Gujarat Iron & Steel Co.Ltd., Ahmedabad V. The Income tax Officer,Ward-4(1), Ahmedabad

ITA 914/AHD/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6158 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 07-02-2017
• Assessment Year: 2004-2005
• Appeal Filed On: 03-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K MADHUSUDAN HEARING CONCLUDE
• Assessee Lawyers: S N DIVATIA
• Keywords: Depreciation; Unabsorbed depreciation; Reassessment proceedings
• Section: 115JB; 148

Judgement Text

ITA NO. 914 / AHD/201 3 ASSESSMENT Y EAR: 20 0 4 - 05 PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH, AHMEDABAD [CORAM: PRAMOD KUMAR AM AND MAHAVIR PRASAD JM] ITA NO. 914 /AHD/201 3 ASSESSMENT Y EAR : 20 0 4 - 05 GUJARAT IRON & STEEL CO. LTD., ..... .......... .APPELLANT ANJANI AVENUE, OPP. CHIEF JUSTICE S BUNGALOWS, BODAKDEV, AHMEDABAD 380 015. [PAN: AA ACG 5302 J ] VS. INCOME TAX OFFICER, WARD 4(1), AHMEDABAD. .. ......... RESPONDENT APPEARANCES BY S.N. DIVATIA FOR THE A PPELLANT K. MADHUSUDAN FOR THE R E SPONDENT HEARING CONCLUDED ON: 07.02 .2017 ORDER PRONOUNCED ON : 26 . 0 4 .2017 O R D E R PER PRAMOD KUMAR , AM: 1. BY WAY OF THIS APPEAL, THE ASSESSEE APPELLANT HAS CHALLENGED CORRECTNESS OF LEARNED CIT(A) S ORDER DATED 17.12.2012 PASSED BY THE LEAR NED CIT(A) , IN THE MATTER OF ASSESSMENT UNDER SECTION 143( 3 ) OF THE I NCOME TAX ACT 1961, FOR THE ASSESSMENT YEAR 20 0 4 - 05 . 2. IT IS A CASE OF REOPENED ASSESSMENT AND THE REASSESSMENT HAS BEEN RESORTED TO ON THE GROUND THAT THE ASSESSEE HAD CLAIMED A SET O FF OF THE DEP RECIATION CARRIED FORWARD AMOUNTING TO RS 42,09,830 BUT THE ACTUAL UNABSORBED DEPRECIATION AVAILABLE TO HIM WAS ONLY RS 21,60,362, AND, AS SUCH, AN INCOME OF RS 20,49,468 HAD THUS ESCAPED ASSESSMENT. IT IS, HOWEVER, IMPORTANT TO BEAR IN MIND THE FACT THAT THE ASSESSEE WAS ITA NO. 914 / AHD/201 3 ASSESSMENT Y EAR: 20 0 4 - 05 PAGE 2 OF 4 SUBJECTED TO MAT ON BOOK PROFITS OF RS 54,43,639 IN THE ORIGINAL ASSESSMENT PROCEEDINGS, AND, EVEN IN THE POST REOPENING REASSESSMENT ORDER, THE ASSESSEE IS SUBJECTED TO MAT ON BOOK PROFITS - THOUGH AT RS 32,83,280, AFTER MAKI NG ADJUSTMENT OF RS 21,60,362. WHATEVER BE THE MERITS OF SUCH AN APPROACH GIVEN THE FACTS OF THIS CASE, PRE - REOPENING AS ALSO POST - REOPENING THE ASSESSEE IS TAXED ON THE BOOK PROFITS ONLY. 3. IN THE BACKDROP OF THE ABOVE FACTS, WHEN APPEAL WAS CALLED OUT FOR HEARING, OUR ATTENTION WAS DRAWN TO A RATHER RECENT JUDGMENT OF HON BLE JURISDICTIONAL HIGH COURT, IN THE CASE OF MOTTO TILES PVT LTD VS ACIT [(2016) 386 ITR 280 (GUJ)] WHICH HOLDS, INTER ALIA, AS FOLLOWS: 11. INSOFAR AS THE SECOND CONTENTION RAISED ON BEHALF OF THE PETITIONER IS CONCERNED, THE CONTROVERSY STANDS SQUARELY CONCLUDED BY THE DECISION OF THIS COURT IN THE CASE OF INDIA GELATINE AND CHEMICALS LTD. V. ASSISTANT COMMISSIONER OF INCOME TAX (NO.1) (SUPRA) WHEREIN, THE COURT IN A CASE WHERE THE ASSESSEE HAD DECLARED A LOSS OF RS.1.44 CRORES UNDER THE NORMAL COMPUTATION AND THE ASSESSMENT WAS FRAMED ON BOOK PROFIT OF RS.2.89, HAD HELD THAT EVEN IF THE EXPENDITURE OF RS.116.86 LAKHS IS DISALLOWED, THERE WOULD BE NO RESULTANT CHANGE IN THE PETITION ER S TAX LIABILITY SINCE THE PETITIONER HAD ALREADY PAID MUCH HIGHER TAX AND HAD ALLOWED THE PETITION. IT APPEARS THAT THE REVENUE HAS ACCEPTED THE SAID DECISION AND HAS NOT CHALLENGED THE SAME BEFORE THE HIGHER FORUM. THE LEARNED COUNSEL FOR THE RESPONDEN T HAS URGED THAT THE DECISION REQUIRES RECONSIDERATION. HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, AS WELL AS THE FACT THAT THE REVENUE HAS ACCEPTED THE SAID DECISION, THE COURT DOES NOT FIND ANY REASON TO REFER THE MATTER FOR CONSIDERATION TO A LARGER BENCH. 12. IN THE LIGHT OF THE DECISION OF THIS COURT IN THE CASE OF INDIA GELATINE AND CHEMICALS LTD. V. ASSISTANT COMMISSIONER OF INCOME TAX (NO.1) (SUPRA), HAVING REGARD TO THE FACT THAT EVEN IF THE ENTIRE AMOUNT WHICH IS PROPOSED TO BE ADD ED BY THE ASSESSING OFFICER IS SUSTAINED, THERE WOULD BE NO ADDITION TO THE TAX LIABILITY OF THE PETITIONER AND THE PETITIONER WOULD STILL BE GOVERNED BY THE PROVISIONS OF SECTION 115JB OF THE ACT AND ASSESSED ON THE SAME BOOK PROFIT, IT CANNOT BE SAID THA T THERE WAS SUFFICIENT MATERIAL BEFORE THE ASSESSING OFFICER TO FORM THE BELIEF THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. THE IMPUGNED NOTICE ISSUED UNDER SECTION 148 OF THE ACT, THEREFORE, CANNOT BE SUSTAINED. ITA NO. 914 / AHD/201 3 ASSESSMENT Y EAR: 20 0 4 - 05 PAGE 3 OF 4 4. LEARNED COUNSEL SUBMITS THAT IN VIEW OF THE ABOVE LEGAL POSITION, AND AS THE FACT OF THE ASSESSEE HAVING BEEN ASSESSED AT BOOK PROFIT EVEN POST THE REASSESSMENT PROCEEDINGS HAS REACHED FINALITY, THE REASSESSMENT PROCEEDINGS SHOULD BE QUASHED FOR THIS REASON ALONE. HE URGES US TO ADJ UDICATE ON THIS GRIEVANCE FIRST, AND SUBMITS THAT, IN THAT EVENT, ALL OTHER ISSUES RAISED IN THE APPEAL WILL BE RENDERED ACADEMIC. 5. LEARNED DEPARTMENTAL REPRESENTATIVE RELIES ON THE STAND OF THE ASSESSING OFFICER. 6. WE MAY MENTION THAT IN THE IMPUGNED REASSESSMENT ORDER, THE ASSESSING OFFICER HAS INDEED TAXED THE BOOK PROFITS BUT, RATHER CURIOUSLY, AFTER MAKING AN ADDITION IN RESPECT OF THE EXCESSIVE DEPRECIATION SET OFF CLAIMED BY THE ASSESSEE. THAT IS EX FACIE INCORRECT. SUCH AN ADJUSTMENT CAN ONLY B E RELEVANT FOR DETERMINATION OF INCOME UNDER THE PROVISIONS OF THE INCOME TAX ACT, AND THE CALL AS TO WHETHER THE CASE IS FIT FOR TAXATION OF BOOK PROFITS UNDER SECTION 115JB OR UNDER THE NORMAL PROVISIONS OF THE ACT IS TAKEN AFTER QUANTIFYING THE INCOME TAXABLE UNDER THE PROVISIONS OF THE ACT. IT WOULD THUS INDEED SEEM THAT THERE IS AN ERROR IN COMPUTATION OF INCOME IN THE POST REOPENING ASSESSMENT ORDER. THERE IS NO CATEGORICAL FINDING THAT POST REOPENING AND POST ADJUSTMENT ON ACCOUNT OF LESSER SET OFF OF UNABSORBED DEPRECIATION, IT IS INDEED A CASE IN WHICH BOOK PROFITS ARE REQUIRED TO BE TAXED. IN VIEW OF THESE DISCUSSIONS, WE DEEM IT FIT AND PROPER TO REMIT THE MATTER TO THE FILE OF THE CIT(A) FOR FRESH ADJUDICATION ON THESE ASPECTS, AND IN CASE IT I S INDEED FOUND THAT THE INCOME IS REQUIRED TO BE TAXED UNDER MAT, EVEN POST REOPENING, THE REOPENING PROCEEDINGS WILL HAVE TO BE QUASHED FOR THIS SHORT REASON ALONE . AS THE MATTER IS BEING REMITTED TO THE FILE OF THE CIT(A) ON THIS SHORT ITA NO. 914 / AHD/201 3 ASSESSMENT Y EAR: 20 0 4 - 05 PAGE 4 OF 4 GROUND, ALL OTHER ISSUES RAISED BY THE ASSESSEE ARE ACADEMIC AT THIS STAGE AND NEED NO ADJUDICATION BY US. 7. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSES IN THE TERMS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT TODAY ON THE 26 TH DAY OF APRIL, 2017. SD/ - SD/ - MAHAVIR PRASAD PRAMOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) DATED: 26 TH DAY OF APRIL , 201 7 . PBN/* COPIES TO : (1) THE APPELLANT (2) THE RESPONDENT (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD