M/S ADDISON & COMPANY LTD, CHENNAI V. DCIT CORPORATE CIRCLE 1 (1), CHENNAI

ITA 899/CHNY/2018

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7991 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-09-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2013-2014
• Appeal Filed On: 14-03-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SAILENDRA MAMMIDI
• Keywords: Depreciation; Additional depreciation; Revised return
• Section: 147

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: CHENNAI . , .. ', BEFORE SHRI ABRAHAM P.GEORGE, ACCOUNTANT MEMBER AND SHRI DUVVURU R.L.REDDY, JUDICIAL MEMBER ./ ITA NO.899/CHNY/2018 $% % /ASSESSMENT YEAR: 2013-14 M/S.ADDISON & COMPANY LTD., NO.803, ANNA SALAI, CHENNAI-600 002. VS. THE DY. COMMISSIONER OF- INCOME TAX, CORPORATE CIRCLE-1(1), CHENNAI-600 034. [PAN: AAACA 5199 H ] ( ( /APPELLANT) ( )*( /RESPONDENT) ( + / APPELLANT BY : MR.SAROJ KUMAR PARIDA, ADV. )*( + /RESPONDENT BY : MR.SAILENDRA MAMMIDI, CIT + /DATE OF HEARING : 20.08.2018 + /DATE OF PRONOUNCEMENT : 24.09.2018 / O R D E R PER DUVVURU R.L.REDDY, JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-1, CHENNAI, DA TED 15.01.2018 FOR THE AY 2013-14. 2. THE ONLY EFFECTIVE GROUND RAISED BY THE ASSESSEE IS THAT THE LD.CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.86 ,63,68,651/- AS LONG TERM CAPITAL GAINS ON PROTECTIVE BASIS AS COMPARED TO A SUM OF RS.60,08,74,606/- APPLIED TO TAX AS LONG TERM CAPIT AL GAINS BY THE ASSESSEE ON SUBSTANTIVE BASIS. ASSESSEE COMPANY IS IN THE BUSINESS OF ITA NO.899/CHNY/2018 :- 2 -: MANUFACTURING AND TRADING OF METAL CUTTING TOOLS. THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE AY 13-14 ON 22.11.2013 ADM ITTING TOTAL INCOME OF RS.69,46,91,500/-. SUBSEQUENTLY, THE ASSESSEE H AS FILED ITS REVISED RETURN OF INCOME ON 29.09.2014 ADMITTING TOTAL INCO ME OF RS.67,06,91,500/-. THE RETURN WAS SELECTED FOR SCR UTINY AND NOTICES U/S.143(2) READ WITH SEC.129 DATED 04.01.2016 WAS I SSUED. IN RESPONSE TO THE NOTICES, ASSESSEE FILED THE DETAILS CALLED F OR. AFTER CONSIDERING THE DETAILS, THE ASSESSMENT WAS COMPLETED U/S.143(3) OF THE ACT ON 29.03.2016 DETERMINING THE TOTAL INCOME OF RS.93,68 ,79,935/-. WHILE COMPLETING THE ASSESSMENT, THE AO MADE ADDITION TOW ARDS LONG TERM CAPITAL GAINS ON PROTECTIVE BASIS AND DISALLOWANCES OF CLAIM FOR ADDITIONAL DEPRECIATION AND DELAYED PAYMENT OF EMPLOYEES CONT RIBUTION TO PF AND ESI. BEING AGGRIEVED, THE ASSESSEE PREFERRED AN AP PEAL BEFORE THE LD.CIT(A). AFTER CONSIDERING THE GROUNDS RAISED BY THE ASSESSEE COMPANY AND MATERIAL ON RECORD, THE LD.CIT(A) PARTLY ALLOWE D THE APPEAL OF THE ASSESSEE. ON BEING AGGRIEVED, THE ASSESSEE PREFERR ED AN APPEAL BEFORE THE TRIBUNAL. 3. NOW THE ISSUE BEFORE THE TRIBUNAL RELATES TO THE ADDITION OF RS.86,63,68,651/- AS LONG TERM CAPITAL GAINS ON A P ROTECTIVE BASIS AS COMPARED TO A SUM OF RS.60,08,74,606/- OFFERED TO T AX AS LONG TERM CAPITAL GAINS BY THE ASSESSEE COMPANY ON SUBSTANTIV E BASIS. IN THIS CONNECTION, THE COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD ENTERED INTO A JOINT DEVELOPMENT AGREEMENT IN RESPE CT OF LAND OWNED BY ITA NO.899/CHNY/2018 :- 3 -: THEM AT CHEMBARAMBAKKAM AND IN RESPECT OF THE SALE OF LONG TERM CAPITAL GAINS WAS ASSESSED IN THE AY 2010-11 AT A S UM OF RS.86,45,99,912/-. THE ASSESSEE HAD OFFERED THE CA PITAL GAINS DURING THE YEAR ON THE BASIS THAT THE PLANNING PERMIT WAS RECE IVED DURING AUGUST, 2012 AND THEREAFTER POSSESSION HAD BEEN HANDED OVER TO THE DEVELOPER AND CONSTRUCTION ACTIVITY COMMENCED ONLY DURING THE RELEVANT PREVIOUS YEAR. HE FURTHER SUBMITTED THAT THE AO IN AY 2010- 11 HAD BROUGHT THE SAME TO TAX BY HOLDING THAT THE DEVELOPMENT AGREEME NT AND THE POWER OF ATTORNEY TOGETHER CONSTITUTED U/S.2(47) OF THE IT A CT AND THE ADDITION MADE BY THE AO IN AY 2010-11 WAS UPHELD BY THE ITAT . HOWEVER, THE ASSESSEE HAS FILED AN APPEAL AGAINST THE ORDER OF T HE ITAT BEFORE THE HONBLE HIGH COURT AND HAS ADDITIONALLY OFFERED THE INCOME TO TAX DURING THE RELEVANT PREVIOUS YEAR ON THE BASIS OF THE PLAN NING PERMIT RECEIVED DURING THE YEAR AND POSSESSION BEING HANDED OVER TO THE DEVELOPER. HE FURTHER SUBMITTED THAT THE GROUND IS BEING TAKEN IS TO KEEP THE ISSUE ALIVE AS THE AO HAS TAXED THE SAID INCOME ON PROTECTIVE B ASIS ONLY. HE FURTHER SUBMITTED THAT SINCE THE SUBSTANTIVE ASSESSMENT IS PENDING BEFORE THE HONBLE HIGH COURT, THE PROTECTIVE ASSESSMENT SHOUL D NOT SURVIVE. 4. THE LD.DR STRONGLY SUPPORTED THE ORDER PASSED BY THE LD.CIT(A). 5. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PER USED THE MATERIAL PLACED ON RECORD. IT IS AN ADMITTED FACT THAT THE ISSUE BEFORE US ONLY PROTECTIVE ASSESSMENT IN THE ASSESSMENT YEAR UNDER CONSIDERATION, FOR ITA NO.899/CHNY/2018 :- 4 -: WHICH, SUBSTANTIVE ASSESSMENT WAS DONE IN THE AY 20 10-11 IN THE ASSESSMENT PROCEEDINGS. THE TRIBUNAL HAS SUSTAINED THE SUBSTANTIVE ASSESSMENT AGAINST WHERE THE ASSESSEE FILED APPEAL AND THE SAME IS PENDING BEFORE THE HONBLE HIGH COURT. IN THIS CAS E, THE SUBSTANTIVE ASSESSMENT WAS DONE IN THE ASSESSMENT YEAR 2010-11 AND THE TRIBUNAL SUSTAINED THE SUBSTANTIVE ASSESSMENT, AGAINST WHICH , THE ASSESSEE PREFERRED FURTHER APPEAL BEFORE THE HONBLE MADRAS HIGH COURT, WHICH IS STILL PENDING FOR ADJUDICATION. SINCE NO REASSESSME NT UNDER SECTION 147 OF THE ACT WAS DONE AND TO PROTECT THE INTEREST OF THE REVENUE, THE ASSESSING OFFICER DONE THE ASSESSMENT ON PROTECTIVE BASIS. THE PROTECTIVE ASSESSMENT IS ALWAYS SUCCESSIVE TO THE SUBSTANTIVE ASSESSMENT. THERE MAY BE A SUBSTANTIVE ASSESSMENT WITHOUT ANY PROTECT IVE ASSESSMENT, BUT THERE CANNOT BE ANY PROTECTIVE ASSESSMENT WITHOUT T HERE BEING A SUBSTANTIVE ASSESSMENT. IN SIMPLE WORDS, THERE HA S TO BE SOME SUBSTANTIVE ASSESSMENT/ADDITION FIRST WHICH ENABLES THE ASSESSING OFFICER TO MAKE A PROTECTIVE ASSESSMENT/ADDITION. SUBSTANTI VE ADDITION/ ASSESSMENT IS MADE IN THE HANDS OF THE PERSON IN WH OSE HANDS THE ASSESSING OFFICER, PRIMA FACIE, HOLDS THE OPINION T HAT THE INCOME IS RIGHTLY TAXABLE. HAVING DONE SO AND WITH A VIEW TO PROTECT THE INTEREST OF THE REVENUE, IF THE AO IS NOT SURE THAT THE PERSON IN W HOSE HANDS HE HAD MADE THE SUBSTANTIVE ADDITION RIGHTLY, HE EMBARKS U PON THE PROTECTIVE ASSESSMENT. THUS, THE PROTECTIVE ASSESSM ENT IS BASICALLY BASED ON THE DOUBT OF THE AO AS DISTINCT FROM HIS BELIEF WHICH IS THERE IS THE SUBSTANTIVE ASSESSMENT. OBVIOUSLY, THERE IS NO PLACE FOR 'DOUBT' IN THE ITA NO.899/CHNY/2018 :- 5 -: SCHEME OF REASSESSMENT, AS IT HAS TO BE BELIEF OF T HE AO ABOUT THE ESCAPEMENT OF INCOME, WHICH IS THE FOUNDATION FOR A SSESSMENT OR REASSESSMENT U/S.147 OF THE ACT. IF THE SUBSTANTIVE ASSESSMENT IS STRUCK DOWN AT A PLACE WHERE IT WAS MADE, IN SUCH A SCENAR IO THE PROTECTIVE ADDITION WILL GET CONVERTED INTO SUBSTANTIVE ADDITI ON. UNDER THE ABOVE FACTS AND CIRCUMSTANCES, WE SUSTAINED THE PROTECTIV E ASSESSMENT MADE BY THE ASSESSING OFFICER AND DISMISS THE GROUND RAISED BY THE ASSESSEE. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON THE 24 TH DAY OF SEPTEMBER, 2018, IN CHENNAI. SD/- SD/- ( . ) ( ABRAHAM P.GEORGE ) /ACCOUNTANT MEMBER ( . . ' ) ( DUVVURU R.L. REDDY ) $ /JUDICIAL MEMBER /CHENNAI, 1 /DATED: SEPTEMBER 24, 2018. TLN + )$23 43 /COPY TO: 1. ( /APPELLANT 4. 5 /CIT 2. )*( /RESPONDENT 5. 3 )$$ /DR 3. 5 ( ) /CIT(A) 6. % /GF