The Sri Venkatesa Mills Limited, Udamalpet V. ACIT, Coimbatore

ITA 947/CHNY/2011

• Counselvise Citation: 94721714 RSA 2011
• Duration Of Justice: 2 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-08-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 23-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K E B RENGARAJAN JR
• Assessee Lawyers: R MAHADEVAN
• Keywords: Depreciation; Unabsorbed depreciation
• Section: 143(3); 115JB; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI [BEFORE DR. O.K. NARAYANAN, VICE-PRESIDENT AND SHRI HARI OM MARATHA, JUDICIAL MEMBER] I.T.A NO.947/MDS/2011 (ASSESSMENT YEAR : 2006-07) THE SRI VENKATESA MILLS LTD NO.132, PALANI ROAD VENKETESA MILLS POST UDAMALPET 642 128 VS THE ACIT SALARY CIRCLE I COIMBATORE [PAN AABCT1464D ] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI R. MAHADEVAN, CA RESPONDENT BY : SHRI K.E.B RENGARAJAN, JR. STANDING COUNSEL DATE OF HEARING : 09-08-2011 DATE OF PRONOUNCEMENT : 18-08-2011 O R D E R PER HARI OM MARATHA, JUDICIAL MEMBER: THIS APPEAL OF THE ASSESSEE, FOR ASSESSMENT YE AR 2006-07, IS DIRECTED AGAINST THE ORDER OF THE LD. CIT , COIMBAT ORE, DATED 23.03.2011, IN WHICH THE ISSUE REGARDING VALIDITY O F ASSUMPTION OF JURISDICTION U/S 263 OF THE ACT IS INVOLVED. 2. IN THIS CASE, THE ASSESSING OFFICER HAD TAKEN A VIEW WITH REGARD TO PROVISIONS OF SECTION 115JB IN FAVOUR OF THE ASSESSEE. THE ITA 947/11 :- 2 -: FACTS OF THE CASE ARE THAT AFTER CALLING FOR AND EX AMINING THE RECORDS OF THE ASSESSMENT ORDER PASSED U/S 143(3), THE LD. CIT HAS NOTICED THAT AS PER THE PROVISIONS OF CLAUSE (III) OF SUB-SECTIO N 115JB OF THE ACT , THE AMOUNT OF LOSS BROUGHT FORWARD OR UNABSORBED DE PRECIATION WHICHEVER IS LESS AS PER THE BOOKS OF ACCOUNT IS TO BE REDUCED FROM THE NET PROFIT AS SHOWN IN THE PROFIT & LOSS ACCOUN T TO ARRIVE AT THE BOOK PROFIT. FOR ASSESSMENT YEAR 2005-06, TO ARR IVE AT THE BOOK PROFIT, THE COMPANY HAS REDUCED THE BUSINESS LOSS F ROM THE PROFIT AS PER THE PROFIT & LOSS ACCOUNT. THE PROFITS RELEVAN T TO ASSESSMENT YEAR 2005-06 HAD TO BE SET OFF AGAINST UNABSORBED DEPREC IATION IN WHICH CASE THE UNABSORBED DEPRECIATION AS PER THE BOOKS A S ON 31.3.2005 WOULD BE AS UNDER: UNABSORBED DEPRECIATION BROUGHT FORWARD ` 4,38,97,462 SET OFF OF NET PROFIT OF ASSESSMENT YEAR 2005-06 ` 1,15,46,215 UNABSORBED DEPRECIATION CARRIED FORWARD ` 3,23,51,247 3. FOR THE ASSESSMENT YEAR 2006-07, UNABSORBED DEPRECI ATION BEING LOWER THAN THE BROUGHT FORWARD LOSSES, UNABSO RBED DEPRECIATION OF ` 3,23,51,247/- HAD TO BE REDUCED FROM THE PROFIT OF ` 7,49,00,209/- AS PER THE PROFIT & LOSS ACCOUNT TO ARRIVE AT THE B OOK PROFIT FOR THE PURPOSE OF SECTION 115JB. THE BOOK PROFIT FOR THE ASSESSMENT YEAR 2006-07 WOULD, THEREFORE, BE ` 4,25,48,962/- AS AGAINST ` 3,10,02,747/- COMPUTED U/S 115JB IN THE ORDER PASSE D U/S 143(3) ON 10.6.2008. ON THIS GROUND, THE LD. CIT HAS TREATED THE ASSESSMENT ITA 947/11 :- 3 -: ORDER AS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL T O THE INTERESTS OF THE REVENUE. CONSEQUENTLY, HE HAS REVISED THE ORDER U/ S 263, AFTER SHOW CAUSING THE ASSESSEE AND CONSIDERING ITS OBJECTIONS AND HAS DIRECTED THE ASSESSING OFFICER TO MODIFY THE ORDER BY ADOPTI NG THE BOOK PROFIT FOR THE YEAR UNDER CONSIDERATION U/S 115JB AS STATE D ABOVE. 4. IT WAS ARGUED BY THE LD.AR THAT ON IDENTICAL FACTS , ITAT CHENNAI BENCH IN THE CASE OF AIRCEL CELLULAR LTD VS ACIT, 8 ITR (TRIB)446(CHENNAI) HAS FOUND SIMILAR ACTION TAKEN B Y THE LD. CIT TO BE INVALID AND NOT IN ACCORDANCE WITH THE PROVISIONS OF SECTION 263, AND HAS QUASHED THE REVISIONAL ORDER. A COPY OF THE ORDER IS PLACED ON RECORD. THE LD.DR COULD NOT DISTINGUISH THE FACTS OF THESE TWO CASES, BUT HE HAS SUPPORTED THE LD. CITS ORDER. 5. WE HAVE GONE THROUGH THE TRIBUNAL ORDER IN QUEST ION. WE HAVE FOUND THAT THE ISSUE INVOLVED IN THIS APPEAL IS FOUND TO BE FULLY COVERED BY THE ABOVE DECISION. ALTHOUGH WE ARE AWA RE THAT THERE ARE CONTRADICTORY DECISIONS ON THIS ISSUE, BUT JUDICIA L PROPRIETY DEMANDS THAT TO MAIN CONSISTENCY, A CO-ORDINATE BENCHS DEC ISION SHOULD BE HONOURED MORE PARTICULARLY WHEN ONE OF US (JM) WAS A PARTY TO THAT DECISION. IN THAT DECISION, THE TRIBUNAL HAS HELD AS UNDER: ITA 947/11 :- 4 -: THE REVISIONAL POWER CONFERRED ON THE COMMISSIONER UNDER SECTION 263 OF THE INCOME-TAX ACT, 1961 ENABLES THE COMMISSIONER TO CALL FOR AND EXAMINE THE RECORDS OF ANY PROCEEDING UNDER THE ACT. IT EMPOWERS THE COMMISSIO NER TO MAKE OR CAUSE TO BE MADE SUCH AN ENQUIRY AS HE DEEM S NECESSARY IN ORDER TO FIND OUT IF ANY ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS IN SO FAR AS IT IS P REJUDICIAL TO THE INTEREST OF THE DEPARTMENT. AN ORDER CAN BE TREATED AS 'ERRONEOUS' IF IT WAS PASSED IN UTTER IGNORANCE OR IN VIOLATION OF ANY LAW; OR PASSED WITHOUT TAKING INTO CONSIDERATIO N ALL THE RELEVANT FACTS OR BY TAKING INTO CONSIDERATION IRRE LEVANT FACTS. THE PREJUDICE CONTEMPLATED UNDER SECTION 263 OF THE ACT IS PREJUDICE TO THE INCOME-TAX ADMINISTRATION AS A WHO LE. THE REVISION HAS TO BE DONE FOR THE PURPOSE OF SETTING RIGHT DISTORTIONS AND PREJUDICES CAUSED TO THE DEPARTMENT. FOR THE ASSESSMENT YEAR 2002-03 ASSESSEE CLAIMED SE T-OFF OF UNABSORBED DEPRECIATION FOR COMPUTING THE BOOK P ROFITS. IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER ALLOWED THE CLAIM OF THE ASSESSEE CONSIDERING THAT THE UNABSORBED DEPRECIATI ON WAS LOWER THAN THE ACCUMULATED BOOK LOSS. THE COMMISSIO NER, UNDER SECTION 263 OF THE ACT HELD THAT THE ASSESSMENT ORDER WAS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE D EPARTMENT ON THE GROUND THAT THE UNABSORBED BOOK DEPRECIATION FOR THE ASSESSMENT YEAR 2002-03 WOULD STAND REDUCED TO THE EXTENT OF ADJUSTMENT MADE FOR THE ASSESSMENT YEAR 2001-02. THE ASSESSEE EXPLAINED, INTER ALIA, THAT THERE WAS NO PROVISION SUBSTITUTING THE METHOD OF COMPUTATION OF UNABSORBE D DEPRECIATION ON A NOTIONAL BASIS HAVING REGARD TO T HE COMPUTATION APPLIED IN PRIOR YEARS. ON APPEAL: HELD, THAT A CONCESSION SOUGHT IN ONE YEAR COULD NOT BE AN ERROR IN THE OTHER YEARS IF THE RELIEF SOUGHT BY THE ASSE SSEE WAS ALLOWED. CONCESSION MADE BY THE ASSESSEE ON A POI NT OF LAW WOULD NOT BIND THE ASSESSEE IN OTHER YEARS. THE AS SESSING OFFICER HAD ADOPTED ONE OF THE TWO INTERPRETATIONS AVAILABLE ON THE ISSUE AND THE ORDER COULD NOT BE ERRONEOUS. TH E COMMISSIONER HAD NOT FOUND ANY ERROR IN THE ASSESSM ENT ORDER. THE REVISION ORDER WAS QUASHED. 6. WE DO NOT FIND ANY ERROR IN THE ASSESSMENT ORDER IN QUESTION AND THEREFORE, THE TWIN CONDITIONS REQUISITE U/S 26 3 DO NOT FOUND TO ITA 947/11 :- 5 -: CO-EXIST. CONSEQUENTLY, THE ASSUMPTION OF JURISDIC TION BY THE LD. CIT IN THIS CASE IS FOUND TO BE LACKING. HENCE, WE QUASH THE LD. CITS ORDER AND RESTORE THE ASSESSMENT ORDER. 7. IN THE RESULT, THE APPEAL STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 8-08-2011. SD/- SD/- (DR. O.K. NARAYANAN) VICE-PRESIDENT (HARI OM MARATHA) JUDICIAL MEMBER DATED: 18 TH AUGUST, 2011 RD COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR