M/S GINNI FILAMENTS LTD.,MATHURA V. A.C.I.T., RANGE-3, MATHURA

MA 24/AGR/2019

AI Insights

The case involves M/s Ginni Filaments Ltd., the appellant, contesting the rejection of their books of account and the taxation of a settlement amount received from M/s Ginni International Ltd. (GIL) under a compromise. Initially, the books of account were rejected by the Assessing Officer (AO) under Section 145(3) of the Income-tax Act, 1961, a decision upheld by the CIT(A) but overturned by the ITAT. The Tribunal also addressed the taxation of Rs. 2.6 crores received from GIL, which included both the value of machines and pending rent charges. The Tribunal's initial ruling led to double taxation of Rs. 29.11 lacs, which was part of the settlement amount and also taxed as rental income. The Tribunal, upon realizing the oversight, directed the AO to rectify the double taxation issue.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 470358 (ITAT-AGRA)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 14-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHAILENDRA SRIVASTAVA
• Assessee Lawyers: SATYAJEET GOEL
• Keywords: Depreciation; Rejection of books of accounts
• Section: 254(2); 32; 2(A); 145(3)

Judgement Text

"P a g e | 1 MA 24/Agr/2019 Arising out of ITA 173/Agr/2013 M/s Ginni Filaments Ltd. IN THE INCOME TAX APPELLATE TRIBUNAL “DB” AGRA BENCH BEFORE SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER & SHRI SUDHIR KUMAR, JUDICIAL MEMBER M.A No. 24/Agr/2019 Arising out of ITA No.173/Agr/2013 (Assessment Year 2008-09) M/s Ginni Filaments Ltd 110 Km. Stone Delhi Mathura Road, Chhata Distt. Mathura v. ACIT, Circle 33(1) New Delhi \u0001थायीलेखासं./जीआइआरसं./PAN/GIR No: AABCG0942K Appellant .. Respondent Appellant by : Sh. Satyajeet Goel, Adv. Respondent by : Sh. Shailendra Srivastava, Sr. DR Date of Hearing 17.01.2025 Date of Pronouncement 14 .02.2025 O R D E R PER RAMIT KOCHAR, AM: This Miscellaneous Application(MA) bearing No. 24/Agr/2019 arising out of ITA No. 173/Agr/2013, for assessment year 2008-09 ,is filed by the assessee before Income Tax Appellate Tribunal, Agra Bench, Agra, wherein the assessee has stated that there are two mistakes apparent from record in the appellate order dated 02.09.2019 passed by P a g e | 2 MA 24/Agr/2019 Arising out of ITA 173/Agr/2013 M/s Ginni Filaments Ltd. Tribunal in ITA No. 173/Agr/2013, which mistakes apparent from records are rectifiable u/s 254(2) of the Income-tax Act, 1961. 2. The ld. Counsel for the assessee submitted that books of account were rejected by the AO by invoking provision of Section 145(3), and the said rejection of the books of accounts was upheld by the Ld. CIT(A). Further, it was submitted that the Tribunal has overturned the decision of authorities below with respect to rejection of books of accounts, and it was also held that the basis of rejection of books of account of the assessee by the authorities below was totally erroneous and uncalled for. Thus, in nutshell, it was submitted that relief was granted by the Tribunal by holding that books of account were wrongly rejected by the authorities below. It was submitted that but while passing the appellate order dated 02.09.2019 at para 12.4 , the Tribunal observed as under: “12.4 In view of the above and also in view of the fact that there was no rejection of books of accounts, ground Nos.2(a) to (c) are allowed.” 2.2 It was submitted by ld. Counsel for the assessee that by mentioning at para 12.4 ,the Tribunal had observed that there was no rejection of books of account and hence ground no. 2(a) to 2(c) are allowed . Our attention was drawn to the appellate order dated 02.09.2019 passed by ITAT, Agra Bench, Agra. It was submitted that Tribunal has rightly held that rejection of books of account by the authorities below isunsustainable,but while passing the order the Tribunal has observed that there was no rejection of books of account, while the fact of the matter is that there was in-fact rejection of the Books of Accounts of the assessee by the AO which rejection of books of accounts was later upheld by ld. CIT(A). Thus, it was submitted that it is factually incorrect ,and hence mistake apparent from record which has P a g e | 3 MA 24/Agr/2019 Arising out of ITA 173/Agr/2013 M/s Ginni Filaments Ltd. crept in the order of the Tribunal dated 02.09.2019 because the books of account were in fact rejected by the AO, and said rejection was later upheld by the CIT(A). It is only the Tribunal which has held rejection of books of account under Section 145(3) to be unsustainable in the eyes of law being erroneous and illegal . Thus, it was submitted that para 12.4 in the Tribunal Order dated 02.09.2019 needs rectification wherein it ought to have been observed by the Tribunal as under: “12.4 In view of the above and also in view of the fact that there is no rejection of books of accounts, ground Nos.2(a) to (c) are allowed.” 2.3 The Ld. DR could not controvert the said contentions of the assessee. 3. We have carefully gone through the records and afterhearing both the parties, we are of the view that the contention of the assessee are correct and in fact there was rejection of books of accounts of the assessee by the AO which was later upheld by ld. CIT(A) by invoking provisions of Section 145(3). It is only the Tribunal which overturned the said rejection of books of account by the authorities below , and held such rejection of books of accounts to be erroneous and illegal. Thus, there is a mistake apparent from record in para 12.4of the appellate order dated 02.09.2019 passed by Tribunal, which should now be read as under: “12.4 In view of the above and also in view of the fact that there is no rejection of books of accounts, ground Nos.2(a) to (c) are allowed.” 4. With respect to the contentions of the assessee as to second mistake apparent from recordfor which rectification is sought by the assessee vide this MA filed with ITAT, it was pointed out by learned P a g e | 4 MA 24/Agr/2019 Arising out of ITA 173/Agr/2013 M/s Ginni Filaments Ltd. counsel for the assessee that theassessee has given on rent machines to GIL after taking consent from financial institution to whom the machines were hypothecated. The dispute arose between the parties and matter reached Hon’ble Delhi High Court wherein civil suit was filed. Thereafter, there was settlement of said civil suit , and on the basis of mutual settlement, the GIL paid an amount of Rs.2.6 crores to the assessee towards machinery cost as well as towards pending rent charges for machinery. It was stated that the total payment of Rs.2.6 crores was received under settlement from GIL , and out of that the Tribunal had brought to tax rental income from GIL from renting of the machines by the assessee, amounting to Rs. 29.11 lacs as income of the impugned assessment year ,and the balance amount was to be considered as consideration for sale of machines taken over by the said M/s Ginni International Ltd.(GIL). It was claimed that the assessee has reduced the entire amount of Rs. 2.60 crores from Block of Assets for assessment year 2010-11. It was submitted that Tribunal has decided the issue against the assessee vide para no. 17 to 19.3 vide order dated 02.09.2019, and accordingly the Tribunal has brought to tax Rs. 29.11 lacs in the hands of the assesseeas rental income of machine given on lease to GIL for the impugned assessment, but the Tribunal has not granted corresponding and consequential credit of the aforesaid amount of Rs. 29.11 lacs from the compromise/settlement amount of Rs. 2.6 crores which consisted of value of machines taken over by GIL and dues towards renting of machines, which has led to double taxation of the same income as firstly rental income got taxed to the tune of Rs. 29.11 lacs for the year under consideration and secondly the entire composite consideration of Rs. 2.60 crores was deducted by the assessee from the Block of Assets of the machinery during assessment year 2010-11. Thus, P a g e | 5 MA 24/Agr/2019 Arising out of ITA 173/Agr/2013 M/s Ginni Filaments Ltd. There is a mistake apparent from record as that the assessee is charged to tax twice of the same income being Rs. 29.11 lacs, firstly Rental income from leased machines to the tune of Rs. 29.11 lacs which was brought to tax as income of the assessee for the impugned assessment year , and secondly the said rental income of Rs. 29.11 lacs was not deducted from the total composite/settlement consideration of Rs. 2.60 crores which was received towards sale of machineries to the GIL and the rental income on the said machines, which led to lower Block of Assets being carried forward as the entire amount of Rs. 2.60 crores was deducted by the assesseeitself from Block of Assets for assessment year 2010-11 , which has led to chargeability of the same income twice , which led is not permissible. It was submitted that this plea was taken before the Tribunal that composite payment of Rs.2.6 crores was received by the assessee from GIL towards machinery cost as well towards rent charges for giving on lease machines to GIL by the assessee. 4.2. The ld. Sr. DR relied upon the order of the Tribunal. 5. After hearing both the parties we are of the considered view that the assessee has received composite amount of Rs.2.6 crores from M/s Ginni International Ltd. under settlement/compromise which consisted of value of machines sold by assessee to GIL as well as for pending rent on the said machines leased by the assessee to GIL. The assessee has given machine on lease to M/s Ginni International Ltd. after taking approval from financial institution to whom machines were hypothecated. There was dispute between the contracting parties. The matter reached Hon’ble Delhi High Court by filing of civil suit. There was settlement/compromise between the parties. Said GIL paid composite amount of Rs. 2.60 crores to the assessee under settlement to cover P a g e | 6 MA 24/Agr/2019 Arising out of ITA 173/Agr/2013 M/s Ginni Filaments Ltd. value of machines taken over by GIL and to pay for pending rent on said machines. The Tribunal has upheld the chargeability to tax to the tune of Rs.29.11 lacs in the hands of the assessee for the year under consideration being rental income on leasing of machines, which was part of Rs.2.6 crores being composite settlement amount received on account of value of machine sold by assessee to M/s Ginni International Ltd.and also for the pending rent on machines leased by the assessee to GIL which was received from the said concern. The assessee raised this issue before ITAT but there is no clear directions given by ITAT on this issue. Thus,principally, we are agreeable that the assessee cannot be doubly taxed on the same income of Rs.29.11 lacs , firstly charging to tax said income of Rs. 29.11 lacs as rental income from machines for the year under consideration, and secondly not allowing deduction of the above amount of Rs. 29.11 lacs from the corresponding Block of Assets. The Tribunal ought to have given finding on the same, as this relief sought by the assessee is consequential in nature, but needs verification by the AO. It is fundamental principles of taxing statute that the same income cannot be taxed twice, unless specifically mandated by the statute.Hence, we direct AO to verify the contentions of the assessee so that the same income does not get taxed twice ,once as rental income on machines leased in the hands of the assessee for the impugned assessment year , and secondly by not reducing the same amount from the block of assets( on which the assessee was eligible to claim deduction u/s 32 towards depreciation). Thus, the order of ITAT is modified and the AO is directed to look into the contention of the assessee so that there is no double taxation of the same income. The assessee is directed to produce all relevant material/record before the AO to that effect, and the AO shall verify /enquire before granting P a g e | 7 MA 24/Agr/2019 Arising out of ITA 173/Agr/2013 M/s Ginni Filaments Ltd. consequential relief so that there is no double taxation of the same income. We order accordingly. 6. In the result, the Miscellaneous Application filed by the assessee is allowed in the manner indicated above. Order pronounced in the open court on 14 .02.2025 Sd/- (Sudhir Kumar) Sd/- (Ramit Kochar ) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated 14.02.2025 PS: Rohit Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT AGRA "