M/S LAXMI POLYCHEM INDIA LIMITED V. THE DEPUTY COMMISSIONER

ITA/100024/2017

AI Insights

The case involves M/s Laxmi Polychem India Limited, the appellant, challenging the penalty levied under Section 271(1)(c) of the Income Tax Act, 1961, for allegedly claiming a double benefit by offsetting unabsorbed depreciation from an earlier assessment year against the income of the assessment year 2006-07. The Income Tax Appellate Tribunal had upheld the penalty, which the appellant contested in the High Court. The High Court noted that the substantial question of law raised by the appellant required examination in light of precedents but found that the issue had not been adjudicated by the Tribunal. Consequently, the matter was remanded for fresh consideration.

• Counselvise Citation: [2018] 140 COUNSELVISE.COM (IT) 732859 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 08-01-2018
• Assessment Year: misc
• Other Referred Cases: Commissioner of Income Tax and another vs. Manjunath Cotton and Ginning Factory, Muninaga Reddy vs. Assistant Commissioner of Income Tax
• Laws Referred To: Income-Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: Y V RAVIRAJ
• Assessee Lawyers: K R PRASAD; ASHOK KULKARNI; NEILOO PRASAD; H R KAMBIYAVAR; PREETHI PATIL; SIDDAREDDY
• Keywords: Assessment Year; Income Tax; Penalty; Tribunal; Unabsorbed depreciation
• Section: 147; 148; 143(1); 271(1)(c); 260A

Judgement Text

"IN THE HIGH COURT OF KARNATAKA DHARWAD BENCH DATED THIS THE 8TH DAY OF JANUARY, 2018 PRESENT THE HON’BLE MRS. JUSTICE S. SUJATHA AND THE HON’BLE MR. JUSTICE JOHN MICHAEL CUNHA I.T.A. NO.100024/2017 BETWEEN M/S LAXMI POLYCHEM INDIA LIMITED GADAG CO-OPERATIVE INDUSTRIAL ESTATE, HUBBALLI ROAD, GADAG-582103. ... APPELLANT (BY SRI. M/S. K.R.PRASAD, SRI. ASHOK A. KULKARNI, SRI. NEILOO PRASAD, SRI. H.R.KAMBIYAVAR, SMT. PREETHI S. PATIL, SRI. SIDDA REDDY K.G., ADVS.) AND THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-2(1), HUBBALLI-580025. ... RESPONDENT (BY SRI. Y.V.RAVIRAJ, ADV.) THIS ITA IS FILED UNDER SECTION 260A OF THE INCOME-TAX ACT, 1961, PRAYING TO FORMULATE THE SUBSTANTIAL QUESTION OF LAW STATED ABOVE AND ALLOW THE APPEAL BY SETTING ASIDE THE ORDER OF THE INCOME TAX APPELLATE TRIBUNAL IN ITA NO.1420/BANG/2016 DATED 21.09.2016 FOR AY: 2006-07 IN ANNEXURE 'A' AND PENALTY ORDER NO. F.NO.AAACL6249F/DCIT/C 2(1)HBL/2010-11 DATED : 2 : 06.05.2010 FOR AY:2006-07 IN ANNEXURE 'N' AND ANNUL THE IMPUGNED PENALTY ORDERS. THIS ITA COMING ON FOR ADMISSION THIS DAY, S.SUJATHA J., DELIVERED THE FOLLOWING: JUDGMENT This appeal is filed by the assessee under Section 260A of the Income Tax Act, 1961 (‘Act’ for short), challenging the order of the Income Tax Appellate Tribunal, Bengaluru Bench ‘SMC’, Bengaluru (‘Tribunal’ for short) for the assessment year 2006-07. 2. The appeal involves the correctness of levy of penalty under Section 271(1)(c) of the Act, on the ground that the appellant had claimed the set off unabsorbed depreciation of an earlier assessment year i.e., 2001-02, in computing the income as originally returned for the assessment year 2006-07 with a view to enjoy a double benefit. This according to the Tribunal merited levy of penalty. As per the return filed by the assessee for the assessment year 2001-02, it was entitled to carry forward of an unabsorbed depreciation of the amount. In the consequential assessment for the : 3 : assessment year 2001-02, no approval was given for sanction of carry forward depreciation which became the subject matter of an appeal finally resolved by the Tribunal, giving a direction in its order dated 13.07.2007 of granting the relief to recompute the income which was done on 07.09.2007. The return filed by the assessee for the assessment year 2001-02, resulted in communication under Section 143(1). The assessment for the assessment year 2006-07 was reopened to disallow the claim for carry forward of unabsorbed depreciation i.e., under Sections 147 and 148 of the Act and the assessment order was passed observing that there was a wrong claim and a direction was issued to issue a notice for action under Section 271(1)(c), finally resulting in the levy of impugned penalty. On appeal against the penalty order preferred before the Commissioner of Income Tax (Appeals), it was affirmed. On further appeal before the Tribunal, the same was dismissed. Hence, this appeal by the assessee. : 4 : 3. The learned counsel appearing for the appellant would contend that the issue in this appeal is squarely covered by the Division Bench judgment of this Court in the case of Commissioner of Income Tax and another vs. Manjunath Cotton and Ginning Factory reported in (2013) 359 ITR 565 and yet another Division Bench judgment of this Court in the case of Muninaga Reddy vs. Assistant Commissioner of Income Tax reported in (2017) 396 ITR 398, which is not disputed by the learned counsel appearing for the revenue. However, learned counsel for the revenue submits that no arguments were addressed on this point by the assessee, neither before the authorities nor before the Tribunal, assessee remained absent before the Tribunal. No finding of fact is given by the lower authorities. 4. Having heard the learned counsel for the parties and perusing the materials on record, it is not in dispute that the substantial question of law raised by the appellant, in this appeal requires to be examined in : 5 : the light of the judgment of this Court referred to above. However, no arguments being advanced and the present issue not being adjudicated by the Tribunal, in the light of the judgment referred to above, we find it appropriate to remand the matter to the Tribunal to reconsider the matter in the light of the judgments of this Court referred to above. Accordingly appeal is allowed. The order impugned herein is set aside and remanded to the Tribunal to reconsider the matter afresh in the light of the observations made herein above. It is needless to mention that the Tribunal shall pass the orders in an expedite manner in accordance with law. Sd/- JUDGE Sd/- JUDGE Rsh "