DCIT, New Delhi V. M/s. SRF Ltd., New Delhi

ITA 914/DEL/2014

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 1323 (ITAT-DELHI)
• Duration Of Justice: 6 year(s) 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 07-06-2017
• Assessment Year: 1995-1996
• Appeal Filed On: 17-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SARAS KUMAR
• Assessee Lawyers: A T
• Keywords: Business expenditure
• Section: 143(3); 72

Judgement Text

1 , , IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G, NEW DELHI , !'$% . & , ()! BEFORE MS. SUSHMA CHOWLA, VP & DR.B.R.R. KUMAR, AM * / ITA NO.914/DEL/2014 + , , / ASSESSMENT YEAR 1995-96 THE DCIT, CIRCLE-9(1), NEW DELHI. .......... -. /APPELLANT VS SRF LTD., C-8, SAFDARJUNG DEVELOPMENT AREA, NEW DELHI-110016. PAN-AAACS0206P . /0-. / RESPONDENT -.12 / APPELLANT BY :SH. SARAS KUMAR, SR. DR /0-.12 / RESPONDENT BY : SH. SATYAN SETHI & A.T.PANDA, A DV. 13( / DATE OF HEARING : 02.01.2020 45 13( / DATE OF PRONOUNCEMENT: 27.04.2020 6 / ORDER PER SUSHMA CHOWLA, VP THE PRESENT APPEAL FILED BY REVENUE IS AGAINST ORDE R OF CIT(A)-XI, NEW DELHI DATED 19.11.2013 RELATING TO ASSESSMENT YEAR 1995-96 AGAINST THE ORDER PASSED UNDER SECTION 143(3) R.W.S 254 OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT). 2. THE ONLY ISSUE RAISED IN THE PRESENT APPEAL FILE D BY THE REVENUE IS AGAINST THE DELETION OF ADDITION MADE ON ACCOUNT OF UNABSORBED INVESTMENT ALLOWANCE AMOUNTING TO RS. 4,18,31,075/- . BRIEFLY IN THE FACTS OF THE CASE, THE PRESENT APPEAL IS THE SECOND ROUND OF PROCEEDINGS BEFORE ITA NO.914/DEL/2014 ASSESSMENT YEAR 1995-96 2 THE TRIBUNAL IN WHICH THE ASSESSEE HAD MADE THE CLA IM ON ACCOUNT OF ADJUSTMENT OF UNABSORBED INVESTMENT ALLOWANCE OF RS . 4,18,31,075/-. THE ASSESSING OFFICER IN THE FIRST ROUND DISALLOWED TH E SAID CLAIM WHICH IS CONFIRMED BY THE CIT(A). THE TRIBUNAL, HOWEVER, REM ITTED THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER, WHICH READS A S UNDER:- WE THEREFORE DIRECT THE ASSESSING OFFICER TO ALL OW THE BENEFIT OF UNABSORBED INVESTMENT ALLOWANCE OF ERSTWHILE FLOW M ORE POLYSTERS LTD. IN TERMS OF SECTION 32A(6) OF THE ACT AND IF THE CONDI TIONS SPECIFIED IN SECTION 32A(6) ARE COMPLIED WITH THE AMOUNT OF UNABSORBED I NVESTMENT ALLOWANCE BE ALLOWED IN THE HANDS OF THE ASSESSEE. 3. THE PROCEEDINGS WERE TAKEN UP BY THE ASSESSING O FFICER AND HE ISSUED A SHOW CAUSE NOTICE TO THE ASSESSEE TO EXPLA IN AS TO WHY THE SAID EXPENDITURE BE ALLOWED AS BUSINESS EXPENDITURE. THE RELEVANT PARA OF THE SHOW CAUSE NOTICE IS AS UNDER:- 3. IN RESPECT OF THE UNABSORBED INVESTMENT ALLOWAN CE AMOUNTING TO RS.4,18,31,075/- DISALLOWED BY THE AO. AND SUBSEQUE NTLY CONFIRMED BY THE LD. CIT(A), IN PARA 25 OF ITS ORDER THE HONBLE ITAT HA S DIRECTED THE AO TO ALLOW THE BENEFIT OF UNABSORBED INVESTMENT ALLOWANCE OF E RSTWHILE M/S. FLOWMORE POLYESTER LIMITED IN TERMS OF SECTION 32A(6) OF THE ACT AND THAT IF THE CONDITIONS SPECIFIED IN SECTION 32A(6) ARE COMPLIED WITH, THE AMOUNT OF UNABSORBED INVESTMENT ALLOWANCE BE ALLOWED IN THE HANDS OF THE ASSESSEE COMPANY. IN VIEW OF THESE DIRECTIONS OF THE HON'BLE ITAT YOU ARE REQ UIRED TO PROVE AS TO HOW EACH OF THE CONDITIONS SPECIFIED IN SECTION 32A(6) OF THE ACT ARE COMPLIED WITH. SUFFICIENT AND NECESSARY DOCUMENTARY EVIDENCES MAY ALSO BE FILED. PLEASE NOTE THAT IN CASE SUFFICIENT AND NECESSARY DETAILS/DOCUM ENTARY EVIDENCES ARE NOT PROVIDED BY YOU IT WILL NOT BE POSSIBLE TO ACCEPT Y OUR CLAIM. 4. THE ASSESSEE IN REPLY EXPLAINED THE ISSUE AND SU BMITTED AS UNDER:- FURTHER TO OUR RESPONSE DATED 4TH NOV, 2009 IN T HIS REGARD WE FURTHER INVITE YOUR ATTENTION TO THE COPY OF THE ORDER OF T HE AO FOR THE YEAR ENDED 1989 IN THE CASE OF FLOWMORE FILED WITH YOURSELF ALONGWI TH THE ABOVE RESPONSE, YOUR GOODSELF WILL AGREE THAT AFTER EXAMINING THE REQUIR EMENT OF SECTION 32A(4) ONLY AO MUST HAVE ALLOWED THE INVESTMENT ALLOWANCE. ITA NO.914/DEL/2014 ASSESSMENT YEAR 1995-96 3 5. THE ASSESSING OFFICER HOWEVER DISALLOWED THE CL AIM OF THE ASSESSEE AS UNDER:- THE INVOLVED ISSUE AND THE REPLY/ DETAILS FILED BY THE ASSESSEE HAVE BEEN CONSIDERED. THE REPLY FILED AND DETAILS MADE AVAILA BLE BY THE ASSESSEE WERE FOUND NOT SUFFICIENT TO CONCLUDE THAT THE VARIOUS C ONDITIONS AS SPECIFIED IN SECTION 32A(6) AND THE SECTIONS 32A(4), 32A(3) AS R EFERRED IN SECTION 32A(6) ARE FULFILLED IN THIS CASE. THE ASSESSEE WAS ASKED VIDE LETTER DATED 10/05/2010 TO PROVE AS TO HOW EACH OF THOSE CONDITIONS ARE COM PLIED WITH. THE ASSESSEE WAS ALSO ASKED TO FILE SUFFICIENT AND NECESSARY DOC UMENTARY EVIDENCES AND TO NOTE THAT IN CASE SUFFICIENT AND NECESSARY DETAILS /DOCUMENTARY EVIDENCES WERE NOT PROVIDED BY THE ASSESSEE IT WOULD NOT BE POSSIB LE TO ACCEPT THE CLAIM. SINCE, THE ASSESSEE HAS NOT FILED SUFFICIENT AND NE CESSARY DETAILS/DOCUMENTARY EVIDENCES IT IS NOT POSSIBLE TO ASCERTAIN WHETHER C ONDITIONS SPECIFIED ON THIS BEHALF ARE FULFILLED OR NOT. ACCORDINGLY, THE CLAIM MADE BY THE ASSESSEE IS NOT BEING ALLOWED. HOWEVER, IT MAY BE MENTIONED THAT AS AND WHEN THE ASSESSEE MAKES PROPER COMPLIANCE, THE ISSUE WILL BE EXAMINED IN ACCORDANCE WITH THE DIRECTIONS OF THE HONBLE ITAT AND RELIEF WILL BE A LLOWED ACCORDINGLY. 6. THE MATTER TRAVELLED TO THE CIT(A) AND THE EXPLA NATION OF THE ASSESSEE WAS THE CONTENTION OF SECTION 32A(6) HAD T O BE COMPLIED WITH AND SINCE THE ASSESSEE HAD COMPLIED THE SAID CONDITION AND FURNISHED PROPER EVIDENCE IN THIS REGARD, THE CLAIM OF THE ASSESSEE SHOULD HAVE BEEN ALLOWED. THE CIT(A) SOUGHT REMAND REPORT FROM THE A O WHICH IS REPRODUCED AT PAGES 6 AND 7 OF THE APPELLATE ORDER. THE ASSESSEE FILED A REJOINDER WHICH IS REPRODUCED AT PAGE 7 OF THE APPE LLATE ORDER. THE AO HAD LAID EMPHASIS ON SECTION 72A OF THE ACT FOR NON-ALL OWANCE OF UNABSORBED INVESTMENT ALLOWANCE. THE ASSESSEE STRESSED THAT ON CE THE TRIBUNAL HAD DIRECTED THE ALLOWANCE OF UNABSORBED INVESTMENT ALL OWANCE IN THE HANDS OF THE ASSESSEE COMPANY, THEN THE AO HAD TO ONLY LO OK AT THE FULFILLMENT OF THE CONDITIONS U/S 32A(6) OF THE ACT, WHICH HE FAIL ED TO DO SO. THE CIT(A) DELIBERATED UPON THE ISSUE IN PARA 10 AND HELD THAT THE AO HAD FAILED TO EXAMINE THE ISSUE PROPERLY AND HAD RELIED ON THE PR OVISIONS OF SECTION 72A ITA NO.914/DEL/2014 ASSESSMENT YEAR 1995-96 4 OF THE ACT AND NOT THE PROVISIONS OF SECTION 32A(6) OF THE ACT. THE CIT(A)ALLOWED THE CLAIM OF THE ASSESSEE AGAINST WHI CH THE REVENUE IS IN APPEAL. 7. MR. SARAS KUMAR, SR. DR APPEARED FOR THE REVENUE AND MR. SATYAN SETHI & MR. A.T. PANDA, ADVOCATES APPEARED FOR THE ASSESSEE AND PUT FORWARDED THEIR CONTENTIONS. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW. 9. THE LIMITED ISSUE WHICH ARISES IN THE PRESENT CA SE IS THE ALLOWANCE OF CLAIM OF THE ASSESSEE OF UNABSORBED INVESTMENT ALLO WANCE OF RS. 4,18,31,075/-. IN VIEW OF THE PROVISIONS OF SECTION 32A(6) OF THE ACT, THE MATTER TRAVELLED BACK TO THE AO AS PER THE DIRECTIO NS OF THE TRIBUNAL WHICH WE HAVE ALREADY REPRODUCED IN THE PARAS ABOVE. THE AO HAD TO SEE WHETHER THE ASSESSEE HAD FULFILLED THE CONDITIONS O F SECTION 32A(6)BUT HE LAID EMPHASIS ON THE PROVISIONS OF SECTION 72 A OF THE ACT, WHICH IS MIS- PLACED. THE RELEVANT SUBMISSIONS OF THE ASSESSEE IN THIS REGARD ARE AS UNDER:- 2. THIS IS KNOWN FACT THAT FLOWMORE POLYESTER LIMI TED MERGED WITH THE ASSESSEE COMPANY W.E.F. 01.04.1994. 3. FROM THE BALANCE SHEET OF THE ASSESSEE WHICH HAS ALREADY BEEN EXAMINED DURING ASSESSMENT PROCEEDING, IT IS APPARENT THAT DURING T HE YEAR UNDER APPEAL THE APPELLANT HAS INVESTED IN PLANT AND MACHINERY AMOUNTING TO RS . 10124.36 LAKHS WHICH IS MUCH MORE THAN THE REQUIRED INVESTMENT OF RS. 314 LACS F OR ALLOWING THE UNABSORBED INVESTMENT ALLOWANCE. THE ASSESSING OFFICER HAS NOT SHOWN ANY DISAGREEMENT IN HIS ASSESSMENT ORDER ABOUT THE AMOUNT OF ADDITION IN TH E PLANT AND MACHINERY. ITA NO.914/DEL/2014 ASSESSMENT YEAR 1995-96 5 10. THE CIT(A) HAS DELIBERATED UPON THE ISSUE VIDE PARA 10 WHICH READS AS UNDER:- 10.GROUND NO. 4 OF THE APPEAL IS AGAINST THE ALLOWA BILITY OF UNABSORBED INVESTMENT ALLOWANCE OF ERSTWHILE M/S FLOWMORE POLY ESTERS LTD. IN TERMS OF SECTION 32A (6) OF THE ACT. IT IS OBSERVED THAT TH E ISSUE HAS NOT BEEN TAKEN BY THE AO IN A PROPER WAY AS PER DIRECTIONS OF THE HONBLE ITAT. THE AO HAD BEEN VERY CASUAL IN CONCLUDING THE ISSUE IN THE FOLLOWING WOR DS: 'SINCE, THE ASSESSEE HAS NOT FILED SUFFICIENT AND N ECESSARY DETAILS/DOCUMENTARY EVIDENCES, IT IS NOT POSSIBLE TO ASCERTAIN WHETHER CONDITIONS SPECIFIED ON THIS BEHALF ARE FULFILLED OR NOT. ACCORDINGLY, THE CLAIM MADE BY THE ASSESSEE IS NOT BEING ALLOWED. HOWEVER, IT MAY BE R MENTIONED THAT AS AND WHEN THE ASSESSEE MAKES PROPER COMPLIANCE, THE ISSUE WILL BE EXAMINED . IN ACCORDANCE WITH THE DIRECTION OF THE HON'BLE ITAT AND RELIEF WILL BE AL LOWED ACCORDINGLY. ' I FAIL TO UNDERSTAND UNDER WHICH SECTION OF THE ACT , THE AO WAS GOING TO EXAMINE THE ISSUE AFTER COMPLETION OF THE ASSESSMEN T!! DURING THE APPELLATE PROCEEDINGS, THE AO WAS GIVEN OPPORTUNITY TO OFFER HIS COMMENTS WHETHER THE CONDITION FOR INVESTMENT ALLOWANCE ARE FULFILLED. I AM SURPRI SED TO NOTE THAT THE AO (THE INCUMBENT WHO HAS SUBMITTED THE REMANDREPORT) COMPL ETELY WENT BEYOND THE DIRECTIONS OF HONBLE ITAT AND REPEATED THE PROVISIONS OF SECT ION72A OF THE ACT WHICH THE AO HAD RELIED UPON IN THE ORIGINAL ASSESSMENT ORDER AN DWHICH WERE ADJUDICATED UPON BY THE HONBLE ITAT. THE SPECIFIC ISSUE WHICH REMAINED TO BE DECIDEDWAS WHETHER VARIOUS CONDITIONS AS SPECIFIED IN SECTION 32A(6) A ND THE SECTION32A(4), 32A(3) AS REFERRED IN SECTION 32A(6) OF THE ACT ARE FULFILLED IN THE APPELLANTS CASE.THE APPELLANT HAS ELABORATELY SHOWN THAT THE CONDITIONS SPECIFIED IN SECTION 32A(6) OF THE ACT ARE FULFILLED BY IT. THEREFORE, THE CLAIM OF THE APPELL ANT IS FULLY JUSTIFIED. THE AO WAS NOTJUSTIFIED IN DENYING THE APPELLANTS CLAIM WITHO UT REALLY EXAMINING THE ISSUE. GROUND NO. 4 OF THE APPEAL IS ALLOWED. 11. THE LEARNED DR FOR THE REVENUE HAS FAILED TO CO NTROVERT THE FINDINGS OF THE CIT(A). ONCE THE ASSESSEE HAS FULFILLED THE CONDITIONS OF SECTION 32A(6) OF THE ACT, THE CLAIM MERITS TO BE ALLOWED I N THE HANDS OF THE ASSESSEE. ACCORDINGLY, WE FIND NO MERIT IN THE PRE SENT APPEAL FILED BY THE REVENUE. ITA NO.914/DEL/2014 ASSESSMENT YEAR 1995-96 6 12. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH APRIL, 2020. SD/- SD/- (B.R.R.KUMAR) (SUSHMA CHOWLA) () /ACCOUNTANT MEMBER ! /VICE PRESIDENT / DATED : 27 TH APRIL, 2020 * AMIT KUMAR* 61/+378983: COPY OF THE ORDER IS FORWARDED TO : 1. -. / THE APPELLANT 2. /0-. / THE RESPONDENT 3. ;3 < = / THE CIT(A) 4. > ;3 / THE PR. CIT 5. 6. 8?@/+3+ A A / DR, ITAT, DELHI @$,B: GUARD FILE. 6 / BY ORDER , 083/+3 // TRUE COPY // CD)E , A ASSISTANT REGISTRAR, ITAT, DELHI