERED WITH SEEPZ AND LOCATED IN SPECIAL ECONOMIC ZONE UNDER THE EXPORT ORIENTED UNIT SCHEME APPROVED BY 2 M/S. GEBBS HEALTHCARE SOLUTIONS PVT. LTD. ITA NO. 87/MUM/2016 CENTRAL GOVERNMENT. IT ORIGINALLY FILED ITS RETURN OF INCOME ON 30 - 09 - 2008 DECLARING A LOSS OF RS.19,876/ - . CONSEQUENT TO DEMERGER ORDER APPROVED BY THE HIGH COURT, THE BPO DIVISION OF THE ASSOCIATE CONCE RN GEBBS TECHNOLOGIES LTD WAS MERGED WITH THE APPELLANT COMPANY W.E.F. 1.4.2007. THEREFORE, THE ASSESSEE FILED A REVISED RET URN OF INCOME (POST MERGER) ON 17.03.2009. IN THE REVISED RETURN OF INCOME, THE ASSESSEE DECLARED ITS TOTAL INCOME AT NIL AFTER CLAIMING DEDUCTION OF RS.329.65 LAKHS U/S 10B OF THE ACT. 3. WITH REGARD TO THE COMPUTATION OF BOOK PROFIT U/S 115JB OF T HE ACT, THE ASSESSEE COMPUTED THE SAME AT NIL AFTER CLAIMING DEDUCTION OF PROFIT OF 10B UNIT UNDER CLAUSE (II) OF EXPLANATION 1 TO SEC. 115JB. HOWEVER, THE ASSESSEE ALSO ADDED FOLLOWING NOTE TO THE STATEMENT OF TOTAL INCOME: - AS THE UNIT IS LOCATED IN SEZ, NO TAX ON BOOK PROFIT IS CHARGEABLE AS PER SEC.115JB(6) OF INCOME TAX ACT. 4. IT IS PERTINENT TO NOTE THAT THE AO HAD REJECTED THE CLAIM FOR DEDUCTION U/S 10B OF THE ACT IN THE EARLIER YEARS, BUT THE SAME WAS REVERSED BY THE TRIBUNAL. SINCE THE REVENUE HAD PREFERRED APPEAL BEFORE THE HIGH COURT CHALLENGING THE DECISION OF THE TRIBUNAL, THE AO PREFERRED TO DISALLOW THE CLAIM UNDER NORMAL PROVISIONS OF THE ACT. ACCORDINGLY THE AO DID NOT ALLOW DEDUCTION U/S 10B OF THE ACT UNDER NORMAL PROVISIONS O F THE ACT. IT IS ALSO PERTINENT TO NOTE THAT THE ASSESSEE HAS ALSO ACCEPTED ITS LIABILITY FOR TAX U/S 115JB OF THE ACT AND ALSO FILED A WORKING OF BOOK PROFIT U/S 115JB OF THE ACT DURING THE COURSE OF ASSESSMENT PROCEEDING. ACCORDINGLY T HE AO ALSO COMPUT ED THE BOOK PROFIT U/S 115JB OF THE ACT WITHOUT ALLOWING ANY DEDUCTION . ACCORDINGLY THE AO DETERMINED THE BOOK PROFIT AT RS.401.32 LAKHS AND TOTAL INCOME AS PER NORMAL PROVISIONS OF THE ACT AT RS.329.65 LAKHS. 3 M/S. GEBBS HEALTHCARE SOLUTIONS PVT. LTD. ITA NO. 87/MUM/2016 5. THEREAFTER THE ASSESSEE MOVED A RE CTIFICATION PETITION DATED 15 - 05 - 2013 BEFORE THE AO U/S 154 OF THE ACT SEEKING RECTIFICATION OF THE ASSESSMENT ORDER. IT WAS SUBMITTED THAT THE PROVISIONS OF SEC. 115JB(6) IS APPLICABLE TO THE ASSESSEE, SINCE ITS UNIT IS LOCATED IN SPECIAL ECONOMIC ZONE. AS PER SEC. 115JB(6), THERE IS NO MAT LIABILITY FOR PROFITS ARISING FROM UNIT CARRYING ON BUSINESS IN SPECIAL ECONOMIC ZONE. THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE ITSELF HAS ACCEPTED ITS LIABILITY UNDER MAT PROVISIONS. ACCORDINGLY HE TOOK THE VIEW THAT THE ACTION OF THE ASSESSEE ADMITTING THE LIABILITY UNDER MAT DOES NOT CONSTITUTE MISTAKE APPARENT FROM RECORD. HE ALSO TOOK THE VIEW THAT THE NEW CLAIM C OULD BE MADE ONLY BY FILING REVISED RETURN OF INCOME AS HELD BY HONBLE SUPREME COURT IN THE CASE OF GOETZ (INDIA) LTD VS. CIT (284 ITR 323). ACCORDINGLY HE REJECTED THE PETITION FILED BY THE ASSESSEE. 6. THE LD CIT(A) ALSO REJECTED THE APPEAL FILED BY THE ASSESSEE ON THE REASONING THAT (A) THE ASSESSEE ITSELF ADMITTED THAT THE EXEMPTION CLAIMED U/S 10B WOULD NOT BE AVAILABLE WHILE COMPUTING THE BOOK PROFIT U/S 115JB OF THE ACT. (B) THE QUESTION OF ALLOWABILITY OF EXEMPTION U/S 10B INVOLVED LOTS OF INTERPRETATION OF FACTS AND LAW, THEREFORE IT CANNOT BE TREATED AS A MISTAKE APPARENT FROM THE RECORD. FURTHER THE MATTER IS STILL PENDING FOR ADJUDICATION BEFORE APPELLATE AUTHORITIES AND IT HAS NOT REACHED ANY FINALITY. AGGRIEVED BY THE ORDER PASSED BY LD CIT(A), THE ASSESSEE HAS FILED THIS APPEAL BEFORE THE TRIBUNAL. 4 M/S. GEBBS HEALTHCARE SOLUTIONS PVT. LTD. ITA NO. 87/MUM/2016 7. WE HAVE HEARD T HE PARTIES AND PERUSED THE RECORD. THE LD A.R SUBMITTED THAT THE LD CIT(A) HAS MISDIRECTED HIMSELF THAT THE ASSESSEE IS CLAIMING DEDUCTION OF PROFITS OF SEC. 10B UNIT WHILE COMPUTING THE BOOK PROFIT U/S 115JB OF THE ACT. HE SUBMITTED THAT THE EXEMPTION F ROM THE PROVISION OF MAT FOR SEC. 10B UNITS HAS BEEN OMITTED W.E.F. 1.4.2008 AND THIS FACT HAS ESCAPED THE ATTENTION OF LD CIT(A) . T HE LD A.R SUBMITTED THAT THE A SSESSEE HAS, IN FACT, SOUGHT DEDUCTION U/S 115JB(6) OF THE ACT, WHICH IT HAD INDICATED IN THE STATEMENT OF TOTAL INCOME FILED ALONG WITH THE REVISED RETURN OF INCOME. HENCE THE LD CIT(A) WAS NOT CORRECT IN OBSERVING THAT THE DEDUCTION CLAIMED BY THE ASSESSEE U/S 10B OF THE ACT IS SUBJECT MATTER OF DISPUTE BEFORE THE TAX AUTHORITIES , WHICH WAS NOT THE CASE OF THE ASSESSEE AT ALL . HE SUBMITTED THAT THE ASSESSEE HAD CLAIMED DEDUCTION U/S 10B WHILE COMPUTING TOTAL INCOME UNDER NORMAL PROVISIONS OF THE ACT. HOWEVER, IT HAS FILED RECTIFICATION PETITION IN CONNECTION WITH BOOK PROFIT COMPUTED U/S 115JB OF THE ACT. 8. HE SUBMITTED THAT THE ASSESSEE HAS, INADVERTENTLY, ACCEPTED THE LIABILITY U/S 115JB OF THE ACT DURING THE COURSE OF ASSESSMENT PROCEEDINGS. HE SUBMITTED THAT THE CIRCULAR NO.14 (XL - 35) OF 1955 REQUIRES THE AO TO DRAW THE ATTENTION O F THE ASSESSEE TO THE RELIEFS AVAILABLE TO THE ASSESSEES. HE SUBMITTED THAT THE ABOVE SAID CIRCULAR WAS APPLIED IN THE CASE OF CHOKSHI METAL REFINERY VS. CIT (1977)(107 ITR 63) (GUJ) . 9 . THE LD A.R FURTHER SUBMITTED THAT THERE IS NO ESTOPPEL AGAINST LAW AND HENCE THE TAX AUTHORITIES SHOULD NOT HAVE REJECTED THE RECTIFICATION PETITION OF THE ASSESSEE ON THE REASONING THAT THE ASSESSEE ITSELF HAS ACCEPTED THE LIABILITY U/S 115JB OF THE ACT. IN SUPPORT OF THIS PROPOSITION, THE LD A.R PLACED RELIANCE ON THE DECISION RENDERED BY HONBLE SUPREME COURT IN THE CASE OF KALIDAS DHAJIBHAT VS. THE STATE OF BOMBAY ((S) AIR 1955 SC 62 (VOL 42 CN 5 M/S. GEBBS HEALTHCARE SOLUTIONS PVT. LTD. ITA NO. 87/MUM/2016 15). HE SUBMITTED THAT THE CO - ORDINATE BENCH OF ITAT HAS HELD AS UNDER IN THE CASE OF STEELFAB ENGINEERING CORPN (INDIA) VS. ACIT (2012)(54 SOT 79): - 28. IT IS QUITE SETTLED PROPOSITION THAT ANY CLAIM FOR DEDUCTION UNDER INCOME TAX ACT ARE DEPENDENT UPON THE CONDITIONS LAID DOWN UNDER THE PROVISIONS OF THE ACT AND THERE ARE REQUISITE FORMALITIES WHICH ARE REQUIRED TO BE DONE AS PER THE LAW. ONCE THESE CONDITIONS ARE FULFILLED, THE ASSESSEE IS ENTITLED FOR STATUTORY DEDUCTION OR CLAIM TO WHICH HE IS ENTITLED TO. MERE CONSENT OR ACQUIESCENCE BY THE ASSESSEE CANNOT TAKE AWAY THE OTHERWISE A LEGITIMATE CLAIM TO WHICH HE IS ENTITLED TO. IT IS AN ADMITTED POSITION OF LAW THAT AN ADMISSION OR ACQUIESCENCE CANNOT BE A FOUNDATION FOR ASSESSMENT WHERE THE INCOME IS RETURNED UNDER ERRONEOUS IMPRESSION OR MISCONCEPTION OF LAW... 10. HE SUBMITTED THAT AN INCOME, WHICH IS OTHERWISE NOT TAXABLE, CANNOT BE BROUGHT TO TAX BY THE ASSESSING OFFICER. SUCH KIND OF ERRORS CAN BE RECTIFIED U/S 154 OF THE ACT. FOR THIS PROPOSITION, THE LD A.R PLACED RELIANCE ON THE DECISION RENDERED BY HONBLE CALCUTTA HIGH COURT IN THE CASE OF WEST BENGAL STATE WAREHOUSING CORPORATION (157 ITR 149). HE SUBMITTED THAT THE ASSESSEE HAD INITIALLY CLAIMED DEDUCTION U/S 115JB(6) BY WAY OF A NOTE. LATER IT WITHDREW THE CLAIM THROUGH A LETTER AND AGAIN SOUGHT THE DEDUCTION IN THE PETITION. HENCE IT CANN OT BE CONSIDERED AS A FRESH DEDUCTION CLAIMED SO AS TO ATTRACT THE DECISION RENDERED IN THE CASE OF GOETZE INDIA LTD (SUPRA). 11. HE FURTHER SUBMITTED THAT THE TAX COLLECTED AGAINST THE AUTHORITY OF LAW CAN BE CHALLENGED AT ANY STAGE AND FOR THIS PROP OSITION; THE LD A.R TOOK SUPPORT OF DECISION RENDERED BY HONBLE BOMBAY HIGH COURT IN THE CASE OF NIRMALA L MEHTA VS. A BALASUBRAMANIAM, CIT (269 ITR 1). 6 M/S. GEBBS HEALTHCARE SOLUTIONS PVT. LTD. ITA NO. 87/MUM/2016 12. ON THE CONTRARY, THE LD D.R STRONGLY SUPPORTED THE ORDER PASSED BY LD CIT(A). 13. WE HAV E HEARD RIVAL CONTENTIONS AND PERUSED THE RECORD. WE NOTICE THAT THE ASSESSING OFFICER HAS REJECTED THE RECTIFICATION FILED BY THE ASSESSEE ONLY ON THE REASONING THAT THE ASSESSEE ITSELF HAS WITHDRAWN THE DEDUCTION AND FURTHER FRESH CLAIMS CAN BE MADE ONLY BY WAY OF FILING REVISED RETURN OF INCOME. THE LD CIT(A), AS POINTED OUT BY LD A.R., HAS MISDIRECTED HIMSELF BY REFERRING TO DEDUCTION CLAIMED U/S 10B OF THE ACT WHILE THE CLAIM OF THE ASSESSEE IN THE RECTIFICATION PETITION WAS FOR DEDUCTION U/S 115JB(6) OF THE ACT. HOWEVER A PERUSAL OF THE STATEMENT OF TOTAL INCOME OF THE ASSESSEE WOULD SHOW THAT THE ASSESSEE HAD INITIALLY CLAIMED DEDUCTION U/S 10B, WHICH WAS NOT AVAILABLE TO IT. A NOTE WAS APPENDED TO THE STATEMENT OF TOTAL INCOME THAT IT IS ELIGIBLE FOR DEDUCTION U/S 115JB(6) OF THE ACT TO THE INCOME DERIVED FROM THE BUSINESS UNIT LOCATED IN SPECIAL ECONOMIC ZONE. HOWEVER, SUBSEQUENTLY FOR THE REASONS BEST KNOWN TO IT, THE ASSESSEE AGREED TO PAY TAX ON BOOK PROFIT U/S 115JB OF THE ACT. SUBSEQUENTLY, IT AGAIN REALISED THAT IT IS NOT LIABLE TO PAY TAX UNDER THAT SECTION BECAUSE OF PROVISIONS OF SEC. 115JB(6) OF THE ACT. 14. WE NOTICE THAT THE AO AS WELL AS LD CIT(A) HAS NOT STATED THAT THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S 115JB(6) OF THE ACT. THEY HAVE ONLY STATED THAT THE ASSESSEE ITSELF HAS AGREED TO PAY TAX U/S 115JB OF THE ACT BY WITHDRAWING ITS CLAIM. THE UNDISPUTED LEGAL PROPOSITION IS THAT THERE IS NO ESTOPPEL AGAINST THE LAW AS ENUNCIATED BY HONBLE SUPREME COURT IN THE CASE OF K ALIDAS DHAJIBHAT VS. THE STATE OF BOMBAY (SUPRA). THIS PROPOSITION HAS BEEN EXPLAINED VERY WELL BY THE CO - ORDINATE BENCH IN THE CASE OF STEELFAB ENGINEERING CORPN (INDIA) VS. ACIT (SUPRA). 7 M/S. GEBBS HEALTHCARE SOLUTIONS PVT. LTD. ITA NO. 87/MUM/2016 15. WE NOTICE THAT THE CBDT, IN ITS CIRCULAR REFERRED SUPRA, HAS CAST A DUTY ON THE ASSESSING OFFICER TO MAKE THE ASSESSEES ABOUT THE RELIEFS AVAILABLE TO THEM. THE SAID CIRCULAR WAS ALSO ACCEPTED IN THE CASE OF CHOKSHI METAL REFINERY (SUPRA) BY HONBLE GUJARAT HIGH COURT. UNDISPUTEDLY, THE ASSESSEE IS ELIGIBLE FO R DEDUCTION U/S 115JB(6) OF THE ACT, WHICH THE ASSESSING OFFICER HAS FAILED TO BRING TO THE NOTICE OF THE ASSESSEE. WHEN THE ASSESSEE HAS REALISED ITS MISTAKE, IT HAS FILED THE IMPUGNED RECTIFICATION PETITION. THUS, THE ERROR POINTED BY THE ASSESSEE IS V ERY MUCH GLARING AND OBVIOUS. HENCE THE SAME REQUIRES RECTIFICATION U/S 154 OF THE ACT AS HELD BY HONBLE CALCUTTA HIGH COURT IN THE CASE OF WEST BENGAL STATE WAREHOUSING CORPORATION (SUPRA). 16. WE HAVE NOTICED THAT THE LD CIT(A) HAS TAKEN THE VIEW TH AT THE ISSUE OF DEDUCTION U/S 10B IS DEBATABLE IN NATURE AND HENCE THE SAME FALLS OUTSIDE THE SCOPE OF SEC. 154 OF THE ACT. WE HAVE EARLIER NOTICED THAT THE CLAIM OF THE ASSESSEE RELATED TO SEC. 115JB(6) OF THE ACT AND THE LD CIT(A) HAS MISDIRECTED HIMSEL F IN THIS REGARD BY PRESUMING THAT THE CLAIM WAS U/S 10B. WE HAVE ALSO NOTICED THAT THE DEDUCTION U/S 10B OF THE ACT IS NO LONGER AVAILABLE WHILE COMPUTING BOOK PROFIT U/S 115JB OF THE ACT. THE ASSESSING OFFICER HAS TAKEN THE SUPPORT OF DECISION RENDERED IN THE CASE OF GOETZ (INDIA) LTD. WE NOTICE THAT THE LD A.R HAS RIGHTLY POINTED OUT THAT THE AO WAS NOT CORRECT IN REFERRING TO THAT DECISION IN THE FACTS AND CIRCUMSTANCES OF THE CASE. EVEN OTHERWISE, IT IS A MISTAKE VERY MUCH GLARING AND OBVIOUS AND H ENCE REQUIRES RECTIFICATION. IT IS ALSO SETTLED PROPOSIT ION THAT INCOME TAX CANNOT BE COLLECTED WITHOUT THE AUTHORITY OF LAW. 17. IN VIEW OF THE FOREGOING DISCUSSIONS, WE ARE OF THE VIEW THAT THERE IS M ERIT IN THE RECTIFICATION PETITION FILED BY THE ASSESSEE. WE NOTICE THAT THERE IS MERIT IN THE CLAIM FOR DEDUCTION U/S 115JB(6) OF THE ACT AND THE SAME NEEDS TO BE ALLOWED AS PER THE REQUIREMENT OF THE ACT WHILE COMPUTING BOOK PROFIT 8 M/S. GEBBS HEALTHCARE SOLUTIONS PVT. LTD. ITA NO. 87/MUM/2016 U/S 115JB OF THE ACT. ACCORDINGLY WE SET ASIDE THE ORDER PASSED BY LD CIT(A) AND DIRECT THE AO TO ALLOW THE CLAIM MADE IN THE RECTIFICATION PETITION FILED BY THE ASSESSEE. 18. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 2 0 .12.2017. SD/ - SD/ - ( RAM LAL NEGI ) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 2 0 . 12 .201 7 *SSL* COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI