ACIT, Palakkad V. M/s.Shalom Charitable Ministries of India, Palakkad

MA 105/COCH/2013

• Counselvise Citation: [2013] 124 COUNSELVISE.COM (IT) 1087 (ITAT-COCHIN)
• Duration Of Justice: 2 month(s) 10 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 22-11-2013
• Appeal Filed By: Department
• Bench Allotted: DB
• Next Hearing Date: 22-11-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 12-09-2013
• Court: TRIBUNAL
• Department Lawyers: LATHA V KUMAR
• Assessee Lawyers: NITHIN S CHETTOOR
• Keywords: Revenue expenditure
• Section: 40A(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND B.R.BASKAR AN, AM M.P. NO. 105/COCH/2013 (ARSG. OUT OF I.T.A. NO. 150/COCH/2012) ASSESSMENT YEAR : 2007-08 THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-1, PALAKKAD. VS. M/S. SHALOM CHARITABLE MINISTRIES OF INDIA, SHALOM NAGAR, GOPALAPURAM ROAD, CHITTOOR, PALAKKAD. [PAN: AADTS 6647Q] (REVENUE -APPELLANT) (ASSESSEE-R ESPONDENT) REVENUE BY SMT. LATHA V. KUMAR, JR.DR ASSESSEE BY SHRI NITHIN S. CHETTOOR, CA DATE OF HEARING 22/11/2013 DATE OF PRONOUNCEMENT 22/11/2013 O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE REVENUE HAS MOVED THIS MISCELLANEOUS APPLICATI ON SEEKING RECTIFICATION/RECALL OF THE ORDER DATED 31-01-2013 PASSED IN THE HANDS O F THE ASSESSEE FOR ASSESSMENT YEAR 2007-08 AGAINST THE REVISION ORDER PASSED BY LD CIT U/S 263 OF THE ACT. 2. THE LD D.R, SMT. LATHA V KUMAR SUBMITTED THAT TH E TRIBUNAL, IN PARAGRAPH 7 OF ITS ORDER CITED ABOVE, HAS SET ASIDE THE ORDER OF L D CIT WITH THE DIRECTION TO EXAMINE ABOUT THE APPLICABILITY OF DISALLOWANCE U/S 40A(3) OF THE ACT ON LAND PURCHASE TRANSACTIONS, ON FINDING THAT THE APPLICABLE RATE O F DISALLOWANCE UNDER THAT SECTION WAS ONLY 20% FOR THE YEAR UNDER CONSIDERATION AND HENCE THE LD CIT WAS NOT CORRECT IN DIRECTING THE AO TO MAKE 100% DISALLOWANCE. THE LD D.R SUBMITTED THAT AO HAD MADE A DISALLOWANCE OF 20% ON A SUM OF RS.6,50,000/-, WH ICH FINDS PLACE IN PAGE 8 OF THE ASSESSMENT ORDER. THE LD D.R SUBMITTED THAT THE AO HAS DISCUSSED, IN PARAGRAPH 5 OF M.P. NO.105/COCH/2013 2 HIS ORDER, ABOUT THE LANDS PURCHASED FOR PIRIYARI P ROJECT AND VELLALORE PROJECT. THE AO ALLOWED THE COST OF LAND FOR THE ABOVE SAID PROJECT S AS DEDUCTION, WITHOUT EXAMINING ABOUT THE APPLICABILITY OF PROVISIONS OF SEC. 40A(3 ) ON THE ABOVE SAID ITEMS. THE LD CIT NOTICED FROM THE RECORD THAT THE ASSESSEE HAS PAID A SUM OF RS.22,83,000/ IN CASH FOR THE LANDS PURCHASED FOR PRIRIYARI PROJECT AND VELLA LORE PROJECT. ACCORDINGLY, THE LD CIT HAS SET ASIDE THE ASSESSMENT ORDER WITH THE DIRECTI ON TO EXAMINE THE APPLICABILITY OF PROVISIONS OF SEC, 40A(3) ON THE ABOVE SAID ITEM. THE LD D.R FURTHER SUBMITTED THAT THE RATE OF DISALLOWANCE, I.E., WHETHER 20% OR 100% WAS NOT AN ISSUE BEFORE THE LD CIT AT ALL. HOWEVER, THE ASSESSEE DID NOT PUT FORT H THE FACTS CORRECTLY AND BASED ON THE WRONG SUBMISSIONS MADE BY THE ASSESSEE, THE TRIBUNA L HAS DECIDED THE GROUND ON THE PRESUMPTION THAT THE RATE OF DISALLOWANCE WAS THE I SSUE BEFORE IT. ACCORDINGLY, THE LD D.R SUBMITTED THAT THE ORDER PASSED BY THE TRIBUNAL SUFFERS FROM A MISTAKE APPARENT FROM RECORD, SINCE THE TRIBUNAL HAS ADJUDICATED AN ISSUE WHICH WAS NOT THE SUBJECT MATTER OF REVISION ORDER. ACCORDINGLY, THE LD D.R SUBMITTED THAT THE ORDER PASSED BY THE TRIBUNAL MAY BE RECTIFIED. 3. THE LD A.R SUBMITTED THAT THE ASSESSEE IS, F OR THE FIRST TIME, NOTICING THE AMOUNT OF RS.22,83,000/- IN THE MISCELLANEOUS PETITION OF DEPARTMENT ONLY. HE SUBMITTED THAT THIS AMOUNT WAS NOT MENTIONED EITHER IN THE NOTICE ISSUED BY THE COMMISSIONER FOR INITIATING REVISION PROCEEDINGS OR IN THE REVISION ORDER. SINCE THE LD CIT DISCUSSED ABOUT THE DISALLOWANCE MADE U/S 40A(3) OF THE ACT A ND SINCE THE AO HAD ALREADY DISALLOWED 20% OF RS.6,50,000/- U/S 40A(3) OF THE A CT, THE ASSESSEE SINCERELY BELIEVED THAT THE SUBJECT MATTER OF REVISION ORDER WAS THE A BOUT THE AMOUNT OF RS.6,50,000/- ALREADY CONSIDERED BY THE AO AND ACCORDINGLY REPRES ENTED THE MATTER BEFORE THE TRIBUNAL. THE LD COUNSEL SUBMITTED THAT THE REVENU E IS TRYING TO BRING A NEW GROUND THROUGH THE MISCELLANEOUS PETITION BY MAKING A REFE RENCE TO RS.22,83,000/-. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERU SED THE RECORD. A CAREFUL PERUSAL OF THE REVISION ORDER PASSED BY LD CIT SHOW THAT THE A DMINISTRATIVE COMMISSIONER IS ONLY DISCUSSING ABOUT THE APPLICABILITY OF PROVISIONS OF SEC. 40A(3) ON THE COST OF LAND, WHICH WAS CLAIMED AS REVENUE EXPENDITURE. WE ALSO NOTICE THAT THE ASSESSING OFFICER HAS M.P. NO.105/COCH/2013 3 IDENTIFIED A SUM OF RS.6,50,000/- AS THE PAYMENTS T O WHICH THE PROVISIONS OF SEC. 40A(3) IS APPLICABLE AND ACCORDINGLY DISALLOWED 20% OF THE SAME IN THE ASSESSMENT ORDER. THUS, IT IS SEEN THAT THE LD CIT HAS DIRECT ED THE ASSESSING OFFICER TO EXAMINE THE APPLICABILITY OF PROVISIONS OF SEC. 40A(3) ON THE P URCHASE OF PLOTS, WITHOUT MAKING ANY SPECIFIC REFERENCE. WE ALSO NOTICE THAT THE LD CIT DID NOT DISCUSS ANYTHING ABOUT THE RATE OF DISALLOWANCE, I.E., WHETHER 20% OR 100%. 5. WE NOTICE THAT THE ASSESSEE HAS PRESUMED TH AT THE LD CIT HAS DIRECTED THE AO TO MAKE 100% DISALLOWANCE AS AGAINST 20% MADE BY THE A O AND ACCORDINGLY RAISED CONTENTIONS BEFORE US. THUS, WE NOTICE THAT THE AS SESSEE HAS FAILED TO URGE CORRECT ISSUE AND THE SAME HAS LED THE TRIBUNAL TO ADJUDICA TE AN ISSUE WHICH WAS NOT SUBJECT MATTER OF REVISION ORDER. WHEN A SPECIFIC QUERY WA S PUT TO THE COUNSEL AS TO WHETHER THE PAYMENT OF RS.22,83,000/- WAS MADE BY WAY OF CA SH OR BY WAY OF CHEQUE, THE LD COUNSEL SUBMITTED THAT THE MATTER REQUIRES VERIFICA TION. 6. FROM THE FOREGOING DISCUSSIONS, WE NOTICE TH AT THE TRIBUNAL HAS CONSIDERED AN ISSUE WHICH WAS NOT SUBJECT MATTER OF REVISION ORDE R AND ACCORDINGLY IT HAS SET ASIDE THE DIRECTION ISSUED BY THE LD CIT WITH REGARD TO EXAMI NATION OF APPLICABILITY OF SEC. 40A(3) SUFFERS FROM MISTAKE APPARENT FROM RECORD. THERE SHOULD NOT BE ANY DISPUTE THAT, RENDERING DECISION ON AN ISSUE ON THE BASIS OF FACT S RELATING TO ANOTHER ISSUE WOULD MAKE THE ORDER ERRONEOUS ONE. HENCE, AS SUBMITTED BY LD D.R, THE IMPUGNED ORDER SUFFERS FROM ERROR, WHICH REQUIRES RECTIFICATION. ACCORDINGLY, WE DEEM IT FIT TO RECALL THE IMPUGNED ORDER OF THE TRIBUNAL RELATING TO THE ISSU E OF APPLICABILITY OF SEC. 40A(3) OF THE ACT. ACCORDINGLY, IN EXERCISE OF THE POWERS VESTED UPON US UNDER SECTION 254(2) OF THE ACT, WE RECALL THE ORDER CITED ABOVE IN ORDER TO CO NSIDER THE GROUND RELATING TO THE DIRECTION ISSUED BY LD CIT ABOUT THE APPLICABILITY OF THE PROVISIONS OF SEC. 40A(3) OF THE ACT. 7. WE ALSO DIRECT THE REGISTRY TO POST THE APPE AL ON 24-12-2013 FOR FINAL HEARING. SINCE THE DATE OF HEARING IS ANNOUNCED IN THE OPEN COURT IN THE PRESENCE OF BOTH THE PARTIES, THE REGISTRY NEED NOT SEND THE NOTICE OF H EARING TO THEM, I.E., THE PRESENT ORDER M.P. NO.105/COCH/2013 4 SHALL ALSO BE CONSTRUED AS NOTICE OF HEARING, WHICH MAY BE TAKEN NOTE OF BY BOTH THE PARTIES. 8. IN THE RESULT, THE MISCELLANEOUS APPLICATION OF THE REVENUE IS ALLOWED. PRONOUNCED ACCORDINGLY ON 22-11-20 13. SD/- SD/- (N.R.S.GANESAN) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 22ND NOVEMBER, 2013 GJ COPY TO: 1. M/S. SHALOM CHARITABLE MINISTRIES OF INDIA, SHAL OM NAGAR, GOPALAPURAM ROAD, CHITTOOR, PALAKKAD. 2. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE -1, PALAKKAD. 3. THE COMMISSIONER OF INCOME-TAX, THRISSUR. 4. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 5. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T, COCHIN M.P. NO.105/COCH/2013 5