M/s Essel Mining & Industries Ltd., Kolkata V. D.C.I.T Cir - 5,kolkata, Kolkata

MA 109/KOL/2017

• Counselvise Citation: [2017] 124 COUNSELVISE.COM (IT) 5904 (ITAT-KOLKATA)
• Duration Of Justice: 4 month(s) 17 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 10-11-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 23-06-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SAURABH KUMAR ADL
• Assessee Lawyers: D S DAMLE
• Keywords: Depreciation; Capital receipt
• Section: 143(3)

Judgement Text

M.A.NO.109/KOL/2017 A/O ITA NO.2073/KOL/2013 M/S. E SSEL MINING & INDS. LTD A.Y.2008-09 1 IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH A KOLKATA BEFORE HONBLE SHRI N.V.VASUDEVAN, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER M.A.NO.109/KOL/2017 I.T.A. NO.2073/KOL/2013 ASSESSMENT YEAR : 2008-09 M/S. ESSEL MINING & INDUSTRIES LTD., 18 TH FLOOR, 10, CAMAC STREET, KOLKATA-17. PAN:AAACE 66007 L V/S . DEPUTY COMMISSIONER OF INCOME TAX,CIRCLE-5, INDUSTRY HOUSE, 18 TH FLOOR, 10, CAMAC STREET, KOLKATA-17 /APPELLANT .. /RESPONDENT /BY APPELLANT SHRI D.S.DAMLE, FCA /BY RESPONDENT SHRI SAURABH KUMAR, ADL. CIT(DR) /DATE OF HEARING 15.09.2017. /DATE OF PRONOUNCEMENT 10/11/2017 / O R D E R PER WASEEM AHMED, AM BY WAY OF THIS MISCELLANEOUS APPLICATION THE ASSESS EE SEEKS TO RECTIFY THE MISTAKE IN THE ORDER PASSED BY THE HONBLE I.T. A.T. VIDE ORDER DATED 10 TH MARCH, 2017 ON THE GROUND THAT THERE IS A MISTAKE A PPARENT FROM THE RECORD. 2. THE LD. AR BEFORE US HAS MADE THE SUBMISSION AS HELD UNDER :- DURING THE F.Y. 2007-08 THE PETITIONER HAD RECEIVED COMPENSATION OF RS. 1928.18 LACS FROM SUZLON ENERGY LTD (SEL). THE SAID COMPENSATION WAS RECEIVED FOR FAILURE OF THE WIND ELECTRIC GENERATOR S (WEG) SUPPLIED BY SEL TO ACHIEVE PERFORMANCE PARAMETERS. IT WAS THE PETITION ER'S CONTENTION THAT THE COMPENSATION RECEIVED WAS A CAPITAL RECEIPT NOT LIA BLE TO TAX. IN THE ASSESSMENT ORDER THE AO HOWEVER HELD THAT THE COMPENSATION WAS A REVENUE RECEIPT LIABLE TO BE INCLUDED IN THE TOTAL INCOME. ON APPEAL THE C IT (A) IN PRINCIPLE AGREED WITH THE PETITIONER'S CONTENTION THAT THE COMPENSATION W AS IN RELATION TO A TRANSACTION IN CAPITAL FIELD AND THEREFORE COULD NOT BE ASSESSE D AS REVENUE RECEIPT. THE CIT (A) HOWEVER HELD THAT THE COMPENSATION AMOUNT WAS R EQUIRED TO BE REDUCED M.A.NO.109/KOL/2017 A/O ITA NO.2073/KOL/2013 M/S. E SSEL MINING & INDS. LTD A.Y.2008-09 2 FROM THE ACTUAL COST/WDV OF THE PLANT & MACHINERY B LOCK IN TERMS OF EXPLANATION (10) TO SEC. 43(1) OF THE I.T. ACT. THE CIT (A) ACCORDINGLY DELETED THE ADDITION MADE TO THE TOTAL INCOME, BUT REQUIRE D THE AO TO RE-COMPUTE THE DEPRECIATION AFTER REDUCING THE COMPENSATION FROM T HE ACTUAL COST OF THE WEGS AND ALLOW THE DEPRECIATION ON THE RESULTANT REDUCED ACTUAL COST. BEING AGGRIEVED BY THE SAID FINDINGS OF THE CIT (A) THE A PPEALS WERE PREFERRED BY THE PETITIONER AS WELL AS THE REVENUE. 10. THE LD. TRIBUNAL RECORDED ITS FINDINGS WITH REG ARD TO THIS ISSUE IN PARA 12.1 OF THE ORDER DATED 10.03.2017. THE TRIBUNAL CONCLUD ED THAT THE COMPENSATION WAS QUANTIFIED AND RECEIVED AFTER PUTTING THE MACHI NES TO ACTUAL USE. ACCORDING TO TRIBUNAL IT WAS CRYSTAL CLEAR THAT THE COMPENSAT ION WAS GIVEN ON THE REVENUE ACCOUNT THAT IS TO REDUCE RUNNING LOSS OF THE ASSES SEE AND THAT TOO IN THE COURSE OF BUSINESS AND COMPENSATION HAD DIRECT NEXUS WITH THE ASSESSEE'S BUSINESS. THE LD. TRIBUNAL REFUSED TO FOLLOW THE RATIO LAID D OWN IN THE JUDGMENT OF THE SUPREME COURT IN THE CASE OF CIT VS SOURASHTRA CEME NTS LTD (325 ITR 422) AS WELL AS DECISIONS OF THE CO-ORDINATE BENCHES OF THE ITAT IN THE CASES OF ACIT VS RDS CONSTRUCTION PVT. LTD AND DCIT VS XPRO INDIA LTD ON THE GROUND THAT THE FACTS WERE DISTINGUISHABLE. ACCORDING TO THE TR IBUNAL THE DECISION OF THE SUPREME COURT WAS NOT APPLICABLE BECAUSE COMPENSATI ON IN THAT CASE WAS GIVEN FOR LATE DELIVERY OF MACHINERY, WHEREAS IN TH E PETITIONER'S CASE THE COMPENSATION WAS GIVEN DUE TO NON PERFORMANCE OF TH E MACHINERIES AT THE DESIRED LEVEL. IN THE CASE BEFORE THE SUPREME COURT , MACHINES WERE NOT PUT INTO USE BUT IN THE PETITIONER'S CASE THE MACHINERY WAS ACTUALLY PUT TO USE FOR PRODUCTION OF UNITS. THE LD. TRIBUNAL ON THESE FACT S HELD THAT THE COMPENSATION WAS IN THE REVENUE FIELD EVEN THOUGH IT WAS PAID FO R NON PERFORMANCE OF THE MACHINERIES AT THE DESIRED LEVEL. 11. THE PETITIONER SUBMITS THAT IN ARRIVING AT ITS DECISION THE LD. TRIBUNAL ERRONEOUSLY FAILED TO FOLLOW THE DECISION OF THE CO -ORDINATE BENCH OF ITAT KOLKATA IN THE CASE OF XPRO INDIA LTD EVEN THOUGH F ACTS IN BOTH THE CASES WERE IDENTICAL. THE LD. TRIBUNAL ERRONEOUSLY FAILED TO T AKE INTO ACCOUNT THE MATERIAL JURISDICTIONAL FACTS INVOLVED IN THE CASE OF XPRO I NDIA LIMITED (SUPRA). EVEN IN THE CASE OF XPRO INDIA LTD THE COMPENSATION WAS RECEIVE D BY THE ASSESSEE MUCH AFTER THE MACHINERIES WERE SUPPLIED, INSTALLED AND PUT TO USE. IN THAT CASE ALSO AT THE TIME OF PURCHASE OF MACHINERIES, THE MACHINE RY SUPPLIER HAD ASSURED TO ATTAIN PERFORMANCE PARAMETERS ONCE THE MACHINERIES WERE INSTALLED AND PUT TO USE. AFTER THE MACHINERIES WERE ACTUALLY PUT TO USE THE XPRO HOWEVER FOUND THAT THE PERFORMANCE PARAMETERS WERE NOT ACHIEVED AND TH EREFORE LEGAL PROCEEDINGS WERE INSTITUTED AGAINST MACHINERY SUPPLIER SEEKING DAMAGES FOR NOT ACHIEVING PERFORMANCE PARAMETER. THE MACHINERY SUPPLIER PAID COMPENSATION TO THE ASSESSEE FOR SETTLING THE CLAIMS RAISED FOR NOT ACH IEVING PERFORMANCE PARAMETERS. IN THE ASSESSMENT ORDER THE AO REDUCED THE COMPENSATION FROM THE ACTUAL COST & ON THE RESULTANT AMOUNT OF WDV; D EPRECIATION WAS ALLOWED. ON APPEAL THE CIT (A) AS WELL AS THE ITAT HELD THAT THE COMPENSATION RECEIVED WAS A CAPITAL RECEIPT NOT LIABLE TO BE TAXED. THE C OPY OF THE ITAT'S ORDER IN THE CASE OF XPRO INDIA LTD WAS FURNISHED BEFORE THE LD. TRIBUNAL. IT MAY BE PERTINENT TO SUBMIT THAT THE DECISION IN THE CASE OF XPRO IND IA LTD WAS DELIVERED BY THE BENCH CONSISTING THE SAME MEMBERS WHO HAVE AUTHORED THE IMPUGNED ORDER. IT WILL BE EVIDENT THAT EVEN IN THE CASE OF XPRO INDIA LTD THE COMPENSATION WAS M.A.NO.109/KOL/2017 A/O ITA NO.2073/KOL/2013 M/S. E SSEL MINING & INDS. LTD A.Y.2008-09 3 PAID BY THE MACHINERY SUPPLIER AFTER THE MACHINERIE S WERE PUT TO USE, BUT FAILED TO ACHIEVE PERFORMANCE PARAMETERS LEADING TO LOSS I NCURRED AND YET THE ITAT KOLKATA BENCH HAD HELD THE COMPENSATION TO BE CAPIT AL RECEIPT. 12. IT IS FURTHER MATERIAL TO SUBMIT THAT COMPENSAT ION WAS RECEIVED BY THE PETITIONER FROM SEL IN A.Y. 2009-10 AS WELL. IN THE RETURN OF INCOME FILED FOR THE A.Y. 2009-10 THE PETITIONER HAD CLAIMED THE COMPENS ATION TO BE CAPITAL RECEIPT NOT LIABLE TO TAX AND THE SAME WAS ALSO NOT REDUCED FROM THE WDV OF THE BLOCK OF PLANT & MACHINERY. IN THE ASSESSMENT ORDER PASSE D U/S 143(3) THE AO ACCEPTED THE APPELLANT'S CLAIM THAT THE COMPENSATIO N WAS CAPITAL RECEIPT NOT LIABLE TO TAX. IN THE PAPER BOOK THE RELEVANT COMPU TATION OF TOTAL INCOME, DEPRECIATION CHART AND THE ASSESSMENT ORDER FOR A.Y . 2009-10 WERE PLACED AT PAGES 53 TO 59. IN DECIDING THE APPEAL THE ITAT HOW EVER DID NOT TAKE INTO ACCOUNT EITHER THE DECISION OF ITAT IN THE CASE OF XPRO INDIA LTD IN ITS PROPER PERSPECTIVE NOR CONSIDERED THE ASSESSMENT ORDER FOR A.Y. 2009-10 INVOLVING IDENTICAL ISSUE. THE PETITIONER SUBMITS THAT NON CO NSIDERATION OF THE RATIO LAID DOWN IN THE CASE OF XPRO INDIA LTD AS ALSO THE ASSE SSMENT ORDER FOR A.Y. 2009- 10 WAS A MISTAKE APPARENT FROM RECORD WITHIN THE ME ANING OF SEC. 254(2) OF THE ACT. 3. ON THE OTHER HAND, THE LD. DR VEHEMENTLY SUPP ORTED THE ORDER OF THE HONBLE ITAT. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE GRIEVANCE OF THE ASSESSEE IS THAT THE HONBLE ITAT HAS PASSED THE ORDER ON THE CLAIM OF THE ASSESSEE A GAINST THE PRINCIPLE LAID DOWN BY THE COURTS AS DETAILED UNDER :- I) CIT VS SOURASHTRA CEMENTS LTD. 325 ITR 422 (SC) II) COORDINATE BENCH OF ITAT, KOLKATA IN THE CASE O F XPRO INDIA LTD. IN ITA NO.214/KOL/2011 . HOWEVER, WE FIND THAT THE HONBLE ITAT, KOLKATA WHI LE DECIDING THE IMPUGNED ISSUE HAS CONSIDERED BOTH THE ORDERS AS DISCUSSED A BOVE AS WELL AS DISTINGUISHING THEM FROM THE PRESENT FACTS OF THE C ASE. THEREFORE, IT CANNOT BE SAID THAT THE PRINCIPLES LAID DOWN BY THE COURTS IN THE CASE OF CIT VS SOURASHTRA CEMENTS LTD AND XPRO INDIA LTD (SUPRA) H AVE NOT BEEN FOLLOWED. AT THIS JUNCTURE WE WANT TO REPRODUCE THE PROVISION OF SECTION 254(2) OF THE ACT WHICH READS AS UNDER : 254(2) THE APPELLATE TRIBUNAL MAY, AT ANY TIME WITHIN [SI X MONTHS FROM THE END OF THE MONTH IN WHICH THE ORDER WAS PASSED] , WITH A VIEW TO RECTIFYING ANY MISTAKE APPARENT FROM THE RECORD, AM END ANY ORDER PASSED M.A.NO.109/KOL/2017 A/O ITA NO.2073/KOL/2013 M/S. E SSEL MINING & INDS. LTD A.Y.2008-09 4 BY IT UNDER SUB-SECTION (1) AND SHALL MAKE SUCH AME NDMENT IF THE MISTAKE IS BROUGHT TO ITS NOTICE BY THE ASSESSEE OR THE ASS ESSING OFFICER. FROM THE ABOVE PROPOSITION WE NOTE THAT THE POWER O F THE HONBLE ITAT IS LIMITED TO RECTIFY THE MISTAKE TO THE EXTENT OF THE MISTAKE APPARENT FROM RECORD. HOWEVER, IN THE INSTANT CASE WE NOTE THAT THE PRINC IPLES LAID DOWN BY THE HONBLE APEX COURT IN THE CASE OF CIT VS SOURASHTRA CEMENTS LTD (SUPRA) AND THE HONBLE ITAT IN THE CASE OF XPRO INDIA LTD (SUPRA) HAVE BEEN DULY DISTINGUISHED BY THE HONBLE ITAT AND THEREAFTER DI SALLOWED THE CLAIM OF THE ASSESSEE BY WAY OF A SPEAKING ORDER. THUS IN VIEW O F THE ABOVE WE CONCLUDE THAT NO MISTAKE IN THE ORDER OF THE HONBLE ITAT HA S OCCURRED WHICH IS APPARENT FROM RECORD. THUS GROUND OF APPEAL RAISED BY THE ASSESSEE IN ITS MISCELLANEOUS APPLICATION IS DISMISSED. 5. IN THE RESULT, M.A OF THE ASSESSEE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 10/11/2017 SD/- SD/- ( !) ( !) (N.V.VASUDEVAN) (WASEEM AHMED) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) *RG.SPS #- 10/11/2017 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-ESSEL MINING & INDUSTRIES LTD. 18 TH FL, 10, CAMAC STREET, KOLKATA-17 2. /RESPONDENT-DCIT, CIRCLE-5, P-7, CHOWRINGHEE SQUARE , KOLKATA-69 3. - 0 / CONCERNED CIT 4. 0- / CIT (A) 5. 3 -, -, KOLKATA / DR, ITAT, KOLKATA 6. 9 / GUARD FILE. BY ORDER/ , /TRUE COPY/ / -,