ACIT, CHENNAI V. M/s. Pioneer Asia Packaging Ltd., CHENNAI

ITA 993/CHNY/2011

• Counselvise Citation: 99321714 RSA 2011
• Duration Of Justice: 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-10-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 06-06-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SANJAY V R DESHMUKH
• Assessee Lawyers: P T PONNAIAH
• Keywords: Depreciation; Additional evidence; Unabsorbed depreciation
• Section: 10B; 12

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL CHENNAI C BENCH, CHENNAI. BEFORE DR. O.K. NARAYANAN, VICE PRESIDENT AND SHRI HARI OM MARATHA, JUDICIAL MEMBER I.T.A. NO. 993/MDS/2011 ASSESSMENT YEAR: 2006-07 THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE V(2), CHENNAI - 34. VS. M/S. PIONEER ASIA PACKAGING LTD., NO. 109/2, G.N.T. ROAD, KARANODAI, CHENNAI 600 067. [PAN:AAACP4324P] (APPELLANT) (RESPONDENT) REVENUE BY : SHRI SANJAY V.R. DESHMUKH, JCIT ASSESSEE BY : SHRI P.T. PONNAIAH, C.A. DATE OF HEARING : 14.09.2011 DATE OF PRONOUNCEMENT 05.10.2011 ORDER PER HARI OM MARATHA, J.M. THIS APPEAL OF THE REVENUE FOR THE ASSESSMENT YEAR 2006-07, IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A) V, CHENNAI DATE D 25.02.2011. 2. THE ASSESSEE HAS DECLARED NIL INCOME FOR THE YEAR UNDER CONSIDERATION AFTER SETTING OFF OF CARRY FORWARD LOSS. BRIEF FACT S OF THE CASE ARE THAT THE CALCULATION OF BOOK PROFIT AS PER THE PROVISIONS OF SECTION 115 JB OF THE INCOME-TAX ACT, 1961. THE ASSESSEE FILED RETURN OF INCOME ON 26.11.2006 D ECLARING INCOME NIL AFTER SET OFF OF CARRY FORWARD LOSSES. THE CASE WAS TAKEN UND ER SCRUTINY AND THE INCOME HAS BEEN ASSESSED BY THE ASST. COMMISSIONER OF INCOME-T AX, COMPANY CIRCLE V(2) ALSO AS NIL. BUT, THE BOOK PROFIT, MAT U/S.115 JB IS ASSESSED A T RS.62,17,173/- AS UNDER: PROFIT AS PER PROFIT AND LOSS A/C. 99,74,790 DEDUCT : UNABSORBED DEPRECIATION B/F 1998-99 9,26,222 1999-2000 14,12,680 2001-2002 14,18,715 - 37,57,617 I II I.T.A. NO .T.A. NO .T.A. NO .T.A. NO. .. .993 993993 993/MDS/ /MDS/ /MDS/ /MDS/11 1111 11 2 62,17,173 TAX PAYABLE THEREOF @ 7.5% - 4,66,288 SURCHARGE - 46,628 EDUCATION CESS - 10,258 5,23,174 AGGRIEVED BY THIS CALCULATION, THE ASSESSEE FILED A PPEAL BEFORE THE LD. CIT(A). 3. REGARDING THE CALCULATION OF BOOK PROFIT U/S.11 5 JB-MAT, THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE PLEADED THAT THE BOO K PROFIT HAS TO BE CALCULATED AFTER REDUCING THE AMOUNT OF LOSS BROUGHT FORWARD O R UNABSORBED DEPRECIATION, WHICHEVER IS LESS AS PER BOOKS OF ACCOUNT (CALCULATED AS PER THE PROVISIONS OF THE COMPANIES ACT, 1956) AND THE PROVISIONS OF SECTION 115 JB(2) AND EXPLANATION (III) TO THE RELEVANT SUB-SECTION HAVE BEEN PRODUCED BEFORE THE LD. CIT(A) : 'EXPLANATION : FOR THE PURPOSE OF THIS SECTION, 'BOOK PROFIT' MEANS THE NET PROFIT AS SHOWN IN THE PROFIT AND LOSS ACCOUNT FOR THE RELEVANT PREVIOUS YEAR PREPARED UNDER SUBSECTION (2) AS INCREASED BY PROVISIONS AND RESERVES AS PER CLAUSES (A) TO (F) AND AS REDUCED BY: I) ANY AMOUNT WITHDRAWN FROM RESERVE. II) THE AMOUNT OF INCOME TO WHICH ANY OF THE PROVI SIONS OF SECTION OTHER THAN THE PROVISIONS CONTAINED IN CLAUSE (234) THERE OF OR SECTION 10A OR SECTION 10B OR SECTION 11 OR SECTION 12 APPLY, IF S UCH AMOUNT IS CREDITED TO PROFIT & LOSS A/C. III) THE AMOUNT OF LOSS BROUGHT FORWARD OR UNABSORBED DEPRECIATION WHICHEVER IS LESS AS PER BOOKS OF ACCOUNT . EXPLANATION FOR THE PURPOSE OF THIS CLAUSE: (A) THE LOSS SHALL NOT INCLUDE DEPRECIATION. (B) THE PROVISIONS OF THIS CLAUSE SHALL NOT APPLY I F THE AMOUNT OF LOSS BROUGHT FORWARD OR UNABSORBED DEPRECIATION IS NIL. 4. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESS EE PRODUCED THE AUDITED BALANCE SHEET OF THE COMPANY AND THE PROFIT AND LOS S ACCOUNT FOR THE YEAR ENDED 31.3.2006 RELEVANT FOR THE ASSESSMENT YEAR 20 06-07 ALONG WITH STATEMENT I II I.T.A. NO .T.A. NO .T.A. NO .T.A. NO. .. .993 993993 993/MDS/ /MDS/ /MDS/ /MDS/11 1111 11 3 OF TOTAL INCOME UNDER REGULAR PROVISIONS AND U/S.11 5 JB AND STATEMENT OF CARRY FORWARD LOSSES FOR SET OFF UNDER THE INCOME-TAX ACT , 1961. THE LD. AUTHORIZED REPRESENTATIVE PLEADED THAT THE BROUGHT FORWARD LOS S AS PER BOOKS OF ACCOUNT AS AT THE OPENING OF THE YEAR ON 1.4.2005 AMOUNTING TO ` ` ` ` .2,44,79,296/- HAS TO BE CONSIDERED FOR REDUCING FROM THE PROFIT OF THE COMP ANY FOR CALCULATING THE BOOK PROFIT. THE BREAK-UP OF UNABSORBED DEPRECIATION AND BROUGHT FORWARD LOSS AS PER BOOKS OF ACCOUNT FROM THE INCORPORATION UPTO THE FINANCIAL YEAR RELE VANT TO THIS ASSESSMENT YEAR HAS BEEN PRODUCED BY THE LD. AUTHOR IZED REPRESENTATIVE BEFORE THE LD. CIT(A). AS PER THE STATEMENT OF TOTAL INCOM E SUBMITTED TO THE ASSESSING OFFICER, THE ASSESSEE HAS CLAIMED THE LEAST OF UNAB SORBED DEPRECIATION OR BUSINESS LOSS OUT OF THE AMOUNT OF RS.2,44,79,296/- FOR THE PURPOSE OF C ALCULATING BOOK PROFIT AND THE BREAK-UP OF THE FIGURE WAS : ` . UNABSORBED DEPRECIATION - 1,23,09,434 BUSINESS LOSS (EXCLUDING DEPRECIATION) - 1,21,69,86 2 2,44,79,296 5. THE LD. AUTHORIZED REPRESENTATIVE ALSO PRODUCED THE STATEMENT OF CARRY FORWARD LOSS AS PER THE REGULAR PROVISIONS OF INCOM E-TAX ACT, 1961 WHEREIN THE UNABSORBED DEPRECIATION WAS ` .37,57,617/- AND BUSINESS LOSS WAS ` .89,75,687/- AND THIS AMOUNT HAS TO BE CONSIDERED FOR MAKING THE REGULAR ASSESSMENT AND NOT 115 JB BEFORE THE LD. CIT(A) . 6. THE CASE OF THE ASSESSEE IS THAT THE BROUGHT FO RWARD LOSS, AS PER BOOKS OF ACCOUNT AT THE OPENING OF THE YEAR AS ON 01.04.2005 , AMOUNTING TO ` . 2,44,79,296/-, HAS TO BE CONSIDERED FOR REDUCING FR OM THE PROFIT OF THE COMPANY FOR CALCULATING THE BOOK PROFIT. THEREFORE, THE ASSESSI NG OFFICER DID NOT ALLOW THIS CLAIM OF THE ASSESSEE. BUT, BEFORE THE LD. CIT(A), IN ADD ITION TO PRODUCING THE ABOVE DOCUMENTS, THE LD. AR APPEARED FOR THE ASSESSEE HAS ALSO FILED THE BREAK-UP OF I II I.T.A. NO .T.A. NO .T.A. NO .T.A. NO. .. .993 993993 993/MDS/ /MDS/ /MDS/ /MDS/11 1111 11 4 UNABSORBED DEPRECIATION AND BROUGHT FORWARD LOSS AS PER THE BOOKS OF ACCOUNTS FROM THE VERY INCORPORATION OF THE COMPANY UPTO THE FINANCIAL YEAR UNDER CONSIDERATION. AFTER PERUSING THE SAME, THE LD. CIT (A) HAS ALLOWED THE DESIRED RELIEF TO THE ASSESSEE. NOW, THE ONLY GRIEVANCE OF THE REVENUE IS THAT THE LD. CIT(A) OUGHT TO HAVE ALLOWED AN OPPORTUNITY OF HEAR ING TO THE ASSESSING OFFICER SO THAT HE COULD EXAMINE THE CORRECTNESS OF THE AMOUNT OF RELIEF OF ` .62,17,173/-, ALLOWED BY HIM IN THE COMPUTATION OF THE BOOK PROFI TS. 7. AFTER HEARING BOTH THE SIDES AND GOING THROUGH THE REDUCED CLAIM OF THE ASSESSEE, WE ARE IN AGREEMENT WITH THE LD. DR SHRI SANJAY V.R. DESHMUKH THAT THE ASSESSING OFFICER WAS NOT ALLOWED AN OPPORTUNIT Y TO EXAMINE THE CORRECTNESS OR OTHERWISE OF THIS CLAIM BECAUSE THE DOCUMENTS ON WHICH THE LD. CIT(A) HAS RECORDED HIS FINDING WERE NEVER PRODUCED BEFORE THE ASSESSING OFFICER. IN TERMS OF RULE 46A OF THE INCOME TAX RULES, THESE EVIDENCE DE FINITELY FALL UNDER THE DEFINITION OF ADDITIONAL EVIDENCE AND IN THAT VIEW OF THE MATTER, THE ASSESSING OFFICER HAS TO BE GIVEN OPPORTUNITY TO CONFRONT THE SE EVIDENCE. IN CASE THESE EVIDENCE ARE EXCLUDED, THE CLAIM MADE BY THE ASSESS EE CANNOT BE ALLOWED. BUT TO BE FAIR, INSTEAD OF EXCLUDING THE EVIDENCE, ADMITTE DLY, WITHOUT DUE PROCESS OF LAW IN THE FURTHERANCE OF CAUSE OF JUSTICE, INSTEAD OF REVERSING THE ASSESSMENT ORDER, WE ARE REMITTING BACK THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL EXAMINE THE CORRECTNESS OR OTHERWISE OF THE EVIDENCE PRODUCED BEFORE THE LD. CIT(A) AND HE IS ALSO FREE TO CALL F OR ANY FURTHER EVIDENCE OR PROOF OR DETAILS OR EXPLANATION, WHICH IS REQUIRED IN THE GI VEN FACTS AND CIRCUMSTANCES OF THE CASE. IF THE ASSESSEE FAILS TO PRODUCE THE DESI RED EVIDENCE OR/ AND FAILS TO EXPLAIN AS AND WHEN FURTHER EXPLANATION IS DEMANDED BY THE ASSESSING OFFICER, THE ASSESSING OFFICER IS AT LIBERTY TO DECLINE TO ACCEPT THE IMPUGNED CLAIM. I II I.T.A. NO .T.A. NO .T.A. NO .T.A. NO. .. .993 993993 993/MDS/ /MDS/ /MDS/ /MDS/11 1111 11 5 ACCORDINGLY, WE ALLOW THIS APPEAL OF THE REVENUE FO R STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 05.10.2011. SD/- SD/- (DR.O.K. NARAYANAN) VICE PRESIDENT (HARI OM MARATHA) JUDICIAL MEMBER CHENNAI, DATED, THE 05.10.2011 VM/- TO: THE ASSESSEE//A.O./CIT(A)/CIT/D.R.