Indian Metal & Ferro Alloys, Bhubaneswar V. ACIT, Bhubaneswar

MA 1/CTK/2012

• Counselvise Citation: [2012] 123 COUNSELVISE.COM (IT) 8620 (ITAT-CUTTACK)
• Duration Of Justice: 5 month(s) 5 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 25-06-2012
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 18-05-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 19-01-2012
• Court: TRIBUNAL
• Department Lawyers: A NAYAK
• Assessee Lawyers: VIBHU BAKHREE
• Keywords: Reopening of assessment; Depreciation; Difference of opinion; Assessment record; Unabsorbed depreciation; Change of opinion; Reassessment proceedings

Judgement Text

IN THE INC O ME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE : SHRI K.K.GUPTA, AM , AND SHRI K.S.S.PRASAD RAO, JM MISC.APPLN.NO.1/CTK/2012 IN ITA NO. 433/CTK/2010 DT.16.12.2011 (ASSESSMENT YEAR 2006 - 07) ASST.COMMISSIONER OF INCOME - TAX, CIRCLE 2(1),BHUBANESWAR. VERSUS INDIAN METALS & FERRO ALLOYS LTD., IMFA BUILDING , BOMIKHAL , RASULGARH, BHUBANESWAR PAN AACI 4818 F (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI VIBHU BAKHREE, AR FOR THE RESPONDENT SHRI A.NAYAK, CIT - DR DATE OF HEARING : 18.5.2012 DATE OF PRONOUNCEMENT : 25.06.2012 ORDER SHRI K.K.GUPTA, AM : THIS APPLICATION IS FILED BY THE ASSESSEE CONTENDING INTER ALIA THAT THE ASSESSEE IS A PUBLIC LIMITED COMPANY INCORPORATED UNDER THE PROVISIONS OF COMPANIES ACT ,1956 HAVING ITS REGISTERED OFFICE AT BOMIKHAL, P.O. RASULGARH, BHUBANESWAR , DISTRICT KHURDA, ORISSA. THE ASSESSEE IS CARRYING ON THE BUSINESS OF MANUFACTURE AND SALE OF HIGH CARBON FERRO CHROME/CHARGE CHROME AND HAS FACTORIES AT CHOUDWAR IN THE DISTRICT O F CUTTACK AS WELL AT THERUBALLI, ORISSA. PRIOR TO 1.4.2005, INDIAN CHROME LTD., (IN SHORT ICCL) WAS ENGAGED IN THE MANUFACTURING OF FERRO ALL OYS, GENERATION OF POWER APART FROM HAVING ITS OWN CHROME ORE MINES. ICCL WAS RUNNING INTO LOSSES SINCE ITS INCEPT ION. CONSEQUENT UPON THE STRUCTURE SETTLEMENT OF ICCL WITH THE BANKS AND FINANCIAL INSTITUTIONS, IT BECAME NECESSARY TO MERGE THE SAID COMPANY WITH ITS PROMOTER COMPANY BEING THE ASSESSEE. THE PROPOSAL OF MERGER WAS APPROVED WITH EFFECT FROM 1.4.2005. IN P URSUANCE TO THE MERGER OF ICCL WITH THE ASSESSEE, THE ENTIRE UNABSORBED DEPRECIATION IN THE ACCOUNT OF ICCL AS PER THE INCOME - TAX ASSESSMENT RECORDS WAS TRANSFERRED TO THE ASSESSEE U/S.72A OF THE I.T.ACT,1961. MISC.APPLN.NO.1/CTK/2012 2 2. WHILE ASSESSING THE ASSESSEE FOR THE ASSES SMENT YEAR 2006 - 07, THE ASSESSING OFFICER VIDE HIS ORDER DT.30.12.2008 INTER ALIA DISALLOWED THE CARRIED FORWARD UNABSORBED DEPRECIATION FOR AYS 1990 - 01,1991 - 92 AND 1992 - 93 AGGREGATING 182.47 CRORES OUT OF THE TOTAL CARRIED FORWARD UNABSORBED DEPRECIATION OF 502.15 CRORES ON THE GROUND THAT THE TIME PERIOD WITHIN WHICH THE UNABSORBED DEPRECIATION OF THE ASSESSMENT YEARS WAS TO BE SET OFF AGAINST THE PROFITS AND GAINS HAD EXPIRED IN TH E AYS 199 - 2000,.2000 - 01 AND 2001 - 02 RESPECTIVELY AS PER THE AMENDMENT TO SECTION 32(2) BY FINANCE ACT, 1996 W.E.F. 1.4.1997. THE ASSESSING OFFICER WAS OF THE OPINION THAT THE UNABSORBED DEPRECIATION ALLOWANCE WHICH WAS AVAILABLE FOR CARRY FORWARD AND SET O FF ON 1.4.2002 WOULD BE GOVERNED BY THE PROVISIONS OF SECTION 32(2) OF THE ACT AS AMENDED BY FINANCE ACT, 2001 WHEREBY THE LIMIT OF 8 YEARS WAS REMOVED. HOWEVER, THE ASSESSEE ERRED IN CALCULATING THE STARTING POINT OF THE 8 YEAR LIMITATION IMPOSED BY THE F INANCE ACT, 1996. THEREFORE THE ASSESSEE CHALLENGED THE ORDER OF THE AO BEFORE THE CIT(A) WHO PASSED THE ORDER DT.30.9.2010 BY SETTING ASIDE THE FINDING OF THE ASSESSING OFFICER AND HOLDING THAT THE DENIAL OF BENEFIT OF CARRY FORWARD THE UNABSORBED DEPRECI ATION RELATING TO THE AYS 1990 - 91, 1991 - 92 AND 1992 - 93 IS NOT IN ACCORDANCE WITH LAW. 3. AGGRIEVED BY THE SAID ORDER OF THE CIT(A), THE DEPARTMENT FILED APPEAL BEFORE THE TRIBUNAL ON 29.11.2010. THE ASSESSING OFFICER ISSUED NOTICE U/S.148 OF THE I.T.ACT T O THE ASSESSEE PROPOSING REOPENING OF THE ASSESSMENT OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2006 - 07 ON THE GROUND THAT THE INCOME OF THE ASSESSEE HAD ESCAPED ASSESSMENT. IN RESPONSE TO THE SAID NOTICE, THE ASSESSEE ADDRESSED A LETTER DT.11.11.2010 REQUEST ING THE AO TO TREAT ITS RETURN OF INCOME FILED ON 26.12.2007 AND ITS PETITION DT.26.12.2007 REQUESTING FOR REVISION IN ITS DEDUCTION CLAIM FOR EXPENDITURE PRESCRIBED MISC.APPLN.NO.1/CTK/2012 3 U/S.35DD OF THE ACT. THE ASSESSEE PLACING RELIANCE ON THE DECISION OF HONBLE SUPREME COUR T IN THE CASE OF GKN DRIVESHAFT S (IND I A) LTD., V.ITO (257 ITR 702) REQUESTED THE ASSESSING OFFICER TO PROVIDE THE REASON FOR ISSUING NOTICE FOR REOPENING OF ASSESSMENT U/S.148 OF THE ACT. THI9S ISSUE WAS CARRIED BY THE ASSESSEE UP TO SUPREME COURT OF INDI A AND IT IS PENDING ADJUDICATION. 4. IN THE MEANWHILE HAVING BEEN AGGRIEVED BY THE ORDER DT.16.12.2011 IN THE DEPARTMENTAL APPEAL FILED BEFORE THE TRIBUNAL IN ITA NO.433/CTK/2010, THE ASSESSEE WENT IN APPEAL BEFORE THE JURISDICTIONAL HIGH COURT OF ORISSA. BEFORE THE HONBLE HIGH COURT, THE DEPARTMENTAL REPRESENTATIVE VEHEMENTLY OPPOSED THE CONTENTIONS OF THE ASSESSEE HEREIN BY RELYING ON PARAGRAPH 4 IN THE IMPUGNED ORDER PASSED BY THE TRIBUNAL. THEREFORE, THE ASSESSEE HAS FILED THE PRESENT MISC.APPLICATION SEEKING CORRECTION OF THE ALLEGED MISTAKE APPARENT ON THE FACE OF RECORD IN PARAGRAPH 4 OF THE TRIBUNAL ORDER DT.16.12.2010. 5. BOTH THE PARTIES WERE HEARD REGARDING MISC.APPLICATION AND ITS LEGAL IMPLICATIONS. 6. PARAGRAPH 4 OF THE SAID ORDER OF THIS TRIB UNAL DT.16.12.2011 IS EXTRACTED HERE UNDER : 4. THE LEARNED COUNSEL FOR THE ASSESSEE - RESPONDENT SUBMITTED THAT THE LEARNED CIT(A) HAD APPRECIATED THE INTENTION OF THE CBDT INSTRUCTION AS WELL AS THE CASE LAWS CITED BEFORE HIM TO ADOPT THE CONCEPTUAL ASPEC T OF THE IMPACT OF CARRY FORWARD OF UNABSORBED DEPRECIATION FOR THE ASSESSMENT YEAR 1997 - 98 ONWARDS. THE EVER LOSS MAKING ICCL WAS AMALGAMATED WITH THE ASSESSEE - COMPANY ON 1 ST APRIL, 2005 UNDER THE DIRECTIONS OF THE HONBLE HIGH COURT THEREFORE HAD CLAIMED THE ADJUSTMENT AGAINST PROFITS UP TO THE ASSESSMENT YEAR 2004 - 05 DID NOT REQUIRE ANY FURTHER DELIBERATION ESPECIALLY IN VIEW OF THE FACT THAT THE INTERVENING AYS BEING 1997 - 98 AND 1998 - 99 WERE CONSIDERED BY THE ASSESSING OFFICER IN THE ORIGINAL ASSESSMENT . AS POINTED OUT BY THE LEARNED DR THE REASSESSMENT PROCEEDINGS HAVE BEEN APPEALED AGAINST BEFORE THE LEARNED CIT(A) WAS ALSO ON THE GROUND OF CHANGE OF OPINION BY THE ASSESSING OFFICER MISC.APPLN.NO.1/CTK/2012 4 WHICH WAS NOT PERMISSIBLE UNDER THE PROVISIONS OF SECTION 147. VARIOUS OTHER CLAIMS WERE MADE BEFORE THE LEARNED CIT(A) WHEN THE ASSESSING OFFICER HAD DISALLOWED CERTAIN LEGITIMATE CLAIM WAS CONSIDERED IN FAVOUR OF THE ASSESSEE RESPONDENT. THEREFORE, THE LEARNED CIT(A) HAD RIGHTLY NOTED THE CLAIM IN ACCORDANCE WITH THE AMEND ED PROVISIONS OF SECTION 32(2) OF THE INCOME - TAX ACT,1961, WHEN HE RELIED ON THE HONBLE FINANCE MINISTERS SPEECH ALONG WITH CBDT INSTRUCTION FOR SUCH ADJUSTMENT. INSOFAR AS FOR CLARITY REGARDING THE ASSETS AMALGAMATED WITH THE ASSESSEE BELONGING TO THE I CCL HE FURNISHED A CHART SHOWING W.D.V. OF ASSETS AS PER THE I.T.ACT OF ICCL BEFORE AND AFTER AMALGAMATION WITH THE ASSESSEE WHICH WAS EFFECTIVE FROM 1.4.2005. THIS WOULD INDICATE THE DISTINCTION BETWEEN THE DEPRECIABLE ASSETS WHICH WERE ADDED BY THE ASSES SEE DURING THE FINANCIAL YEAR 2005 - 06 OTHER THAN THE ASSETS TAKEN OVER FROM ICCL GIVING NO ROOM FOR CAPITALI ZATION AS CONSIDERED DISALLOWABLE BY THE ASSESSING OFFICER BEING UNABSORBED DEPRECIATION RELATING TO THE ICCL OF 319 CRORES BEING SET OFF TO THE EXTENT OF INCOME AVAILABLE UP TO 67.5 CRORES ONLY. THE UNABSORBED DEPRECIATION RELATING TO THE ICCL WAS TO BE CARRIED FORWARD AMOUNTING TO 251.8 CRORES WAS DEALT WITH BY THE LEARNED CIT(A). ON THE PRAYER OF THE LEARNED DR FOR RESTORATION TO THE LEARNED CIT(A), THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE GROUND FOR CHANGE OF OPINION BY THE ASSESSIN G OFFICER BEFORE THE LEARNED CIT(A) MAY KINDLY BE ALLOWED TO BE CONTESTED INSOFAR AS THE FACTS AND FIGURES HAVE BEEN DEALT WITH BY BOTH THE AUTHORITIES IN ITS ENTIRETY. ON A READING OF THE ABOVE PARAGRAPH, IT IS CLEAR THAT THIS TRIBUNAL AFTER CONSIDERING THE RIVAL SUBMISSIONS OF THE PARTIES HAS RESTORED THE MATTER TO THE FILE OF THE CIT(A) FOR DE NOVO CONSIDERATION OF THE ISSUE ALONG WITH THE ISSUE OF REASONS FOR REOPENING THE ASSESSMENT BUT IT IS NOT THE INTENTION OF THE TRIBUNAL THAT THE ASSESSEES AR H AS ANYTHING ADMITTED DURING THE COURSE OF HEARING OF THE SAID APPEAL BEFORE THE TRIBUNAL. HENCE, THE PRESENT MISC.APPLICATION FILED BY THE ASSESSEE ALLEGING THAT THERE IS A MISTAKE APPARENT IN THE ORDER PASSED OF THE TRIBUNAL DT.16.12.2011 IS NOT AT ALL CO RRECT. WITH THIS OBSERVATION, WE FIND THAT THE MISC. APPLICATION OF THE ASSESSEE IS NOTHING BUT AN ILLUSORY. ACCORDINGLY, THE MISC. APPLICATION FILED BY THE ASSESSEE IS DISMISSED. MISC.APPLN.NO.1/CTK/2012 5 7. IN THE RESULT, THE MISC.APPLICATION FILED BY THE ASSESSEE IS DISMISSED. SD/ SD/ - ( K.S.S.PRASAD RAO) JUDICIAL MEMBER (K.K.GUPTA) ACCOUNTANT MEMBER DATE: 25.06.2012 H.K.PADHEE, SENIOR PRIVATE SECRETARY. COPY OF THE ORDER FORWARDED TO : 1. T HE APPELLANT: ASST.COMMISSIONER OF INCOME - TAX, CIRCLE 2(1),BHUBANESWAR. 2. THE RESPONDENT: INDIAN METALS & FERRO ALLOYS LTD., IMFA BUILDING , BOMIKHAL , RASULGARH, BHUBANESWAR PAN AACI 4818 F 3. THE CIT, 4. THE CIT(A), 5. THE DR, CUTTACK 6. GUARD FI LE (IN DUPLICATE) TRUE COPY, BY ORDER, SENIOR PRIVATE SECRETARY. APPENDIX XVII SEAL TO BE AFFIXED ON THE ORDER SHEET BY THE SR. P.S./P.S. AFTER DICTATION IS GIVEN 1. DATE OF DICTATION 29.05.2012 .. 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 18.06.2012 OTHER MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.... 5. DATE ON WHICH THE FAIR ORD ER COMES BACK TO THE SR. P.S./P.S . 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON TH E ORDER ................ 9. DATE OF DESPATCH OF THE ORDER ..