ACIT, Ajmer V. AJMER VIDHYUT VITRAN NIGAM LTD., Ajmer

MA 108/JPR/2018

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 5352 (ITAT-JAIPUR)
• Duration Of Justice: 4 month(s) 2 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 04-10-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2002-2003
• Appeal Filed On: 01-06-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: J C KULHARI
• Assessee Lawyers: ASHOK GUPTA CA DH
• Keywords: Capital asset; Depreciation; Question of law
• Section: 143(3); 115JB; 32

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM M.A. NOS. 108,109 & 110/JP/2018 (ARISING OUT OF ITA NOS. 306, 307 & 308/JP/2016) FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2002-03, 2003-04 & 2006-07 . THE ACIT CIRCLE-2, AJMER CUKE VS. M/S AJMER VIDYUT VITRAN NIGAM LTD., VIDYUT BHAWAN, PANCHSHEEL NAGAR, MAKARWALI ROAD, AJMER LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AACCA8562E VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS @ REVENUE BY : SHRI J. C. KULHARI (JCIT) FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI SUNIL PORWAL & SHRI ASHOK GUPTA (CA) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 28/09/2018 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 04/10/2018 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THESE ARE THREE MISCELLANEOUS APPLICATIONS FILED BY THE REVENUE AGAINST THE CONSOLIDATED ORDER PASSED BY THE CO-ORD INATE BENCH IN ITA NOS. 306, 307 & 308/JP/2016 DATED 09/08/2017. 2. IN THE SAID ORDER, THE CO-ORDINATE BENCH HAS DEL ETED THE LEVY OF PENALTY ON DEPRECIATION DISALLOWED ON NON-EXISTING ASSETS AS WELL AS EXCESS DEPRECIATION DISALLOWED U/S 32(1)(III) READ WITH SEC 43(1) AND EXPLANATION 10 THERETO. M.A. NOS. 108,109 & 110/JP/2018 THE ACIT, AJMER VS. M/S AJMER VIDYUT VITRAN NIGAM L TD., AJMER 2 3. THE LD. DR HAS SUBMITTED THAT THE DEPARTMENT HA S SINCE MOVED AN APPEAL BEFORE THE HONBLE HIGH COURT AGAINST THE SAID CONSOLIDATED ORDER PASSED BY THE CO-ORDINATE BENCH AND THE HONB LE HIGH COURT HAS BEEN PLEASED TO PASS AN ORDER IN DB APPEAL NO. 19, 26 & 31/2018 DATED 03/04/2018 WHEREIN IT WAS HELD AS UNDER:- 4. THE FACTS OF THE CASE ARE THAT THE RETURN DECLA RING INCOME NIL FILED ON 31.10.2002 THAN IT HAD BEEN REVISED AT INCOME OF RS. 49,70,09,117/- BEFORE ALLOWING DEPRECIATION WAS FIL ED ON 31.10.2003 SHOWN IN THE RETURN AS NIL INCOME. LATER ON THE ORD ER U/S 143(3) WAS MADE. THE ORDER U/S 143(2)/148 WAS MADE AS PER THE DIRECTION U/S 144A ISSUED BY WORTHY ADDL. CIT, RAGE-2, AJMER ON 2 3.12.2008. WHILE COMPLETING THE ASSESSMENT THE FOLLOWING ADDIT IONS WERE MADE:- (I) DEPRECIATION DISALLOWED ON NON EXISTING ASSETS : RS . 21,60,26,673/- (II) DEPRECIATION DISALLOWED U/S 43(1) EXPLANATION 10 RS . 18,99,41,047/-. 5. COUNSEL FOR THE APPELLANT STATES THAT IN ALL THE SE APPEALS, THE MATTERS MAY BE REMITTED BACK TO THE TRIBUNAL ON THE MAIN ISSUE. IN THAT VIEW OF THE MATTER, HE WOULD LIKE TO FILE RECT IFICATION APPLICATION BEFORE THE TRIBUNAL AND REQUEST THE TRIBUNAL TO HEA RD ALL THESE MATTERS TOGETHER. 6. IN VIEW OF THE ABOVE, ALL THESE APPEALS STAND DI SPOSED OF WITH LIBERTY TO THE APPELLANT TO MOVE RECTIFICATION APPL ICATION BEFORE THE TRIBUNAL WITH A REQUEST TO HEAR ALL THE MATTERS TOG ETHER. IF SUCH A REQUEST IS MADE BEFORE THE TRIBUNAL, WE HOPE THAT T HE TRIBUNAL WILL DECIDE ALL THE MATTERS TOGETHER. M.A. NOS. 108,109 & 110/JP/2018 THE ACIT, AJMER VS. M/S AJMER VIDYUT VITRAN NIGAM L TD., AJMER 3 4. IT WAS ACCORDINGLY SUBMITTED BY THE LD. DR THAT THE SAID ORDER PASSED BY THE CO-ORDINATE BENCH MAY KINDLY BE RECAL LED IN LIGHT OF THE DIRECTION SO PASSED BY THE HONBLE HIGH COURT. 5. PER CONTRA, THE LD. AR SUBMITTED THAT IN THE CON TEXT OF QUANTUM PROCEEDINGS, THE HONBLE HIGH COURT IN ITS EARLIER ORDER DATED 21.12.2017 IN DB APPEAL NO. 298, 299, 300, 35, 36 & 37/2017 DATED 21/12/2017 HAS ADMITTED THE FOLLOWING SUBSTANTIAL Q UESTIONS OF LAW AND HAS HELD AS UNDER: 3. THIS COURT WHILE ADMITTING THE APPEALS FRAMED FOLLOWING SUBSTANTIAL QUESTION OF LAW:- 3.1 APPEALS NO. 298/2016, 299/2016 & 300/2016 ADMITTED ON 8.2.2017. 'WHETHER THE ID. ITAT WAS JUSTIFIED IN LAW IN UPLOADING THE REDUCTION OF SUBSIDY/GRANT FROM THE ACTUAL COST OF THE CAPITAL ASSET BEFORE COMPUTATION OF DEPRECIATION UNDER SECTION 32 OF THE ACT OF 1961 WITHOUT APPRECIATING THAT THE APPELLANT IS A STATE GOVERNMENT COMPANY GOVERNED BY THE RAJASTHAN STATE ELECTRICITY BOARD'S RULES AND REGULATIONS AND AS PER THE RULES FRAMED UNDER THE ELECTRICITY (SUPPLY) ANNUAL ACCOUNTS RULES, 1985, WHEREIN THE COST OF TH E CAPITAL ASSET SHALL BE CALCULATED WITHOUT CONSIDERI NG M.A. NOS. 108,109 & 110/JP/2018 THE ACIT, AJMER VS. M/S AJMER VIDYUT VITRAN NIGAM L TD., AJMER 4 THE CONTRIBUTION, SUBSIDY OR GRANTS RECEIVED TOWARD S THE COST OF THE ASSET IS MANDATORY?' 3.2 APPEAL NO. 35/2017 ADMITTED ON 23.5.2017. '(I) WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE ITAT WAS JUSTIFIED IN LAW IN ALLOWING THE DEPRECIATION CLAIMED EVEN WHEN THE PHYSICAL EXISTENCE OF THE ASSETS HAS NOT BEEN PROVED BY THE ASSESSEE COMPANY AND THIS HAS BEEN ACKNOWLEDGED BY THE TRIBUNAL IN PARA 9.6 OF ITS ORDER. (II) WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE ITAT WAS JUSTIFIED IN LAW IN HOLDING THAT THE PROVISIONS OF SECTION 115JB OF THE IT ACT ARE N OT APPLICABLE ON THE ASSESSEE COMPANY BEING A COMPANY GOVERNED UNDER THE ELECTRICITY ACT AND THE COMPANIES ACT, IGNORING THAT SECTION 115JB DOES NOT MAKE ANY EXCEPTION FOR ANY COMPANY. (III) WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE ITAT WAS JUSTIFIED IN LAW IN CONFIRMING TH E ORDER OF THE CIT(A) WHO HAD DELETED THE ADDITION OF RS. 93,26,61,20/- IGNORING THAT THE ASSESSEE FAILED TO SUBMIT VOUCHERS/EVIDENCE OF SUCH EXPENDITURE. 3.3 APPEALS NO. 36/2017 & 37/2017 ADMITTED ON 25.1.2017. M.A. NOS. 108,109 & 110/JP/2018 THE ACIT, AJMER VS. M/S AJMER VIDYUT VITRAN NIGAM L TD., AJMER 5 (I) WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE ITAT WAS JUSTIFIED IN LAW IN ALLOWING THE DEPRECIATION CLAIMED EVEN WHEN THE PHYSICAL EXISTENCE OF THE ASSETS HAS NCT BEEN PROVED BY THE ASSESSEE COMPANY AND THIS HAS BEEN ACKNOWLEDGED BY THE TRIBUNAL IN PARA 9.6 OF ITS ORDER. (II) WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE ITAT WAS JUSTIFIED IN LAW IN HOLDING THAT THE PROVISIONS OF SECTION 1153B OF THE IT ACT ARE N OT APPLICABLE ON THE ASSESSEE COMPANY BEING A CMPANY GOVERNED UNDER THE ELECTRICITY ACT AND THE COMPANIES ACT, IGNORING THAT SECTION 115JB DOES NOT MAKE ANY EXCEPTION FOR ANY COMPANY. 4. THE FACTS OF THE CASE ARE THAT THE APPELLANT COMPANY IS A PUBLIC SECTOR COMPANY CARRYING ON BUSI NESS OF SUB TRANSACTION, DISTRIBUTION AND SUPPLY OF ELEC TRICITY. THE COMPANY WAS FORMED AFTER RE-STRUCTURING OF RSEB (RAJASTHAN STATE ELECTRICITY BOARD) ON 19.06.2000, WHEN 5 COMPANIES CAME IN TO EXISTENCE. WHEN THE COMPANY WAS FORMED, CERTAIN ASSETS AND LIABILITIES WERE TRA NSFERRED FROM THE PARENT COMPANY AND INCOME AND EXPENDITURE WAS SUBJECT TO RECONCILIATION. THE YEAR UNDER CONSIDERATION WAS THIRD YEAR AFTER THE COMPANYS INCEPTION AND CERTAIN EXPENSES AND INCOME BEING IN THE NATURE OF PRIOR PERIOD WERE CLAIMED AS PER NORMAL ACCOUNTING NORMS AND ON THE BELIEF THAT CERTAIN EXP ENSES M.A. NOS. 108,109 & 110/JP/2018 THE ACIT, AJMER VS. M/S AJMER VIDYUT VITRAN NIGAM L TD., AJMER 6 THOUGH PERTAINING TO THE PREVIOUS YEARS ARE ADMISSI BLE ONLY IN THE YEAR IN WHICH IT CRYSTALLIZED AND ACCOU NTED FOR ON THE BASIS OF SYSTEM OF ACCOUNTING REGULARLY FOLL OWED BY THE ASSESSEE. DURING THE YEAR THE PRIOR PERIOD I NCOME AMOUNTED TO RS. 1,99,40,531/- AND PRIOR PERIOD EXPE NSES AMOUNTED TO RS. 3,54,81,308/-. THUS, NET EXPENSES W ERE CLAIMED AT RS. 1,55,40,777/- (RS. 3,54,81,308 RS. 1,99,40,531/-). 5. WE HAVE HEARD BOTH THE PARTIES EARLIER BUT IN VI EW OF THE NOTIFICATION WHICH HAS BEEN ISSUED ON 18.01. 2002, THE PRESENT APPELLANT-COMPANY IS COVERED BY THE SAI D NOTIFICATION ISSUED BY THE STATE GOVERNMENT. 6. IN THAT VIEW OF THE MATTER, THE VERY BASIS OF TH E CONSIDERATION BY THE TRIBUNAL CONSIDERING IT TO BE UNDER THE COMPANIES ACT IS REQUIRED TO BE RECONSIDERED. I N THAT VIEW OF THE MATTER, THE ORDER OF THE TRIBUNAL IS RE QUIRED TO BE QUASHED AND SET ASIDE AS IT IS BASED ON WRONG PRESUMPTIONS. 7. HENCE, WE REMIT BACK THE MATTERS TO THE TRIB UNAL. 8. IT WILL BE OPEN FOR THE PARTIES TO RAISE ALL CONTENTIONS BEFORE THE TRIBUNAL IN ALL THE APPEALS. THE TRIBUNAL WILL RECONSIDER THE MATTERS AFTER TAKING I NTO CONSIDERATION NOTIFICATION OF 2002. THE COUNSEL FOR THE M.A. NOS. 108,109 & 110/JP/2018 THE ACIT, AJMER VS. M/S AJMER VIDYUT VITRAN NIGAM L TD., AJMER 7 ASSESSEE WILL PUT ALL THE DOCUMENTS BEFORE THE TRIB UNAL BY THE FIRST WEEK OF JANUARY, 2018. 9. BOTH THE PARTIES WILL APPEAR BEFORE THE TRIBUNAL ON OR BEFORE 22.1.2018 AND TRIBUNAL WILL HEAR THE MATT ERS AFRESH INCLUDING ALL THE ISSUES WHICH ARE ADMITTED BY THE COURT. 6. AFTER HEARING BOTH THE PARTIES AND IN LIGHT OF D IRECTIONS OF THE HONBLE HIGH COURT VIDE ITS ORDER DATED 3.04.2018, WE HEREBY RECALL THE ORDER PASSED BY THE CO-ORDINATE BENCH IN ITA NO. 30 6, 307 & 308/JP/2016 DATED 09/08/2017 FOR HEARING THE MATTER AFRESH ALONG WITH MATTER RELATING TO QUANTUM PROCEEDINGS IN TERMS OF ORDER OF THE HONBLE HIGH COURT DATED 21/12/2017. 7. BOTH THE PENALTY AND QUANTUM MATTERS ARE DIRECTE D TO BE LISTED FOR HEARING ON 18/11/2018. INFORM PARTIES. IN THE RESULT, MISCELLANEOUS APPLICATIONS FILED BY THE REVENUE ARE DISPOSED OFF IN LIGHT OF ABOVE DIRECTIONS. PRONOUNCED IN THE OPEN COURT ON 04/10/2018. SD/- SD/- FOT; IKY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 04/10/2018. * GANESH. M.A. NOS. 108,109 & 110/JP/2018 THE ACIT, AJMER VS. M/S AJMER VIDYUT VITRAN NIGAM L TD., AJMER 8 VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- THE ACIT, AJMER 2. IZR;FKHZ@ THE RESPONDENT- M/S AJMER VIDYUT VITRAN NIGAM LTD., AJMER 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE {M.A NOS. 108,109 & 110/JP/2018} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR